ON THE ROAD TO ADDIS Ababa 13-16 July 2015
Preparing for the International Conference on Financing for Sustainable Development
The United Nations General Assembly agreed to hold the third International Conference on Financing for Development (FfD) on 13-16 July 2015 in Addis Ababa, Ethiopia. This is an important opportunity to overcome disappointing experiences on international cooperation and forge a concrete programme of work on a number of pressing development issues. The central question right now is what programme of work might win endorsement with less than one year’s preparation? Which ones are worth fighting for? What reforms or programmes are attainable? Social Justice in Global Development seeks to stimulate concrete discussion of these questions among interested parties.
The Addis opportunity
The first FfD conference at Monterrey, Mexico in 2002 led to significantly increased official development assistance (ODA), more effective ODA, modestly upgraded UN international tax discussions, a modestly improved voice of developing countries in decision making at the International Monetary Fund (IMF) and the World Bank, official acceptance of the principle that poor country debt-servicing should not impede their advancement toward the Millennium Development Goals, and so on. Frankly, many of the initiatives endorsed at Monterrey were not successful, such as the Doha Development Agenda of negotiations at the World Trade Organization (WTO) and the design of a mechanism for a fair and effective resolution of sovereign debt crises at IMF. But what Monterrey did agree was to try to advance various proposals in particular intergovernmental venues, setting in motion or endorsing serious efforts to address them. Especially in light of the short time for preparation, it is doubtful that more than that can be attained at the Addis conference. But it would be worth attaining such a work programme.
The Addis FfD conference also has to be seen in the context of the preparations for the “post-2015 development agenda” that governments have agreed to launch at a meeting of heads of state at the UN General Assembly in September 2015. It is expected that the agenda will aim to realize a set of Sustainable Development Goals, a draft of which was agreed on 19 July 2014 by the Open Working Group of the Assembly, which had been set up for that purpose. The Assembly also established the Intergovernmental Committee of Experts on Sustainable Development Financing which will conclude its work and present options for sustainable development financing in September 2014. While that committee works behind closed doors, people who have seen its draft report say it will not break new ground. The Addis meeting will thus be the primary opportunity to agree to a specific work programme on international cooperation before the heads of state convene in September 2015.
The civil society challenge
While Addis is an opportunity for global social and economic progress, it is also a challenge. The global spirit of multilateralism is weaker than it was in the early years of the new Millennium. Countries are absorbed in domestic policy battles and have turned increasingly to bilateral and plurilateral arrangements in frustration at failures in multilateral ones. Examples include the effort of groups of countries to negotiate a Trans Pacific Partnership and a Transatlantic Trade and Investment Partnership in lieu of the inability to negotiate any global agreement in WTO. Other examples include the establishment of the BRICS Bank of and for countries of the South in lieu of dissatisfaction with the processes and policies of the World Bank and the regional development banks which are controlled by the North. Indeed, the very future of the planet remains in jeopardy because governments have been unable to agree on what steps to take to combat global warming, which must be done collectively. In short, the global spirit of cooperation is not propitious, but neither is there reason to expect any benefit from waiting for it to improve on its own
While the major impediments to global cooperation cannot be overcome in a year, a number of limited but promising steps could be agreed in Addis, which itself would give multilateralism a boost. What is required is to identify a package of these steps that are broadly desirable to civil society and that might attract governmental and multilateral institution champions, building an expanding coalition of campaigners and actors who see the value in capturing opportunities at Addis.
A work programme for Addis
Thankfully, there is a great deal of work underway on specific policy issues that might be advanced at Addis. Some of the work is in international organizations, some in civil society organizations and some in academia. Thankfully as well, the scope of FfD is broad so that almost any issue could be included. As perusal of the Monterrey Consensus shows, it encompasses domestic economic, social and financial policies, foreign investment and other private flows, trade, ODA and other official flows, including innovative sources of public finance, sovereign debt and systemic issues, including not only addressing sources of global financial instability and improving global economic governance, but also means for promoting coherence among international economic policies of nations and international institutions.
