Tentative agreement on financial summit document

UNITED NATIONS — The General Assembly president announced tentative agreement on a blueprint for a global response to the world’s worst economic crisis in 70 years which would make the United Nations a player in promoting recovery, especially in hard-hit poor countries.

After weeks of intense negotiations, rich and poor nations agreed on the 15-page document ahead of Wednesday’s opening of a three-day U.N. summit on the crisis and its impact on development. But its 126 participants — including 14 world leaders and several dozen ministers — must approve the text and it could still be changed.

While the document would not be legally binding if it is approved, it would put on record the view that a solution to the crisis cannot be left just to the Group of Eight major industrialized nations or the Group of 20 key countries that account for over 80 percent of the global economy. It must include the views of all 192 U.N. member states, especially developing countries which have been impacted more severely than the richer developed countries that are mainly to blame for the crisis.

General Assembly President Miguel D’Escoto Brockmann, a leftist Nicaraguan priest and former foreign minister, told a news conference he had good news on the final document, which he welcomed though many of the initial proposals he supported were dropped in the negotiations.

“It is absolutely essential that the needs of the most vulnerable be take seriously into account,” D’Escoto said. “I hope and I trust that we are not once again going to be in an exercise of giving alms to the natives but really doing what we must do, which is help them to cope with a crisis that they have not created, a crisis concerning which they are the victims of decisions taken by others,” he said.

“There is no doubt that the proper and most central venue to discuss these type of problems is the United Nations,” he added. “After all, we’re talking about global problems and they should be discussed globally.”

The draft document calls the conference “a milestone” in engaging all U.N. member states to address the economic crisis. It is intended “to provide political impetus to future actions,” and “highlights the importance of the United Nations’ role in international economic issues,” the draft says.

It paints a depressing picture of the current state of the world economy: millions of people losing jobs, savings and their homes; more than 50 million additional people driven into extreme poverty, according to the World Bank; and the prospect of over 1 billion hungry and undernourished people, a historic high, according to the U.N. Food and Agriculture Organization.

Martin Knor, executive director of the South Center, a Geneva-based research organization with 50 developing countries as members, told a news conference Monday that the summit will be a success if participants say in the final document that there’s a crisis; that U.N. members agree to help developing countries facing plunging exports, falling reserves, and the possibility of a new debt crisis, and decide to follow up with specific proposals for action.

While the draft is short on specifics, it states that “the world is confronted with the worst financial and economic crisis since the Great Depression.”

In order to respond to the crisis, it says “developing countries will need a larger share of any additional resources — both short-term liquidity and long-term development financing.” And it calls for an examination of ways to ensure that adequate resources are provided, especially to the least developed countries.

The draft notes that the G20 at its London summit in April agreed to make available an additional US$1.1 trillion to revitalize the world economy, but only US$50 billion was targeted to low income countries.

“We call on the G20 to further consider addressing the financial needs of developing countries, especially low income countries,” the draft says, without making any specific recommendations.

It also calls for the International Monetary Fund, the World Bank and other international lending institutions to be flexible in imposing conditions on developing countries so that they can take action to deal with the economic crisis, including adopting stimulus packages.

The draft also calls for measures to avoid a new debt crisis and new approaches to restructuring debt. It urges further study of the feasibility and advisability of reforming the current global reserve system, now based on the U.S. dollar, “to overcome its insufficiencies.”

As for reforms, it recognizes “the critical need for expanding the scope of regulation and supervision and making it more effective, with respect to all major financial centers, instruments and actors, including financial institutions, credit rating agencies and hedge funds.” It also recognizes “the need for tighter and more coordinated regulation of incentives, derivatives and the trading of standardized contracts.”

The draft calls on the General Assembly to establish a working group to follow-up on the issues in the document and report to its next session which starts in September.