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Too little, too late? The UN and the global financial crisis

Alison Evans and Dirk Willem te Velde, 23 - 06 - 2009

A major summit on the impact of the "great recession" on the developing world is an opportunity for the United Nations to take a lead in a critical area, say Alison Evans & Dirk Willem te Velde.


 

The title of the summit being held at the United Nations in New York on 24-26 June 2009 - the United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development - suggests a large ambition that some observers already think is misplaced. Their argument is that it has already been overtaken by events. After all, the global financial crisisis already almost two years old. The problems in the United States housing market emerged in Augu st 2007, in banks and financial institutions (such as Bear Stearns and Northern Rock) by early 2008, and the implosion of Lehman Brothers in September 2008. The crisis is, in this perspective, well into its third wave. A summit held now to pinpoint the action needed to ease its impact, particularly on the most vulnerable, seems - at first sight - "too little, too late".

Alison Evans is director of the Overseas Development Institute (ODI)

Also by Alison Evans in openDemocracy:

"Financing development: from Monterrey to Doha" (26 November 2008) - with Simon Maxwell

Dirk Willem te Velde is a research fellow at the International Economic Development Group (IEDG)

There are arguments to the contrary - status (it is being attended by heads of state and government, as mandated in December 2008 at the Financing for Development conferencein Doha), timing (it comes neatly between the G20 summit in London on 2 April 2009 and its follow-up in Pittsburgh on 24-25 September), and reach (this, unlike the G20 discussions, is a meeting of the entire UN membership - the most wide-ranging and inclusive body able to reflect seriously on the scale of the global financial crisis and its impact on development). The last point in particular should in principle be the summit's strength; but it could also be its weakness.

The context

The context of the summit is sobering. Developing countries are being hit by falls in trade, private-capital flows, remittances and (possibly) in the value of official development assistance (ODA). Research by the Overseas Development Institute (ODI) and developing-country teams have provided new evidence on these transmission-belts in ten poor countries. Moreover, the predicted effect of these trends is a rise in poverty levels, social unrest and even conflict.  The much-discussed recent "green shoots" are at best showing only some levelling off in the heavy losses to date.

The groundbreaking ODI research into ten developing countries shows how high the economic and human costs of the crisis already are. Some countries may see the strong positive economic growth that lasted into 2008 sink into negative growth in 2009. There is no doubt too that jobs are being lost, with some sectors being especially hard hit. The garment industry in Cambodia, for example, employed around 350,000 people, but saw approximately 51,000 people - many of them women - laid off between September 2008 and March 2009.

The implications for poverty are alarming. The crisis is likely to push many households into poverty, far more than would otherwise have been the case: as many as 650,0o0 in Indonesia, for example; 300,000 in Bangladesh; 233,000 in Uganda; 230,000 in Ghana; and 110,000 in Cambodia. Behind these numbers are countless human miseries: illnesses acquired and untreated, children unable to go to school, families broken or degraded. What is more, the research suggests that poorer countries have been hit even harder than initially expected, and that the worst is yet to come. This sentiment is echoed in the World Bank's prediction in June 2009 of "multiple waves of economic stress", and in the fear of eminent economists such as Paul Krugman of a lost decade ahead.

The G8 ministers of finance may talk about "exit strategies" and the need to shore up confidence to pull their countries out of the recession. But from the perspective of poorer countries, for whom "monitoring and coping" remains the mantra, this is to say the least premature.

The opportunity

Does all this indeed make the United Nations summit "too little, too late"? There are certainly real concerns about the role and effectiveness of the UN in the global financial and economic crisis. A dominant view is that the UN as a whole is hobbled by its internal divisions and bogged down in opaque, bureaucratic procedures and processes of consensus-building that make it look bloated and inefficient to the outside world. By contrast, the smaller "clubs" of the international system that operate independently of the UN - the G8, G8+5 and G20, for example - have less legitimacy but are able to agree on things and deliver accordingly.

At the time of the G20 summit on 2 April 2009, the ODI's former director Simon Maxwell noted that the United Nations Economic and Social Council (Ecosoc) - the UN body established to take the lead on global economic and financial issues - "has played no part yet in solving the current financial crisis". 

But it would be "too much, too early" to give up on the UN. Rather, this crisis provides two strong spurs for UN reform that if pursued would establish once and for all its role in leading global debate on issues of worldwide concern.

The first spur relates to the impact of the crisis on the global political order;  in particular, the damage that has been done to the reputation of OECD economiesand the longstanding belief that "the west knows best". It is now not only donors who are asking for clean governments - politicians in Cambodia, for example, are asking that the west be held to account for its financial "crimes".

