NOBEL-WINNING ECONOMIST SAYS UN BEST SUITED TO OVERSEE GLOBAL ECONOMIC OVERHAUL

The United Nations is the only institution with the legitimacy to oversee democratic reforms of the global economic system to pull the world out of the current recession, Nobel prize-winning economist Joseph Stiglitz said today.

The UN has a crucial role to play in addressing the roots of the downturn and in reshaping the global economy into a more fair and sustainable system, he said at the UN Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, Thailand.

"As this is a global crisis, a small group of industrialized countries are ill-equipped to deal with it," he said.

"There are 192 countries in the world, [and] 20 is a small percentage," he added, referring to the so-called Group of 20 (G20) industrialized countries. "Obviously what is necessary to respond to the crisis is not a G20 but a G192."

The economic system prior to the current crisis – characterized by excessive financial deregulation coupled with massive consumption financed by debt – is unsound and must be reinvented, Mr. Stiglitz said.

"As we think about this crisis – and we think about the world that will come after it – we should think about how we can create a global economic architecture which works better, for more people, in a more sustainable way."

Protectionist practices, although they may benefit nations in the short-run, can slow global recovery, and any successful response to the crisis requires paying closer attention to the needs of developing countries, said Mr. Stiglitz, who chairs the UN Commission of Experts on Reforms of the International Monetary and Financial System.

Earlier this year, that group called for the drastic overhaul of international finance structures, urging wealthier nations to direct one per cent of their economic stimulus packages to help developing countries address poverty. It also underlined the importance of setting up an elected and representative Global Economic Coordination Council, as part of the UN, to meet annually at the head-of-State level to assess development.

"We've now created a global economy but we haven't created the institutions to make that economy work," Mr. Stiglitz, winner of the 2001 Nobel Prize in Economic Sciences and professor at Columbia University in New York, said today.

Also addressing today's event on the "UN System and the economic crisis: towards a new global financial and economic architecture" was ESCAP Executive Secretary Noeleen Heyzer, who also appealed for developing nations to have a greater say in reshaping globalization.
In Asia and the Pacific, an agenda for inclusive and sustainable development that is "about bringing economic, social and ecological balance in an integrated whole to address various development deficits and inequalities facing our region is essential, she said.

GENERAL ASSEMBLY AGREES ON TERMS OF UN SUMMIT ON FINANCIAL CRISIS

The United Nations will convene a global summit in June to assess the impact of the world economic crisis on development, it was announced today, after the General Assembly agreed on the arrangements for the conference.

"In the midst of the most serious economic downturn since the Great Depression, we now have the opportunity and the responsibility to search for solutions that take into account the interests of all nations, the rich and the poor, the large and the small," Assembly President Miguel D'Escoto stated after the 192-member body adopted a resolution on the 1 to 3 June summit.

Mr. D'Escoto has been tasked with organizing the UN Conference on the World Financial and Economic Crisis and its Impact on Development, which was called for by participants at a financing for development meeting held in Qatar in late 2008.

Last month, he travelled to a number of countries to build support for participation at the highest level in the June meeting, and he plans to visit several more in the weeks ahead.

"In agreeing to hold this United Nations conference at the highest level, Member States are recognizing the vital importance of assuring that all nations have an opportunity to participate equally and fully in the common search for solutions that meet the concerns and needs of all countries, large and small," said Mr. D'Escoto.

He stressed that, in this effort, it is vital to draw on "technical expertise and practical wisdom" from all over the world, and from countries at every stage of development, as well as from international organizations, academia, private sector organizations, and civil society.

In addition to the impact of the crisis on development, the conference will also focus on ongoing discussions on reforming and strengthening the international financial and economic system and architecture.

A Commission of Experts appointed by Mr. D'Escoto and chaired by Nobel Laureate Joseph Stiglitz has stated that international finance structures must be drastically overhauled in the face of the current global economic crisis.

The panel, as well as the meeting later this month of the Economic and Social Council with the World Bank, International Monetary Fund (IMF) and World Trade Organisation (WTO), are expected to contribute to the preparations for the June summit.

Mr. D'Escoto will likely circulate a draft outcome text for the summit for negotiation in early May.
________________

GLOBAL FINANCE STRUCTURES MUST BE REVAMPED, SAYS UN EXPERT PANEL

International finance structures must be drastically overhauled in the face of the current global economic crisis, a panel of experts convened by the United Nations General Assembly said today, calling on wealthier nations to direct one per cent of their economic stimulus packages to help developing countries address poverty.

A coordinated approach – bringing together not just the so-called Group of Eight (G-8) or even Group of 20 (G-20) nations, but the "G-192" representing all members of the Assembly – is needed to pull the world out of the recession, according to the recommendations of the Commission of Experts on Reforms of International Finance and Economic Structures.

Chaired by Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, the nearly two dozen-member body stressed that many poorer countries lack the resources necessary to tackle the crisis, and developed nations should not attach inappropriate conditionalities to such funds.

"The nature, the severity of this crisis has really opened up opportunities for change for reform that I think would not have been conceivable even a few months ago," Mr. Stiglitz told reporters.

The experts also called for the International Monetary Fund (IMF) to increase the availability of funds for hard-hit nations.

A new global reserve system must be put into place to promote economic stability and equity, the Commission said, as this would ease the deflationary effects of the massive accumulation of reserves that countries believe are necessary to brace themselves against global instability. Such a system would offset the risk of a drop in value of a major reserve currency.

Other recommendations included the creation of an elected and representative Global Economic Coordination Council, as part of the UN, to meet annually at the head-of-State level to assess development and serve as a "democratically representative alternative to the G-20."

Further, a financial regulatory board and competition authority – which would both answer to the Coordination Council – could prevent the expansion of multi-national firms that threaten competition or become problematic when they become too big to fail, the experts said.

The creation of a new international credit facility, under the aegis of the World Bank, would provide additional credit to developing countries without pro-cyclical conditionalities, and the governance of such an entity would represent both new donor countries and take into account concerns of developing countries.

"We see the United Nations system, which includes the Bretton Woods institutions, has the institutional capacity, the expertise, and the global presence to respond in significant and practical ways" to the current crisis, Assembly President Miguel D'Escoto said today.

An interactive dialogue, expected to wrap up tomorrow, is under way at UN Headquarters on the panel's recommendations. The results of the three-day gathering will help lay the groundwork for the International Conference on the Global Economic and Financial Crisis and its Impact on Development slated to be held in New York in June.
________________