TWN Info Service on Finance and Development (Apr12/05)
13 April 2012
Third World Network

Former officials warn on moves to silence UNCTAD's voice
Published in SUNS #7349 dated 13 April 2012

Geneva, 12 Apr (Kanaga Raja) -- A group of former senior officials of the UN Conference on Trade and Development (UNCTAD) has warned over efforts by major developed countries to trim the organisation's mandate and deny it the right to continue to analyse global macroeconomic issues from a development perspective.

This warning, on the eve of the UNCTAD quadrennial conference in Doha (Qatar), came in a statement issued by the former staff members of UNCTAD on 11 April. The some fifty signatories include one former Secretary-General (Rubens Ricupero), and two former deputy Secretaries-General (Carlos Fortin and Jan Pronk).

Noting that UNCTAD-XIII is going to be held at the end of next week in Doha, Qatar, John Burley, one of the signatories to the statement, said at a media briefing at The Swiss Press Club that an attempt is going to be made there "to change UNCTAD's mandate by denying the organisation the right to continue - and I emphasise to continue - to analyse and report on global macroeconomic issues, including the role of global finance in development."

He stressed that UNCTAD has always looked at these issues in the context of interdependence, meaning the relationship among the various flows of trade, finance and technology and how that relationship affects development.

"This aspect of UNCTAD's work has never been popular with the developed countries," he further said, pointing out that ever since the first conference of UNCTAD almost fifty years ago now, "they have always preferred UNCTAD not to address these subjects."

But in the end, Burley added, all countries have accepted that a full understanding of the development process requires inclusion of this aspect of macroeconomic analysis. "And what is now at stake is a continuation of that acceptance,in other words in plain English, part of UNCTAD is to stop what it has been doing."

Burley underscored that this is not simply about an UNCTAD report on a particular issue. This issue goes beyond discussions in UNCTAD and that there are profound issues of principle involved, he said, adding that this is why a group of former UNCTAD staff members had decided to speak out.

Elaborating as to what these principles are, Burley said that firstly it is the need for a plurality of views in the international system on these exceptionally important issues.

"At a time when in effect no one and no organisation has yet found the right policy to lead the world out of the present crisis, it seems to us folly to silence a view that differs from the prevailing orthodoxy."

In contrast to the World Bank, where the process of selecting a new President has at last been opened up, Burley said that "it is somewhat ironic that developed countries should want to shut down a dissenting view in UNCTAD."

According to Burley, the second principle is that of freedom of speech in UNCTAD. "In order for UNCTAD to do its job properly, it must be allowed to have an independent voice on how global macroeconomic and financial issues affect development, and if not, the fundamental purpose of the organisation is threatened."

"We are angry because we feel that the two principles ... namely, the need for a plurality of views in the international system and the need to preserve UNCTAD's freedom of speech, are being threatened. This is not good for UNCTAD nor for the United Nations, and therefore it is not good for the international community," Burley concluded.

Also speaking at the media briefing, Yilmaz Akyuz, a former chief economist at UNCTAD and now chief economist at the South Centre, said that the UNCTAD secretariat has always strived to observe a number of principles in its research and policy analysis.

This includes intellectual independence, integrity, competence, and scientific modesty, he said, adding that in return the secretariat has also expected from governments a recognition that in scientific inquiry there can be no monopoly of truth, and to be prepared to see results contradicting their positions and engage in constructive dialogue over policy options.

However, said Akyuz, since the collapse of the Berlin Wall, the major OECD (Organisation for Economic Cooperation and Development) countries "have become increasingly intolerant to diversity of views and indeed wanted the Washington Consensus to become a global consensus. They have seldom engaged in constructive dialogue in UNCTAD over policy options and ignored UNCTAD research findings even when they are proven right."

Akyuz said that UNCTAD has always taken interest in areas of national and international policy with significant effect on development and developing countries. "It has done so by taking a broad perspective, focusing on interdependence of issues, and in several areas, UNCTAD has been well ahead of the curve in anticipating problems and proposing feasible solutions."

Providing some examples, Akyuz said that UNCTAD was the first organisation in the 1980s to argue for the need for debt relief in Latin America, several years before it became part of the official wisdom to the Brady Plan.

It was the first one to argue in the early 1990s for the need for the relief of debt of poor countries to the Bretton Woods Institutions, something which was taboo at the time but then it came to be accepted by the mainstream in the HIPC (Heavily Indebted Poor Countries) initiative.

According to Akyuz, UNCTAD was also the first to argue for orderly workout mechanisms for sovereign debt, more than a decade before it came to be put on the agenda of the IMF.

"Again UNCTAD has been well ahead of the curve in predicting and analysing financial crises in emerging economies and recognising the need for reform of the international financial architecture and to manage international capital flows," said Akyuz.

For many years, UNCTAD has been warning that instabilities and misalignments of the exchange rate non-system could become very disruptive for world trade and tried to draw attention to lack of coherence between trading and monetary systems in respect of multilateral disciplines, he added.