The second spur lies in the attention now being given to the need to refurbish global governance.

The G20 may have allocated most of its "crisis resources" to the international financial institutions (IFIs), but the UN will remain a crucial part of any long-term governance solution. The IFIs too lack the UN's legitimacy; and in any case the draft report prepared by a commission of experts (headed by Joseph Stiglitz) for the 24-26 June summit highlights the failures of the IFIs rather than seeing them as an immediate solution to the crisis. The UN has a pivotal role to play in monitoring the crisis, especially its impact on the poorest and most vulnerable groups. But to fulfil this, it must be stronger in coordinating dialogue on country-development models, and facilitating this process at country level.

The UN is already expanding its own monitoring work, in cooperation with others. The Overseas Development Institute has worked with Unicef to look at how the crisis might affect children, for example. If the summit in New York achieves just one thing, it should be to agree on the monitoring role of the UN. This could turn out to be its greatest strength. A UN that works "above" the smaller groupings with their specific agendas and vested interests, is the body best placed to pioneer the monitoring of this systemic global crisis, and to host the global dialogue on how to respond both now and in the future.

 

openDemocracy writers on the world economy and the poor:

Michael Edwards, "A world made new through love and reason: what future for 'development'?" (25 April 2007)

Paul Collier, "The aid evasion: raising the ‘bottom billion'" (11 June 2007)

Robert Wade, " The financial crisis: burst bubble, frayed model" (1 October 2007)

David Held, " Global challenges: accountability and effectiveness" (17 January 2008)

Ann Pettifor, " The week that changed everything" (22 September 2008)

Andrew Shepherd, "The anti-poverty relay: a progress report" (24 September 2008)

Godfrey Hodgson, "The week that democracy won" (29 September 2008)

Will Hutton, "Wanted: a fairer capitalism" (6 October 2008)

Anita Sharma, "The core crisis: standing with the poor" (30 October 2008)

Paul Rogers, "A world in flux: crisis to agency" (16 October 2008)

Krzysztof Rybinski, "A new world order" (4 December 2008)

Simon Maxwell, "Global development: Barack Obama's agenda" (20 January 2009)

Sue Branford, "The G20's missing voice" (25 March 2009)

Average rating
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UN Conference on the World Financial and Economic Crisis and its Impact on Development, 24-26 June 2009 

Overseas Development Institute (ODI)

International Economic Development Group (IEDG)

VoxEU

Share the World's Resources (StWR)

IFI Watch

 
This article is published by Alison Evans, Dirk Willem te Velde, and openDemocracy.net under a Creative Commons licence. You may republish it without needing further permission, with attribution for non-commercial purposes following these guidelines. These rules apply to one-off or infrequent use. For all re-print, syndication and educational use please see read our republishing guidelines or contact us. Some articles on this site are published under different terms. No images on the site or in articles may be re-used without permission unless specifically licensed under Creative Commons.
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Not logged in Lawrence Efana (not verified) said:



Thu, 2009-06-25 20:41

Question-mark sub-part of the authors' title is more challenging than might otherwise be appreciated. Frankly, another question must be raised: What could The UN have done, thinking of the real power it doesn't have? Like others we come across often, who lament - wishing The UN could have the power it should, David Held explains ("Global challenges: accountability and effectiveness" (oD 17 January 2008) why the wishes are hard to fulfil in spite of the governance innovations of recent decades, which could equip it with more real power to live-up-to its global challenges and expectations. Held's primary point is: "weak and fragmented global-governance system" tend to stifle authoritative involvement due to "complex unbundling of sovereignty, territoriality and political forces", best evident in the plurality of actors, a variety of political processes, and diverse levels of co-ordination and operation.

The UN has been portrayed in many different ways. That we all know. It does achieve a lot of the good and so further peace and progress. But, should we settle thereafter to make a sense of it in the global financial crisis - we are entering into trouble waters! Like operative political values, especially at nation states' and regional levels wittingly or unwittingly put limits on UN operative frames, so too we are likely to equivocally argue that so-called economic modus operandi - values] promise not to relax the limits. In all as independent or interdependent areas, surely we see the impact of governance innovations. The hope in "the opportunity" referred to by both authors might in the long-run mature through such an impact.

