Oxfam: An ambitious deal in Copenhagen is still possible

The conference in Poznan was meant to be a key milestone between the start of negotiations in Bali last year and their conclusion at Copenhagen next year. But it has exposed a shameful lack of progress. By Poznan, developed nations (“Annex 1”) were meant to have submitted proposals on emissions reductions, finance and technology; they have failed to do so. They have tried to delay, shift the blame, and in the case of Canada, renege on their climate change obligations. In contrast, many of the developing countries came to Poznan with clear proposals, a willingness to show flexibility, and, in the case of countries such as South Africa, Mexico and China, national action plans to reduce climate emissions.

An ambitious deal in Copenhagen is still possible, and is needed more than ever, but it will need far more rapid progress than over the past year, says Oxfam in its analyses of the outcomes of COP-14 in Poznan. Specifically, it will need Annex 1 countries to come to the negotiations early in 2009 with far more political will and flexibility in negotiations. The only area of progress in Poznan was on adaptation. In response to the recognition that climate change is already impacting on the lives of millions of people, the conference agreed to start up an Adaptation Fund. However, after exhaustive negotiations, the developed countries rejected the strong push for additional funds. This was condemned vehemently by developing counties, citing the urgent needs of vulnerable people suffering from a crisis they did not cause.

The following provides an overview of the Poznan negotiations and what is needed to reach Copenhagen with the required preparation and political will.

Setting the long term goal

There was no agreement on a long term goal to avoid dangerous impacts of climate change…
* New scientific evidence shows an ambitious goal will be needed to avoid massive suffering.
* Tuvalu and other small island nations called for urgent action and a goal of below 1.5°C.
* The lack of proposals for intermediate emission reduction targets from Annex 1 countries meant that no agreement was possible.

A deal in Copenhagen will need a goal to keep global warming well below 2°C…
* Strong and ambitious proposals on the goal need be put forward as soon as possible.

Emissions reductions

Targets for emissions reductions were not agreed…
* Instead of proposals, Annex 1 countries arrived pleading for their special circumstances.
* They tried to shift the blame through calling for cuts by developing countries.
* The IPCC has called for Annex 1 countries to make cuts of 25-40% from 1990 levels by 2020; this should have been agreed in Poznan.
A deal in Copenhagen will need proposals by February and then expedited negotiations.

Adaptation finance

Developing countries failed to push through key measures to secure more adequate funding on favorable terms…
* In the face of bitter resistance from rich countries, an Adaptation Fund was finally agreed.
* Annex 1 countries failed to live up to their moral obligation to provide increased adaptation funding through new mechanisms, such as proceeds from auctioning emissions permits.
* At last, over a decade after negotiations started, an Adaptation Fund that is actually responsive to developing country needs has been given the go-ahead.
* This is an important step: it will help cut through red tape and ensure poor countries have a greater say in the terms under which funds are provided.
* Voluntary contributions of funds announced by Sweden and other countries are welcome, but no substitute for arrangements that guarantee adequate and predictable sources.

A deal in Copenhagen will need agreement on massively scaled up funding for adaptation.
* The funding needs to be delivered through mechanisms under the UNFCCC (such as the Adaptation Fund), with transparency, democratic accountability and civil society involvement.

The Adaptation Fund was established under the Kyoto Protocol in 1997 and rules were agreed in the 2001 Conference of Parties (COP) in Marrakech. The principles for operation for the fund were agreed at the 2006 COP in Nairobi and the Fund was formally established in Bali at the UNFCCC COP last year. The Adaptation Fund Board has met three times in 2008 and will meet again immediately following the Poznan COP. Oxfam has made a proposal for adaptation funding in its briefing paper “Turning Carbon into Gold” entailing the auction of allocated emissions.

Technology transfer and finance

There was no progress towards developing and sharing clean technology or finance…
* Developing countries submitted new proposals in August 2008, but there has still been no constructive response from developed nations.
* A deal in Copenhagen will need proposals from Annex 1 countries by February to help developing countries to move towards a low carbon development path.

Deforestation

Negotiations on avoided deforestation were held but are causing deep concern…
* Canada, Australia, New Zealand and the US opposed provisions to protect indigenous peoples’ rights.

A deal in Copenhagen will need major changes to the draft agreement on deforestation…
* The agreement will need to respect the rights of indigenous peoples, local people and communities, protect biodiversity and address the causes of deforestation.

The road from Poznan to Copenhagen

Progress has been slow over the past year and little has been achieved in Poznan …
* The work program calls for proposals in February and a negotiating document by June.
* Heads of State will meet in September at the opening of the UN General Assembly.

A deal in Copenhagen will need a step change in the level of urgency and political commitment …
* The role of the UN Secretary-General will be crucial, working with Heads of State who are committed to an ambitious agreement, including vulnerable countries.
* If there is not significant convergence in positions by March, there will need to be a Conference of the Parties around mid-year, in order to finally agree the political mandate.
* Annex 1 countries must change their approach to negotiations to accept their responsibilities to move first and furthest and support efforts by developing countries.
* The aim must be to agree a full negotiated text, not merely a political declaration.

Rich countries still need to prove that poor countries are not being left out in the cold

The international community’s decision to convene a UN Conference to discuss the financial crisis and its impacts on development is important. However, it will only prove its value if it receives the support of all eco-political power blocks, especially the G20. The convening of a UN Conference on the financial crisis and its impact on development in 2009 was a key decision made at the three-day International Conference to Review the Monterrey Consensus which concluded in Doha today.

According to the Catholic network IDSE, the UN Conference on the Financial Crisis to be convened in 2009 will be the first test of political commitment to the outcomes of the Doha Financing for Development Conference. Industrialised countries and particularly the new US Obama administration will be under close scrutiny. Serious and high level participation in the Conference will be fundamental to achieve an outcome that reinforces the Monterrey Consensus’ commitment to ‘promote sustainable development as we advance to a fully inclusive and equitable global economic system.’

The political will to see this Conference succeed is all the more significant in the face of the general weakness of the Doha Conference’s outcome. "Poor deals on trade, debt, to concretely reach ODA targets, and to follow-up on the Monterrey Consensus have been the casualties of the long and discordant negotiations during the Doha Conference. It is at least fortunate that tax evasion, a curse for poor countries’ revenues, has been recognised for what it is," observed Jean Saldanha, Policy Officer in CIDSE. The Conference’s failure to strengthen efforts to gear political support for innovative resources for development, and especially the glaring absence of a mention of a Currency Transaction Tax sets back the progress in demonstrating its feasibility and value since the Monterrey Conference in 2002. The Conference’s feeble outcomes fly in the face of the plea for urgent action made by many countries in Doha who have been hard hit by the financial crisis. For CIDSE the big question now is whether the UN Conference on the Financial Crisis will be able to succeed to turn around the fundamental problems of global architecture that is perpetuating today’s financial crisis.