Social Justice in Global Development offers to facilitate consideration of possible initiatives for Addis by posting well-argued proposals for reflection by colleagues and friends.
Details are on the links to other pages here >>>
See paper on ODA here >>>
Please send us your comments and further ideas here >>>
Impact of domestic and international environments on sustainable development financing
In the context of the UN High Level Dialogue on Financing for Development and the presence of a number of senior officials and experts, the Permanent UN Mission of Chile, the Ralph Bunche Institute and Social Justice in Global Development held a consultation at the UN Headquarters on 9th October 2013 on the "Imapct ofdomesticandinternational environments on sustainable development financing".
About 45 representatives from Governments, institutions and civil society participated. The following points were discussed: For many Governments from North and South,“Monterrey” remains a benchmark for international cooperation for development owing to its insistence on the holistic policy agenda, its processes formultistakeholderdialogue, andits success in building political momentum for stronger cooperation. A number of Government representatives thus recommended holding a “MonterreyPlus” conferencein the firsthalf of 2015 to promote “sustainable and equitable development”.
A more enabling domestic environment includes an effective and adequately financed government. It would strengthen the domestic financial sector’s ability to arrange long-termfinancing and develop appropriate access of the poor and small and medium enterprises to financial services. It was proposed that policy makers consider alternativeoptionswhendeciding the proper role of government and public institutions in development financing.
A more enabling international environment would lessen the systemic sources of the continued high risk and volatility of international financial flows, including bycounteringfinancialindustry efforts to dilute international regulatory standards. It would promote more internationally coherent sets of macroeconomic policies (as opposed touniversalausterity), as wellas reform the international financial and trade architecture, for example by increasing fairness in the system of intellectual property rights and introducingasovereign debt workoutmechanism.
There was considerable skepticism about the strategy under discussion in some quarters to overcome the envisaged shortfall in official development assistance (ODA) by using aid to “leverage” private funds, especially as regards tapping for-profit pools of investment funds and investment by corporations. There was also fear that the partnerships that didresult would redirect ODA into the priorities of the private partners instead of social development purposes. Interest was also expressed in promoting effective innovativesourcesoffinancing for development.
ECLAC will soon host another meeting in Santiago on this topic. There will likely be a continuing dialogue of official and non-state stakeholders on financing sustainable development.
See Agenda here >>> and See Report here >>>
Austerity Policies Expanding Worldwide, including in the South
New IPD- South Centre Report on “The Age of Austerity: A Review of Public Expenditures and Adjustment Measures in 181 Countries
By Isabel Ortiz and Matthew Cummins
Contrary to public perception, austerity measures are not limited to Europe; in fact, many adjustment measures feature most prominently in developing countries. According toIMFdata,119 countries will be adjusting public expenditures in 2013, increasing to 131 countries in 2014 and the trend will continue at least until 2016. This is revealed in a globalupdateonausterity, co-published by IPD and the South Centre: “The Age of Austerity – A Review of Public Expenditures and Adjustment Measures in 181 Countries”.
See paper here »»
The paper examines the latest IMF government spending projections for 181 countries by comparing the four distinct periods of 2005-07 (pre-crisis), 2008-09 (crisis phase I: fiscal expansion), 2010-12 (crisis phase II: onset of fiscal contraction) and 2013-15 (crisis phase III: intensification of fiscal contraction); (ii) reviews 314 IMF country reports in 174 countries to identify the main adjustment measures considered in high-income and developing countries; (iv) discusses the threats of austerity to development goals and social progress; and (v) calls for urgent action by governments to adopt alternative and equitable policies for socio-economic recovery.
