By Raquel Thompson
26 June [MEDIAGLOBAL]: Governments from all over the world participated in the United Nations Conference on the World Financial and Economic Crisis this week, where they discussed whether time has come to create a Global Council to oversee the global economy.
Nobel Prize-winning economist, Joseph Stiglitz, expressed the rationale for creating a Global Council in this capacity.
“We have allowed economic globalization to proceed apace without devising the kinds of political institutions to help manage [it],” he said. “And we are now experiencing some of the adverse consequences of that.”
A Global Council should have been making sure the International Monetary Fund (IMF), or a similar institution, was undertaking better surveillance of international capital flows and financial markets, and looking out for early warning signs for impending crises, Stiglitz said.
A Global Council would also help ensure individual country actions do not undermine a global recovery, he added. “What is clear is this is a global crisis, and yet economic policies are still determined at the national level.”
Since the start of the crisis, the World Trade Organization has noted a rise in protectionist policies, which it says, “only threatens the prospects for recovery and prolongs the downturn.”
Ensuring coordination and coherence amongst governments and international institutions is the essence of the role envisioned for the Global Economic Coordination Council, as outlined by the Stiglitz’s Commission of Experts, who was charged by the President of the General Assembly with providing recommendations in advance of this week’s Conference.
“Since the end of the Second World War, there’s been so many [financial and economic] institutions that have been created that one has to take a fresh look at it and see if some of these organizations are outdated,” Andrei Bougrov, a member of the commission of experts, told MediaGlobal.
“There’s a lot of overlap and duplication. Mandates have to be changed and modernized so they reflect the modern structure of the world economy,” he said.
The Global Council would be based at the UN and exist at a level equivalent with the General Assembly and the Security Council. It would be designed to ensure that all continents and all major economies are represented, says the Commission.
For Stiglitz, wide representation is key. “There needs to be an inclusive process of decision making—not the G-8, not the G-20, but the G-192,” he said.
Developing countries have overwhelmingly expressed their support for the creation of a Global Council in this capacity, while several developed countries have voiced their objection.
The United States, for example, issued a statement which said the UN “does not have the expertise or the mandate” to serve as a forum for meaningful dialogue or to provide direction on global financial and economic issues.
The Stiglitz Commission recommends creating an international expert panel, similar to that of the Nobel Prize-winning Intergovernmental Panel on Climate Change, to intellectually support the work of the Council.
As for the mandate of the UN, Jomo Kwame Sundaram reminded an audience at the Conference that when governments of the world first gathered at Bretton Woods in 1944 to create today’s leading international financial institutions, they did so under the title: United Nations Conference for Monetary and Financial Affairs.
“I want to emphasize this because it is often thought that the United Nations has got nothing to do with monetary and financial affairs, and right from the mid-forties, the UN was clearly envisioned as part and parcel of a new inclusive multilateralism,” Sundaram, a member of the Stiglitz Commission, said.
“The Global Council would allow the UN to get back to its role as originally envisioned,” he continued.
At the end of the Conference, UN Member States adopted an outcome document, which “encourages greater cooperation and coordination amongst countries,” and establishes a working group to follow up on the issues presented during the three days, but stopped short of creating a Global Council.
Many developing countries and non-governmental organizations have nonetheless expressed a sense of achievement.
Vitalice Meja, who is heading back to Zimbabwe to continue work with the African Forum and Network on Debt and Development, told MediaGlobal, “We got what we wanted. Many people feared the Conference would be a one-time event, where changes to the global financial and economic system would never be brought up again. On the contrary, the working group is an opportunity to further discuss how we can come up with a permanent structure that would indeed facilitate the kind of reform we are seeking.”
The President of the General Assembly echoed Meja’s thoughts. “The follow-up is the all important result because it makes this a process,” he said, addressing a group of reporters on the final day of the Conference. “Am I satisfied with what came out? Yes. It’s a beginning.”
The fact that the Conference happened at all—the first since Bretton Woods to discuss world financial issues—is reason for celebration, the President added.
“It makes it clear that the G-192 is the adequate venue for this kind of decision-making,” he said.