A human rights approach is the only way to overcome the current crisis, argues the new Social Watch Report

The unusual combination of financial crisis, food crisis, energy and climate crisis requires a new approach based on human rights, argues the international Social Watch coalition in its 2008 report, launched during the United Nations Conference on Financing for Development in Doha. Next 10 December, as the report remembers the 60th Anniversary of Universal Declaration of Human Rights will be commemorated and the title of the new report is, precisely, “Rights is the Answer”. The report documents how governments are falling short in their commitment to eradicate poverty and achieve gender equity through the testimony of civil society groups in 59 countries. Its main message is that the multiple crises currently affecting the world require a “rights-based approach” and provides examples on how the current financial architecture has ignored or openly violated those rights and triggered spiralling inequity all around the world.

The growing income inequalities both within and between countries spurred by capital flight, tax evasion, and privatization have slowed down the progress on key social indicators to a near halt over the last two decades. According to the Social Watch calculations, universal compliance with the Millennium Development Goals is now an impossible feat, if the world governments maintain a “business as usual” attitude. The grassroots activists and civil society analysts from around the world that contributed to the report show how the pervasiveness of extreme poverty and gender inequity is intimately linked to the immediate effects of the current triple crisis and to longer term structural issues ingrained in the global financial architecture. The report documents the widespread, haphazard implementation of policies promoting economic liberalization and deregulation having provoked the curtailment of peoples´ economic and social rights around the globe. That liberalization and deregulation now curtail the ability of many governments to comply with their international commitments to end poverty and achieve gender equality.

Trade unions demand new effort to successfully conclude Doha conference

As negotiations reach an impasse at the International Conference on Financing for Development in Doha, Qatar, the ITUC has expressed its concern that crucial commitments to mobilise financial resources for development could be compromised. “At the current stage, the trade union delegation is working hard to convince official delegations at all levels not to back down on core issues pertaining to Decent Work and to ensure that there is a strong follow-up mechanism under the auspices of the United Nations,” said ITUC General Secretary Guy Ryder.

Key questions, including, the impact of international trade on development, the future of the international financial system and the urgency of confronting climate change are provoking major debate between the G77 group, the US, the EU and Australia, Canada, New Zealand and Japan. There are three major issues on which disagreement persists: First, opposition was voiced by the US and to a certain extent by the EU to strong draft language on the way trade policies affect development. Second, there is no consensus among governments on the way forward to review the international financial and monetary architecture and global economic structures. Third, a number of countries, such as the US and Russia, contend that the issue of financing climate change belongs to the UN’s climate change (UNFCCC) process and should be excluded from the discussions.

“It is of the utmost importance that the world listens to the aspirations of the developing world, because they suffer the worst impact of the current crises: job losses, downward pressure on working conditions and deterioration of living standards,” Ryder added. Apart from actively lobbying government officials at this critical point, the ITUC delegation together with the other members of the Decent Work, Decent Life Campaign hosted a parallel side-event “Financing Decent Work – An Imperative for Sustainable Development” at the Conference.

Bretton Woods II? We Need a Second UN Finance and Monetary Conference

Closing Remarks by Jens Martens to the Civil Society Forum Doha

1. Let me start with a quote from the Draft Outcome Document:
“The environment for Financing for Development has improved over the past 6 years, primarily due to a significant improvement in domestic savings of developing countries but also because of a sustained expansion in world trade, record private capital flows, higher remittances, a reduction in debt burdens especially in heavily-indebted poor countries and a reversal in ODA from earlier declines. The development impact of these flows is enhanced by a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets and efficient, effectively regulated financial systems. These principles are essential to economic growth and prosperity and have lifted millions out of poverty and have significantly raised the global standard of living.” (para 2bis)

This paragraph is not agreed and hopefully will never be agreed, but I am wondering: Do the delegates who drafted these sentences live in a parallel universe, when they praise the “efficient and effectively regulated financial systems” that have lifted millions out of poverty? At least additional 75 million people are forced to live in hunger and poverty this year due to the global food crisis. What would they think when they had to read these sentences?

2. The world faces an unprecedented crisis of the current financial and economic system. But the negotiations on the Doha outcome document seem to continue as if nothing has happened. We miss any sense of urgency in the negotiations. What we need now is creative thinking and collective multilateral action instead of following the business as usual and muddling through approaches of the past.

3. Two weeks ago, the leaders of the 20 most powerful countries of the world met in Washington as the G-20. After three and a half hours they adopted a declaration on “Financial Markets and the World Economy” – a preliminary “to-do-list” to solve the current financial crisis. Without doubt, some of the 47 announced measures might be useful and necessary. But the G-20 failed to really address the root causes of the crisis. Instead, they primarily intend to stabilize the current financial system – a system that has been characterized for the last 20 years as “casino capitalism”. But we don’t need better rules for the casino. The casino has to be closed down!

4. That the Washington summit took place at the level of the G-20 and not the G-7 or 8 reflects the changing realities of the world and is a step in the right direction. But it would be a grave mistake to stop there and to exclude 172 governments and the global civil society from the decision making process about the future financial and economic system.

5. About 20 years ago the G-7 took the lead in promoting the Washington Consensus and its neo-liberal ideology of deregulation and privatization – the same ideology that caused the current crisis. We don’t need a new Washington Consensus of the new G-20, which primary goal is to stabilize the present system, without taking into account the needs and demands of the people who are most affected by the crisis and the structural causes of this crisis.
(The G-20 leaders made “a commitment to free market principles, including the rule of law, respect for private property, open trade and investment, competitive markets, and efficient, effectively regulated financial systems.”)

6. What we need instead is a new global consensus, name it New York, Geneva or Nairobi Consensus, of the G-192 – the members of the United Nations. This is the reason, why we are here in Doha at a conference of the United Nations.

7. We are not naïve. We are aware of the weaknesses and limitations of the UN. Its decision making process is painfully slow and its results are based on the lowest common denominator. This was the reason, why many Civil Society Organisations declared in Monterrey 6 years ago that they are not part of the Monterrey Consensus. The Monterrey Conference was important, but its outcome didn’t respond adequately to the urgency of the economic and social situation in the world. Since then, the situation has become even worse.

8. However, the UN is the only universal forum that is inclusive, the forum where nearly all governments of the world have voice and vote, and where civil society organizations have participatory rights. Therefore it’s worth to fight for the strengthening of the UN.

9. This brings me back to the draft outcome document of the Doha conference. The existing draft is weak and the negotiations proceed again painfully slow. But the text contains at least a few elements – although not agreed yet - which could bring incremental progress, for instance
* the upgrading of the United Nations Committee of Experts on International Cooperation in Tax Matters to an intergovernmental body of the UN (para 8)
* the proposal for new ad hoc forums to explore sovereign debt work-out mechanisms and the possibility of crafting permanent debt mediation or arbitration procedures (para 46), and particularly
* the proposal to convene a major international conference, under the UN auspices, to review the international financial and monetary architecture and global economic governance structures ( one of 4 and my favourite versions of para. 58).

The adoption of this paragraph would in fact mean to bring not only the global discourse but also the decision making process on the reform of the economic and financial system back to the United Nations.

