Global Trends by Martin Khor

Monday 16 April 2012

Battle to save UNCTAD’s mandate

On the eve of its Ministerial conference, a major battle is under way at the United Nations’ premier development organization UNCTAD to preserve its mandate to work on macro-economic and finance issues.


The United Nations’ most important development organization, the UN Conference on Trade and Development, is facing a serious impasse on the eve of its most important event, its thirteenth session, known as UNCTAD XIII, to be held in Doha (Qatar) on 21-26 April. 

This general session, held once every four years, is to be attended by Trade and other Ministers, and some heads of government too.  Its theme is “development-centred gobalisation.” 

While the previous two or three conferences were rather tame affairs, it looks like UNCTAD XIII will be fiery, with the organisation’s future scope of work and influence at stake.


UNCTAD was set up in 1964 to support developing countries to strengthen their weak position in international economic structures, and to design national development strategies.

It became a kind of secretariat on behalf of developing countries, providing a small pro-development balance to the huge organisations dominated by the developed countries, such as the OECD, the IMF and World Bank.  

In the past two decades, however, the developed countries have tried to curb the pro-South orientation of the UNCTAD secretariat and its many reports.  The inter-governmental discussions became less significant, while UNCTAD’s pro-development mission was increasingly challenged by the developed countries.

This unhealthy trend seemed to have subsided in the past decade, but in the past two months the meetings in Geneva to prepare for UNCTAD XIII, have become a North-South battle ground.

Last week’s meetings ended in a near crisis, with the countries unable to agree on how to proceed with some key principles and with a draft of a declaration that the Ministers are to adopt in Doha.

At a 13 April meeting, some developed countries did not even agree to “reaffirm” the mandate given to UNCTAD at the previous session (UNCTAD XII held in Accra in 2008).   Instead, they wanted language to “build on” the Accra Accord.

This caused frustration to the G77 and China, the group of developing countries, who saw the move as an attempt to take away some of the issues that UNCTAD is working on. Refusal to reaffirm the Accra accord seemed to be another measure to chip away at the influence of UNCTAD and its support for development.

Speaking on behalf of the G77 and China, Ambassador Pisanu Chanvitan of Thailand

regretted that the accommodative stance of the group had been viewed as weakness or capitulation. 

The group has hoped that the global economic and financial crisis marks once and for all the end of the bad old days, and perhaps the dawn of an international regime of global economic governance based on the highest principles and ideals of the United Nations, including sovereignty, equality, and mutual respect.

“Instead, we see behaviour that seems to indicate a desire for the dawn of a new neocolonialism. We cannot, we will not, accept this.”

The G77 and China believed that UNCTAD XIII can contribute to a new beginning, and that the theme of development-centered globalization could articulate a vision of development based on equality and equal respect for all.

Unfortunately, the developing countries feel increasingly marginalized by our partners especially when they seem to deny us our own priorities.

The Thai Ambassador stressed that the Accra Accord must be reaffirmed. And while the G77 and China had already made “incredible compromises”, it now proposed that at the minimum the Doha conference could adopt the compromise text that the President of the conference (Ambassador Maruping of Lesotho) had issued.

In response, a group of developed countries regretted that they were being painted as being on the “bad side” and asked that their proposals be not “engineered always as a weapon in a North-South conflict.”

At the close of the meeting, Ambassador Maruping proposed that negotiations resume on 16 April on the basis of his compromise text.

Meanwhile, an influential group of 50 former senior UNCTAD staff issued a joint statement criticizing efforts by major developed countries to reduce UNCTAD’s mandate and deny it the right to continue to analyse global macroeconomic issues from a development perspective.

The signatories included former UNCTAD Secretary-General Rubens Ricupero, two former deputy Secretaries-General, Carlos Fortin and Jan Pronk, and several Directors.

At a press conference on the statement, reported in the SUNS Bulletin, former UNCTAD Director John Burley, warned of an attempt “to change UNCTAD's mandate by denying the organisation the right to continue to analyse and report on global macroeconomic issues, including the role of global finance in development.”

“We are angry because we feel that the two principles of the need for a plurality of views in the international system and the need to preserve UNCTAD’s freedom of speech, are being threatened.” 

Yilmaz Akyuz, former UNCTAD chief economist, said that since the collapse of the Berlin Wall, the major developed 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 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.

“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.

Asked to elaborate on the areas that the major OECD governments are trying to stymie UNCTAD's work, Akyuz said 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.

In their statement, the former UNCTAD staff members said that 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.”

They stressed that developing countries in Geneva are struggling to resist the strong pressure piled on them by OECD countries and to defend the organisation. The developed countries in Geneva have seized the occasion to stifle UNCTAD's capacity to think outside the box.

The former UNCTAD staff depicted the developed countries’ move as “if you cannot kill the message, at least kill the messenger.”

These developments at the UN’s premier development institution are disturbing, to say the least.  It is hoped that the developing countries can strongly defend the organisation that has supported their development efforts through many decades, and that the developed countries can allow UNCTAD to continue and expand its work for the benefit of the international system at a time of global crisis.