In a first phase of the global economic crisis (2008-09), most governments introduced fiscal stimulus programs and ramped up public spending, as the world was able to coordinate policies. However, premature expenditure contraction became widespread in 2010, which marked the beginning of the second phase of the crisis, despite vulnerable populations’ urgent and significant need of public assistance. In 2013, the scope of public expenditure consolidation is expected to intensify significantly, impacting 119 countries in terms of GDP, and then steadily increase to reach 132 countries in 2015. The latest IMF projections suggest that this trend will continue at least through 2016.
One of the key findings of this analysis is that fiscal contraction is most severe in the developing world. Overall, 68 developing countries are projected to cut public spending by 3.7% of GDP, on average, in the third phase of the crisis (2013-15) compared to 26 high-income countries, which are expected to contract by 2.2% of GDP, on average. Moreover, comparing the 2013-15 and 2005-07 periods suggest that a quarter of countries are undergoing excessive contraction, defined as cutting expenditures below pre-crisis levels. In terms of population, austerity will be affecting 5.8 billion people or 80% of the global population in 2013; this is expected to increase to 6.3 billion or 90% of persons worldwide by 2015.
Regarding austerity measures, a desk review of IMF country reports published between January 2010 and February 2013 indicates that governments are weighing various adjustment strategies. These include: (i) elimination or reduction of subsidies, including on fuel, agriculture and food products (in 100 countries); (ii) wage bill cuts/caps, including the salaries of education, health and other public sector workers (in 98 countries); (iii) rationalizing and further targeting safety nets (in 80 countries); (iv) pension reform (in 86 countries); (v) healthcare reform (in 37 countries); and (vi) labor flexibilization (in 32 countries). Many governments are also considering revenue-side measures that can adversely impact vulnerable populations, mainly through introducing or broadening consumption taxes, such as value added taxes (VATs), on basic products that are disproportionately consumed by poor households (in 94 countries).
The paper questions if the projected fiscal contraction trajectory—in terms of timing, scope and magnitude—as well as the specific austerity measures being considered are conducive to socio-economic recovery and the achievement of development goals. The worldwide propensity toward fiscal consolidation can be expected to aggravate the employment crisis and diminish public support at a time when it is most needed. The costs of adjustment are being thrust upon populations who have been relentlessly coping with fewer and lower-paying job opportunities, higher food and fuel costs, and reduced access to essential services since the crisis began. In short, millions of households continue to bear the costs of a “recovery” that has largely excluded them. It is imperative that policymakers recognize the high human and developmental costs of poorly designed adjustment strategies and consider alternative policies that support a recovery for all.
Download:The Age of Austerity: A Review of Public Expenditures and Adjustment Measures in 181 Countries written by Isabel Ortiz and Matthew Cummins
United Nations Social Forum on "People-centred development and globalization"
The Human Rights Council of the United Nations organized a Social Forum to foster dialogue between governments, experts and civil society. It took place from 1 to 3 October 2012 in Room XXI, Palais des Nations, Geneva, Switzerland. As requested by the Council the Social Forum focussed on “People-centred development and globalization”, and in particular: Enhancing a globally enabling environment for development, including through the international financial system, which should support sustained, inclusive and equitable economic growth, sustainable development and hunger and poverty eradication in developing countries, while allowing for the coherent mobilization of all sources of financing for development. "Social Justice in Global Development" (SocDevJustice) organised two panels and invited its advisors and friends to make the following presentations:
François Mercier, Desk Officer at Fastenopfer for Financing for Development and the Democratic Republic of Congo: Tax havens hinder the mobilization of domestic resources for development
See full presentation here »»»
Gemma Adaba, Social Justice in Global Development and Representative, Peoples Movement for Human Rights Learning: Mobilizing official development assistance (ODA) and harnessing South/South cooperation for development effectiveness.
