PUBLIC SECTOR'S ABILITY TO DELIVER INSTITUTIONS AND FRAMEWORKS FOR JOINT ACTION UNIQUE, EXECUTIVE COORDINATOR TELLS SECOND COMMITTEE

PUBLIC SECTOR'S ABILITY TO DELIVER INSTITUTIONS AND FRAMEWORKS FOR JOINT

ACTION UNIQUE, EXECUTIVE COORDINATOR TELLS SECOND COMMITTEE

Only the public sector could provide the necessary institutions, rules and joint frameworks for action without which the law of the jungle would reign, Eveline Herfkens, the Secretary-General’s Executive Coordinator for the Millennium Development Goals Campaign, told the Second Committee (Economic and Financial) this morning.

Speaking during a panel discussion on managing globalization, she said that national governments had a major role to play in improving global governance, emphasizing that they must establish policies to deal with the vagaries arising from greater competition in world markets.  Poor institutions and bad policies, rather than globalization and technology, were to blame for poverty and failed development, she added.

Ann Pettifor, Director of the Centre for International Finance and Governance of the New Economic Foundation, said that reforming international markets and creditors, rather than reforming financial institutions, was the way to manage globalization.  Calling for an international insolvency framework overseen by the United Nations instead of the International Monetary Fund (IMF), she said that the IMF and World Bank reform would follow.  The United Nations was the only organization that was truly capable of deciding sustainable debt levels in keeping with the Millennium Development Goals, she added.

Urging a restoration of policy autonomy to national governments, she recalled that in 1944, the Bretton Woods institutions had subordinated the finance sector to the productive sector by imposing restraints.  Capital was controlled and trade was liberalized, resulting in a period of great economic growth.

Also referring to national government, Adrian Wooldridge of the Economist magazine noted that the United States Government must now play an active role in reforming its corporate sector.  Governments also played a vital role in ameliorating the downside of globalization, although the international community must help some countries in dealing with that.

Regarding the problems of the developing world, he noted the importance of open markets, but pointed out that poor countries also needed direct solutions, such as money, advice, debt relief, and education.  Globalization was a fragile process that required tough monetary policies, but also gentle policies like debt relief, he added.

Roberto Bissio, Coordinator of Social Watch, noted that the United Nations did not exist during the first era of globalization, which had ended in 1914.  During the current period of globalization, political decisions were confronted with legally binding human rights treaties.  The United Nations could not be absent from any globalization debate, he stressed.

Responding to a question during the ensuing discussion on future lending and borrowing failures, Mr. Wooldridge said that the globalization process was self-correcting.  Countries that had borrowed irresponsibly would hopefully learn from the past, with democratically elected governments as their teachers.

In response to another question, Ms. Pettifor said that the United Nations should have a minor role in disciplining international lenders and borrowers by overseeing the appointment of an ad hoc panel of three people -- two nominated by each creditor and the third jointly by both.  The IMF would have to be involved, since it would provide interim financing during bankruptcy proceedings.

Several speakers questioned the ability of international lending institutions to create suitable debt-restructuring schemes when investors and decision-makers were more or less the same.  The representative of Argentina expressed doubts about working through the IMF to emerge from crisis, as required by Western nations, since IMF-prescribed policies had failed his country in the past. 

Others speaking this morning were the representatives of Peru, Iran, United States, Netherlands, Nigeria, Saint Lucia, India, China, Mexico, Mali, Pakistan and Suriname.

The Committee will meet again at 3 p.m. today, when it will take up the question of globalization and independence.

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