That the burdens of political and economic systems constrain the operational functions of The UN: world organization] hence alarm expectations of peoples in various parts of the world should warn about real achievements or failures attributed to activities of various small and larger group world summit meetings, all resulting lessons, tied particularly to the meltdowns and the impacts on ODA and ODI, remain parts of above burdens. Why ECOSOC, for example, might not have played a significant role in tackling current financial crisis could be hard to separate from the general state of world politics and economics as we know, sympathize with or criticize - for want of best way to align and change. The legitimacy of IFIs, their modus-operandi, as a realization of the best ways to use investments as a part of the equalizing tool in search of balance and sustainable development in the world, might have to be seen beyond technical efficiency or interests, to convince about the moral integrity of its functions.

It is nice to note in the paper that its authors agree that one of the ways to keep abreast on interrelated issues is for the UN to actively coordinate dialogues on country-development models: country case-study routines to support world sustainable development. Impossible to say how many readers of this paper closely focus on: "exit strategies" from the present crisis. Similarly impossible to say how readers of the paper respond to cited individuals and all the references listed. Personally, I feel the joy to have focused on the exhilarating interview with Paul Krugman - the Nobel Prize Economist]. Since the current 'much-talked and written about meltdown' gained an extraordinary foothold alongside the US presidential election campaigns, we are living to see culminations upon culminations. There might be other interpretations and summaries of history of the crisis and so also opinions about "exit strategies". Someone might argue: whatever - are un-free from politics, values and technical strategies. I wouldn't argue any differently and yet it strikes me pragmatic and sane to see Paul Krugman, well embedded in history of this economic ailment, shy-not-away in his favor for 'regulation' instead of 'deregulation'. Not only that, so let me quote from the said interview: to stress on why I admire his argument: "...... All of that is true. I have a more mundane view about what we do. I just want a stronger welfare state, and a little bit more social democracy. And some restoration of the labour movement as a counterweight. I'm not sure - maybe I'm just not thinking about it deeply enough. I guess I've got the same attitude Keynes had, which was he was looking for almost technical fixes. You're looking for ways to fix the parts that have gone wrong rather than replace the whole thing....."

Many have been critical against raw capitalism and greed, and for that reason agitated for system overhaul of various undefined dimensions. What do you expect in the heat of confusion. Now we take the time to calm down and note that the profuse leak in our house is possible to fix by calling in plumbers. Don't miss it, we must also have mindset plumbers! The UN future, doubt me not lies partly here!

Not logged in Lawrence Efana (not verified) said:



Thu, 2009-06-25 14:23

Question-mark sub-part of the authors' title is more challenging than might otherwise be appreciated. Frankly, another question must be raised: What could The UN have done, thinking of the real power it doesn't have? Like others we come across often, who lament - wishing The UN could have the power it should, David Held explains ("Global challenges: accountability and effectiveness" (oD 17 January 2008) why the wishes are hard to fulfil in spite of the governance innovations of recent decades, which could equip it with more real power to live-up-to its global challenges and expectations. Held's primary point is: "weak and fragmented global-governance system" tend to stifle authoritative involvement due to "complex unbundling of sovereignty, territoriality and political forces", best evident in the plurality of actors, a variety of political processes, and diverse levels of co-ordination and operation.

The UN has been portrayed in many different ways. That we all know. It does achieve a lot of the good and so further peace and progress. But, should we settle thereafter to make a sense of it in the global financial crisis - we are entering into trouble waters! Like operative political values, especially at nation states' and regional levels wittingly or unwittingly put limits on UN operative frames, so too we are likely to equivocally argue that so-called economic modus operandi - values] promise not to relax the limits. In all as independent or interdependent areas, surely we see the impact of governance innovations. The hope in "the opportunity" referred to by both authors might in the long-run mature through such an impact.

That the burdens of political and economic systems constrain the operational functions of The UN: world organization] hence alarm expectations of peoples in various parts of the world should warn about real achievements or failures attributed to activities of various small and larger group world summit meetings, all resulting lessons, tied particularly to the meltdowns and the impacts on ODA and ODI, remain parts of above burdens. Why ECOSOC, for example, might not have played a significant role in tackling current financial crisis could be hard to separate from the general state of world politics and economics as we know, sympathize with or criticize - for want of best way to align and change. The legitimacy of IFIs, their modus-operandi, as a realization of the best ways to use investments as a part of the equalizing tool in search of balance and sustainable development in the world, might have to be seen beyond technical efficiency or interests, to convince about the moral integrity of its functions.

