UN Commission Proposes Global Economic Council to Create and Govern a "More Sustainable and Just Global Economic Order"
Monday, April 13, 2009
In draft recommendations released on March 19, the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System (the “Commission”) has proposed the creation of a Global Economic Council in response to the current economic crisis. The Council could potentially replace the G-20.
The Commission was created in October 2008 by UN General Assembly President Miguel D’Escoto Brockmann in order to “review the workings of the global financial system, including major bodies such as the World Bank and the IMF, and to suggest steps to be taken by Member States to secure a more sustainable and just global economic order.”
The Commission is made up of 18 financial experts and is chaired by Professor Joseph Stiglitz, 2001 Nobel Laureate Prize Winner in Economics. It is responsible for identifying the foundational principles necessary to ensure global economic stability, as well as making recommendations for reforming the international monetary and financial system. In making its recommendations, the Commission is tasked with considering how to use international monetary and financial system reforms to ameliorate global challenges, such as climate change, poverty reduction, peace and security, and the elimination of hunger. The Commission is to hold three meetings to discuss these issues, the second of which concluded in early March.
The recently released draft recommendations call for an “inclusive global response” to the global recession that would establish “the better functioning of the world economic system for the global good.” Particular emphasis should be placed on the needs of developing countries.
The draft recommendations present two ten-point plans for resolving the financial crisis. Both plans would severely limit the sovereignty of national governments in their ability to direct domestic monetary and financial policies.
The first plan addresses immediate responses to the economic crisis. One policy proposal urges all developed countries to establish economic stimulus plans that include global benefits. Specifically, the Commission recommends that one percent of all stimulus packages be put towards aid for developing countries. Additionally, the Commission suggests that developing countries receive increased funding without “inappropriate” conditionalities. Funds for developing countries, argues the Commission, should be made available through the creation of a new international credit facility, perhaps under the auspices of the World Bank or Regional Development Banks, and individual nation states should avoid protectionist measures in their responses to the financial crisis. Finally, the Commission makes the case for the coordination of global economic policies. In particular, it suggests establishing a panel within the United Nations system that would advise the General Assembly, the United Nations Economic and Social Council, and other international organizations on such policies.
In addition to recommending short-term solutions, the Commission also presents an agenda for systemic reforms of the international financial system. Included in this plan is the suggestion that significant governance reforms be undertaken by the major international financial institutions, including the World Bank and the International Monetary Fund (IMF). The Commission also recommends regulating financial market policies to create a “global regulatory framework to establish minimum national standards and also govern the global operations of systemical relevant global financial institutions.” The creation of an International Bankruptcy Court is also suggested, as is the establishment of a system of stable and sustainable development financing, which could include generating revenues from various global taxes, such as an international carbon tax and a financial services tax.
Most significant from a global governance perspective is the Commission’s recommendation for the creation of a Global Economic Coordination Council. According to the draft plan, such a Council would be a “globally representative forum to address areas of concern in the functioning of the global economic system in a comprehensive way.” As a United Nations body, the Council is envisioned as being on equal footing with the General Assembly and the Security Council and would provide international financial leadership. The Council would “promote development, secure consistency and coherence in the policy goals of the major international organizations and support consensus building among governments on efficient and effective solutions for issues of global economic governance.” Other tasks of the Council would include encouraging accountability in international economic organizations, identifying regulation gaps within the international financial system, and assisting in agenda-setting for global economic reform. Other international financial institutions, such as the World Bank, the IMF, the World Trade Organization and the International Labor Organization, would participate in the Council as advisors. The Commission advertises the Council as a “democratically representative alternative to the G-20.”
The draft recommendations were presented at the G-20 Summit in London last week, and the finalized version will be given to the President of the General Assembly for consideration by Member States in April 2009.
Jim Kelly is the President of Solidarity Center for Law and Justice, P.C., a public interest civil and human rights law firm based in Atlanta, Georgia. The opinions expressed herein are his own.
A JOINT PROGRAM OF