"Now the major OECD governments are trying to silence the Secretariat once-and-for-all at a time when we need a broad-based, participatory debate on the governance of international finance or even the governance of global economic system of the kind that the UN system allows is desperately needed. This will not do any good to anybody," he said.

"Experience teaches us that progress tends to be slow and mistakes become too frequent and costly when dominant powers have little tolerance for diversity. And it is no wonder that yesterday's unyielding advocates of the Washington Consensus are now talking about ‘capitalism in crisis'", he added.

Asked to elaborate on the areas that the major OECD governments are trying to stymie UNCTAD's work, Akyuz said that these areas include finance, governance of international finance, the exchange rate in the international monetary system, and the form of the international financial architecture.

He said that his understanding is that "they don't want to see the word ‘finance' in the agreed text defining the mandate of UNCTAD."

He further said that his impression is that they want to keep the issues regarding finance that they take up in the IMF and the G20 out of the UN system, and not just UNCTAD.

Burley said that UNCTAD's work on macroeconomic analysis and finance has never been a popular feature of UNCTAD as far as developed countries are concerned.

"They take the view that such work should be undertaken by other organisations, specifically, the World Bank and the IMF, and to some extent OECD, and they don't see this as part of the fundamental purposes of UNCTAD as an organisation," he said, adding that this "is not a new issue. Its been with us for many, many years."

In their statement, the former UNCTAD staff members said that since its establishment almost 50 years ago at the instance of developing countries, UNCTAD has always been a thorn in the flesh of economic orthodoxy. Its analyses of global macro-economic issues from a development perspective have regularly provided an alternative view to that offered by the World Bank and the IMF controlled by the West.

"Now efforts are afoot to silence that voice. It might be understandable if this analysis was being eliminated because it duplicated the work and views of other international organizations, but the opposite is the case - a few countries want to suppress any dissent with the prevailing orthodoxy."

No multilateral institution is perfect, but UNCTAD's track-record of analysis and warnings on global trends and problems certainly stands up to those of other organisations. As otherwise unfavourable commentators have occasionally admitted, UNCTAD was ahead of the curve in its warnings of how global finance was trumping the real economy, both nationally and internationally, the statement noted.

It forecast the Mexican tequila crisis of 1994/5. It warned of the East Asian crisis of 1997 and the Argentinian crisis of 2001. It has consistently sounded the alarm of the dangers of excessive deregulation of financial markets. It has stressed the perils of rapid, non-reciprocal trade liberalization by developing countries.UNCTAD economists have not had to suffer the psychology of denial so prevalent in other organisations.

"So why is the UNCTAD message so unwelcome? The fact that UNCTAD has no formal responsibility for the global management of the international economy and none of its own funds to dispense means that its analysis is free of vested interests. No organisation correctly foresaw the current crisis, and no organisation has a magic wand to deal with present difficulties. But it is unquestionable that the crisis originated in and is widespread among the countries that now wish to stifle debate about global economic policies, despite their own manifest failings in this area."

Because of the crisis, the statement said, "we do now have a better explanation of the inter-relationships between the real economy and the world of finance. Those explanations are now a good deal closer to what UNCTAD has been saying for nigh on three decades about the dangers of finance-driven globalization. And it is precisely in its analysis of interdependence that UNCTAD brings added value to an understanding of how the functioning of the global economy impacts on the majority of the world's population who live in developing countries. Given the current pressure on the organisation and its secretariat, that contribution could now be gone for good."

Noting that UNCTAD is about to have its next quadrennial conference (Doha, 21-26 April), the former UNCTAD staff members said that UNCTAD conferences are a shadow of their past, being now simply a time to agree on secretariat work programme priorities for the next four years. "But that is precisely what is at stake."

They stressed that developing countries in Geneva, again, are struggling to resist the strong pressure piled on them by OECD countries and to defend the organisation to which they had been "umbilically" tied.

They are not fully succeeding, in spite of the BRICS (Brazil, Russia, India, China and South Africa) pledge of support manifested at its recent summit. So, the developed countries in Geneva have seized the occasion to stifle UNCTAD's capacity to think outside the box.

According to the statement, this is neither a cost-saving measure nor an attempt to "eliminate duplication" as some would claim. "The budget for UNCTAD's research work is peanuts and disparate views on economic policy are needed today more than ever as the world clamours for new economic thinking as a sustainable way out of the current crisis. No, it is rather - if you cannot kill the message, at least kill the messenger."

"Individually, we may not necessarily have agreed with what UNCTAD was saying on specific issues. We have no vested interest in this matter except that we all fervently believe in the value of maintaining an independent research capability that serves to focus inter-governmental debates on how the workings of the global economy affect developing countries," the signatories to the statement said.

"At time when pluralism is finally being meaningfully discussed in the election of the President of the World Bank, it is ironic that OECD countries are endeavouring to stifle freedom of speech within another multilateral organization. If those who were proud to work for UNCTAD do not speak out now, who will?," they added.+