I have been arguing for weeks now that the present global economic crisis coming on top of the food and fuel crisis of 2007-2008, requires a global effort to resolve it. This position is now widely accepted among development experts and practitioners, as well as most international development agencies.
The call that I also made for the United Nations to reform itself by creating an elective United Nations Economic Security Council, echoes similar calls made several decades ago in an effort by poor countries to restrain the rampant excesses of the Bretton Woods Twins: the IMF and World Bank.
At that earlier time, the brutal orthodoxy of the Wash-ington Consensus had devastated the economic, social and political environment of many developing countries, causing enormous human suffering, which should not be forgotten.
In the context of the Cold War struggles prevailing then between the ‘imperialist bloc’ led by the USA and the ‘socialist bloc’ led by the USSR, those calls for an elective United Nations Economic Security Council were part of the broader efforts of the Non-Aligned Movement to bring these two international financial institutions (IFIs) under the umbrella and jurisdiction of the United Nations. It was indeed argued that the original goal behind the establishment of the Bretton Woods twins in the post-World War years, was to make them part of the United Nations’ inter-governmental structure.
Aided and abetted
As we know, aided and abetted by the rich industrial nations, this did not happen. The goal, however, remained a latent hope for those developing countries that saw the IMF and World Bank as agents of external domination, acting on behalf of the rich industrialised states, which pre-eminently determined their management, policies, programmes, and practices.
The rich industrialised nations controlled the financing of these institutions and as the saying goes: ‘Who pays the piper, calls the tunes.’
Although the wishes of the rich industrialised nations have prevailed in the two IFIs, other groupings nevertheless emerged to frame the broader policy and resource availability of these institutions. In particular, the G20 and G8 previously discussed in recent Sunday Stabroek columns.
As we saw, the G20 represents the political and technical face to deal with global economic concerns. While the G8 represents a gathering of heads of government of the eight leading industrialised nations.
These two bodies have routinely and without public demurral from other governments, made pronouncements and gave policy instructions to the Bretton Woods twins. Indeed these two organisations are required to be in attendance at both G20 and G8 meetings!
It is from this perspective that the United Nations Conference on the Global Financial and Economic Crisis held a few weeks ago on June 24-26 will be considered in this and next week’s columns.
Symbolic value
However, before getting to the substance of what was discussed at the conference, matters of the utmost symbolic importance need to be addressed. First and foremost is that the conference should be seen as part of the continuing effort and aspiration of many concerned with the injustices being perpetrated in the global economy, to bring the regulation of the global financial system under the oversight authority of the United Nations.
Presently, the G8 and G20 groups routinely ‘decide’ on ‘global’ action affecting the IMF and the World Bank; for example, the recent announced decision to boost the resources of the IMF by US$500 billion. If the G8 and G20, both exclusive groups selected by the rich industrial nations, can routinely make and send onto these two bodies for global implementation, decisions affecting the entire world, surely the United Nations can do the same.
The United Nations, from the perspective of poor countries, is a more inclusive and universal body than the G8 or G20. Indeed, it has more global legitimacy to act in the name of the entire world than any other body. One might go further and say that, given the gravity of the crisis and its costs in terms of human pain and suffering, the United Nations has a duty to intervene, and not merely the right to so act.
The G192!
The United Nations General Assembly hosted the Conference on the Global Economic and Financial Crisis on June 24 to 26, 2009. Comprising as it does all 192 countries, in the course of the conference debates it came to be referred to as the G192.
All poor countries are represented in the General Assembly as of right. In stark contrast the G8 is an exclusive gathering of the rich. And the G20 includes the G8 and those other countries, which the G8 chooses to invite. There is no room in such a gathering for any of the many small vulnerable economies, like those of Caricom.
Such structural defects severely constrain the effectiveness of any global solutions they might promote. The paradox is, however, that predominantly, the human suffering occasioned by the global crisis has fallen on the poor countries. Thus as we saw the World Bank, predicts a nearly 6 per cent decline in the national income of poor countries this year. That is, falling from the originally projected 8.3 per cent for 2009 to 1.6 per cent.
Despite suffering the greatest damage by far under present global arrangements, poor countries have had the least say in shaping global responses to the crisis. The United Nations forum is therefore, crucial, as it is the only one in which poor countries are represented as of right.
Situating the discourse over the crisis in the General Assembly, consequently creates the possibility for asserting a more democratic and inclusive approach towards providing global solutions, without which as I have argued, the global financial and economic crisis cannot be sustainably resolved.
Next week I shall assess 1) whether the conference outcomes lived up to its expectations and 2) what this indicates for the evolving structure of global economic governance. In particular, does it give hope to the earlier calls for an elected United Nations Economic Security Council and all this implies for the re-assertion/establishment of the United Nations at the centre and as the highest level of authority, for addressing the present crisis and future ones.