It is nice to note in the paper that its authors agree that one of the ways to keep abreast on interrelated issues is for the UN to actively coordinate dialogues on country-development models: country case-study routines to support world sustainable development. Impossible to say how many readers of this paper closely focus on: "exit strategies" from the present crisis. Similarly impossible to say how readers of the paper respond to cited individuals and all the references listed. Personally, I feel the joy to have focused on the exhilarating interview with Paul Krugman - the Nobel Prize Economist]. Since the current 'much-talked and written about meltdown' gained an extraordinary foothold alongside the US presidential election campaigns, we are living to see culminations upon culminations. There might be other interpretations and summaries of history of the crisis and so also opinions about "exit strategies". Someone might argue: whatever - are un-free from politics, values and technical strategies. I wouldn't argue any differently and yet it strikes me pragmatic and sane to see Paul Krugman, well embedded in history of this economic ailment, shy-not-away in his favor for 'regulation' instead of 'deregulation'. Not only that, so let me quote from the said interview: to stress on why I admire his argument: "...... All of that is true. I have a more mundane view about what we do. I just want a stronger welfare state, and a little bit more social democracy. And some restoration of the labour movement as a counterweight. I'm not sure - maybe I'm just not thinking about it deeply enough. I guess I've got the same attitude Keynes had, which was he was looking for almost technical fixes. You're looking for ways to fix the parts that have gone wrong rather than replace the whole thing....."

Many have been critical against raw capitalism and greed, and for that reason agitated for system overhaul of various undefined dimensions. What do you expect in the heat of confusion. Now we take the time to calm down and note that the profuse leak in our house is possible to fix by calling in plumbers. Don't miss it, we must also have mindset plumbers! The UN future, doubt me not lies partly here!

Not logged in Lawrence Efana (not verified) said:



Thu, 2009-06-25 14:22

Question-mark sub-part of the authors' title is more challenging than might otherwise be appreciated. Frankly, another question must be raised: What could The UN have done, thinking of the real power it doesn't have? Like others we come across often, who lament - wishing The UN could have the power it should, David Held explains ("Global challenges: accountability and effectiveness" (oD 17 January 2008) why the wishes are hard to fulfil in spite of the governance innovations of recent decades, which could equip it with more real power to live-up-to its global challenges and expectations. Held's primary point is: "weak and fragmented global-governance system" tend to stifle authoritative involvement due to "complex unbundling of sovereignty, territoriality and political forces", best evident in the plurality of actors, a variety of political processes, and diverse levels of co-ordination and operation.

The UN has been portrayed in many different ways. That we all know. It does achieve a lot of the good and so further peace and progress. But, should we settle thereafter to make a sense of it in the global financial crisis - we are entering into trouble waters! Like operative political values, especially at nation states' and regional levels wittingly or unwittingly put limits on UN operative frames, so too we are likely to equivocally argue that so-called economic modus operandi - values] promise not to relax the limits. In all as independent or interdependent areas, surely we see the impact of governance innovations. The hope in "the opportunity" referred to by both authors might in the long-run mature through such an impact.

That the burdens of political and economic systems constrain the operational functions of The UN: world organization] hence alarm expectations of peoples in various parts of the world should warn about real achievements or failures attributed to activities of various small and larger group world summit meetings, all resulting lessons, tied particularly to the meltdowns and the impacts on ODA and ODI, remain parts of above burdens. Why ECOSOC, for example, might not have played a significant role in tackling current financial crisis could be hard to separate from the general state of world politics and economics as we know, sympathize with or criticize - for want of best way to align and change. The legitimacy of IFIs, their modus-operandi, as a realization of the best ways to use investments as a part of the equalizing tool in search of balance and sustainable development in the world, might have to be seen beyond technical efficiency or interests, to convince about the moral integrity of its functions.

It is nice to note in the paper that its authors agree that one of the ways to keep abreast on interrelated issues is for the UN to actively coordinate dialogues on country-development models: country case-study routines to support world sustainable development. Impossible to say how many readers of this paper closely focus on: "exit strategies" from the present crisis. Similarly impossible to say how readers of the paper respond to cited individuals and all the references listed. Personally, I feel the joy to have focused on the exhilarating interview with Paul Krugman - the Nobel Prize Economist]. Since the current 'much-talked and written about meltdown' gained an extraordinary foothold alongside the US presidential election campaigns, we are living to see culminations upon culminations. There might be other interpretations and summaries of history of the crisis and so also opinions about "exit strategies". Someone might argue: whatever - are un-free from politics, values and technical strategies. I wouldn't argue any differently and yet it strikes me pragmatic and sane to see Paul Krugman, well embedded in history of this economic ailment, shy-not-away in his favor for 'regulation' instead of 'deregulation'. Not only that, so let me quote from the said interview: to stress on why I admire his argument: "...... All of that is true. I have a more mundane view about what we do. I just want a stronger welfare state, and a little bit more social democracy. And some restoration of the labour movement as a counterweight. I'm not sure - maybe I'm just not thinking about it deeply enough. I guess I've got the same attitude Keynes had, which was he was looking for almost technical fixes. You're looking for ways to fix the parts that have gone wrong rather than replace the whole thing....."