See full presentation here »»»
Jean Saldanha, Policy and Advocacy Officer on Resources for Development, CIDSE, Catholic NGO Network: Taxing financial markets as if peoples’ rights mattered more than money See abstract here »»»
Collins Magalasi, Executive Director, African Forum and Network on Debt and Development (AFRODAD): Towards a lasting solution to sovereign debt problems: promoting responsible lending and borrowing through fair transparent debt arbitration See abstract here »»»
Isabel Ortiz, Associate Director, UNICEF: A Recovery for All - There are Alternatives See full presentation here »»»
Manuel Montes, Senior Adviser on Finance and Development, South Centre: The international financial system and enhancing a globally enabling environment for development
See full presentation here »»»
See more information about the Forum here »»»
Global Ecumenical Conference on a New International Financial and Economic Architecture
Barry Herman was asked by the World Council of Churches (WCC) to prepare a study for a Global Ecumenical Conference on a New International Financial and Economic Architecture that WCC was jointly organizing with the World Communion of Reformed Churches and the Council for World Mission. The effort to explain to the non-expert all the essential functions of a financial sector, why regulation is essential and how the financial sector actually functions in the major economies and internationally resulted in a rather long backgound paper that the World Council of Churches has posted on its webpage see study on the WCC website here »»»
A shorter version of the study, including specific reform proposals, was circulated to conference participants before the conference began: See short version of the study here »»»
See here the full version of the background paper on the financial sector and its reform
The conference was held in Guarulhos in the State of São Paulo, Brazil from 30 September to 5 October 2012, leading to a Joint Statement of the Churches, the São Paolo Statement: São Paulo Statement, see here »»»
Creating an enabling environment for productive investment and decent jobs
Side event at the occasion of the 2012 UN ECOSOC/ Bretton Woods meeting
Dialogue at the 2012 United Nations ECOSOC/Bretton Woods Institutions/World Trade Organizations and UNCTAD meeting
About 50 people participated in this informal lunch-time panel discussion that took place on the occasion of during the annual meeting of ECOSOC with the Bretton Woods institutions, WTO and UNCTAD. The side event was co- sponsored by the Office of the High Commissioner for Human Rights, the NGO Committee on Financing for Development and Social Justice Global Development.
Read full report here »»»
GLOBAL ECONOMIC GOVERNANCE
By John Langmore and Shaun Fitzerald, University of Melbourne (2011)
The remarkable growth in the extent of international economic integration in recent decades has far outpaced the existing capacity for global economic governance. The intensification of globalisation has increased the inadequacy of the institutions of global economic governance and their policies. This became especially apparent during the Global Financial Crisis, also known as the Great Recession, which began in 2008 and the destructive effects of which still continue. The crisis showed that contemporary national and international economic institutions could not achieve stability let alone other goals. In fact, some of the policies multilateral economic institutions have been commending during the last thirty years contributed to the contagion which spread globally from the US where the crisis began. The frequency and speed with which economic problems in one country spill over to others indicates the importance of strengthening international institutions sufficiently to ensure that they are capable of taking swift, effective corrective action.
Enhanced global economic governance would be a key component of renewing the dominant discourse in international political economy. The most cost-effective national economic policies work partly because they are of benefit to other countries, but many are only possible if other countries adopt them too. For example, if all countries collaboratively introduce expansionary macroeconomic policies these then become mutually reinforcing, without damaging asymmetrical externalities. The most widely recognised example amongst economists is that of “beggar-thy-neighbour” tariff increases. When introduced to protect national manufacturing or agriculture, they do so at the expense of reduced global trade, with the aggregate effect being the retardation of economic recovery everywhere.
