Did you notice last week’s UN Conference on the crisis? Thought not…..

July 3, 2009

     By Duncan Green     

In the end the UN Conference that considered Joe Stiglitz’s Commission’s report on the crisis was even more underwhelming than I predicted (given the chaotic preparations, which included a last minute postponement). Only 14 heads of state attended, 10 of them from Latin America; most of Stiglitz’ recommendations bit the dust (e.g. his proposal for a new Global Economic Council); press coverage was minimal and the resulting communiqué was littered with ‘best endeavours language’ that commits countries to precisely nothing – lots of ‘we encourage’s and ‘shoulds’, but precious few ‘shalls’ or ‘wills’ (for tips on reading communiques see here). But at least they agreed on a text, which at one point seemed far from certain.

The UN may be chaotic, slow and often frustrating but it has one thing the G20, G8 etc will never have – the legitimacy that derives from being the G192 of all the world’s countries, including the poorest ones that are usually absent from the more exclusive gatherings. So let’s indulge in a little straw-clutchism and accentuate the positive in what the conference agreed [numbers in brackets refer to paras in the communiqué]:

The plight of the poorest countries was squarely at the top of the agenda, with a call for them to get a ‘larger share of any additional resources’ [14], both from bailouts and long term financing.

In very general terms it recognized the systemic nature and depth of the crisis: ‘many of the main causes of the crisis are linked to systemic fragilities and imbalances…. Regulatory failures, compounded by over-reliance on market self-regulation, overall lack of transparency, financial integrity and irresponsible behaviour, have led to excessive risk-taking, unsustainably high asset prices, irresponsible leveraging, and high levels of consumption fuelled by easy credit and inflated asset prices.’ [9]

It kicked a few cans down the road, rather than abandoned them altogether, agreeing to set up a working group to report back to the next General Assembly [54], and called on that meeting to make the impact of the crisis on development its main theme. Many more leaders will be present then.

On corruption, the UN said ‘we urge all States that have not done so to consider ratifying or acceding to the UN Convention Against Corruption and call upon all States parties to vigorously implement the Convention.’ [19]

Some positive new language (compared to the G20, for example) on conditionality [17], avoiding protectionism [12], resisting discrimination against migrant workers [27], policy space [18], additional resources for social protection [22], greening development [32], debt standstills [15] and new issues of Special Drawing Rights [35] (SDRs are IMF funny money – what Paul Collier calls ‘global quantitative easing’).

Generally, the communiqué was about mood music rather than specifics – there were no new numbers on aid in sharp contrast to the G20 communique. But sometimes mood music matters in setting future agendas.

After a reported stand-off between the US and China, a very watered down version of Stiglitz’ proposal for a new global reserve currency struggled into the final text – check this out for a classic example of best endeavours language: ‘We acknowledge the calls by many states for further study of the feasibility and advisability of a more efficient reserve system, including the possible function of SDRs in any such system and the complimentary roles that could be played by various regional arrangements.’ [35] Weak language perhaps, but it’s a big deal and it’s still in play.

The challenge now is to build on the good bits, between now and the next UN General Assembly, which takes place in New York from 22 September – 2 October, coinciding with the rather shorter G20 Pittsburgh Summit (24-25 September).