South's views should be aired at UN Summit
Martin Khor
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The United Nations will hold a summit on the
global economic crisis in early June. It should be used by developing
countries to voice their concerns, which they could not do at the
exclusive G20 club.
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Action on the global economic crisis will be addressed by a special
United Nations General Assembly summit from June 1 to 3. It is a more
'inclusive' meeting as all 162 countries belonging to the UN can attend
- unlike the G20 meetings which only the developed countries and a few
big developing countries are invited.
Problems or issues of priority to developing countries have a better
chance of being raised, and actions proposed as they have been worst hit
by a crisis not of their doing.
UN Summit in progress |
However, it is uncertain whether major developed countries, which are
so used to having their own way, would allow the UN to become a body to
make important decisions.
In any case, developing countries should prepare well for this
meeting and push their issues as hard as they can because this is a
chance for them to get their problems addressed.
Among the priorities for developing countries are:
* Establishing an international system that fosters financial
stability for developing countries;
* Having access to adequate and stable financial resources as private
sector flows and exports decline;
* Avoidance of financial and debt crises and proper management of
crises if they occur;
* Unimpaired access to markets for their goods and services;
* Avoiding collateral damage from policies taken by developed
countries in response to the crisis; and
* Being able to maintain and expand 'policy space' to implement
appropriate policies for economic recovery and development.
The issues of collateral damage and protectionism arising from
developed countries' anti-recession policies are very topical. Recently,
China made a complaint at the WTO against the US for blocking the
imports of its poultry. This is only the latest example of how countries
are trying to protect their markets at a time of crisis.
Protection under 'bail-out' policies is even more massive. The US
Congress bill passing the 'fiscal stimulus package' specified that only
made-in-America products could be used in projects funded by the
package.
When China adopted its stimulus package, worth almost US$600bil, it
did not have a buy-China clause. China is in fact sending a 'shopping
team' to the US to purchase US products, following a similar trip to
Europe, to show that it intends to boost the sagging exports of the
major countries.
There is also the fear that trillions of dollars spent on bailing out
the banking, insurance, automobile and other industries will eventually
negatively affect developing countries' companies since their own
governments lack the funds to provide similar subsidies. The otherwise
bankrupt companies of the developed world could out-compete or even take
over some of the non-subsidised companies of the South.
Take the airline industry which is now hit by falling passenger and
cargo traffic. Last week Cathay Pacific, facing a massive loss, asked
its staff whether they would agree to taking no-pay leave. Asian
governments may not be willing to provide huge bail-outs, and most of
them lack the huge funds needed even if they want to subsidise.
As developing countries' air companies face a tighter squeeze, they
will be watching if Western-owned airlines that are also facing losses,
will be rescued by their governments and thus be able to out-compete the
former.
Another collateral damage is the fall in commodity prices which
affect poorer countries the worst. Some of them now face difficulties in
meeting payments for their imports or debts. A large credit-and-grant
facility should be made available for these countries to help them tide
over the recession, and the funds should come without the kind of
harmful conditions typical of the International Monetary Fund.
These and other issues need to be aired in the UN Summit in early
June so that developing countries' concerns about the crisis can be put
on the global agenda.
Third World
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