Read full paper here » » »
In Ralph Pettman, (Ed.), forthcoming, A Handbook of International Political Economy, World Scientific Publishing, Singapore
THE CHALLENGE OF BUILDING EMPLOYMENT FOR A SUSTAINABLE RECOVERY
United Nations expert group meeting, Geneva, Switzerland, 23-24 June, 2011
By Gemma Adaba, former Director of the ICFTU/ITS Washington Office
Hard won gains in terms of achieving decent livelihoods and workers’ rights began seriously eroding in 2008 with the onset of the economic and financial crisis. The net effect has been to roll back the gains in those countries and economic sectors where growth and well-being were beginning to make some progress, and to exacerbate the situation for millions of working women and men, already faced with the hardships of informal and precarious working arrangements. A sense of social tension and unrest is palpable in the world community of workers, spanning the popular uprisings in the Middle East and North Africa, through to widespread discontent in face of austerity measures introduced in Greece, Spain, Portugal and Ireland, and to protest movements spawned by proposed legislation to deprive public sector workers in Wisconsin, USA of their collective bargaining rights. And there is a sense that there is more to come.
These social upheavals can be traced back to inappropriate and unsustainable models of economic growth and development – models that keep wealth concentrated in a financialized sector with weak linkages to the real productive economy; - models that fail to provide vital public goods such as decent work and livelihoods for all, and democratic spaces for the enjoyment of fundamental human and trade union rights.
A comprehensive framework for employment-centred policies:
Global Unions therefore insist on the need for changes in the broader macro-economic framework and policy responses. There is a need for global coordination, so that policies converge and reinforce each other, and remain firmly linked to socially just outcomes, particularly decent work and social protection.
Countercyclical policies should prioritize the strengthening of labor markets through the following means. Investments should be promoted in areas such as infrastructure that would generate employment opportunities. Read full paper »»»
See Powerpoint presentation »»»
G20 - WRONG INTERNATIONAL FORUM FOR DEVELOPMENT
By Barry Herman, Graduate Program in International Affairs, The New School, Nov.2011
On September 18-19, 2011, the “Development Working Group” of the Group of 20 met in Paris and sought to finalize its
proposals for policies that the leaders of the 20 would likely adopt at their summit meeting on November 3-4 in France. Had the countries in the Group forged development-oriented compromises to end the stalemates in the main global trade, financial and environmental forums, they might have made a more convincing case for appointing themselves the leaders of global economic policy making. They have not, but have nevertheless begun directing the international institutions to follow the G20’s own
development agenda. This note is offered to help understand the actions the Group is taking, which are quite detailed, but little discussed publicly. read full paper here »»»
Many commentators are saying that the November 3-4 Cannes Summit of the Group of 20 (G20) did not produce any policy results that justified the meeting. And yet, below the surface, the G20 is succeeding in something important. It is, in effect, institutionalizing the role it gave itself as executive committee of international development policy. However, not only was the G20 not asked by the international community of nations to take on this role, it is not doing a good job of it. The work is mainly carried out behind closed doors by the Development Working Group (DWG) that the G20 set up a year before at its Seoul Summit. That work in 2011, in essence, directs the multilateral institutions in their programs in infrastructure investment; International trade; private investment, job creation and skills; agricultural production, food security and humanitarian needs; domestic resource mobilization (i.e., cooperation on taxes); social protection of vulnerable populations; remittance transfers and other issues. G20 members adopted the DWG conclusions but did not commit themselves to national policy changes or to breaking negotiation deadlocks among their members that impede realizing potentially important contributions to development. read more »»»
How to avoid another financial crisis?
Proposals of a UN Expert Commission on reform of the international financial system (2009)
September 2009, the President of the General Assembly established the so-called 'Stiglitz Commission', who presented its final report. 18 high-level experts from different regions in the world submitted under the chairmanship of Nobel Laureate Joseph Stiglitz proposals for the stabilization and reform of the international financial and monetary system.
