UN economic conference :

Unable to secure financing for developing countries

The inability to secure funding for low-income countries is the most unfortunate development to come out of the ongoing United Nations conference on the financial crisis, said Martin Khor, the head of an influential think tank of developing countries, here on Thursday.

"This is the greatest deficiency, that there was no decision made to give concrete financing to countries that are now facing major problems," Khor of the South Center told Xinhua in an exclusive interview. "This, everybody knows, and this was the weakness of the conference." The South Center, based in Geneva, is an intergovernmental organization and think tank of developing countries.

Developing countries had put forward certain proposals at the conference, which opened on Wednesday at the UN Headquarters in New York, to get financing, but they were not exactly embraced by developed countries like the United States, Europe and Japan, said Khor, who is an economist from Malaysia.

In particular, the Group of 77 (G77) argued for 100 billion in Special Drawing Rights (SDRs) at no cost, which, Khor said, did not seem unreasonable as the Group of 20 (G20) key economies in the world had previously made a commitment of 250 billion U.S. dollars in SDRs.

However, from that G20 commitment, only 25 to 30 billion dollars made it to low-income countries, while 80 billion dollars will go to the developed countries because the allocations were made on quotas and not on need, said Khor.

The G77 proposal, along with several others, was rejected during the negotiations over the draft document to be voted on by the 192 countries of the General Assembly on Friday.

Khor, who observed part of the negotiations, said if financing was secured for low-income and middle-income countries, the conference would have had a "fantastic conclusion."

Used to promote South-South cooperation, the Geneva-based South Center put forward a report in early June on steps the international community could take to mitigate the devastating impact of the financial crisis on developing countries.

One such proposal, which has also been put forward by the International Monetary Fund, is to create an international debt arbitration system with debt standstill and the continuation of working capital to prevent countries that are in financial difficulties from falling into debt default.

Far from reaching a consensus on whether the United Nations should establish an international court for debt, diplomats have reached agreement on the outcome document.

For example, it states that the international community will take measures to avoid a new debt crisis, although it doesn't exactly say how, Khor said. But "the most important decision of this conference is the creation of a follow-up agenda," which will establish a working group to report back to the General Assembly on issues that were raised at the conference, he noted.

"Our hope is that after this conference is over, in the next few weeks, the General Assembly will establish the working group and get to work quickly in translating the good ideas and political direction ... into proposals for action," said Khor.

UNITED NATIONS, Xinhua