10. You may ask, why back to the UN? Was it ever there? Yes, 64 years ago, when the first United Nations Monetary and Financial Conference took place – better known as Bretton Woods Conference. The preparation of this conference took nearly 3 years and the conference was attended by delegates from 44 countries – by the way more than twice the membership of the G-20.

What we need now is a second United Nations Monetary and Financial Conference. Doha could mark the first step towards it.

Civil Society supports UN-led Summit on finances

As one of the lead elements proposed for recommendation to the Financing for Development Review Conference, the Civil Society Forum supports an international summit on financial and economic architecture and global economic governance structures, in 2009. The Forum position challenges the proposal of some governments that the Bretton Woods Institutions organize an event, as well as moves to concentrate decision-making in the G-20 group of governments. Speaking to the plenary, Rana Al Sairafi, a civil society delegate from Bahrain, said “instead of focusing on ad hoc mechanisms like the G20, such a conference should be under the umbrella of the United Nations with the inclusive principles that govern the Financing for Development process, including the active participation of civil society organizations.” In preparation for the event, the UN should be asked to prepare a comprehensive review of the existing global financial architecture.

There are currently four alternate proposals (para.58) regarding the conference in negotiations for the Review Conference. The Forum recommendation supports the UN-led option. Addressing the Forum regarding the locus and purpose of economic governance, Jens Martens, Global Policy Forum (Germany) noted “The G20 failed to really address the root causes of the crisis. Instead, they primarily intend to stabilize the current financial system - a system that has been characterized for the last 20 years as “casino capitalism”. “We don’t need better rules for the casino,” Martens concludes. “The casino has to be closed down!”

Forum delegates spent Wednesday in sessions focusing on the six agenda items of the Review Conference, followed by intense workshops and caucuses on specific issues, including: women setting the agenda, addressing climate change, achieving the health MDGs, the Currency Transaction Tax, among others. Women, trade unions, and other sector-specific caucuses have met as well. Further recommendations on finance reform include support for the upgrading of the UN Committee of Experts on tax to become an inter-governmental body, moves to make international financial flows fully transparent, ending illicit transfers of resources, and ensuring rapid fulfillment of aid commitments and enhancement of quality and accountability of aid.

Civil Society Forum at Doha: The US a failed state?

“Is the United States a ‘failed state’? Its financial mismanagement has triggered a worldwide crisis.” Thus, Social Watch coordinator Roberto Bissio challenged some 300 civil society delegates, who are meeting since yesterday at the Ramada Plaza Hotel. The Civil Society Forum leading to the Financing for Development Review Conference is addressing the international crises that threaten our climate, development and social justice, developing recommendations for change to carry into the official Conference. The Draft Declaration to be considered by the Forum states:

“The world is consumed by an urgent triple crisis of energy, food and finance that not only threatens the realization of the MDGs, but also the stability of the world’s economies. The Northern governments and financial system are responsible for the current financial crisis, but the costs and the impacts are paid for by the entire world and by the poorest countries in particular. Moreover, climate change is threatening the lives and livelihoods of hundreds of millions of people, in the North and the South.”

Barbara Adams, a former UN official and Senior Fellow with the Global Policy Forum introduced delegates to the state of the negotiations, which continue in New York and will be finalized in Doha before 2 December. The final agreement must address decent work, growing inequality and continuing imbalances in the global economy and polity, she noted. Perhaps the most significant major issue remaining is the nature and organizing body for a “Bretton Woods II” international conference for a new global economic architecture, she pointed out. Many civil society delegates stress that such a follow-up event should be organized by the universally-based United Nations and not by the existing Bretton Woods Institutions.

The Forum is the penultimate step leading to the UN Financing for Development follow-up Conference convening at the Sheraton Hotel November 29. The Forum was opened by H. E Mohammed Abdullah Mutib Al Rumaihi, Deputy Minister of Foreign Affairs for Qatar and Dr. Ali Ben Samiekh El Marri, General Secretary of the National Human Rights Committee of Qatar. The Civil Society Forum continues through Thursday, November 27, when a final declaration for delivery to the official Conference will be agreed.

IMF head should not evade UN

While initially scheduled to attend the Doha Financing for Development Review in Doha, the IMF Managing Director Mr. Dominique Strauss-Kahn has hinted he is no longer planning to attend. This is very unfortunate and difficult to explain, especially given the extraordinary influence that has been given to the IMF in the drafting process (in fact, the IMF is on record making suggestions on the same footing with member states, even though only member states are supposed to formally make drafting suggestions and even though its intervention, with such representation regime, means an unfair advantage for some large developed countries in the negotiation). By withdrawing representation at the highest level, the gesture would send a political signal that seeks to undermine the strength of the UN process as it enters into critical matters of reform of international finance and at a very critical juncture in the negotiations addressing such issues at this moment in New York. In an open letter NGOs worldwide are urging Strauss-Kahn to attend.

The letter:

Dear Mr. Strauss-Kahn,
We, the undersigned, are writing to urge you to attend the Doha Review Conference on Financing for Development.
On November 29, governments of the world will gather in Doha, Qatar, to reassert their 2002 Monterrey Consensus commitments to “eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable global economic system,” and evaluate progress.
The Monterrey process was unique in that it represented a new and fresh type of multilateralism, one that sought to build bridges across governments, global institutions with different economic responsibilities, such as the one you head, development responsibilities, civil society and the private sector. Its multi-stakeholder nature generated the open, fresh approach needed for facing the challenges of global policy-making in a changed—and changing-- world. More importantly, in the collective agreement to build those bridges at the global level it also paved the ground for building those bridges at the domestic levels of governments.
In this sense, the Monterrey Consensus represented not a static, one-off event, but a dynamic one. It established an innovative process for dialogue: dynamic enough to allow for the adjustments that any learning process brings, but solid enough to ensure the continuity of a global partnership.
Though unforeseen at that time, the Doha Review Conference will take place at a time when those principles and commitments are more relevant than ever. A global financial crisis, the largest anyone alive has seen, is threatening to undo progress in poverty reduction and achievement of MDGs of several decades. The Conference also takes place amidst global crisis in food, energy and climate. The Monterrey follow-up offers the best hope of harvesting the broad-based knowledge, ownership, and political support that a response to these exceptional times call for. But it cannot work without all the partners at the table.
It is, therefore, with the utmost concern that we write to you to urge you to attend the Doha Financing for Development Review. We understand you are seriously considering not to attend this conference, even though you had committed at a very early stage. We believe were you to delegate this responsibility, it would send the wrong signal about the seriousness with which the IMF takes the challenges that we face, and how it perceives its role as a partner in solidarity with the international community of nations and organizations. It would certainly undermine its claims to leadership in global financial crisis response efforts.

To sign click >>> here.