One focus of the work were the consequences of the crisis for developing and emerging countries. The Commission sees an urgent need to strengthen international cooperation in the economic and financial sectors in order to achieve a sustainable development of global economic policy.
read full Report of the UN Expert Commission >>>
Video (6 min) about the movement "We are the 99%"
Occupy Wall Street, New York at Liberty and Times Square in Oct. 2011 see video here »»»
More Coherence, but How? The Institutional Predicament of Coherence
By Barry Herman (Ph.D., University of Michigan) is Visiting Senior Fellow at the Graduate Program in International Affairs of The New School in New York (2010)
The global crises of 2008-2010 forced recognition that global survival depends on more effective international cooperation. Decisions are made by states and national legislation is required to turn international agreements into laws that bind non-state actors, which national courts will enforce. A largely ineffective and politically weak multilateral system could not cope with the crisis. G20 was created to solve the coherence problem. We need a new system for coherent and effective global policy. This new system should be developed that earns the confidence of the people in rich and poor countries, of labor and capital, of public and private sectors. The following scenario envisages a world of “global governance” but not of global government.
Proposal for a new system: Two-level structure: New specialized international institutions would address technical policy issues, such as in rules for international trade or cooperation for international financial stability. A new Global Governance Assembly (GGA) should determine the overall principles that guide these aforementioned institutions, and the priorities in terms of resolving conflicts among them.
Decision-making procedures: dual voting systems: Decisions should generally be taken by a dual voting system demanding for a specified majority of the number of states voting and a specified majority of weighted votes by economic significance. This voting system makes small states count and the importance of big states is adequately reflected as they have to pay more of the bill.
The new system should have a 15-member Global Council as an affiliated body of the GGA. It would include large state members that are elected for 10-year terms and another group elected for two-year terms, with appropriate geographical distribution. The Council would address inconsistencies among specialized institutions and deal with complex economic and political emergencies, including social and environmental emergencies. It would be subject to review by the GGA.
read more and download full PowerPoint presentation >>>
Poverty Reduction through Social Protection: A Potential Form of Debt for Development Exchange
By John Langmore and Anthony Clunies Ross (2011)
The global financial crisis is expected to add 64 million more people in poverty than would have been so in the absence of the crisis. Progress in reducing poverty below US$2 is expected to be slower: about 2 billion people are expected to be living on US$2 or less in 2015. These figures mean that despite significant economic growth in many countries huge numbers of people will remain oppressed by deprivation for the foreseeable future. Even if the MDG target was achieved that would still leave nearly a billion people living in severe poverty. Stronger, equitable economic and social development is essential and so too are additional means of poverty reduction. One mechanism is the possibility of establishing or strengthening social protection as a means of directly reducing income poverty. The right to social protection has been widely recognised for decades and advocated as a cost-effective method of strengthening economic security.
The International Labour Organisation (ILO) is currently advocating that the international community should not just repair the problems identified by the crisis in global financial, monetary and economic systems, but should be advocating and supporting the development of a social protection floor to protect people during the crisis, and thereafter. A social protection floor could consist of two main elements that help to realize respective human rights: essential services: ensuring the availability, continuity, and access to public services (such as water and sanitation, health, education, and family-focused social work support); and social transfers: a basic set of essential social transfers, in cash and in kind, paid to the poor and vulnerable to enhance food security and nutrition and provide a minimum income security.
A basic social protection package is demonstrably affordable on condition that the package is implemented through the joint efforts of the low-income countries themselves and of the international donor community. Steps towards such programs are already underway in additional countries such as Tanzania, Zambia, Mozambique and Nepal and other countries are expected to start soon.
Debt for social protection’ exchange could play a role in inaugurating or capitalising a new scheme. By increasing financial resources for a government at one point a ‘debt for social protection’ exchange could contribute to overcoming initial financial constraints. Another possible means of playing a role would be for debt swaps to be phased over a period of years.
read full paper here » » »
In Ross P. Buckley (Ed.), 2011, Debt-for-Development Exchanges: History and New Applications, New York, OUP, pp 209 - 222.
