Delegation Reports
Parliamentary Conference on the Global Economic Crisis, Geneva.
7 to 8 May 2009
Report by Mark Hendrick MP
Delegation
Mark Hendrick MP
Lord Paul
Thursday, 7 May
Inaugural session
Dr Theo-Ben Gurirab, President of the IPU, welcomed the delegates to the conference, and spoke about the importance of dialogue between world parliamentarians as a means of enhancing understanding and co-operation between world parliaments and world governments.
Dr Supachai Panitchpakdi, Secretary-General of UNCTAD, gave the background to the economic crisis and made the important point that there was no exit strategy just for the developed world. What was needed was a strategy for the developing world as well.
He made the point that while the developed world is in recession now, the developing world will not go into recession until later this year and it will hit the developing world much harder. There will be no ‘green shoots’ in the developing world irrespective of what rising stock markets and rising currency values will bring.
Dr Panitchpakdi then went on to quote Ban Ki-moon, the UN Secretary General, who said: “Watching the plight of Wall Street and Main Street, we must also watch what is happening in countries with no street.”
The developing world will be hit on four sides: trade, finance, mobility of people and investment. Highly liberalised countries will suffer the most because exports have been hit hard; already $800m worth of trade has been lost by the poorer countries. All liquidity has been absorbed into the advanced economies. The IMF needs to change its lending schemes, in particular with respect to ‘conditionalities’ and not do what it has done in the past, that is, fund deflation.
New special drawing rights (SDR) units are now in use to provide hard currency for developing nations.
There is also a need to counter current imbalances. There are countries particularly in Asia, such as China, which are saving too much, and countries in the West, such as the United States, with far too much debt.
A way forward through the crisis will be to try to balance global trade and consumption much more evenly. The emergence of the Financial Stability Board (FSB) made up of G20 Members is one way forward. The IMF needs to distribute on the basis of a stimulus that meets the needs of economies across the world, rather than just reflecting the interests of the voting powers of the seven contributors to the Fund. This and a number of other measures were put forward by the Secretary General of UNCTAD.
Cascading failures: the genesis of the crisis
Mr Jeffrey D Sachs, Director of the Earth Institute, Columbia University, USA, gave a history of previous crises and the impact of the current crisis on the economies of developing nations.
He commented on the failure of the MDGs which he said had done little for the poor and that it was essential that the global community did as much as it could to honour existing commitments with the MDGs and move towards both economic and environmental sustainability.
Theme 1: Macroeconomic policies to stimulate the global economy
Creating jobs and warding off social recession
Mr Juan Somavia, Director-General, International Labour Office, spoke about the global economic crisis providing an enormous opportunity for new types of jobs, particularly those that can facilitate or improve the environment.
He spoke about the importance of parliamentarians in that process because members of parliaments, rather than members of government, are much closer to the people and, therefore, encouraging the provision of jobs and providing economic safety nets was an important part of their work.
Mr Jean-Pierre Lehmann, Professor of International Political Economy and Founding Director, the Evian Group, talked about the political and economic history of the 20th Century.
He stated that in the first half of the 20th century, 60 million people died as a result of war. In the second half of the 20th century one million people died as a result of war. He attributed this to the growing amount of international co-operation after the Second World War and the formation of international institutions.
However, he also spoke about the absence of global citizenship and the face that many people around the world are still not engaged with the global community.
In addition, economic growth didn’t always have a positive effect and in many cases contributes to social exclusion. As he put it, therefore, growth “doesn’t raise all boats”.
Mr Lehmann went on to say that rich countries are predominantly worried about pensions and the ageing population, and a major challenger remains the fact that the world will increase by 2.5 billion in the coming decade. This poses major challenges for international co-operation.
Finding a new path to stability and growth: conclusions of the G20
Lord Malloch-Brown, Minister of State at the Foreign Office, described the current crisis as the first crisis of globalisation.