UN Task Force on reform of global finance stands ready

On the eve of the World Financial Summit in Washington, General Assembly President Miguel D’Escoto announced the full composition of a high-level task force he is setting up to examine possible reform of the global financial system, including the International Monetary Fund (IMF) and the World Bank. Joseph Stiglitz (see photo), who won the Nobel Prize for Economics in 2001 and is a former chief economist at the World Bank, will chair the Commission of Experts on Reforms of the International Monetary and Financial System, which will suggest steps that Member States can take to secure a more stable global economic order. The commission’s other members are:

* Jomo Kwame Sundaram, the current Assistant Secretary-General for Economic Development and the UN Department of Economic and Social Affairs (DESA);
* José Antonio Ocampo of Colombia, who is a former Under-Secretary-General for Economic and Social Affairs;
* Zeti Akhtar Aziz, the Governor and Chairman of Malaysia’s Central Bank;
* Jean-Paul Fitoussi, Professor of Economics at the Institute d’Etudes Politiques de Paris in France;
* Avinash Persaud of Barbados, who is Chairman of Intelligence Capital Limited;
* Yaga Venugopal Reddy, former governor of India’s Reserve Bank;
* Eisuke Sakakibara of Japan, who is currently Professor at Waseda University in Tokyo;
* Chukwuma Soludo, the Governor of Nigeria’s Central Bank;
* Yu Yongding of China, the Director of the Institute of World Economics and Politics.

When D’Escoto announced the formation of the panel last month, he noted that “there is growing recognition that the current turmoil in the financial system cannot be solved through piecemeal responses at the national and regional levels but requires a coordinated effort at the global level.”

Trade Unions’ reform plan for the G20

Trade union leaders from the G20 countries will put forward a comprehensive plan to turn around the global economy, in meetings with world leaders in Washington DC on the eve of the financial crisis summit hosted by the US government on 15 November. The top level union delegation will discuss the plan with IMF Managing Director Dominique Strauss-Kahn, World Bank President Robert Zoellick and heads of government from the G20 countries. The world's unions are calling for a series of urgent actions to stave off the prospect of deep and long-lasting global recession, coupled with major changes in the running of the global economy to turn back decades of deregulation policies that have caused the current crisis.

According to the International Trade Union Confederation (ITUC), a fresh push for development and decent work is needed, as well as a "Green New Deal" to tackle climate change effectively. The detailed union proposals are set out in a recovery and reform programme entitled the Washington Declaration. "Immediate action is needed to get the world economy moving and boost employment. Governments need to be prepared to make further, coordinated, cuts in interest rates and to front-load investment in infrastructure, education and health to help stimulate demand growth and reinforce public services. This needs to be accompanied by tax and spending measures to support the purchasing power of low- and middle-income earners, and concrete steps to launch investment in green goods and services, to help address climate change", said John Evans, General Secretary of the Trade Union Advisory Board to the OECD (TUAC).

The ITUC and TUAC are co-organising the union summit which will be hosted by the US trade union centre AFL-CIO at its Washington DC Headquarters. Along with the immediate steps to stimulate the world economy, the trade unions are putting forward a comprehensive regulatory package to ensure global governance of the global economy with a strong role for the ILO in line with the new ILO Social Justice Declaration. Key elements of the package include: ( 1) Regulation of hedge funds and private equity, (2) Proper supervision of banks and global conglomerates, (3) Reform and control of executive pay and profit distribution, (4) Taxation of international financial transactions, (5) Reform of the credit rating industry, (6) Ending tax havens, (7) Protection against predatory lending, (8) Active policies for housing and for community-based financial Services.

The Washington Declaration also draws attention to the plight of the world's poorest countries, where the impacts of global downturn will hit hardest. It calls on richer countries to ensure that international targets on development aid and the UN Millennium Development Goals are met, and urges action to ensure that basic commodities, especially food, become affordable for the poorest.
The Declaration sets out the global trade union movement's platform for a new governance structure for the world economy. This must not be limited only to financial markets and currency flows. The new structure must overcome the major flaws in the current system, and ensure that emerging economies and developing countries have their rightful place at the centre of policy-making.

G20 must put fight against poverty at the center

The G20 must avoid small-scale tinkering and instead take immediate, aggressive action to tackle poverty while laying out an ambitious vision for reforming the world economy at its Financial Crisis Summit. In a new report, If Not Now, When?, international relief and development agency Oxfam says that people living in poverty will be hit hard by the financial crisis unless urgent action is taken, adding that the poor should not have to pay for rich countries’ mistakes. The International Labor Organization estimates the number of workers living on less than one dollar a day may increase by 40 million and those living on less than two dollars a day could increase by more than 100 million.

According to Oxfam, there is a risk that recessions in rich countries will lead politicians to take the short-sighted approach of cutting aid. Given the tiny amounts of money involved compared to rich country economies, this would do little more than offer symbolic budget savings, but at huge human cost. Aid to all developing countries last year was $104bn. In comparison the US and EU mobilized nearly 30 times this – around $3trillion – in the last few months to help bail out their banks.

In "If Not Now, When?" Oxfam says that global leaders should immediately develop a new international regulatory institution with teeth, to prevent future financial crises and protect the interests of workers, consumers, and the environment. This includes taking on the secretive tax havens which undermine regulations and rob poor countries' of vital revenue that could be spent on schools and hospitals. It also calls for leaders to build a new representative global governance structure to tackle the economic, climate, food and energy crises. Reform must include far greater roles for developing countries as well as the poorest. Rich countries are going to have to concede some power on governing bodies like the G20 because they are desperate to get their hands on the huge financial reserves held by emerging markets.

Oxfam urges global leaders to see the opportunity to develop a new 21st century political and economic system that puts people and planet before profits. Oxfam calls on the G20 leaders to do three things:

1. Honor the OECD pledge not to cut development assistance, and increase aid instead by an additional $140bn necessary to meet the UN target of 0.7 percent of GNI immediately. In addition, urgently extend credit to emerging markets facing liquidity crises.
2. Rewrite global financial rules and regulations, including tackling tax havens and moving towards a more stable exchange rate system, in order to make the market work for all and not just for the few.
3. Build a new representative global governance system that can effectively tackle the economic, food, and energy crises.

Voices on the upcoming G20 summit IV: UBUNTU

The “network of the networks”, UBUNTU which is presently running the World Campaign for In-depth Reform of the System of International Institutions has published the following statement regarding the G20 summit in Washington DC:

While emphasising that, of course, all people have the right to meet whomever and wherever they choose, we the undersigned, in the tradition of the statements issued by the UBUNTU Forum, wish to declare the following:

1. Our deep concern about the serious impact the implosion of neo‐liberal capitalism will have on humanity, an implosion which will surely be the last – although it unfortunately is still going on – of an economic model that we have denounced many, many times as extremely unjust and damaging to society.

2. Our perplexity, because the main protagonists who have worked to impose this model over the last 25 years, the G7 and the Bretton Woods Institutions (the
IMF and the WB) are now taking on the role of saviours in this disaster, when they should rather be seen as the guilty parties to a large degree, and should consequently accept the responsibilities that pertain to them.