ENOFAD: achieving the MDGs is threatened by costs of climate change - a solution lies in innovative finance
By David Hillman, Stampout Poverty and Eva Hanfstaengl, SocDevJustice
After the recent report of the Intergovernmental Panel on Climate Change and other important dialogues by both Governments and NGOs it has become apparent that costs of Climate Change Adaptation and Mitigation will run into tens of billions of dollars each year. At present these costs threaten to swallow development budgets. Unprecedented choices now need to be made between, for example, protecting forests or building schools. Both are necessary - we must protect the environment and we have to develop the skills of future generations. Additional sources of finance derived from Innovative Instruments are a relatively recent phenomenon. They have been on the sidelines boosting ODA in certain strategic areas such as Immunisation and HIV/AIDS treatments. They now need to move to centre-stage. Years of research into various initiatives has set the scene for the introduction of powerful untapped income streams worth billions of dollars. With the new budgetary pressure of Climate Change, Innovative Finance Instruments need to be introduced. Additional budgetary demands require additional resources. Without them, how can the Millennium Development Goals possibly be met?
read more >>>
Stamp Out Poverty campaigns for additional sources of finance to bridge the massive funding gap required to bring the world’s poorest people out of poverty. It is a network of more than 40 UK organisations, including Oxfam, Save the Children, Christian Aid and War on Want, pioneering initiatives such as UNITAID, which has already raised $1 billion for healthcare in developing countries. Additional, long-term finance is needed to pay for the millennium development goals to provide clean water, healthcare and education to the poorest parts of the world. A situation compounded by the financial crisis squeezing traditional aid budgets. Stamp Out Poverty is a leading member of the Robin Hood tax campaign.
Check out the campaign's film written by Richard Curtis and starring Bill Nighy click link here >>>
An International Insolvency Framework –Why it is needed and what it could look like
By Juergen Kaiser/Erlassjahr and Eva Hanfstaengl/SocDevJustice
The International Financial Institutions (IFIs) have tried to control new borrowing with the help of the World Bank’s Debt Sustainability Framework (DSF). This approach is not likely to be overly successful. It unilaterally exerts pressure on the borrower, without providing much of an incentive for the creditor to forego an investment opportunity, simply because it would eventually endanger the borrower’s long-term debt sustainability. There is an extreme danger today that in both, low and middle income countries, a new round of defensive lending by multilateral institutions will start a new debt cycle like the one of the 1990s. It is therefore essential that the provision of fresh funding for Southern countries, which are suffering from the crisis must be accompanied by a new mechanism to deal in a comprehensive way, (i.e. involving all creditors), quickly implementable and in a fair way with new situations of sovereign over-indebtedness.
read full article >>>
Should the United Nations have a Role in the Reforming the Global Economic System?
By Eva Hanfstaengl
On June 26, in New York, the high-level United Nations Conference on the World Financial and Economic Crisis and its Impact on Development adopted unanimously an "outcome document" that opens a door - even if only a small one - to a possible UN role in the reform of global financial governance. The preparations for the UN conference, however, were not without severe difficulties. The run-up to the conference highlighted sharp differences between Southern nations, which want to give the United Nations more say in tackling the financial crisis, and Western governments, who prefer to conduct their business within the Group of 20 (G-20) nations. Until now, global financial and monetary issues have been the responsibility of the International Monetary Fund and the Group of 8 and then the Group of 20, relying on the expertise of the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board, both of which include central banks and treasuries hailing largely from developed nations. However, with the past financial crisis having originated in the North and posing untold negative consequences for the South, political pressure has ramped up on the developed world to include other voices in mitigating this disaster. Impacts of the crisis, such as slowing growth rates, rising unemployment, and declining budgets are beginning to affect developing countries. Developing countries, including the poorest countries, therefore claim that everybody should have a stake in financial regulation. It is in this context that the demand for this global conference on reform of the financial and monetary system emerged. read full article>>>
Towards A New International Financial Architecture
By Peter Wahl and Eva Hanfstaengl
The recent financial crisis shows that systemic problems in the financial system have not been solved. Exchange rate volatility means altering foreign trade prices and amounts of debt service. The accumulation of currency reserves to protect from exchange rate risks ties up tremendous amounts of money, which are lost to a country’s own development. New actors, highly leveraged and non-transparent, such as Hedge Funds and Private Equity Funds are a threat to financial stability. Complex instruments and most derivatives are uncontrolled by supervisory bodies. Unregulated offshore centers and tax havens make capital flight and tax evasion easy. Capital flight and tax evasion remove funds needed for government spending in developing countries. Current proposals are insufficient. Broader international space is required for discussion among all relevant stakeholders including civil society. International regulatory frameworks are needed which allow countries, especially in the developing world to preserve and ensure economic stability.
