IPS Inter Press Service - Independent News
UN MDG financing up in smoke By Patrick Bond, director, Centre for Civil Society, University of KwaZulu-Natal, South Africa
Two statements about the global economy released earlier this week -- from the World Economic Forum (WEF) and United Nations (UN) -- leave a strong impression that Millennium Development Goal (MDG) advocacy is just not working. On the back of already depleted overseas development aid commitments and the ongoing world financial crisis, it is apparent that "global governance" needs either a dramatic makeover or simply a write-off as a civil society engagement site.
With world military spending 13 times higher than overseas development assistance and rich countries’ shrinkage of aid by 8.4 percent in 2007 (compared to a six percent rise in arms expenditure), the global ruling elite has signalled its dim view of MDGs, and of multilateralism more generally.
The WEF’s Global Risks 2009 report concedes the point: “The degree to which the world has lost confidence in its institutions and systems is serious. Without confidence, we could face a protracted and potentially calamitous downward spiral.”
Not only is the financial system still at risk, worries the WEF. The calamitous spiral of recession and depression fed by crashing asset prices could forever end civil society’s confidence in the soaring MDG rhetoric of UN officials.
Such rhetoric was meant to be backed by hard cash and, last October, General Assembly president Miguel d'Escoto Brockmann (a former Nicaraguan Sandinista foreign minister) asked for help from an impressive group of economists, led by Columbia University professor Joseph Stiglitz.
But the context for the commission’s work is extremely unfavourable, as signified by the refusal by International Monetary Fund (IMF) and World Bank leaders to attend the UN Financing for Development conference in Doha seven weeks ago.
Moreover, in spite of widespread calls for state intervention and public works spending similar to the United States’ 1930s New Deal, the drainage of vast taxpayer funds into commercial banks and investment banks since September limits the fiscal options.
The idea of Keynesian “reflation” -- deficit spending to boost economic output -- was endorsed in principle by new US president Barack Obama and, in a policy u-turn, by IMF managing director Dominique Strauss-Kahn at last November’s G20 financial crisis meeting.
But Nobel Economics Prize Laureate Paul Krugman of Princeton University is unimpressed with Obama’s fiscal stimulation: “The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed.”
And Strauss-Kahn permits his IMF economists to impose fiscal restraints and push privatisation on a new set of borrowers, even at the risk of jeopardising MDG targets.
The same inherent conservatism emanates from the UN Commission of Experts on Reforms of the International Monetary and Financial System. On the one hand, Stiglitz's commission issued eleven “Recommendations for Immediate Action” after meeting in early January, including development aid increases of 20 percent.
On the other, the commission will disappoint civil society fans of Stiglitz, who while World Bank chief economist in 1998 coined the phrase “post-Washington consensus” to reflect disgust with the neo-liberal model.
Instead of advocating the replacement of the IMF with a more democratic and growth-oriented institution, as he did in August 2002 on the Left Business Observer radio programme, the commission suggests the fund be re-legitimised and re-capitalised.
Stiglitz’s group also declined to express support for capital controls to protect developing countries from global financial turmoil, contrary to his earlier pronouncements. And the commission neglected to consider how to convert the recent wave of bank nationalisations from what might be termed “lemon socialism” (bailing out failed capitalists) into genuine public development finance utilities.
It also ignored Jubilee South’s calls for Third World debt cancellation and did not recognise the concept of “odious debt”. There is no mention of reparations, in spite of South African anti-apartheid activists’ US "Alien Tort Claims Act" court strategy aimed at recovering $400 billion in pre-1994 debt repayments and profit outflows.
Environmentalists hoping for detailed strategies to address the North's ecological debt to the South and the financing implications of climate crisis will be distressed. Those desiring a Tobin Tax, arms tax or the abolition of unregulated hot money centres won’t find a mention. Neither is commodity price regulation on the commission’s immediate agenda.
Stiglitz and colleagues also revive the tired old Doha Agenda of trade liberalisation with its many dangers for MDGs and attempt to restore faith in a mildly reformed market ideology.
The high-profile lobby of Washington/London/Brussels/Johannesburg international NGOs that advocate MDGs now apparently have lost a meaningful grip even within a left-led UN General Assembly, if these commission recommendations are a sign of the times.
Hence the real work of funding MDG progress and insulating national economies from the cancer of international finance will have to begin at home, starting with exchange controls, as Venezuela’s government showed a few years ago when it halted capital flight by the unpatriotic wealthy.
Likewise, instead of relying on fickle, declining Northern aid, the NGO community should turn for inspiration to radical social movements, such as Brasil’s Landless Workers’ Movement or South Africa's Treatment Action Campaign.
These appear the only effective forces fighting poverty and disease now that the crash of neo-liberalism is being met by silence.
Indeed, perhaps it's only by ignoring the smoke and mirrors of UN global governance rhetoric that a genuine grassroots project can be fertilised, deep within the ashes of global finance.