FINANCE-UN: Leaders Call for New Ways to Deal with Global Crisis

By Farhan Haq Reprint | | Print |

UNITED NATIONS, Sep 21 1998 (IPS) - The global financial crisis that particularly is affecting the developing world showed the need for new economic responses, including the revamping of international financial institutions, leaders at the U.N. General Assembly argued Monday.

“All parts of the international system need to come together, to find global solutions to this truly global crisis,” U.N. Secretary-General Kofi Annan told the General Assembly at the opening of its 53rd annual plenary session.

Warning that the economic crisis has now hit Russia and may spread to industrialised nations, Annan argued, “The day is past when the seven major industrialised powers could or should take on the task alone.”

Instead, he contended, institutions like the World Bank, International Monetary Fund (IMF) and United Nations must increasingly work together, not just to find technical and financial strategies to deal with the crisis, but “to define the political framework in which they can be applied”.

South African President Nelson Mandela added that the international financial bodies must also be reformed “so that they become responsive to the needs of the poor of the world”.

In what he said was probably his last speech to the UN General Assembly, Mandela added that the time has come for such financial institutions to be strengthened to deal with the worsening problems of global poverty. “Fortunately, the matter is no longer seriously in dispute,” he said, noting mounting concern about the financial crisis.

Even as the leaders spoke, early returns on Wall Street indicated another fall of the Dow Jones industrial average, which plummeted by 200 points Monday within one hour of the airing on U.S. television of President Bill Clinton’s Aug. 17 testimony about an affair with a White House intern. The latest stock market woes only served to underscore some leaders’ warnings that action on financial reform is urgently needed.

“The international community cannot wait, arms crossed, for the course of events to shed light on our quandary,” argued Luiz Felipe Lampreia, Brazil’s foreign minister. Like many leaders who spoke from the General Assembly podium Monday, Lampreia lobbied for greater oversight of the global economy by international organisations.

“We can no longer accept situations such as the present financial crisis in which, despite the undeniable international nature of the phenomenon, governments and societies simply do not fully trust any of the existing organisations, fora or mechanisms as a source of support, guidance or even interpretation of the problem at hand,” he said. “We must give serious consideration to the fact that growing interdependence renders effective governance at the international level indispensible.”

British Prime Minister Tony Blair shared that view, urging greater regulation of capital flows by the World Bank and IMF, including the creation of codes for financial conduct for all countries applying for IMF loans.

Clinton, despite his own impeachment woes, tried to get the ball rolling on efforts to revamp the global financial system last week, when he called for finance ministers from the seven richest nations and some developing countries to meet soon to discuss the “new financial architecture” for the world economy.

Annan quickly approved, telling the Assembly, “I look forward to U.N. participation in discussions of the new world financial architecture, such as those suggested by President Clinton … Our special responsibility is to restore development to its rightful and central place in global economic strategy.”

In a gentle slap at the pro-liberalisation and structural adjustment policies recommended by the IMF, Annan contended that “the present crisis springs partly from a neglect of political factors, during years when some believed that markets alone would bring worldwide prosperity”. But he added that a model focusing only on governance and political solutions to globalisation’s problems “would be as misguided as the one-size-fits-all economic policy which has now come to grief in many countries”.

Clinton himself offered few specifics in his own General Assembly speech, simply warning that concern over the global economy “threatens to undermine faith in free markets” and democracy.

“The promise of our time is attended by perils,” Clinton siad and added that the United States was determined to play its own role among the industrialised nations to respond.