2009/04/21

Civil Society perspectives on the financing for development agenda

Social Watch

The Economic and Social Council held a panel discussion on "Civil Society Perspectives on the Financing for Development Agenda" on Monday, 20 April 2009, in the ECOSOC Chamber in New York. Roberto Bissio from Social Watch intervened at the first panel together with other civil society representatives.

The panel discussion was held in preparation for the ECOSOC Special high-level meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development to be held in New York, 27 April 2009.

The first panel focused on "Addressing the impact of the global financial and economic crisis on development, including issues related to the international financial and monetary architecture and global governance structures." The panellists included Roberto Bissio, Director of Social Watch; Jo Marie Griesgraber, Executive Director of New Rules of the Global Finance Coalition and Marina Durano, Senior Policy Researcher of Development Alternatives with Women for a New Era (DAWN).

The second panel addressed the issue of "Strengthening of the intergovernmental inclusive process to carry out the financing for development follow-up." The panellists included John Foster, Principal Researcher of the North-South Institute; Aldo Caliari, Director of Rethinking Bretton Woods Project, Center of Concern and Barry Herman, Visiting Senior Fellow of the New School University.

Read below the presentations by Roberto Bissio, Marina Durano and John Foster as well as a video of Social Watch Director Roberto Bissio at the UN.

Intervention by Mr. Roberto Bissio, head of the International Secretariat of Social Watch

Thank you, Madame Chairperson,

I am speaking on behalf of Social Watch, which is a network of civil society organizations in seventy countries monitoring how governments implement the internationally agreed commitments to eradicate poverty and achieve gender equality.

The Social Watch network is in the process of preparing its 2009 report, devoted precisely to the social impact of the current crisis. As contributions from grassroots organizations around the world are starting to come in, it becomes obvious that the crisis that started in the financial centers of the most sophisticated and developed economies is having a disproportionate toll among the poor in developing countries and particularly among women.

Last August we were informed by the World Bank that their previous estimate about the number of people living in poverty in the world was wrong and the total estimated figure increased by 50% to 1.4 billion women and men living under one dollar a day... in 2005! That was before the food crisis, so that by the time the World Bank published those figures, they warned that in between the number of people living in poverty should have grown. And that warning came a few weeks before the collapse of the financial markets, so that the figure is now increasing even more.

This is the bad news. The good news is that it is now universally accepted as economic common sense that governments have to intervene in the economy because markets do fail and that the intervention has to be countercyclical. “Stimulus” is the name of the new consensus and several trillions dollars are being spent to produce that stimulating effect. Problem is that when those billions reach banks with diminished assets or upper and middle class people with worries about the future recession, instead of circulating that money as credit or spending, they save it and no stimulus effect results out of that. If the money reaches the poor, they spend it, not because of any better understanding of their duties as citizens, but just because they have no choice. Not just ethically, but also economically antipoverty programs make more sense then million dollar bonuses for high level executives. The fight against poverty, both at home and abroad is the best possible stimulus program, and it would be consistent with human rights, including the right to development, as well as with common sense perceptions of what is of basic justice.

The G20 Summit last April 2 got it right when it concluded that countries lacking deep pockets, huge reserves or capacity to contract more debts (among other things because the bond markets risk getting saturated with huge emissions from the biggest economies) should be supported if they are expected to engage in countercyclical spending. But they got it wrong when the Bretton Woods institutions were assigned that task before reforming them in the way that the Monterrey consensus spelled out.

Can the proper balance between debtors and creditors, between countercyclical stimulus and future inflation, between the needs of the poor and the necessity to keep the financial systems afloat be determined unilaterally? We think that recent history proves that is not the case. While a lot of finger pointing was happening, demanding painful structural adjustments from small countries, the biggest economy was allowed to run its own finances (and the world savings) in an irresponsible way that led to the collapse of the world economy. Why did none of the institutions in charge of overseeing the world economy warned us? For the same reasons that no minister would dare to say that the emperor was naked in the old story for children. A subordinate can not be an adequate supervisor of its boss and the crisis erupted precisely in the one country with veto power in the Bretton Woods institutions, lacking any proper surveillance or international accountability.

Legitimacy and proper governance are the first requisite for the proper financial architecture and any necessary expertise can be built later. Expertise alone, which is certainly not lacking in the Bretton Woods institutions, cannot do the job. That is why we need a Second United Nations Monetary and Financial Conference. The first one, as you know, was held in Bretton Woods in 1944, before the adoption of the UN Charter itself. But the Bretton Woods agenda was left unfinished for many decades for lack of an comprehensive agreement on trade, without which a financial agreement is meaningless and because of the collapse of the gold standard in 1972.

During the last two or three decades, the Bretton Woods institutions and the OECD have actively promoted a model based on liberalization of capital flows, opening up of markets for trade and services and reduction of the role of the state, including for example with the active promotion of a race to the bottom in tax competition between countries. Now that it is widely recognized that the assumptions backing that model were “flawed”, to use the words of Alan Greenspan, the former chairman of the Fed in his testimony at the US Congress, those same institutions can not be left unreformed and uncoordinated to manage the world economy. While on the one hand the G20 issued last April 2 a threat of “sanctions” against countries not following the rules on taxation, the latest “Paying Taxes” report of the World Bank actually praises countries blacklisted by the OECD as “tax havens” as better places for “doing business”.

