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UNCTAD discusses new development paths for a world in crisis

19 May 2010

By Nuria Molina

The United Nations Conference on Trade and Development (UNCTAD) convened a public symposium in Geneva on 10 and 11 May to discuss new development paths that are needed in the aftermath of the global crisis. Participants at the meeting made proposals for key reforms in the global financial architecture and expressed a common desire to move forward with new alliances to address urgent development needs, but remained disappointed by the little progress made in reforming global finance since the start of the global crisis.

The meeting was attended by officials from UN agencies and member states, civil society activists, private sector representatives and academics. UNCTAD Secretary-General Supachai Panitchpakdi opened the Symposium with a gloomy picture of how the global crisis has made it “near impossible” to achieve the Millennium Development Goals (MDGs) by 2015. “Prior to the crisis, the chances of achieving the MDGs were deteriorating,” he told the meeting. “Now, after the crisis, it will be near to impossible to achieve all of the MDGs.”

Participants discussed a broad range of issues including  alternative development strategies, how to ensure food sovereignty in developing countries, innovative sources to finance climate change needs, and trade and financial reforms to make the global financial architecture work for the poor.

Most of the proposals that came across were not new. However, there was a renewed impetus – particularly from Southern academics and NGOs – on the need to limit or phase out reliance on external (Northern) sources of finance, and to boost domestic resource mobilisation and South-South cooperation.

“An alternative development path is one that does not rely on the continuous generation of net exports, which is what developing countries are currently doing,” said Jayati Gosh, from the Centre for Economic Studies and Planning in India. “If you get an inflow capital that you then do not use, what is good about it?” she went on to say.

Participants at the meeting also recurrently lamented a “lost moment,” when the financial crisis was severe and hopes were high that the apparent political will to change the international financial system might turn into action.

“Whether the new sovereign debt crisis in Europe, highlighting once again the need for lasting reforms in the global financial system, will reignite Northern countries’ willingness for in-depth reforms, is yet to be seen,” said Nuria Molina, Eurodad director, in a panel that discussed the trade and financial reforms in global economic governance that are needed to support development. “If European governments are ready to impose the harshest structural adjustment on their own electorate, with terrible impacts on the most vulnerable, where will they stop when it comes to the world’s poorest countries?”

Despite the loss of political momentum, there was a general sense among officials, activists and experts in the meeting that new strategic alliances are needed to support truly multilateral reforms of the global financial architecture that are legitimate, democratic, and that transform the current system into one that is fairer and supports the needs of the poor. Reforms identified as the most urgent included setting up new sources for development finance such as a Financial Transaction Tax (FTT), curbing capital flight from developing countries, establishing a  debt workout mechanism to deal with potential new debt crises, independent mechanisms to settle investment disputes, and a global monetary system that ensures stability and has no deflationary bias.

Click here to download the full report of the symposium.