3. Our indignation regarding the meeting called for 14 November in Washington for, among others, the following reasons:
a) That precisely Washington, home of the Government and Organisations most responsible politically for what is now happening, is the one calling the meeting.
b) That invitations to the meeting have been issued in a totally arbitrary and discriminatory form. As if, for example, the poorest countries, those who have suffered most from this model and will probably suffer most from the consequences of the current debacle, had nothing to say about what to do now and in the future.
c) That it not only fails to take advantage of but even overshadows the Doha
Conference on Financing for Development to Review the Implementation of the Monterrey Consensus, scheduled for 29 November to 2 December, especially when this Consensus includes a section on systemic ‐ structural issues, which have been worked on for months in the United Nations’ most pluralistic and transparent framework, and which, appropriately reviewed and extended in the current context, could contribute to opening the way to a new world economic and financial model.
4. Our conviction that the time has come for an in‐depth Reform of the System of International Institutions, so long demanded by many world forums, to begin to lay the foundation for a world democratic governance which, among many other things, would prevent the world having to experience another situation like this one. In any case, the ongoing world regionalisation processes should be considered amongst the new principles upon which the system must be refounded.
5. Our urge that in the headquarters of the United Nations, in the context of the imminent Doha Conference, the process towards a Multiactor World
Conference on a New International Monetary and Financial System and its New
Democratic Institutions of Governance immediately begins, with the active participation of all the relevant actors of the present world situation, and thus and most fundamentally with the participation of civil society and of social movements.

Voices on the upcoming G20 summit III: NGOs

In a letter to the Financial Times Aldo Caliari, the director of the Rethinking Bretton Woods Project, Center of Concern, in Washington DC writes today:

Sir, Does it really come as a big surprise that the level of ambition for the November 15 summit of Group of 20 leaders is so low? ("Don't bank on Bretton Woods II, says IMF chief", 8 November) It should not.

We only need to look back at what came out of the last time leaders of rich countries talked about a "new global financial architecture", in the late 1990s. The response conveniently underscored changes to the domestic financial structures of developing countries, rather than to those of developed countries or the gaps and dysfunctions of global institutions. Unless a much more inclusive approach is followed, giving an institutional platform for the voice of all developing countries, it is unrealistic to expect better results this time.

Fortunately, such a platform is available. Only two weeks after the summit, leaders of the world will meet in Doha, Qatar, to review progress in implementation of the 2002 International Conference on Financing for Development. Reform of the international financial system is a key item on the agenda. Indeed, the current draft outcome document contains a breakthrough call for a major review of the "international financial and monetary architecture, and global governance structures". The basis for the review is the 2002 Monterrey consensus, whose pertinent chapter constitutes the first north-south multilateral consensual framework for reform of the international financial system.

The Doha review clearly provides a much better forum to launch a long-term discussion on reform, one that gives some voice to the poor and vulnerable and that garners the broadly based knowledge, ownership and political support that needs to be behind such reform.

Only something with such multilateral roots deserves to be called "Bretton Woods II", and G20 leaders meeting in Washington should use the opportunity to lend their support to it.

Voices on the upcoming G20 summit II: The OECD

OECD is preparing a two-pillar action plan for governments, as part of a global response to the world financial crisis, calling for tighter regulation and oversight of financial markets and improved national policies to promote economic growth. OECD Secretary General Angel Gurría said the action plan would cover a wide range of areas, from financial regulation, corporate governance and fiscal policy to competition, employment policy, insurance and pensions. “The causes and consequences of this crisis are rooted in a wide set of inter-related policy areas and can only be addressed through integrated responses,” he told participants at a briefing seminar organised by the European Policy Centre in Brussels.

The OECD action plan will be organised around two pillars, he said. “First, align regulations and incentives in the financial sector so that market operators act in a tighter oversight and risk management environment. Second, review and upgrade national policies and improve policy coordination at the international level to restore the conditions for economic growth.” One of the key lessons of the financial crisis has been the critical importance of efficiently functioning financial markets for the stability of the real economy. “That efficiency relies not just on competition but also on effective regulation and supervision,” Gurría said.

Looking beyond financial markets, however, he emphasised that governments must also play their part in sustaining economic activity. “Automatic fiscal stabilisers are already helping to cushion the downturn, especially in Europe. But more needs to be done,” he said. “While social safety nets are in place in OECD countries, there will be a need to step up re-training efforts for those who have become unemployed. There may also be more pressure to help those who are in danger of losing their homes.” Finally, Mr. Gurría emphasised the urgency of keeping policy attention focused on other major challenges. “The current economic crisis demands tough decisions now, but it must not distract our attention from the other grave structural challenges that we confront.” Governments must hold fast to their efforts to address poverty, inequality and climate change, he said. “It is crucial, in the middle of the storm, that we don’t lose our sense of direction… that we keep our commitments to scale-up development aid, to keep global trade and investments open, to develop cleaner energy to protect our environment.”

Voices on the upcoming G20 summit I: The economists

The world is at a dangerous point. Governments seem unprepared for the next round of difficulties that will arise as the recession grows and financial crises spread to emerging markets. Economically and financially, there is a clear sense that things are spiralling out of control again. The G20 meeting in Washington next weekend is an opportunity for leaders to show that they have the will to solve the global crisis. In an E-book from VoxEU.org - edited by Barry Eichengreen and Richard Baldwin - some of the world's leading economists provide essays from on what the G20 should do. The authors identify four priorities for action:

1. In the financial sector, apply triage to stop the bleeding; in the real sector, use fiscal stimuli: There is unanimity on this. Governments need to move fast - and coordinate their actions - in recapitalising banks, guaranteeing cross-border bank claims, restructuring non-performing assets, and extending financial support for crisis countries. Similarly, there is an urgent need for an immediate, substantial, internationally coordinated fiscal stimulus. Here China has shown leadership, and other countries should follow. Leaders from some countries may argue that they cannot - that their national circumstances are special. This cannot be accepted: commitments should be announced on 15 November.

2. Strengthen the ability of existing institutions to deal with the crisis in emerging markets: The most urgent task is to augment IMF resources immediately so that the institution has adequate firepower. There are a variety of ways to do this, but absolutely no dissent from the view that action must be taken now.

3. Start thinking outside the box about longer term reforms: Several contributors argue for new approaches to the regulation of large cross-border financial institutions: an International Bank Charter, a World Financial Organisation, an International Insolvency Mechanism for financial institutions, or even a single global regulator. None of these proposals can come to fruition on November 15th but it is essential to start discussing them now.

4. Do no harm: The contributors argue for caution in introducing new regulation: don't clamp down so hard on financial institutions and transactions that they stop providing intermediation services or innovating. And don't respond to deep recession with protectionist measures that beggar one's neighbours and destroy the world trading system. In their communiqué, the G20 leaders should promise to avoid such actions - and announce immediate steps to make this commitment credible.

EU position for Doha unsettled by G20 summit

According to observers in Brussels, the G20 summit on 15 November in Washington has thrown a wrench in the works to finalize a common European position for the UN conference on Financing for Development in Doha, Qatar at the end of the month. EU heads of state are meeting in Brussels today to discuss the EU’s positioning at the Washington summit on the future of the international financial architecture. This architecture has an essential impact on the financing for development issues on the agenda in Doha. But the development perspective is low on the radar screen for the G20 countries invited to the Washington summit. And a development perspective is nowhere to be found in the preparatory paper for today’s EU summit.

