Global Policy Forum

The Location of the Full Stop

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By Roberto Bissio

May 21, 2009

 

The ordinary citizen who pays the salaries of the diplomatic corps with taxes does not welcome press reports that say that the UN spent hours discussing the location of a comma. These days, the General Assembly is addressing the issues that really matter such as the global crisis and its devastating impact on savings and jobs the world over. And since this is a negotiation in which the stakes are high, the success or failure of the summit to be held in New York in June does not depend on where to place a comma ... but on where to place the full stop.

We are only ten days ahead of the beginning of the summit, and positions are bluntly divided. On one side are those who believe that the Group of 20 (G-20) is the best available mechanism to deal with the crisis and decide on the international financial architecture, leaving the United Nations in the role of coordinating humanitarian aid to the victims. On the other side, Father Miguel D'Escoto, president of the General Assembly, and most of the 170 members who are not part of the G-20 want the June summit to discuss "at the highest level" (ministerial or presidential) the reform of international financial institutions like the World Bank and the International Monetary Fund (IMF), the creation of an Economic Council that has the ability to monitor the largest economies and ensure that they do not put at risk the smaller ones with their irresponsible management and even the creation of an international reserve currency that replaces the dollar.

The G-20 is composed of the major industrialized economies, grouped in the G-8 (Germany, Canada, United States, France, Italy, Japan, United Kingdom and Russia) plus other countries considered "systemically important": Saudi Arabia, Argentina, Australia, Brazil, China, South Korea, India, Indonesia, Japan, Mexico, South Africa and Turkey. The British government also invited Spain and The Netherlands to participate in the summit held in London in April.

D'Escoto coined the term "G-192" to refer to the General Assembly of the United Nations that has 192 member states, arguing that it is the only international body with the legitimacy to resolve changes that have a global impact, because all countries are represented.  On May 8, this Nicaraguan priest and former Sandinista foreign minister in the 80's, presented to the General Assembly a draft declaration to be adopted at the June summit , in which he formulated an ambitious reform plan, including all recommendations made by the committee of experts chaired by Nobel laureate Joseph Stiglitz.

Developed countries reacted angrily and protested against what they described as an abuse of power by introducing a text that had not been previously consulted with them. They openly threatened with sending no high-level delegations to the June meeting or withdrawing from it if these ambitious proposals still remained on the table.

Only Cuba, Venezuela, Iran and Syria openly defended D'Escoto. Ghana and Chile requested more time for consultations and negotiations. The Sudanese ambassador Lumumba Stanislaus-Kaw Di-Aping - president of G-77, the negotiating group of developing countries - had to make efforts to prevent this coalition from splitting and civil society organizations from around the world began to fill the United Nations with calls for facts and not words, to put it in their own words: "We want discussions of substance and not of procedures."

After several days of intense and nervous negotiations, D'Escoto distributed to the ambassadors a new text on Monday 18, together with a clarifying letter stating that this text had the explicit approval of the ambassadors Majoor from The Netherlands, and Goncalves from San Vicente, who were appointed to consult with members of the North and South respectively.

The new proposal maintains an analysis of the crisis that criticizes the lack of financial regulation and mentions the failure of the IMF and World Bank "for not designing an appropriate response" and recognizes that "the legitimacy of our institutions and future financial system" requires the presence and formulations of all (ie the United Nations).

However, when the text was open for discussion on Wednesday 20, developing countries expressed frustration at the lack of concrete measures to stimulate their economies, the non insistence of the need to reform the IMF and World Bank, and the demise of the paragraph that called for compensation for poorer countries when the stimulation of larger economies has "collateral effects" on poor countries. This is the case, for example, of major capital flows from healthy banks in the South to banks in the North that are technically bankrupt but that have their deposits guaranteed by their respective governments.

With diplomatic ability, the new document mentions all the major reform measures proposed by the Stiglitz Commission, such as the creation of a Council for Economic Coordination or the review of the terms of agreement with the World Bank and IMF so that these two specialized agencies are subordinated to the control of the United Nations.  But in fact, all of this is included in the penultimate paragraph of the document, in a list of "issues to be considered in the future". That an issue is "to be considered" does not mean that it could not be discarded afterwards; therefore this list lacks real political value.The only victory that D'Escoto and the "other 172 " (ie countries outside the G-20) can celebrate in the beginning of these negotiations is the sentence which reads: "We (the presidents of the World) request the President of the General Assembly to keep the conference open and name seven working groups of technical and ministerial level" to continue discussing the restructuring of international finance and the Bretton Woods Institutions, creating global stimulus plans, debt relief and trade promotion in poor countries, and even the creation of regional and global reserves to replace the dollar in the global economy.

If consensus is reached on this text, the General Assembly of the United Nations, in which poor countries are the majority, would become the main international body in charge of resolving the crisis, mitigating its impact and reforming the global finance of the future.

The problem is that instead of being a new paragraph, and thus a resolution of the conference, this text appears as the last of a list of proposals to "be considered. " Thus, to produce a successful outcome there is no need to change a single word in the draft. It all depends on where to locate the full stop.

Important: The UN General Assembly postponed the celebration of the UN Conference on the World Financial and Economic Crisis and its Impact on Development (previously scheduled for Jun.1-3) to June 24-26, 2009.
 

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