by Gustavo Capdevila

Geneva,27 Jun 2000 (IPS) -- The world’s industrialised countries got everything they wanted when it came to democratisation policies for developing countries, but did not give up one iota when the issue of democratising international financial institutions came up in the talks at the Social Summit underway here.

The European Union (EU) proposed an initiative to ensure national and local institutions are democratic, effective, transparent and responsible, targeting the countries of the developing South - often identified with the stereotype of being difficult to govern.

The Group of 77 (G-77), made up of developing countries and China, accepted an initiative for implementing commitments to create an economic, political, social, cultural and legal environment that encourages social development.

In turn, the G-77 proposed that to reinforce these same objectives, developing and transitional economies should have full and effective participation in the decision-making processes of the world’s financial institutions - an idea that was flatly rejected.

The statement drafted by the G-77 maintains that such participation should be achieved through reforming and democratising these institutions, thus creating greater transparency and a balance of accounts in their administration and actions.

The debate for the most part refers to the International Monetary Fund (IMF) and the World Bank, two institutions that are seen to have an elitist governance that ensures control by those countries with the greatest assets.

The G-77 initiative was explicitly blocked by the United States, which announced it would not accept any reference whatsoever about the democratisation of international financial institutions.

The debate unfolded in the Working Group I of the UN Special Session of the General Assembly underway this week in Geneva to assess the implementation of commitments made in Copenhagen in 1995 to eradicate poverty, unemployment and social exclusion around the world.

These political terms reveal the struggle between groups of countries within the two Working Groups that are negotiating the application of what are known as the Social Summit commitments, said John Langmore, director of the Division for Social Policy and Development of the UN Department of Economic and Social Affairs, based in New York.

The UN official said “there are powerful differences of positions and interests between the various groups of countries,” and he underscored the role played by non-governmental organisations (NGOs) in this debate.

In a summary of the contentions, Langmore explained that “industrialised countries tend to argue that poverty should be reduced through good governance and related policies within developing countries.”

In contrast, the South tends to argue that in poverty reduction, “the crucial factor is the international enabling environment, the extent to which they have market access for their exports, the scope of debt reduction and increased development assistance, and the internal structure of the international financial institutions,” he said.

The president of Working Group I, Chilean diplomat Cristian Maquieira, said Tuesday that negotiations continue to move slowly, but have begun to see some progress.

Working Group discussions are to conclude Thursday in order to give the UN General Assembly time to adopt the summit’s final declaration during the closing session Friday.-SUNS4697