It is against this backdrop, the EU Council of Ministers is moving towards agreement on its position for Doha. On aid, the question of clear timetables for Member States to implement their commitments to provide 0.7% of GNI in ODA will be left to Development Ministers at the 11 November Council meeting, with certain countries using the current economic context as an excuse to renege on their promises. On innovative sources of finance, some Member States refuse to consider funds raised e.g. through the air ticket levy as additional to their 0.7% ODA commitment, preferring to use these as compensation for declining aid budgets.

The EU position places a strong emphasis on the responsibility of developing countries for mobilizing their own resources for development, giving less attention to ways in which the EU is undermining their ability to do so. Several Member States are opposed to civil society proposals on taxation, such as upgrading the UN Tax Committee to an intergovernmental body, which would give it a stronger mandate on issues like EU tax havens which allow multinational companies to pay lower taxes to developing countries. The EU is also resisting strengthening the FfD follow-up process within the UN, which would help to ensure implementation of agreements reached in Doha.

According to the CIDSE network of catholic aid agencies, the choice is now clear: The EU can seize the opportunity of revisions to the international financial architecture to change unfair global power structures and rules that inhibit developing countries’ ability to finance their own people’s development. Or, it can continue to proclaim grand rhetoric about the impact of the financial, food, and energy crises on the world’s poor, while disregarding the interests of the vulnerable in the scramble for profile at the table of the world’s most powerful. CIDSE will organize a side event at Doha launching a new policy paper on taxation and development.

El Escorial statement stresses ‘New Green Deal’

The civil society network BankTrack has released Bank to the Future: El Escorial Statement on Banks and the Financial Crisis today in Madrid. The statement was drafted at BankTrack's annual strategy meeting, held in El Escorial de San Lorenzo earlier this week. It contains BankTracks´ current position on what is needed to deal with the unfolding financial crisis of today so that it will lead to a sustainable, robust and just financial system in the future. The statement recognizes that the world financial system is at the brink of collapse. It characterizes the current crisis as not only an economic and financial crisis, but one of governance and sustainability.

The statement stresses the need for a ´New Green Deal´. Such a deal would not seek to stabilize the economic system as it is, but also aim to transform it into one that helps solve the pressing social and environmental problems the world is facing. The fiscal spending that is necessary to stimulate crisis-affected economies entering recession should be directed at achieving social justice, the promotion of sustainable production and consumption systems, and the transition of the world’s economies onto a low carbon path.

The statement outlines a number of steps to deal with the crisis in each of these dimensions, including:

• eliminating the influence of banks in the political process
• ensuring democratic participation in the design of a new global financial order
• putting a "sustainable twist" on international banking rules (such as including environmental and social risks into capital adequacy requirements)
• ensuring complete bank transparency regarding risk assessment processes and transactions
• eliminating the shadow banking sector by introducing regulations and reporting requirements
• prohibiting speculation in the derivatives markets, particularly those related to food and energy
• reducing incentives for excessive risk taking, such as eliminating short-term, volume-driven bonuses.

The Statement concludes, "We face a time of dramatic change that presents unique opportunities. Now that the once-dominant forces of market fundamentalism have been discredited, a new, equitable, and sustainable future can be built on the rubble of past excesses."

Civil Society statement on the proposed “Global Summit” to reform the international financial system

The past few months have seen one of the most significant financial crises in North American and European history. The response was just as historic. To stave off regional and global recessions and restore stability and confidence in the market, northern governments are pursuing a massive and unprecedented program of government intervention, nationalizing banks, injecting massive subsidies into ailing institutions and re-regulating their financial sectors.

This response sits in direct contrast to the austere neoliberal policies pressed on developing countries by the World Bank, International Monetary Fund and developed countries for the past thirty years. Governments have been pushed to liberalize trade barriers, deregulate financial and labour markets, privatize national industries, abolish subsidies, and reduce social and economic spending. The state saw its role severely reduced.

This double standard is not only unacceptable, but it also signals the demise of free-market fundamentalism. The international financial system, its architecture and its institutions have been completely overwhelmed by the scale of the current financial and economic crisis. The financial system, its architecture and its institutions must be completely rethought.

A truly global response to a global crisis
In recent weeks, leaders worldwide have recognized the deficiencies of the existing system and the need to meet to address a broader set of proposals to reform the global financial system and its institutions. The G20 are now set to meet in Washington DC on November 15 to begin the discussions. It is of course imperative to agree on immediate measures to address the crisis, and we emphasize that priority must be given to responses to the impacts on ordinary employees and workers, low-income households, pensioners and other extremely vulnerable sectors. But we are deeply concerned that the proposed meetings will be carried out in a rushed and non-inclusive manner, and as a result, not address the comprehensive range of changes needed, nor fairly allocate their burden.

Though the crisis originated in northern countries, the impacts are likely to be greatest in developing countries. It is therefore critical that all countries have a say in the process to change the international financial architecture. No equitable and sustainable solutions to transforming the current system will come out of a conference that is rapidly-prepared and excludes many countries and civil society. Such efforts are in fact more likely to further undermine public trust and confidence and to further disenfranchise countries that are already opting for regional solutions over a stronger, more coherent and fairer international financial system.

Our demands – time for a fundamental rethink
We, the undersigned civil society organizations, support the fundamental and far-reaching transformation of the international financial and economic system. To serve this purpose, we support a major international conference convened by the UN to review the international financial and monetary architecture, its institutions and its governance, but only if the meeting follows a process that:

1. is inclusive and participatory of all governments of the world;
2. includes representatives from civil society, citizen’s groups, social movements and other stakeholders;
3. has a clear timeline and process for regional consultations, particularly with those most affected by the crisis;
4. is comprehensive in scope, tackling the full array of issues and institutions;
5. is transparent, with proposals and draft outcome documents made publicly available and discussed well in advance of the meeting.

Full use should be made of the new UN task force on the global financial system, the upcoming UN Financing for Development meeting and other UN instances to begin preparing such a global meeting.

There are no quick fixes in the transition from the current system - which has fostered instability and inequity - towards a just, sustainable and accountable one, which yields benefits for the majority of the world’s people.

Signatories

Spotlight on EU's worst lobbyists and worst conflict of interests

Business lobby groups, MEPs and Commission officials are all under scrutiny in the shortlist for this year's Worst EU Lobbying Awards, published on 20 October. Members of the public are now invited to vote for the most deceptive lobbying and the most biased decision-makers at www.worstlobby.eu to select the Worst EU Lobby of 2008 and the Worst Conflict of Interest 2008. Five candidates in each category have been short-listed for the awards, following online nominations made earlier this year.

In the category for the Worst EU Lobbying Award, the five candidates are:
* The agrofuels lobby (including MPOC, Unica and Abengoa) - nominated for their misleading campaigns to promote agrofuels as green
* The European Alliance for Access to Safe Medicines (EAASM) nominated for hiding the involvement of big pharma corporations in their campaigns
* The European Business and Parliament Scheme - nominated for abusing their location and lobbying from inside Parliament offices
* Brussels-based lobbying and PR agencies Gplus and Aspect Consulting are nominated for supporting the spread of war propaganda in the recent conflict between Russia and Georgia.
* The International Air Transport Association (IATA) - nominated for its deceptive lobbying campaign to avoid CO2 reduction obligations for aviation.

