A UN conference on the global financial crisis will take place later this month, and on the table lies a set of proposals which are far more interesting and wide-reaching than anything the G20 has been able to come up with. Yet in Australia, as in other wealthy countries, neither the Government nor the mainstream media have paid much attention.
But it doesn’t have to be this way. Australia could once again show global leadership and recognise that, for the first time since the global financial crisis has hit, there are some genuine and much-needed reforms to our financial system being proposed. In a recent thinkpiece in The Monthly, Prime Minister Kevin Rudd bemoaned the dire consequences of the "neoliberal" propensity for deregulated markets. If the Prime Minister really meant what he said, he would give his full support to this UN process, which is not only more determined to push for fundamental reforms than the G20, but also to do so in a global forum that will bestow legitimacy on the decisions that are taken.
How did the UN suddenly become a vehicle for such potentially significant global reform?
Last November, as the global financial crisis deepened, delegates at the UN Financing for Development Conference in Doha agreed to meet at the UN this year to discuss the effect of the crisis on developing countries. The result is this month’s UN Conference on the Financial and Economic Crisis and Its Impact on Development. The meeting has been dubbed the G192 and will be held in New York from 24–26 June.
The real action started a few weeks ago when the President of the General Assembly, a priest and former Minister in the Nicaraguan Government, Miguel d’Escoto Brockmann, tabled a strong statement calling for fundamental reforms of the global financial system and of global governance.
Mr d’Escoto’s bold move has been widely criticised, for example in an article in the New York Times, which basically paints him as an out-of-control clergyman trying to Sandanista-ise the world economy. Moreover, citing a dissatisfaction with the President’s failure to adhere to proper UN consultation processes, a number of countries had threatened to pull out of the conference altogether. After negotiation, a new watered-down interim draft of the outcomes document was adopted as a basis for further negotiation. The disagreements meant that the conference had to be rescheduled from its original date in early June.
Did a serious breach of etiquette really occur? Or was this in fact a convenient pretext for developed nations to stymie a process which they saw as threatening the status quo? In reality, the kerfuffle over UN etiquette is a sideshow. The real issues are, firstly, what the conference can actually deliver in terms of concrete outcomes, and secondly, what level of buy-in developed countries will have. Developing countries have shown more interest in it because, unlike other global fora, their voice actually matters.
D’Escoto’s document was strongly influenced by a more detailed and thorough analysis prepared by a UN appointed Commission of Experts chaired by Nobel Prize-winning economist Joseph Stiglitz. Central to both analyses is the acknowledgement that advances in economic theory — pioneered by Stiglitz, among others — have revealed the folly of hasty and comprehensive deregulation, underwritten by the belief that market mechanisms can overcome all obstacles. Stiglitz and his colleagues have demonstrated that "deregulation at all costs" policies will consistently run aground due to the market failures that are inherent in any non-perfect economic system. A markets-only system is simply unstable, as recent events have shown us.
Some of the practical changes that both the President of the General Assembly and the Stiglitz Commission call for in the preliminary version of the report include: a new global reserve currency; debt relief and the creation of a sovereign debt and default restructuring mechanism; a much tighter regulatory structure for the financial system; a more just resolution of the global trade round; closer international cooperation on tax reform; the creation of a new Global Economic Coordination Council, run through the UN; and genuine (rather than piecemeal) reform of the Bretton Woods Institutions (the World Bank and the International Monetary Fund).
Reforms are being proposed that would once again embed the global economy within global social structures — steps that would place the paper economy in service of the real economy, not the other way around. Not only has the UN finally got its act together around economic matters, but the support of such a high-profile and well respected figure as Joseph Stiglitz adds credibility to this process. However, the only way for this process to have a chance of reforming the global economy is if governments like ours take it seriously.
The UN may not be perfect — and it is certainly unwieldy and inefficient — but it is at least representative, and for now it is the least-worst solution to the problem of global governance. Moreover, three decades of the World Bank and IMF bullying developing countries and enforcing a problematic globalisation model has been a disaster. The UN is the only entity capable of wrestling the baton back from the out-of-control Bretton Woods twins that have both overstepped their mandates.
The World Bank and IMF are nervous, as they should be. They realise that for the first time in 30 years the UN is challenging their hegemony as the controllers of globalisation. Rumours from New York are that the Bank and the Fund have been wining and dining developing country ambassadors in an effort to moderate their support for the UN process. The feeling among campaigners is that if China and the US — and Australia — send high-level representation, the UN Missions will advise their governments that it is appropriate that their heads of state attend, thus bestowing on the conference the legitimacy it will need to succeed
Australia’s Parliamentary Secretary for Overseas Development Assistance, Bob McMullan, was due to lead the delegation when the conference was scheduled for early June. The date change affords Kevin Rudd the opportunity to do what he always should have done: either join McMullan himself or send the Treasurer in his place. And he should be encouraging his G20 colleagues to do the same. Kevin Rudd — who is supposed to be a multilateralist by disposition — should be able to pursue this course of action with ease.
Meanwhile, the Prime Minister’s responsibility here needs to be seen in context. The Government’s failure so far to take this UN process seriously is slightly more understandable amid the deathly silence from the mainstream press on such an important issue. Australian civil society groups could also be doing more to use this opportunity to push for real change.
Now, will the supporters of a more just global economy please stand up?
Donate To New Matilda
New Matilda is a small, independent media outlet. We survive through reader contributions, and never losing a lawsuit. If you got something from this article, giving something back helps us to continue speaking truth to power. Every little bit counts.