Even before the current crisis started, those incoherences were already recognized in Monterrey and the task of coordinating a globalized economy can only be legitimately conferred to a United Nations body, as the Stiglitz Comission rightly suggested. An ad hoc group can not impose sanctions and even an established organization like the OECD has no right to impose disciplines via politically manipulated “black lists” over non-members.

Madame Chair, my organization, together with many other NGOs is in favour of tax justice, against the race to the bottom both in taxation and labour standards, which frequently goes together, and against bank secrecy, which is a vehicle for both, but last time I checked only the UN Security Council has an authority to impose sanctions on “rogue countries” and organisations with “teeth” to impose economic disciplines, like the World Trade Organization, only have the authority conferred to them by their members after careful negotiations.

This is why the United Nations to be the coordinating body over the specialized agencies and organizations dealing with finance, development assistance and trade, as well as ensuring collaboration in tax matters. That is why the UN summit on the economic and financial crisis and its impact on development, next June is a key opportunity to fulfill the mandate of Monterrey, reaffirmed last December in Doha.

As NGOs we are committed with this process and we urge governments to attend the Summit with high level representations and committed to its success. In light of growing poverty figures and the human sufferings that those cold statistics express, failure is not an option.

Thank you, Madame Chairperson

Read Roberto Bissio's speech (doc format)

Intervention by Marina Durano Development Alternatives with Women for a New Era (DAWN)

Thank you for this opportunity. I am here representing DAWN – Development Alternatives with Women for a New Era – a network of women activists and scholars from across the global South.

At the end of the Doha Review Conference, women welcomed the improved language in its outcome document, found in Paragraphs 4 and 19, that when taken together, probably represent the most wide-ranging commitments to gender equality made by governments in any recent economic policy-oriented forum, which typically ignores this dimension of development. This breakthrough, however, is limited by the weak commitments in just about every dimension of financing for development.

Women’s organizations and feminists, have long engaged with the UN as the most representative, transparent and open of available inter-governmental spaces. Especially during the 1990s, the UN conferences opened up spaces for civil society engagement on a range of issues – the environment, human rights, population, women, social development, habitat, racism, and more. The UN has been the terrain where women’s human rights and gender equality have become an important part of global commitments.

However, it was in the heyday of the Washington Consensus that the UN Conferences of the 1990s, with their themes addressing critical global public goods and social inequalities, occurred.

As a result, the commitments under the UN Conferences often conflicted with the fiscal belttightening and privatization of the reigning neoliberal orthodoxy; their mandates remained underfunded; and, they tended to fall into institutional vacuums or parallel structures. As a result, the commitments were often at odds with or had limited connection to the financing programmes pursued by the main global economic institutions that were also setting the core development agenda. Since, the UN itself, was being weakened institutionally in terms of its capacity to address this agenda, gender equality faced a double whammy.

The current financial crisis presents an opportunity to make significant structural changes in the global development architecture. I think we can all agree that the old structures and approaches cannot continue. We clearly need new institutional arrangements that genuinely promote the rights-based development of both countries and peoples in the global South. We have four proposals to move us in this direction: First, the UN must regain a pivotal role in this new global development architecture. We need to recognize that the UN system has been weakened along with national state machineries. In the current division of labor, the Paris Club and the World Bank deals with external debt and debt sustainability. The OECD DAC’s Paris Declaration is the preferred framework for official development assistance. Resolving issues around international trade policies are left to the World Trade Organization. Hence, the Bretton Woods Institutions and the WTO take the lead in defining macroeconomic policies while the UN is left to deal with (a) humanitarian and peacekeeping efforts; (b) establishing normative frameworks, such as human rights; and (c) setting development targets, such as the MDGs, all of which are disconnected from macroeconomic policy frameworks. As a result many development issues get sidelined by multilateral institutions that are focused on growth rather than the reduction of inequalities. Unfortunately, the commitments made during the G20 summit in London to increase resources of the Bank and the Fund will only reinforce the sidelining of the United Nations system in the global development architecture.

Second, it is critical that the new global development architecture fully integrates gender equality in its agenda. Women’s empowerment, women’s human rights and gender equality must be given prominence by an agency that has the capacity to determine the UN’s front and center development framework and not be marginalized to the sidelines. Thus, deliberations on the UN System-wide Coherence will be an indicator of commitments, or lack thereof, to secure the UN’s pivotal role.

Third, we need to not only strengthen the UN’s gender equality machinery but also enhance the capacity of national gender machineries to participate and influence the financial, monetary and fiscal policy processes at the country level. Capacity is critical to create coherence between macroeconomic policy and gender equality goals. By coherence we mean a different kind of division of labor, where public policies change the incentive structures in society so that the responsibilities for provisioning and for the performance of care are shared among state institutions, market institutions, and the institutions of the households and communities.

