miércoles, julio 16, 2008

Finance and Development: An inescapable congruence

Reproduzco a continuación el reciente artículo que escribí para Latindadd, en inglés, gracias a Choike - International Financial Institutions in Latin America Monitor (ver aquí fuente).

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Source: Latindadd
Raúl Mauro
Tue Jul 08 2008

The recent UN meeting held with civil society last June 18, in the context of the Follow-up International Conference on Financing for Development, has gone over several of the speeches made within this space and, at the same time, has reinforced the actions aimed at solving the difficult global equation between finance and development, with a view to the declaration that may be obtained in Doha next November 2008.

A first speech, to which the papers by Vitalice Meja (AFRODAD), Lidy Napcil (Jubilee South) and Josefa Francisco (Development Alternatives with Women for a New Era) contributed, is that which claims the elimination of conditionalities on development aid; especially those associated to external debt cancellation and relief programmes. In both cases, it was evident that the assistance being currently given to developing countries has the nature of political and financial patronage, which limits (and in other cases, cuts short) their own efforts to overcome poverty and inequality issues. An aspect not analysed in depth, for instance, is the negative impact of the conditionality conceived as ‘positive’, when assistance is attached to gender issues. This sort of approach jeopardizes a broader notion of society development such as the mutual responsibility within families. In that sense, it is vitally important not only to appeal to an increase in the level of resources for development financing, but also to the need for implementing a reform concerning the goals and priorities of the assistance provided by wealthier countries to developing countries. This reform must nourish from the experiences containing best practices regarding management of official development aid, including the rendering of accounts as regards both the countries receiving aid and the Northern and Southern civil society. This would contribute to strengthtening democracy in those countries benefitting from development aid and debt programmes, by enabling them to select and implement their own development strategies based on key principles contained in documents such as the Monterrey Consensus and the Universal Declaration of Human Rights.

A second speech, of a more systemical order, is the one connected with the redefinition of the role played by the Bretton Woods international organizations compared to the poor performance these have had in order to overcome current global-scale financial, monetary and trade imbalance. José Antonio Ocampo’s paper was highly explicit in this regard. This would result from the excessive dependency on the international reserve system on a single national currency (the US dollar) and the lack of a global finance regulatory scheme, allowing for the coordination of macroeconomic policies between countries. The need to set forth the “dependency on a [non-domestic] global reserve currency, together with the creation of macroeconomic policy coordination mechanisms” as a remedy, and the adoption of a countercyclical approach for world financial regulation is therefore evident. This would be possible if there was an institutional regulatory scheme of global dimension, such as an international debt court where over-indebtedness cases could be brought forward, just as bankruptcy cases are dealt with in the existing courts nationwide, avoiding ad-hoc solutions tried out by the WB or the IMF, overburdened with excessive conditionalities and social and economic pressures.

In parallel with this discussion, there is the funding problem for mitigating and adapting humankind to climate change effects. This was Philo Morris’s contribution, a representative of the Society of Catholic Medical Missionaries. These effects, as will be noticed, may be conceived as ‘systemic’ to the world economic growth pattern and their financing must therefore issue from it, governed by the principle: “whoever pollutes must pay”. The proposed policy, in that regard, is that the Doha paper should formulate the creation of differentiated funds for financing programmes regarding adaptation and mitigation of adverse effects of climate change, in a holistic development approach which includes people and their environment; otherwise, the achievement of the Millennium Development Goals (MDG) shall be jeopardized.

Another of the significant financing proposals regarding the achievement of MDGs came from Josep Xercavins, of the Ubuntu Forum Secretariat, who emphasized the dimensions of several ‘non-traditional’ development indicators. Some outstanding examples are, for instance, the annual amount allocated to International Development Aid (USD 103.7 billion), the United Nations, World Bank, and IMF annual administrative costs (USD 5.1 billion), the estimated bank loss owing to the financial crisis (USD 565 billion), the world military spending (USD 1158 billion), climate change adaptation costs (USD 50 billion), illicit capital flows (USD 1600 billion), migrant remittances (USD 240 billion), among others. Facing these figures, there appears a significant amount that might be collected (little more than USD 43 billion) at a very low rate (0.005%) applied to international financial transactions. This is the CCT tax (tax on financial transactions), whose antecedent is the Tobin tax proposal formulated by Nobel prize-winning economist James Tobin. This tax would not generate any imbalances in the huge capital masses being freely transferred worldwide and yet they would contribute to achieve some of the jointly agreed development goals set for 2015.

Finally, Gyeke Tanoh’s intervention, of Third World Network Africa, points out the huge imbalance accumulated in global trade, in terms of its structure and governance, dimensions which pose a real challenge to discuss a consensual proposal in Doha, aimed at solving it. The example used by Tanoh limits itself to the African reality, where trade liberalization has privileged a growth pattern based on raw material exports, which have yielded great profit for the invested capital but have decapitalized sectors that are strategic to broad-based financial and social development, such as manufacture and agriculture. At the same time, the region has been exposed to risks connected with international prices and financial shocks by excessively focusing its economies on the production and export of commodities, especially minerals. Additionally, imports are undermining domestic agricultural economies by bringing in subsidized foods, thus exacerbating inequities in local trade and fostering a society dependent on imported or donated foods. This experience is not far from that of Latin American countries. In this way, the idea that trade is serving as a development tool is put in doubt, and an evil scheme of dependency and inequity is rather promoted. As regards this, the proposal is for urgent measures to be developed and implemented at international and national levels so as to deal with vulnerabilities, particularly as regards food sovereignty, an assessment of international trade standards, the implementation of a progressive tax reform regarding the extractive sector, among other specific proposals which deserve greater analysis and discussion.

In conclusion, one can underline the importance of having held this meeting, despite the poor attendance on the part of the countries’ delegates, since a key agenda for discussion in Doha has been provided, in the context of a consensual global institutionality. Crises, such as those we are witnessing at present, seem to give shape to a necessary prelude in order to propose a new global financial, monetary and trade order which promotes a fairer and more balanced development in our countries.

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