In the category for the Worst Conflict of Interest, the five candidates are:
* Dr Caroline Jackson MEP - nominated for her twin roles as an elected representative dealing with environmental issues and as an appointed environmental advisor to a private waste management company, Shanks.
* Piia-Noora Kauppi MEP - nominated for abusing her role as an MEP by promoting the interests of her future employer, a big banking lobby group
* Klaus-Heiner Lehne MEP - nominated for his dual role as an MEP and lawyer for EU competition and regulatory issues, and for using his position as an MEP to allow lawyers to lobby in the dark.
* Ex-European Commission officials Petite, Klotz and Kjølbye - nominated for going through the revolving door to law firms lobbying for industry clients
* DG Trade Director Fritz-Harald Wenig - nominated for revealing inside information on trade tariffs to "lobbyists" who were in fact journalists working under cover.

The Worst EU Lobbying Awards put the spotlight on the behind the scenes' activities of lobbyists which influence European decision making. They highlight some of the controversial lobbying practices being practised by some of the thousands of corporate lobbyists roaming the corridors of power inside the EU. The Worst Conflict of Interest award was introduced this year to highlight the need for European Institutions to clean up their own activities - there have been a number of cases of conflict of interest in recent years, but little action has been taken to prevent such cases from occurring. The nominations show the need for stronger ethics rules for the European Parliament and the European Commission.

The awards also take place against the backdrop of the European Commission's failed attempt to make lobbyists' activities more transparent with the launch of a voluntary online register. More than three months after the register was launched, 430 lobbying bodies have registered - a tiny proportion of the total number of lobbying organisations operating in Brussels. The register has failed to shed the necessary light on lobby campaigns or lobby firms - as demonstrated by some of the nominations for this year's awards.

Voting for the Worst EU Lobbying Awards closes on 30 November and the winners will be announced at a special ceremony in Brussels on 9 December, with the results also published online. The Worst EU Lobbying Awards is organised by Corporate Europe Observatory, Friends of the Earth Europe, LobbyControl and Spinwatch.

European climate leadership runs down blind alley

Environmental NGOs of the Time-to-Lead-Alliance have yesterday accused the EU Environment Ministers of supporting old-fashioned, inefficient and wasteful industries at the expense of those that innovate and create new jobs. During the discussion on the EU climate and energy package, ministers are also watering down the emission reduction proposals for non-industrial sectors, undermining the best chance to help European households suffering from high energy bills. At the meeting of the EU Environment Council in Luxembourg protectionism was the call of the day, with ministers defending as a priority the short term interests of a small portion of European industry, rather than pushing to protect European citizens from the most dangerous impacts of climate change and put an end to our dependency on expensive fossil fuels. The ministers opened the door for free CO2 permits for electricity production and weakened rules for free permits to manufacturing industries.

Climate Action Network Europe, Friends of the Earth Europe, Greenpeace and WWF said: "Today's level of debate was extremely poor and gave more room to the opportunistic demands of the Polish and Italian governments, who want to give old fashioned, inefficient and wasteful industries a free ride at the expense of innovation and job creation. These positions are particularly ironic since ministers also expressed high hopes for the UN climate summit next year in Copenhagen." One week after EU countries agreed to release €2000bn in support of the financial sector, Environment Ministers are backtracking on the €70-90bn investments needed by 2020 to safeguard future generations through the EU climate and energy package. Italy and Poland fail to grasp where Europe and the world's future lie and what unabated climate change will cost the world. Furthermore the Polish government has shown itself to be unfit to lead the next international climate negotiations taking place in December in Poznan. The international community should actively look for a new chair.

Financial crisis and the South: UNCTAD officials say UN should be involved

The United Nations and a wider variety of countries should play a significant role as the international financial system is reshaped to cope with spreading turmoil and a looming worldwide recession, UNCTAD's Secretary-General and the director of its globalization division said on 16 October, after the organization's monthly consultation with the president of its governing body, the Trade and Development Board (TDB). UNCTAD officials warned that the likely impacts of the crisis on the world's poor nations are not receiving sufficient attention as global economic giants deal day to day with the tumult.

UNCTAD Secretary-General Supachai Panitchpakdi expressed concern for what he called "innocent bystanders." "The impact on developing countries will be much deeper than was anticipated," he said. "'Real' sectors" of their economies "are beginning to suffer, and this is only the beginning." Volatile exchange-rate movements affecting some of these countries "certainly will not help," the Secretary-General said. "Trade will suffer, and the commodities boom that has helped developing countries for a number of years now is ending."

* Capital-flow paradox intensified

Mr. Supachai said four issues need to be addressed:

* Global liquidity is being "sucked away" as banks in industrialized nations are bolstered by huge government infusions of funds, leaving the question of whether any cash will be left for credit and development aid needed for efforts such as achieving the Millennium Development Goals, enhancing productive capacities in poor countries, and coping with such problems there as climate change.

* The fate of smaller private banks, especially in developing countries, has to be considered; they are not among the large institutions now "effectively being nationalized" around the world, and they may not be able to compete for limited funds or receive sufficient help in coping with the current turmoil.

* More has to be done to keep capital from fleeing from developing countries. The so-called "capital-flow paradox" has intensified, meaning profits earned in poor nations often end up overseas rather than helping these countries to further their development.

* And liberalized global markets need to be regulated so that they continue to energize the world economy but have less volatility and risk, especially for small nations that are at the mercy of such factors as large investment and currency shifts.

Refashioning the global financial system "must be a global effort," should include the participation of all countries, and should include significant UN participation, Mr. Supachai concluded.

* Speculation: Major threat to small countries

Heiner Flassbeck, Director of UNCTAD's Division on Globalization and Development Strategies, which produces the organization's flagship Trade and Development Report, summarized the current turmoil as "a global de-leveraging, a global going out of risky positions. That is all right on its own - in fact we have said for several years that this was going to happen - but it can go too fast. It must be slowed down by government intervention."

Flassbeck said currency fluctuations, driven to a great degree by speculation, are proving now to be a major threat to small countries. Widespread speculation known as the "carry trade" for some time has driven currency values in the wrong direction from standard economic patterns, he said. As these now unwind, "there is overdone flight out of currencies perceived to be less secure." "The next row of dominoes to fall in this crisis could be from speculation in currencies," he warned, "and this is not being talked about enough. Countries with appreciating currencies must step in and help stop the process on behalf of countries with depreciating currencies. We have to avoid more cases of what is happening in Iceland."

Flassbeck also warned of a "huge slowdown in trade due to the global recession that is looming”. “The current malaise is that we have built a huge casino next to the real economy, and given too many people the means to play there, and now that casino has collapsed. We need to realize, to learn the lesson, that this kind of casino is not productive, is not helpful. We must go back to balanced and real economic relations and to balanced relations between currencies."

