Opinion Sur Joven

“United Nations Conference on the World Financial and Economic Crisis and its Impact on Development”. With this hideous and long title, the United Nations officially discussed the economic crisis affecting the whole planet. And although the importance of this issue is evident, developed countries put all sorts of obstacles to avoid the conference: among others, they tried to cancel it.

But thanks to the positive attitude of several developing countries, and under the leadership of the Nicaraguan president of the General Assembly, the summit was eventually held. What does it mean, and why is it important that it took place at the UN? Which were the results?

A close look at the conference

I was excited; I always follow UN debates through international press, and that day I had the unique chance to be at the very General Assembly hall witnessing the debates. The thrill didn’t last much longer: one by one, heads of State, ministers and other representatives would read their speeches… a lot of words, but they didn’t say much.

The two typical sides were perfectly defined: on one side, developing countries were complaining about suffering a crisis they didn’t cause. On the other side, developed countries were showing their worry and pointing out how their economies were affected by the crisis. Although developing countries made a lot of (justified) criticism, no one proposed new ideas. I heard almost no concrete proposals.

Luckily, during the second day of the conference Ecuadorian president, Rafael Correa, marked a real turning point. His speech, very early in the morning, helped wake more than one up. Not only did he mention the enormous injustice of today’s international context, but -more importantly- he proposed some solutions regarding the key role South American countries could have in the construction process of a new system. Many other representatives from Latin America and the rest of the world showed similar positions, showing hope for a possible change.

Proud to be Latin American

Here are some of the main issues dealt with, along with quotes by the Ecuadorian president and the final statement of the summit.

It is important to mention that president Correa’s words agree with the ideas expressed by representatives of countries such as Venezuela, El Salvador, Cuba, Nicaragua, Chile and Argentina, among others, who proved to be very united in their message throughout the conference.

Why the United Nations? Correa’s speech began as follows: “After several decades of the United Nations, the lack of conviction, will and political generosity is quite obvious. Is it the absence of a humanistic project? Is it the preponderance of the selfishness inherent in the capitalist system? (…) A sort of clan of the powerful that boasts respect and equality, which even succeeded in regulating the organisms of our very nations, and never treated others on an equal footing”.

So why participate in these summits? Because this is the only international forum where countries may express their ideas in equal conditions, unlike G8 or G20 summits, or the utterly exclusive boards of global financial institutions. So it is essential to participate, to let our voices be heard and give a new meaning to this space, sixty years after its creation. But that implies vindicating the voices of the “different”, the large majority of the planet’s inhabitants who are victims of this crisis: “The different also come from Latin America, a Cinderella-like humiliated continent, but today more than ever, insurgent and rebellious, aware of its historical responsibility”, Correa pointed out.

The true dimension of the crisis

Comparing this crisis with the 1929 international crisis has become a commonplace these days. And the growth rate fall leads to think this is the worst crisis since. The very final statement of the conference points it out: “Many of you pointed to the interrelationship between the economic collapse and the problems of climate change and of food and energy security (…)”. Only acknowledging the systemic and structural characteristic of the crisis can we move forward with the substantial changes we urgently need.

Who will be affected the most? The crisis will likely lead to disastrous consequences for human beings and development. All over the world, millions of citizens are losing their jobs, their incomes, their savings and their homes. The World Bank estimates that more than fifty million people, especially women and children, have already fallen into extreme poverty. According to FAO (Food and Agriculture Organization) estimates, the crisis will increase famine and malnutrition levels all over the world, reaching the highest point in history with more than a billion people affected by them. [1] Poor and developing countries will clearly endure the hardest part.

Proposed solutions

Some of the suggested ideas were the following: “Restoring confidence and economic growth, and creating full and productive employment and decent work for all; providing adequate support for developing countries to address the human and social impacts of the crisis, in order to safeguard and build upon hard-won economic and development gains to date (…); safeguarding economic, development and social gains…”. Furthermore, the resolution of the General Assembly also adds that “Strengthening existing social safety nets, establishing new ones where needed and protecting social expenditures are important for the advancement of people-centered development and addressing the human and social impacts of the crisis”.

The environmental issue was mentioned as well, and all the countries involved agreed to foster “an inclusive, green and sustainable recovery”, and they will continue to provide “support for sustainable development efforts by developing countries”.

All of these are undoubtedly important measures, although we should wonder how many of those goals will be achieved. At least the commitment is written, so we must demand our governments to comply with it.

Reforming or replacing?

Many of the countries highlighted the importance of reforming the global financial architecture. Basically, the so-called Bretton Woods institutions (World Bank and International Monetary Fund) are the ones under scrutiny; they were created after the Second World War, supposedly to help strengthen the economies of the countries. The problem is that their methods haven’t been positive for the development of the poorest nations, and this crisis evidenced their incapacity and inefficiency to regulate the international financial system.

So which were the conference conclusions? “We stress the urgent need for further reform of the governance of the Bretton Woods institutions, on the basis of a fair and equitable representation of developing countries, in order to increase the credibility and accountability of these institutions. These reforms must reflect current realities and should enhance the perspective and voice and participation of dynamic emerging markets and developing countries, including the poorest”.

The road to follow: integration

As I’ve previously mentioned at the beginning of this article, what I found most impressive about Correa’s speech is that criticism was immediately followed by proposals, something I couldn’t clearly find in other representatives’ speeches. He mentioned three essential topics as the keys to Latin American economy:

Enhancing integration: He proposed to generate a stronger monetary-financial sovereignty by creating supranational spaces. “We are already working in our region to create a Development Bank for the South, capitalized by the countries of the region”, he explained.

Constituting a common reserve fund: The idea applies to Latin America. This would prevent depositing more than 200 billion dollars from our countries in banks of developed countries. “It is paradoxical that, in the midst of the crisis, we still allow our money to finance rich countries, in exchange for a few dollars accrued as interests. If we join our reserves in a common fund, we will need less money to tackle regional contingencies and crises”, he assured.

Consolidating a common monetary system: His idea is to begin with an electronic currency and then have a common physical currency. It is worth to mention that this goal has already been agreed upon by Mercosur countries, although it hasn’t been implemented yet.

Time to do something

It’s not usual to discuss economic issues at the UN, because it’s always been said economy is not one of its fields. The closing statement, agreed upon by all the involved countries, proved the opposite.

But there’s a lot more to do; throughout the whole summit, the developed countries showed their unwillingness to accept substantial changes. As a conclusion, I would like to include a quote that summarizes the most important pending actions. Joseph Stiglitz, the Nobel Prize recipient in Economic Sciences who chaired the expert commission that prepared the report for this conference, said: “We have allowed economic globalization to outpace political globalization – we do not have the institutions or the mindset to respond collectively in ways that advance the wellbeing of all. The UN meeting represented a small, but important, step forward”.

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