National governments alone were inadequate to deal with the crisis on such a scale. A crisis that was formed in one sector (housing) ripped across the global banking system and a housing crisis became a banking crisis and a banking crisis became an economic crisis.
This global economic crisis has become an important turning point for global economic governance: a crisis of trust has been created in financial institutions and political institutions/government in transactions that underpin the global economy
Is there anyone or any organisation in control? We now have the G20 moving ahead with a real plan.
It is a test of trust and the G20 summit itself was part of that test.
Lord Malloch-Brown went on to speak about the resource package for middle income countries; SDRs for LDCs; new financial regulations and global standards; including an end to tax havens; on trade a new commitment to resume the Doha Trade Round with $250bn for credit guarantees and insurance; and finally the commitment to hold another heads of government G20 in the US in September at the opening of the UN General Assembly to look at two issues:
- Imbalances – saving some debt
- The dollar as a global reserve currency
Mitigating the impact of the crisis on development
Ben Turok MP, from South Africa, spoke about the crisis of capitalism and the need for governments to promote development in developing countries and not just fix the financial system.
What was needed was a fiscal stimulus for the developing world. At a time when the private sector was said to be the future and the public sector was said to be finished, we have seen the nationalisation of banks and the application of fiscal stimuli.
In addition, we are witnessing a US recovery which is dependent upon demand for goods from China and India.
Mr Paul Larsen, Director, External Relations Division of the World Food Programme, spoke about food security and the need to ensure that agriculture was well supported throughout the economic and financial crisis.
Friday, 8 May
Gender aspects of the crisis
Ms Barbara Prammer, Speaker of Parliament, Austria, spoke about the role of women in the economic crisis and how women generally suffer the most and are the first to lose jobs and experience the impact of any down-turn before men do.
Theme 2: Reform of the international financial system
Achieving financial stability
Mr Jomo Kwame Sundaram, Assistant Secretary General for Economic Development, Department of Economic and Social Affairs at the UN, spoke about the current imbalances being a reflection of the colonialism of the past, with rich Western countries consuming and former colonies providing materials and goods for consumption.
What was needed was a new global financial architecture which supported growth and stability. Financial globalisation has undermined growth and resulted in instability.
We have seen net flows from capital poor countries to capital rich countries and no institution is available to bring about global regulation.
The IMF is not like the World Trade Organisation because financial reform and regulation is still conducted at the national level. The system that has existed since the Second World War was meant to be developmental but has not been.
The reformed Bretton Woods institutions should not only bring about financial stability for the future but be developmental as well.
Mr Geir Haarde, former Prime Minister of Iceland, spoke about the collapse of the Icelandic banks and the fact that the bank’s assets were worth ten times the GDP of Iceland itself before the crisis.
Following the crisis and the collapse of those assets, he spoke about the inability of the Icelandic government to support the Icelandic system and also commented on the British government’s role in freezing those banking assets in the UK with the use in some cases of anti-terrorist legislation. He was particularly critical of our Prime Minister and his approach.
Principles of reform: towards a new Bretton Woods?
Mr Jan Kregel, Chief Rapporteur of the Commission of Experts of the President of the UN General Assembly on the Reform of the International Monetary and Financial System, spoke about proposals to take the world out of the downturn and provide the framework that will support sustainability over the medium to long-term, in particular, the new financing facility to help in these developing countries.
Mr Jose Antonio Ocampo, Professor at Columbia University (USA), former UN Under-Secretary General for Economic and Social Affairs, discussed the international monetary fund proposals and their new regime to deal with debt.
In addition, he spoke of the need for a world financial authority to oversee regulation. Finally, he said he wished to see work in the future in the area of cooperation in the field of taxation which is not currently the subject of international agreement.
Theme 3: Elements for a parliamentary strategy
Roundtable
The conference concluded with a variety of contributions that would widen the scope and involvement of world parliaments in order to contribute to the debate and discussion around global events such as the current economic crisis.
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