PRESS CONFERENCE ON UN CONFERENCE ON WORLD FINANCIAL CRISIS

 

With developing countries starting to feel the sting from recessions rooted in rich nations, there was a special need for the United Nations, especially its most representative body, the 192-member General Assembly, to identify inclusive responses to mitigate the impact of the ongoing economic crisis, and initiate the broad-based dialogue required to transform our outdated global financial system, a senior adviser to Assembly President Miguel d’Escoto Brockmann said today.

During a Headquarters press conference this afternoon on the upcoming United Nations conference on the economic and financial crisis, Michael Clark, Senior Adviser to the President of the General Assembly, said that, while many countries had seen their credit markets dry up and consumer spending drop to historic lows, it was poor and least developed nations that stood to be crippled by sharply reduced exports and commodity prices and dwindling remittance flows.

“The burden of the crisis is falling unevenly, particularly hurting those that are the least able to bail themselves out”, he said, acknowledging that the issue was being discussed in various forums, including the “Group of 20” (G-20) industrialized and developing countries), which had recently met in London and which, in 2008, held an extraordinary meeting in the margins of the International Monetary Fund (IMF) and World Bank annual meetings in recognition of the current economic situation.

However, Mr. Clark said, the myriad concerns triggered by the crisis demanded a concerted effort to amplify the voices of all countries –- rich, poor and middle income –- to clarify global thinking on the matter.  With that goal in mind, he said the United Nations conference, to be held form 1 to 3 June, as well as the preparatory process under way and expected follow-up measures, would aim to “catalyse and institutionalise” the world body’s role in such discussions, and to ensure that any decisions taken, especially on overhauling the Bretton Woods institutions, were more inclusive.

He argued that the United Nations, and especially the General Assembly, which President d’Escoto has referred to as the “G-192”, was uniquely placed to ensure that emergency and long-term responses to the crisis included greater input from and participation of developing countries on vital economic and development issues.  The world had evolved considerably in the past 60 years, and despite the good that had come out of the Bretton Woods system, it was time to “take another look” at how that system worked and integrate new realities.

He said the conference, formally known as the United Nations Conference at the Highest Level on the World Financial and Economic Crisis and Its Impact on Development, would try to inculcate the need to widen the conversation; deepen the range of issues; and approach the crisis in a systematic, but urgent way.  He added that, while some might see the meeting as “another UN talk shop”:  “Agreeing to talk more is how the world solves problems […] the most important thing is outcomes.”

Responding to a host of questions about the Conference’s final document, he said the facilitators planned to make the text available by the middle of next week, though no decision had been made as to whether it would be called an outcome document or declaration.  He stressed, however, that the extent of the United Nations response would not be limited “to what’s on a piece of paper”.

While the final document would aim to bring together key concerns of all nations, including how to stave off what the World Bank had referred to as a “development crisis”, and improving the voices of developing countries, it would also acknowledge that the financial crisis was about more than “repairing a bubble”. The crisis, at its core, was about economics -– about unsustainable deficits, as well as unsustainable surpluses.  The fallout from Wall Street’s implosion suggested deeper, structural problems about how the global economy was managed and how marquee financial institutions, in all countries, had handled banking, credit and lending.

“There’s a real need to get to the heart of these issues”, he said, adding that what had started as a financial crisis had spiralled into a crisis of jobs and credit.  The United Nations was the forum that could make the discussion legitimate by ensuring that it looked outside the concerns of “this or that club”. A broader view was crucial to discussions on strengthening the global financial architecture.

Indeed, that would require more than “changing the seats at the table” and improving voting rights.  It would require a real effort to ensure countries outside “the club” could influence and bring about change in areas such as loans and credit terms.  Mr. Clark said the objective of the Conference and the Assembly President was to mobilise developing countries to believe they had a voice in making decisions that affected their futures.

He went on to say that the outcome document had undergone a “very extensive” process of taking on inputs, including from the Economic and Social Council’s meeting last week with representatives of the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (UNCTAD).  Now, the assigned facilitators were working on a document that he hoped most countries would see as a “pretty good plan” about the role of the United Nations in tackling the crisis, as well as the way forward.  “The pressure is certainly on”, he acknowledged, adding that the content of the outcome document “will probably affect the level of participation” at the Conference.

As global economists were having difficulty predicting exactly when the crisis would bottom-out, Mr. Clark said forecasting was tricky because the upheaval had both financial and psychological components.  Money –- particularly private money -- had to begin to flow, but, at the same time, no one could say, with any certainty, when financial institutions would start letting go of their resources, when businesses would start expanding or when ordinary people would feel secure enough, or optimistic enough, to start spending and borrowing again.

“The heart of the crisis is trust and belief”, he continued, stressing that trust in the major banks and global lenders had to be repaired.  Confidence had to be built so that money would start to flow again.  Such trust had to be built across the globe, as the marquee lending institutions had outposts worldwide.  With that in mind, he said the Conference outcome document would be a “statement of unity” rather than of division, “which one might think was an unusual thing to come out of the UN”.

Further, he said, individual actions, such as those undertaken by the G-20, might not give ordinary people, especially in the developing and least developed world, the “psychological kick” needed to ensure them that a concerted response was being worked out on their behalf.  Decisions taken at the highest political level, backed by the universality of the United Nations General Assembly, went a long way to dissuade such fears.  “And, when people feel a sense of ownership over decisions, they have a tendency to support them more effectively”, he said.

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For information media • not an official record