read full article >>>
Civil Society Background Paper on how to avoid another Financial Crisis
By Jo Marie Griesgraber and Eva Hanfstaengl
The recent financial crisis emanating from Wall Street and its consequences shows that systemic problems of the financial system are not a thing of the past. The crises and ensuing credit turmoil have also renewed attention to the drawbacks in credit rating agencies, financial standards (in particular Basel II) and the bodies that design them, and the roles of supervisors and regulators. Unfortunately, measures proposed in the Monterrey Consensus that would have helped prevent the crisis or its unfair consequences remain unheeded. The Financing for Development (FFD) follow up process should be taken as a setting for crafting a multilaterally and politically agreed vision and guidance for global and regional economic institutions in charting their future roles, while also identifying the institutional gaps and deficiencies that have helped trigger such crises.
read full paper >>>
ACHIEVING THE MILLENNIUM DEVELOPMENT GOALS (MDGS) REQUIRES FUNDAMENTAL REFORMS IN THE INTERNATIONAL FINANCIAL ARCHITECTURE
By Bhumika Muchhala, Third World Network June 15, 2010, New York
Development-oriented macroeconomic policies, debt mechanisms and innovative financing measures are critical to achieve the MDGs United Nations General Assembly hearings on the Millennium Development Goals.
In the last few years, as the world economy has experienced both a financial and an economic crisis of magnitude proportions, the predominant arrangements and assumptions of the model for economic development and global finance has also come into a fundamental crisis of its own. As the shock waves of the global financial crisis rippled over the developed world, painful repercussions were generated for developing countries, which are still reeling from the deep contraction in world demand and the consequent decreases in export earnings, FDI and private capital flows, and remittances, despite news headlines and official reports that say the world is now in a ‘post‐crisis mode.’ These effects not only exacerbate the already existing challenges in achieving the MDGs, but also point to systemic flaws and gaps in the economic development model pursued by most developing countries, such as macroeconomic policies, debt measures and financial liberalization.
A central challenge in creating this basis is not the lack of explicitly economic goals in the MDG framework, but rather the challenge of formulating a policy strategy, in the context of an imbalanced global financial and trade system, that would back up the human‐development ambitions of the MDG framework.
read full paper >>>
Civil Society Background Paper on External Debt Relief
By Bro.Steve O'Neil, SM, NGO Committee on FfD, and Eva Hanfstaengl, SocDevJustice
Many NGO networks have long campaigned on and monitored the impacts of unjust and unsustainable debt and now want to respond to new challenges that have emerged in the five years since Monterrey. It is important to put into context the scope of external debt held by developing nations. While there is no doubt that debt financing can be a critical tool for mobilizing resources for public and private investment and economic development, we remain concerned about the crushing burden that this debt continues to represent for many developing nations. Developing country debt today stands at US$2.85 trillion, up from US$2.24 trillion in 2000 and US$1.3 trillion in 1990. Developing countries paid out more than US$540 billion in debt service in 2005. Indeed, low income countries continue to pay out $100 million each day to creditors, diverting large sums of scare government revenue to external debt service and away from investments needed to reach the Millennium Development Goals (MDGs).
read full paper >>>