About Alison Evans

Alison Evans is director of programmes for the poverty and public policy group of the Overseas Development Institute (ODI)

Articles by Alison Evans

This week's guest editors

Four immediate responses to Phil Vernon

Phil Vernon asks if overseas development aid is working. This is a good moment, he argues, to take a step back and ask ourselves whether we would call today’s aid policy and practise successful in providing sufficient impetus to overcome the strong forces worldwide that keep people poor. Four immediate replies…

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

 

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)

Financing development: from Monterrey to Doha

For the world's poorest nations, the United Nations conference on financing for development (FFD) in Doha on 29 November - 2 December 2008 is the most important economic summit in half a decade.

Even before the financial crisis erupted, this meeting was likely to be marked by recrimination. Developing nations feel that they have been hit first and hardest by oil shocks and food-price surges, and failed by G8 promises on aid that have not materialised. The aid shortfall already amounts to some $30 billion a year, or 30% of pledges made at the Gleneagles summit in 2005. The stakes are now much higher, as the financial crisis bites. Research from the Overseas Development Institute (ODI) suggests that total financial flows to developing countries are likely to shrink by ten times as much as the extra promised by the G8 in Gleneagles: $300 billion - or 25% of current flows.

Alison Evans is director of programmes for the poverty and public policy group of the Overseas Development Institute (ODI)

Simon Maxwell is director of the Overseas Development Institute

Also by Simon Maxwell in openDemocracy:

"Inside the palace of glass" (27 June 2001)

"Chemical warfare in the bathroom" (15 August 2001)

"The global development agenda in 2007" (21 December 2006)

"Rome's food summit: a torch passed" (6 June 2008)

"Development in a downturn" (4 July 2008)

" A new global order: Bretton Woods II...and San Francisco II" (11 November 2008) - with Dirk Messner

Growth forecasts have been cut repeatedly in autumn 2008. The International Monetary Fund (IMF), for example, predicted growth rates for the different regions of the world in October and again in November. In just a few weeks, global growth for 2009 was downgraded from 3% to 2.2%, and for sub-Saharan Africa from 6.3% to 5%. The next round of estimates may well be even more pessimistic.

There will certainly be job losses. There will also be an increase in poverty, adding to the 100 million driven back below the poverty-line by the sharp increases in food prices in 2007-08. The World Bank estimates that for every 1% drop in growth, another 20 million people slide into absolute poverty.

Developing countries have not yet felt the full force of the hurricane that is about to blow through the world economy. But it is time to start nailing shutters on the windows (see "Development in a downturn", 4 July 2008).

The Monterrey model

The FFD conference in Doha is not the arena for a global programme to fight recession. That discussion is ongoing at the G20, the group of wealthy nations and emerging economies which met in Washington on 15 November 2008 and will reconvene under British leadership (probably on 2 April 2009 in London). For the same reason, there is unlikely to be much progress on the core G20 issue of financial-sector regulation. What, then, can be hoped for?

It is important that this is a United Nations event in which all countries are represented, not just the largest economies. Thus, Doha will agree a statement about global solidarity. This could be a bland homily about how we are all in this together, with no concrete commitments; or it could be a strong vision of global social justice, with specific agreements to share the pain and reduce global inequality. Expect the first.

The outcome document will reaffirm the basic bargain agreed at the first FFD conference in Monterrey in 2002. This meeting, just six months after 9/11, marked a turning-point in relations between rich and poor countries. For their part, developing countries made a commitment to good policies, good governance and the rule of law. Developed countries matched this with a commitment to debt relief and increased aid. The guiding principle was one of partnership. As a model of international cooperation, that still holds.

The Doha document is, for the moment, a tangle. But it will lay out the current agenda, and the main headings from Monterrey remain: domestic financing, private finance, trade, aid, debt, and systemic issues.

Much of the text will be aspirational: yes to trade deals, no to unsustainable debt, yes to donors keeping their promises. On past experience, it will not set out who must do what, and by when. Is there room for more than aspiration? There is nothing like a crisis to focus minds and make bold leaps seem more feasible.