Finally, the UN will succeed in reclaiming its central role in the development architecture only IF women’s and other social movements, are fully involved in this process. The multistakeholder approach of the FFD process remains an important mechanism for an exchange of analysis and political views and needs to be an integral part of any discussions on reform. The multi-stakeholder process can be strengthened with shadow reporting mechanism that women’s organizations have benefitted as they engage with CEDAW. Under this type of mechanism, women’s movements can easily demonstrate their capacity to analyze the development challenges from a feminist perspective, to mobilize our constituencies, and to push the envelope for development alternatives.

In closing, the big picture is not just economic governance but a broader notion of development governance. We believe this is THE political moment to move away from failed institutions and policies toward a rights-based global development architecture that recognizes the central role of care, social reproduction and sexuality. We are ready to engage with you in this political challenge.

Read Marina Durano's speech (pdf format)

Intervention by John W. Foster The North-South Institute

Madam President, Delegates, Colleagues Permit me to salute you, as President of the ECOSOC for organizing this timely session and with you to congratulate the staff of the Non-Governmental Liaison Service of the U.N. for their support of the initiative.

I would like to address three points with a few supplementary comments.

With regard to the context in which we find ourselves, a leading Canadian dramatist some time ago triumphed with a work entitled “Tectonic Plates”. The plates are shifting, and the proposals which come to the High-Level Meeting and the U.N. Conference in June, must address not only what we experience today, but the possibility of further dramatic events. These affect the power balances, currency values and the daily situation of millions…billions of the earth’s inhabitants. There is a tendency to caution, perhaps even timidity, built into so many of the processes and documents which occur here and in other global meetings. Do we not need to address the potential for transformation of the global economic system and the institutions which seek to govern it.

This suggests that we need new foundations or frameworks. I note that the G-20 in paragraph 21 of its Leaders’ Statement, supported development of what they called a “charter for sustainable economic activity.” This could become an excuse for endless debate, or it could become a moment akin to the launching of the Universal Declaration of Human Rights in 1948. I mention the latter for two reasons:

1. the discussion of a global charter must take place in the only legitimate body to develop and endorse such a framework, the United Nations.

2. such a process must be informed by long experience of U.N. related bodies like the International Labour Organization, by the results of the U.N. Conferences and their sequels (Beijing, Vienna, Copenhagen, Rio, etc.) but particularly by the vision and experience of the Covenant on Economic, Social and Cultural Rights.

Such a process should naturally engaged the voices and experience of workers, farmers and peasants, women, indigenous and many other sectors of wisdom and experience.

Other speakers are addressing the process and proposals for the continuation and reinforcement of the Financing for Development process, its inclusive membership, its rhythm of activities and its support and staff. This is absolutely essential. A strong continuing body, with ministerial engagement, regular meetings and a comprehensive agenda is absolutely necessary.

We must also look forward to and through the June UN Conference at a continuing process which will enable the global community to establish a legitimate and fully representative, and ultimately powerful body to assist with governing the global economy, setting standards for the many specialized bodies necessary to do so, and review and hold accountable the actions of various actors. The current operations of “informal” and “self-defining” invitational groups – the G’s – can be positive, in limited areas, but are lacking in legitimacy and inadequate in terms of governance.

The Commission of Experts has proposed the development of a Global Economic Coordination Council. This idea has many pre-cursors from Ramphal and Carlsson, through Delors and Zedillo to the current day. It is an idea whose time has come! The ECOSOC High-Level Meeting should contribute to advancing the proposal and the June Conference should set in place an ongoing mechanism for its full development.

The Commission of Experts has suggested a related mechanism for integrated independent analysis on questions of global economic policy, including its social and environmental dimensions, which would offer advise to the General Assembly and the ECOSOC and ultimately to the Global Economic Coordination Council. We understand this be a body of experts, including those from both official and non-governmental sectors and social movements. It should be supported and informed by reinforced data collection and analysis from the various relevant elements of the U.N. system, an objective which we advanced in the Helsinki Process on global governance a few years ago.

There is no reason why the coming High-Level Meeting should not endorse and amplify this proposal and create momentum for it in the weeks leading to the U.N. Conference.

Madame President, These new initiatives will not solve the present or upcoming crises, but they will ensure more universally participatory, politically legitimate and well-informed assessment and response transcending and coordinating the current mélange of interim consortia and responses.

In conclusion, the willingness and readiness of many in civil society to participate in the construction of such new bodies is apparent in the many proposals which were made for the Doha Conference on Financing for Development, and in preparation for the current High Level Meeting and the U.N. Conference. One of the primary values of the Financing for Development Process is the collaboration it has embodied with civil society, on the part of process design, but also in the leadership offered by Senor de Rojas and his staff. Your leadership in inaugurating this session embodies that spirit.

Thank you.

Read John Foster's speech in doc format

Watch the video (118 MB)

Read more statements from the panelists in the NGLS site