press conference by global social economy group on conference on the world

financial and economic crisis and its impact on development

Voicing the interests of civil society a day before the United Nations begins a three-day summit on the world financial crisis, the Global Social Economy Group called today for sweeping reform of international financial and economic institutions and practices that had contributed to the current global economic turmoil.

At a Headquarters press conference this afternoon, representatives from the Group said broad reforms and measures, including the creation of an economic coordinating council at the United Nations, would help counter a crisis that was severely hurting the world’s poorest people.

Pauline Vande-Pallen, representing the Women’s Working Group/Network for Women’s Rights in Ghana, said she was concerned that Governments were not making the structural changes necessary to revise flawed systems that had worsened the lives of women and many others already suffering greatly from the recent food and energy crises.  “Women need to be actively engaged in whatever recovery programmes are put in place,” she said, urging that the upcoming Conference be used as a vehicle to build global consensus for a just economic system.

Roberto Bissio, representing Social Watch, cited new projections showing that the financial crisis was deeper than previously believed.  Developing countries were particularly hard hit by the impact of falling commodity prices, slowing global investment, more expensive credit, and falling remittances.  Governments should be able to provide cash directly to the poor, who could then put it directly into the global economy.  However, developing-country Governments could not do that without aggravating existing debt problems, he warned.

Kristian Weise, representing Global Unions/LO-Denmark, said global unemployment was expected to increase by 50 million in 2009 due to the financial crisis.  The job crisis would last much longer than the economic one, and economic recovery policies should address unemployment.  Workers around the world and developing countries that had played no role in creating the turmoil were paying for it.  Too much money had been directed to banks and big companies and not enough to restoring employment.  “This crisis is not an excuse for pursuing bad policies and backing down on promises made in better times,” he said, referring to official development assistance (ODA) commitments made by developed nations.

Bhumika Muchhala of the Third World Network advocated the use of collaborative measures to help remedy the financial crisis facing developing nations.  One such measure would be to increase liquidity, since developing countries faced a severe liquidity squeeze owing to a drop in exports, remittances, tourism revenue, foreign direct investment and aid.  Other measures would include reforming the Bretton Woods institutions, revising restrictive measures in international trade agreements and temporarily reversing restrictions on capital flows into their countries.  There was also a need to strengthen regulation of the financial markets.

Asked whether the Group’s recommendations were being taken seriously by the international community, Mr. Bissio said he believed the agreed draft outcome document would give the United Nations a place in the economic world.  The conference and outcome document were a step in the right direction.  “We are not completely pessimistic,” he added.

Mr. Weise said the crisis had made politicians discuss issues that they previously would not have discussed, such as tax havens and employment.  Indeed, the idea of a global economic council was one that global trade unions had advocated over many years.

Replying to a question about greater protection for consumers of financial products, Mr. Weise called for additional regulation of lending practices, while Mr. Bissio suggested testing the safety of financial products sold on the markets.  Like toxic toys, toxic debt should be prohibited from sale, he added.  “These products were made to be used by highly sophisticated investors, not sold over the counter.”

In response to a question about who might oversee a global economic council established at the United Nations, Mr. Bissio said that any Government system needed checks and balances, so any United Nations economic coordinating or security council must be transparent.

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For information media • not an official record