Many have been critical against raw capitalism and greed, and for that reason agitated for system overhaul of various undefined dimensions. What do you expect in the heat of confusion. Now we take the time to calm down and note that the profuse leak in our house is possible to fix by calling in plumbers. Don't miss it, we must also have mindset plumbers! The UN future, doubt me not lies partly here!

Not logged in Lawrence Efana (not verified) said:



Wed, 2009-06-24 16:32

Question-mark sub-part of the authors' title is more challenging than might otherwise be appreciated. Frankly, another question must be raised: What could The UN have done, thinking of the real power it doesn't have? Like others we come across often, who lament - wishing The UN could have the power it should, David Held explains ("Global challenges: accountability and effectiveness" (oD 17 January 2008) why the wishes are hard to fulfil in spite of the governance innovations of recent decades, which could equip it with more real power to live-up-to its global challenges and expectations. Held's primary point is: "weak and fragmented global-governance system" tend to stifle authoritative involvement due to "complex unbundling of sovereignty, territoriality and political forces", best evident in the plurality of actors, a variety of political processes, and diverse levels of co-ordination and operation.

The UN has been portrayed in many different ways. That we all know. It does achieve a lot of the good and so further peace and progress. But, should we settle thereafter to make a sense of it in the global financial crisis - we are entering into trouble waters! Like operative political values, especially at nation states' and regional levels wittingly or unwittingly put limits on UN operative frames, so too we are likely to equivocally argue that so-called economic modus operandi - values] promise not to relax the limits. In all as independent or interdependent areas, surely we see the impact of governance innovations. The hope in "the opportunity" referred to by both authors might in the long-run mature through such an impact.

That the burdens of political and economic systems constrain the operational functions of The UN: world organization] hence alarm expectations of peoples in various parts of the world should warn about real achievements or failures attributed to activities of various small and larger group world summit meetings, all resulting lessons, tied particularly to the meltdowns and the impacts on ODA and ODI, remain parts of above burdens. Why ECOSOC, for example, might not have played a significant role in tackling current financial crisis could be hard to separate from the general state of world politics and economics as we know, sympathize with or criticize - for want of best way to align and change. The legitimacy of IFIs, their modus-operandi, as a realization of the best ways to use investments as a part of the equalizing tool in search of balance and sustainable development in the world, might have to be seen beyond technical efficiency or interests, to convince about the moral integrity of its functions.

It is nice to note in the paper that its authors agree that one of the ways to keep abreast on interrelated issues is for the UN to actively coordinate dialogues on country-development models: country case-study routines to support world sustainable development. Impossible to say how many readers of this paper closely focus on: "exit strategies" from the present crisis. Similarly impossible to say how readers of the paper respond to cited individuals and all the references listed. Personally, I feel the joy to have focused on the exhilarating interview with Paul Krugman - the Nobel Prize Economist]. Since the current 'much-talked and written about meltdown' gained an extraordinary foothold alongside the US presidential election campaigns, we are living to see culminations upon culminations. There might be other interpretations and summaries of history of the crisis and so also opinions about "exit strategies". Someone might argue: whatever - are un-free from politics, values and technical strategies. I wouldn't argue any differently and yet it strikes me pragmatic and sane to see Paul Krugman, well embedded in history of this economic ailment, shy-not-away in his favor for 'regulation' instead of 'deregulation'. Not only that, so let me quote from the said interview: to stress on why I admire his argument: "...... All of that is true. I have a more mundane view about what we do. I just want a stronger welfare state, and a little bit more social democracy. And some restoration of the labour movement as a counterweight. I'm not sure - maybe I'm just not thinking about it deeply enough. I guess I've got the same attitude Keynes had, which was he was looking for almost technical fixes. You're looking for ways to fix the parts that have gone wrong rather than replace the whole thing....."

Many have been critical against raw capitalism and greed, and for that reason agitated for system overhaul of various undefined dimensions. What do you expect in the heat of confusion. Now we take the time to calm down and note that the profuse leak in our house is possible to fix by calling in plumbers. Don't miss it, we must also have mindset plumbers! The UN future, doubt me not lies partly here!

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