TWN Info Service on Finance and Development (Dec12/02)
13 December 2012
Third World Network

Developed countries continue to block UN work on financial crisis

New York, 13 December (Bhumika Muchhala) - In the three years since the UN Conference on the World Financial and Economic Crisis and Its Impact on Development took place in June 2009, the various avenues for a meaningful follow-up have been blocked and undermined by disagreements between Member States, in particular between the G77 group of developing countries and developed countries.

However, once again the Second Committee of the General Assembly, which discusses macroeconomic and financial issues, has been carrying out informal intergovernmental negotiations on a follow-up process.

On 23 October this year, Kazakhstan tabled a proposal to hold a “United Nations Conference in Astana in May 2013 as a follow-up to the United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development, and to deliver a world anti-crisis action oriented response plan.”

Kazakhstan added that their initiative is “timely” and “responds to the relevant decisions and requests of the General Assembly and other high-level gatherings.” The effort could yield “significant results, should a strong political will be in place and an agreement reached to advance a global anti-crisis action plan.”

Anticipating the opposition of most of the developed countries to such a follow-up UN conference, Kazakhstan’s proposal acknowledged the “different views over policy options to revive the global economy,” and that “there are established formats dealing with international economy policy.”

However, the proposal asserted that “it is only the United Nations which is a truly universal and inclusive multilateral organization,” adding that the UN has “the most suitable format in which all states, in particular small and developing countries, can contribute to the adoption of decisions that have global impact.”

The Kazakhstan’s proposal concluded by reinforcing that a meaningful and inclusive world economic policy can only be established through “real engagement and common efforts.” The delegation of Kazakhstan ensured that open and transparent consultations with Member States will ensue.

This proposal was tabled before the Second Committee during initial discussions on the topic of “international financial system and development,” under agenda item 18 on “macroeconomic policy questions.”

Consequently, the draft resolution (AC.267L.25) on a UN Conference to follow-up to the 2009 UN conference on the financial crisis was put forth by the Group of 77 developing countries negotiating block of the Second Committee in the UN General Assembly.

The draft resolution made two specific decisions. First, to hold a follow-up conference on the world financial and economic crisis in May 2013.

And second, to include in the provisional agenda of its 68th session under an item entitled ‘International Financial System and Development,’ a sub-item entitled ‘Follow-up to and implementation of the outcome of the UN Conference on the World Financial and Economic Crisis and Its Impact on Development.’

The latter decision recognized the various resolutions and initiatives in the UN, primarily led by the G77, that have strived to meaningfully follow-up on the critical issues of the international financial system and its impact on development (which are contained in the outcome document of the UN Conference on the financial crisis held in 2009).

Almost all of these initiatives, occurring over the last 3 years, have been blocked or stalled by the US, the European Union, Canada, Australia and Japan. The intergovernmental stalemate has occluded the UN from being able to follow-up on the critical and systemic issues of the international financial architecture, and in particular how the global financial crisis of 2007-8 affected developing countries and what reforms need to take place to help balance and correct a dysfunctional world economy.

The various initiatives to follow-up on the significant opening provided by the 2009 conference for the UN to focus on systemic financial issues have been led by the G77 group. They include the numerous attempts to establish an ad hoc open-ended working group of the General Assembly (GA) to follow up on the issues contained in the Outcome of the Conference on the World Financial and Economic Crisis and Its Impact on Development.

This open-ended working group of the GA is based on several UN decisions, particularly in two Resolutions. The first is UN Resolution 63/305 of 31 July 2009 and the second is UN Resolution 65/313 of 12 September 2011, which “decided to explore further the most efficient modalities for the intergovernmental follow-up process of the Conference on the World Financial and Economic Crisis and Its Impact on Development, and its request to the President of the General Assembly to hold open, inclusive, timely and transparent consultations with all Member States.”

Most recently, the President of the General Assembly held a high-level thematic debate on 17 and 18 May 2012 to contribute to the follow-up process of the outcomes of the Conference on the World Financial and Economic Crisis and Its Impact on Development. Heads of State made an urgent call during this high-level debate on the need for more action by the UN to follow up the Conference on the World Financial and Economic Crisis and Its Impact on Development.

During the informal negotiations, held in November last month, the G77 set the premise of the intergovernmental exchanges by saying that the rationale of the group in making its proposal is that the process and substance of following-up on the financial crisis conference has been pending since late 2010.

Although several UN resolutions, preceded and followed by consultations with Member States, had taken place on the ad hoc open-ended working group discussions, the political will has been sorely lacking from developed country Member States in the General Assembly.

