17 November 2008
The Secretary-General of the United Nations Conference on Trade and Development, UNCTAD, Supachai Panitchpadki, last Thursday told an executive session of UNCTAD's Trade and Development Board (TDB) that aid and other economic support to developing countries must not dry up as richer nations struggle to cope with their own financial turmoil.
"There is a need for systemic remedies to the global financial crisis, the United Nations - with its comprehensive membership - should be involved in crafting solutions.
"The developing world is facing, with the expanding financial turmoil, difficulties over food costs, and wildly gyrating energy prices, a "triple crisis" that must be addressed," the Secretary-General said.
His opinions were echoed by a series of speakers as the TDB readies its contribution to the Follow-Up International Conference on Financing for Development. That conference will be held November 29 - December 2 in Doha, five years after the Monterrey Consensus on financing for development was adopted in Monterrey, Mexico.
"The availability of phenomenal sums for bailouts and stimulus packages" in rich nations "makes it hard to understand why resources are suddenly so scarce when it comes to developmental assistance," Mr. Supachai said.
"As (economist) Jeffrey Sachs has rightly pointed out, Europe and the US have mobilized around $3 trillion in the past month in guarantees and bailout funds for banks, but failed to mobilize even one ten-thousandth of that this year to help the world's poorest grow more food - and this is in the midst of a food and hunger crisis."
Mr. Supachai said preliminary research indicates that during past banking crises official development assistance (ODA) to poor nations has declined anywhere from 20 per cent to 40 per cent. For the current crisis, according to estimates of the Organization for Economic Cooperation and Development (OECD), foreign direct investment to developing countries will have declined by 40 per cent during 2008. Remittances to developing countries from nationals working overseas - a huge source of income - may fall by up to six percent. And the International Labour Office has estimated that the financial crisis will cause global unemployment to increase by 20 million and extreme poverty to rise by 40 million.
The crisis should be an occasion for the United Nations to perform "an essential function in generating innovative ideas, fostering universal dialogue and building consensus," Mr. Supachai said. "It is the forum, par excellence, for universal participation in global decision making when needed."
UNCTAD has assembled a Task Force on Systemic Issues and Economic Cooperation "to coordinate research on major weaknesses in the international financial system and related institutional architecture of concern to developing countries," Mr. Supachai said.
The task force will focus, among other things, on currency speculation and global monetary cooperation; commodity futures speculation and price volatility; and financial sector regulation and surveillance.
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