Friday, June 26, 2009

Unite Nation Delegates Call for a New International Financial Order

Developing countries called for a new international financial system at the United Nations on the World Financial and Economic Crisis and Its Impact on Development yesterday. The whole press release is here. Here are some paragraphs:

Decrying a world economic order that had rewarded the powerful, marginalized the poor and promoted an unbridled capitalism that ignited unprecedented financial contagion, General Assembly delegates today urged swift and concerted measures to restructure international finance bodies and forge people-centred policies that addressed human security.

Ecuadorian President Rafael Correra said that the creation of a coordinating entity that could issue Special Drawing Rights would help break a monopoly in the provision of liquidity that guaranteed the dominance of the United States dollar and asymmetric decisions of the International Monetary Fund (IMF). Channelling those rights through such bodies as the Food and Agriculture Organization (FAO) would prevent the Fund from re-editing its asymmetry.

Ralph E. Gonsalves, Prime Minister of Saint Vincent and the Grenadines, also questioned why countries should be forced to borrow from those whose bad advice and reckless regulatory neglect had precipitated the crisis. The responsibility lay in the world’s unregulated financial centres, and in those who considered it their right to prescribe other peoples’ policy space. A good solution required a framework for a modern, competitive and many-sided “post-colonial” economy that was at once local, national, regional and global. To deal with the fallout, his country sought to strengthen bonds with other nations through various regional groupings.

At the same time, Heidemarie Wieczorek-Zeul, Federal Minister for Economic Cooperation and Development of Germany, pointed out that it would take an organization with the United Nations legitimacy to fully tackle the crisis. With today’s Conference, countries were strengthening the United Nations role in global economic governance and she welcomed the proposed creation of a panel of experts that included expertise from all regions.

She stressed the need for a global stimulus package that would benefit the poorest and embrace an ecological dimension. More financing was needed for development, which could be mobilized by fighting tax evasion, making greater use of instruments -- like emissions trading and “debt2health” swaps -- and having banks accept financial responsibility for the crisis. The allocation of Special Drawing Rights would provide an important foreign reserve cushion for developing countries in need.

Building on that, Reneet Kaur, Minister of State for External Affairs of India, underscored that today’s conference was the first United Nations gathering on the global financial and economic system since 1944. It was vital that the Organization’s convening power be used to hear the voice of the entire global community. At the Bretton Woods institutions, voice and quota reform needed to be accelerated. Lending by international financial institutions and multilateral development banks must also increase, and associated loan conditionalities must soften.

International financial system is falling part and financial firms are under the life support of developed nations. I am wondering how these voices will go into the ears of US politicians. Of course US won't care about the voices of these little countries accept a few big emerging countries such as China, Russia and India etc.

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