To guarantee a meaningful follow-up, the G77 said, is the priority, and despite the previous discussions that have taken place over the last 2 years, the G77 group prioritizes an open discussion among all Member States on the modalities and technicalities of a follow-up process that can work for all.

The G77 made a particular emphasis that even after many disagreements over the last several years, there is a chance now to come to some kind of final agreement or consensus to follow-up on the 2009 UN Conference on the World Financial Crisis, even if in a very humble way.

The result can be small, the G77 said, but that is fine as long as it is something to work with. The G77 has repeatedly expressed its strong interest on addressing the intergovernmental stalemate on the follow-up process and to contribute to the strength of the UNGA.

The G77 focused on the UN Resolution 11/39, adopted on 28 July 2011, which made a decision to “consider the possible establishment of a UN Panel of Experts on reforms to the international monetary and financial system.”

Internal discussions with the G77 have focused on inviting experts to have an thorough discussion on the international monetary and financial system and to produce something non-binding. This would, the G77 acceded, be the best option available given the lack of agreement between Member States.

The US said that they don’t see the need to have such a conference given that the issues of financial and macroeconomic policies are mainstreamed into many other Second Committee discussions, such as Financing for Development (FfD), external debt sustainability and the international financial system and development.

The US argued that the 2009 UN Conference on the financial crisis was borne out of unique circumstances during that time, and that those circumstances are no longer the same.

If Kazakhstan wants to have an international conference on a follow-up to the 2009 UN Conference, that is fine, the US said, but there is clearly no need for it to be a UN conference.

While the frustration of the G77 is also clear, the US said, the idea of a UN Panel of Experts is also an idea that has been floating around for awhile. However, the US said that its delegation thought that the work on the financial crisis is done and over, and they see no need for continuance.

There will be no change from Washington on the position of the US delegation. However, they will be willing to see any detailed proposals from the G77 on such a Panel of Experts.

The US added that given this scenario, it seems that this discussion might be on a collision course, and we have to thus try to generate a consensus and clarify a vote.

At a subsequent reading of the G77’s proposal for a panel of experts, the US made it clear that they cannot agree to a follow-up UN Conference on the financial crisis, a UN Panel of Experts, or a sub-agenda item of following up to the 2009 UN Conference in the next session of the General Assembly. “These three items are off the table,” said the US delegate, adding that he has no mandate to accept any of these three proposals as part of a consensus document.

Admitting that the discussions are now at a “fundamental impasse,” the US delegate said that Member States are “now on a collision course for a vote, which would be an unfortunate outcome.”

The US concluded by saying they see no need for continuing any consultation on this, and asked the G77 and Kazakhstan to retract their proposal and decide on what alternate course they want to take. The US repeated their view that the world is now farther away from the financial crisis and there is no need to focus on it any further.

The European Union said that they too cannot accept the two proposals in the resolution for a follow-up UN Conference in Astana in May 2013, nor a sub-agenda item in next year’s General Assembly. However, the EU delegate said that they will consider a proposal for a Panel of Experts, which will be sent to the various European delegations that are under the EU group.

Referring to the “fundamental impasse” that the US mentioned, the EU said that UN member states should work in a more proactive way to achieve consensus. However, the onus was placed on the G77 as he reiterated that the G77 should try to work in a more proactive way.

The delegate for Russia said that in his view, there is not enough political will for a follow-up UN Conference in Astana in May 2013. However, Russia is willing to consider a proposal to convene a meeting of a Panel of Experts in Astana, in May 2013.

The Russian delegate repeated that his capital would likely be willing to support such a meeting as long as it is not an official UN Conference. However, Russia still had a lot of questions regarding such a meeting of a Panel of Experts, in particular the focus of such a panel on the international financial and monetary system. Russia highlighted that ECOSOC does not mention that topic in particular.

In response, the G77 said that if there is agreement to create a Panel of Experts, the G77 group will drop the follow-up conference. The G77 emphasized that it is important to work together in a spirit of solidarity.

And such a spirit means that it is not viable to kill off both a follow-up Conference and a Panel of Experts.

The language in the draft resolution, which is bound to change in due course, reads: “Decides on a panel of experts of UN financial experts on reforms to the International Financial and Monetary System in accordance with Resolution 2011/39, and in this regard welcomes the effort of the government of Kazakhstan to host its first meeting in Astana in May 2013. The working modalities of the panel would be decided by the General Assembly in March 2013 at the latest.” +