Trends by Martin Khor
Monday 1 May 2006
Meeting of world’s top economic agencies
one-day meeting at the United Nations brought together representatives
of the world’s top economic and social agencies for a dialogue with
government diplomats. It was an attempt by the UN to re-build its role
as an eminent development forum and policy maker.
For one rather unique
day each year, representatives of the world’s leading economic and social
organizations come together to review the state of the global economy
and to dialogue with governments and civil society.
On 24 April, this
happened at the United Nations headquarters in New York, at the meeting
of the UN’s Economic and Social Council (ECOSOC) with the International
Monetary Fund, the World Bank and the World Trade Organisation and the
UN Conference on Trade and Development (UNCTAD).
In attendance were
hundreds of government diplomats, international agency officials and
a sprinkling of non-governmental groups.
The meeting marks
the attempt of the UN system to regain some of the important role it
used to have in guiding the world economy, and in providing economic
advice to developing countries.
This role had been
gradually eroded with the rise of the IMF, World Bank and the WTO in
the past two decades, as the developed countries control and thus prefer
these organizations. They engineered reforms to shift powers away from
the UN towards the other agencies.
ECOSOC is the UN’s
main umbrella organization for all economic and social affairs. As
the meeting opened, its President, Ali Hachani of Tunisia, stressed
that the world leaders at the UN World Summit in 2005 had assigned new
functions to ECOSOC.
This, he said, had
placed it at the centre of the effort to monitor and advance implementation
of the global development agenda.
But it remains to
be seen if the UN can rebuild its previously eminent role. It will be
a long hard struggle. The meeting was a small step in that.
UN Secretary General
Kofi Annan kicked off the dialogue by warning that stalling of world
trade talks were “perilous” and called on rich countries to do more
by eliminating agricultural subsidies and deal with the costs borne
by developing countries in adjusting to a new trade regime.
He welcomed discussions
at the IMF to increase the voice of developing countries in the Fund’s
decision-making. “I urge the Fund to use its meeting in Singapore
in September to give a real voice to the developing world,” he said.
“This is a matter of both principle and effectiveness. I also
hope other intergovernmental bodies -- not least our own Security Council
-- will follow this lead and render their membership, and their procedures,
more representative of today’s realities.”
Annan said last
September’s World Summit triggered positive steps on aid, and debt relief.
The aid amount has almost doubled and debt servicing by the highly indebted
poor countries has declined, and further progress is expected, but more
must be done.
IMF Deputy Managing
Director Augustin Carstens reported on the recent IMF spring meeting,
which noted risks to the world economy risks from high oil prices,
possible global financial market instability, a rise in protectionism,
and a possible avian flu pandemic.
The IMF meeting
highlighted the need to solve global financial imbalances. Measures
needed include reducing the budget deficit, boostinbg domestic demand
in Europe, further structural reforms in Japan; and more exchange rate
flexibility in some Asian countries.
Touching on the
IMF’s credibility (which has eroded as it is seen as a rich-country
tool), he said the IMF members had agreed on the need for basic reforms
to the decision-making system by reviewing the system of quotas (determining
the voting rights of countries). He was referring to proposals to increase
the shares to developing countries such as China.
Colombi’a Finance Minister and Chairman of the World Bank’s Development
Committee said poverty reduction remained uneven. East Asia had already
reached the target, and South Asia would soon do it, but Latin America
was slightly off target and very few African countries would reach the
poverty Millennium Goal.
President of the UNCTAD Trade and Development Board, stressed the central
role of national development strategies and the need for international
negotiations to respect the developing countries’ right to have space
to choose alternative policy options.
on the latest initiatiative at the WTO on “Aid for Trade”, he said this
must reflect recipients’ priorities, and cover adjustment and compliance
costs of developing countries implementing new WTO agreements, and for
building production capacity to benefit from the trading system.
WTO deputy director
general Valentine Rugwabiza said all hopes were pinned on the chance
for a global trade deal in the foreseeable future. Failure means
a grim future for multilateral trade. But above all, the development
objective must be at the heart of the talks, and be its benchmark of
were held on national development strategies, debt and trade and middle-income
counties. Among the interesting conclusions were:
-- The “Aid for
Trade” initiative should help developing countries’ ability to produce
for export and also compensate them for costs they incur to adjust to
new trade rules. Such aid should however not divert from the rich countries’
need to reform, for example to eliminate their agricultural subsidies.
In the current UN reform process, there is need to examine the relationship
of the UN’s ECOSOC, the IMF, World Bank, WTO and UNCTAD. The need for
coherence, transparency, monitoring and accountability was stressed.
Debt relief for poor countries should be additional to and not be at
the expense of aid. Steps should be taken to prevent new unsustainable
debt and to minimize the risk of countries facing debt distress in the
-- Middle income
developing countries also need attention and assistance as many also
have problems such as poverty, excessive debt, social inequities and
vulnerability to external shocks.
In closing, the
ECOSOC President, Ali Hachani of Tunisia, said strong action was needed
on the ideas given and he will consult on how ECOSOC could follow up
on the key recommendations.
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