Doha's choice: four recommendations

In this light, four steps could be taken in Doha to create a new deal.

First, Doha should make specific commitments to safety-nets and social protection for the poorest people. Humanitarian relief should be guaranteed for the 90 million people already in need of food aid, and the millions more who will join them as the recession deepens. Beyond that, ODI research shows that options exist to deliver social protection in almost every country - through cash grants, old age pensions, targeted subsidies, or direct provision of goods and services.

Among openDemocracy's articles on global development policy:

Jonathon Porritt, "'As if the world matters': reconciling sustainable development and capitalism" (30 November 2005)

Ehsan Masood, "The aid business: phantoms and realities" (18 July 2006)

Michael Hopkins, "Sustainable development: from word to policy" (11 April 2007)

John Elkington, "Brundtland and sustainability: history's balance-sheet" (11 April 2007)

Stephen Browne, "G8 aid: beyond the target trap" (6 June 2007)

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

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

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

Andre Wilkens, "The global financial crisis: opportunities for change" (10 November 2008)
Doha should therefore encourage all countries to develop and support concrete plans to create safety-nets for the most vulnerable, and commit the international system to providing additional financial support. But this financial support no longer refers to traditional donors alone. The international system now includes the new donors -  such as China, India, and the oil-rich countries of the middle east. What a dramatic gesture it would be, at a time of global threats and falling oil prices, if those countries were to use Doha to announce timetables for increases of aid.

Second, Doha should build on the new enthusiasm for multilateral solutions, by putting the UN, the World Bank and the multilateral development banks (like the African and Asian Development Banks) at the heart of the aid system. At present, only about 25% of aid is reported by the Organisation for Economic Cooperation and Development (OECD) as multilateral, with 75% channelled bilaterally through a frighteningly large, confusing, incoherent and growing number of bilateral agencies and special-purpose funds. This has to change. A specific Doha commitment could be to stand the aid system on its head, with donors agreeing that 75% of aid should be multilateral by 2013.

The management of multilateral aid also needs an overhaul. Aid is coordinated by a donor club, the Development Assistance Committee (DAC) of the OECD, which, for all its good work, lacks legitimacy among developing countries and the bite to underpin enforcement. The UN has a separate body, the Development Cooperation Forum (DCF), which has suffered from association with the poor performance of the UN Economic and Social Council (Ecosoc), and the underfunding and political pressures that afflict the UN's department of economic and social affairs (DESA). Could the best of both be preserved, if the DAC and the DCF were merged or more strongly linked?

Third, Doha should establish a new formula for mutual accountability between rich and poor countries. Conferences, with their tendency to produce declarations with good intentions, are a poor way to do this. An alternative is to look at the structures developed by the European Union with its (to date seventy-nine) African, Caribbean and Pacific partners in the Cotonou agreement signed in 2000. This is based on a treaty with the force of law, and its key principles are enshrined and backed up by an agreed arbitration procedure. There is political oversight, through a joint council of ministers, and a joint parliamentary assembly. The UN political apparatus provides a structure of this kind. What is missing is an arbitration procedure to monitor progress and hold countries to account.

Fourth, Doha should build on shifts in the provision of development aid. Governments alone cannot bear the burden of support to development. Philanthropic donations may - when debt-relief, humanitarian aid and technical assistance are removed from the equation - be outstripping official aid flows. Companies have taken up the cause of global corporate citizenship, looking not just at their charitable donations, but also at the impact of their activities on development. This is a win-win for companies, reducing costs and boosting their local popularity. Doha should celebrate this trend and launch a programme to codify standards.

At the height of another global crisis, in August 1941, Franklin D Roosevelt and Winston Churchill agreed the Atlantic Charter - a vision of a world that could, realistically, be created.  From that vision stemmed victory in war, the Universal Declaration of Human Rights, the creation of the United Nations and the financial scaffolding of the Bretton Woods system. Can Doha exceed expectations and be the platform from which to launch a change of similar magnitude?

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