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November 02, 2008

The "G192" Respond to the Financial Crisis

I was in New York on Friday to attend the "Interactive Panel on the Global Financial Crisis” convened by the United Nations. Last month, President Bush announced an exclusive summit for leaders of G8 and G20 countries to begin formulating a coordinated response to the financial crisis, to be held in Washington D.C. on November 15th. But civil society organizations and developing country governments have objected to this approach. To them, the solution to this global crisis must be developed and agreed on by the international community as a whole. The Interactive Panel was clearly meant as a multilateral response to Bush’s announcement.

200209-brockmann UN General Assembly President Miguel D’Escoto opened the meeting with a statement that set the tone for the day. “It is time to stop viewing the global economy as the private dominion of some exclusive clubs,” he said, clearly referring to the November 15 meeting. Instead, this is a job for “the G192,” i.e. the United Nations. D’Escoto’s opening speech was followed by remarks from members of the High Level Task Force he convened to develop recommendations for dealing with the financial crisis. 

Nobel laureate Joseph Stiglitz re-enforced D’Escoto’s argument, pointing out the irony that developing countries, who managed their financial sectors responsibly, are now suffering from the shoddy regulation and greed of wealthy countries. Other Panel members elaborated on this point, illustrating the ways in which the crisis would effect not only the finance sectors of developing countries, but their “real” economies as well, because of the drying up of international credit and depressed prices and demand for the commodities exported by developing countries. They also noted the particularly severe hardships that will be experienced by poor, rural and female citizens in the Global South.

To me, the most exciting presentation was that of Indian economist Prabhat Patnaik, who talked about the relationship between the finance and food crises, and urged the global community to make guaranteeing food security the centerpiece of its response to both crises:  “…the new growth stimulus will have to come not from some speculative bubble but from enlarged government spending that directly improves the livelihoods of the people, both in the advanced and in the developing economies…the new paradigm must entail a foodgrain-led growth strategy (on the basis of peasant agriculture) sustained through larger government spending toward this end, which simultaneously rids the world of both depression and of financial and food crises.”

Speaking for the Group of 77 + China, Antigua’s representative decried the “fundamentally weak and undemocratic international financial governance system,” and stressed the need for a multilateral solution. He cited the upcoming Doha Conference on Finance for Development as a key forum for forging solutions, noting that it will have broad representation and will tackle a broader set of issues than just the financial sector.

Most other statements (e.g. Mexico, Chile, Venezuela, Jamaica, Argentina, Japan, Spain) echoed this sentiment, and the anger of developing country governments at their victimization by an economic disaster not of their making was palpable.

France’s representative, speaking for the EU, called the November 15 meeting a first step, but also recognized the importance of the Doha conference. He re-affirmed the EU’s commitment to overseas development assistance and achievement of the Millenium Development Goals.

The U.S. representative’s remarks contrasted sharply from virtually all others. He focused on the November 15 summit rather than acknowledging the need for truly multilateral solutions, called on the international community to “keep level heads,” and said we all must “maintain our commitment to economic freedom, open markets and open investment regimes.”

Jim Harkness

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