Rich countries accused of undermining UN proposals

News peg: The United Nations Conference on the World Financial Crisis and its Impact on Development, New York (24-26 June) UN Showdown Exposes Rich Countries’ Resistance to Financial Reform, warns ActionAid New York: Rich countries are undermining UN proposals to address the global financial crisis, warns ActionAid on the eve of the UN Conference on the World Financial Crisis in New York. “The US and EU appear to be resistant to even exploring structural change, despite World Bank figures showing one trillion dollars likely to drain from the poorest economies this year,” said Raman Mehta, with ActionAid India. “What’s needed is a stimulus package for developing countries to support self reliant national development plans,” he said. “This means a new approach, focused on the whole world economy. That change can only come from the UN, not a self-selected, exclusive grouping like the G8 or G20.” The World Bank yesterday released its annual Global Development Finance report, which shows private investment in the developing world dropping precipitously. The Bank calls for urgent regulatory reforms and increased assistance for the most vulnerable countries. “The EU and the US are merrily spending trillions to get their own economies in order, leaving poor countries twisting in the wind,” said Soren Ambrose, ActionAid’s development finance expert. Negotiations leading up to this conference have pitted developing countries against the rich. A series of innovative proposals has been advanced by a diverse panel of experts, adopted by developing countries, but stymied by the US, the EU, and other rich countries. The proposals address, among other subjects, the global reserve system, regulatory reforms, debt work-out mechanisms, new global taxes to raise funds and discourage speculation, reform of international institutions and a new high-level Global Economic Coordination Council The conference could end on Friday in a virtual stalemate if rich countries fail to engage in reform. ActionAid is pushing for the use of Special Drawing Rights (SDRs), the IMF’s “reserve assets”. SDRs provide condition-free resources at low cost, both through new allocations and transfers from rich to poor countries. But minor reforms are needed to make their use more flexible and the costs more predictable – and preferably subsidized for low-income countries. “SDRs are the quickest, cheapest way to mobilize resources to protect people in developing countries from the worst impacts of the current crisis,” said Soren Ambrose, ActionAid’s development finance expert. ActionAid is also calling for an end to the pro-cyclical, recessionary conditions still attached to the crisis assistance being offered by the IMF, even as rich countries go in the opposite direction to adopt stimulus programmes. Indeed, if the IMF is to regain legitimacy, it must amplify developing countries’ voices despite their limited shareholdings: “double-majority voting,” which would require decisions to be affirmed by both a one-country-one-vote tally and the existing quota-weighted votes. Ultimately, the call from the UN’s panel of experts for an entirely new credit facility for poor countries would be the best solution. The UN’s tax committee also needs strengthening so that it can oversee multilateral, comprehensive agreements for halting tax avoidance and tax evasion. The UN conference must call for a global system for automatic exchange of information between tax authorities. “International tax cooperation is the most important step the countries gathered at the UN can take to ensure that they mobilize their own resources, for sustainable and sovereign development,” said Anna Thomas, ActionAid’s tax expert in the UK. “Failure to agree on a course of innovative action, or at least to continue discussions until such a path can be agreed on, would be a tragic waste of an opportunity.” says Raman Mehta, ActionAid’s policy officer in India. “Keeping the process alive is our minimum demand, and it is hard to see how rich countries could justify blocking further study and discussion,” added Mehta. ENDS Note to Editors: Negotiations over the conference communiqué have been ongoing since early May. Disagreements over procedures eventually forced the postponement of the entire conference by three weeks (it was originally scheduled for June 1-3). ActionAid is an international anti-poverty agency working in over 40 countries taking sides with poor people to end poverty and injustice together www.actionaid.org ActionAid’s HungerFREE campaign calls on governments to deliver on their commitment to halve world hunger by 2015.

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