World must learn lessons from food price crisis

Small farmers in developing countries have not benefited from higher food prices, thanks in part to flawed trade and agricultural policies that have made them vulnerable and weakened their positions in markets, said international agency Oxfam in a new report released today, World Food Day. In Double Edged Prices, Oxfam says that all governments, donors, and agencies, must learn the lessons from the crisis. These include the importance of investing in agriculture, having trade policies that ensure food security, and designing social protection systems that protect the poorest.

Teresa Cavero, author of the report and head of research at Oxfam in Spain, said: “The trend in agriculture, as in international finance, has been towards deregulation and a reduced role for the State. This has had devastating effects and innocent lives have been blighted by exposure to market volatility. It is time the world woke up to the need for developing country governments to support their poor farmers, and the obligation of developed countries to help them to do so. In countries where governments have invested in agriculture, and put policies in place to target vulnerable or marginalized groups, the impacts of food price inflation have been less severe. In contrast, where there has been unmanaged trade liberalization, underinvestment in agriculture, and little support from government, the effects have been devastating.”

The sharp rise in global food prices has pushed 119m more people into hunger, taking the global total to 967m. Higher food prices mean people are eating less and lower quality food, children are being taken out of school and farmers are being forced to migrate to cities to live in slums (see case studies below). Women are especially vulnerable because they rarely own land and have limited access to credit and other services, but they bear much of the responsibility for feeding and caring for families. Meanwhile, some of the biggest international food companies have made windfall profits. Commodity-trader, Bunge, saw its profits in the second fiscal quarter of 2008 increase by $583m, or quadruple, compared with the same period last year. Nestlé’s global sales grew nearly 9% in the first half of 2008, and UK supermarket Tesco, has reported profits up 10% from last year. Seed company, Monsanto, reported a 26% increase in revenue to a record $3.6bn in the fiscal quarter that ended 31 May 2008.

Misguided or inadequate national agricultural policies, coupled with unfair trade rules and poor economic advice, has created a situation where big traders and supermarkets are gaining from price rises, and small farmers and consumers are losing out. Oxfam criticizes the international community’s inadequate response – both in terms of money and coordination. At an emergency meeting in Rome earlier this year, $12.3bn was pledged for the food crisis, but little more than $1bn has been disbursed so far.

New ActionAid report: Europe must fight, not foster, hunger

In a week which marks the observance of World Food Day, World Poverty Day and a crucial meeting of EU Heads of State in Brussels, ActionAid is demanding that the EU urgently revisits its plans to address the world food crisis. In a new report, Bread and Butter Solutions to the Food Crisis, ActionAid urges the EU to do more to stem the impact of rising fuel and food prices on the world’s poor. Since the crisis started, the number of people going hungry each night has risen to one billion – one sixth of the world’s population. Furthermore, the FAO has estimated that food prices will remain high for the next five to ten years.

“Rising food and oil prices are acting as a double whammy, driving hunger to new levels and people to desperation,” said Carol Kayira, Food Rights Coordinator of ActionAid Malawi. “Upsets in the banking sector should not divert attention from Europe’s commitments to the poor. The food crisis has not gone away and a coherent European response is badly needed.” This year high prices for European agricultural goods are likely to mean a surplus of billions of Euros in the Common Agricultural Policy (CAP) pot. The EU is currently considering the use of €1bn of this excess cash to address the food crisis.

“The €1bn fund being proposed by the EU is a drop in the ocean when compared to what governments are spending to bail out the banks,” Ms Kayira added. “The EU should mobilise this food crisis fund and keep to its existing commitments on aid. By allocating more and better aid to agriculture, Europe can get back on track and address world hunger,” Ms Kayira added.

More and better aid is not the only action being proposed by ActionAid. The Economic Partnership Agreements (EPAs), being negotiated between the EU and Africa, Caribbean and Pacific (ACP) countries pose a major threat to food security in these countries and must therefore be renegotiated. French MP Christiane Taubira, who wrote an official report for the French Government on the EPAs spoke to ActionAid yesterday on the potential impact of the EPAs: “The EPAs cast a shadow over the potential for development of the EU’s southern partners…. In particular the agricultural sector has to be subject to specific treatment, and an international right to food must be a priority objective.” She also called on the French Presidency of the EU to listen to the concerns recently expressed by Caribbean countries negotiating the EPAs: “The French Presidency must take into account the strong reticence expressed by negotiators from ACP countries which has even come to light within the CARIFORUM grouping, the only one to have initialled the full agreements to date,” Ms Taubira added.

Bread and Butter solutions also highlights the role which agrofuels have played in the recent upsurge of food prices. “In 2007 the EU used 2.85m hectares of farmable land to grow crops for agrofuels, rather than food,” said Laura Hurtado, Food Rights Coordinator at ActionAid Guatemala. “This has fuelled rising food prices and threatened millions more with hunger. Because Europe does not have enough land, it is increasingly looking to developing countries to meet its targets on biofuels. This will only intensify the food crisis.” ActionAid also warns Europe that GMOs will not address hunger in the world. Rather they will contribute to rising see and food prices and make farmers dependent on supply chains in the hands of a few multinational corporations protected by intellectual property rights.

WB/IMF annual meetings failed to guarantee assistance to the poorest

International NGO ActionAid charged that world leaders attending the World Bank/International Monetary Fund annual meetings failed to guarantee assistance for the world’s poorest countries, despite admitting that the most vulnerable could face “serious, and in some cases, permanent damage” from the global financial crisis. Shefali Sharma, ActionAid International’s Food Crisis Task Force Coordinator pointed out that the Bank’s funding response is more applicable to middle-income countries – with its plan to double non-concessional lending through the International Bank for Reconstruction and Development (IBRD) – and will do little to help low income countries.

Sharma said:

“An extra $14bn in the World Bank’s lending to middle-income countries is a drop in the ocean for emerging markets, which have access to other sources of finance and often substantial foreign exchange reserves built up since the Asian financial crisis of 1997/8. It’s no help at all for the poorest countries, which have few resources of their own to cope with the burgeoning food, fuel and financial crises, particularly as the IMF is still imposing suffocatingly tight inflation and deficit targets. Ironically, the pressure of maintaining such restrictive economic policies may be what finally tips some developing countries over the edge in months to come.”

ActionAid said that the final Development Committee communiqué merely reiterates past pledges to deal with the food and fuel crisis, but without any new aid commitments. Instead, the communiqué repeats previous policy recommendations that have little validity in the current state of affairs.

Who owns the IMF?

Guest comment by Ngaire Woods

To fix a global financial crisis, global cooperation is vital. Earlier this week, European countries failed to coordinate their efforts to support their respective banking systems. The result was beggar-thy-neighbour moves, which increased the chaos. Until today's coordinated rate cut by central banks across the world, the prospects of coordination looked dim.

One obvious question to ask is: where is International Monetary Fund? Created by governments to avoid beggar-thy-neighbour policies, to facilitate cooperation among governments, and to contribute to global financial stability, the IMF is curiously marginal. It is standing on the sidelines of the crisis, offering opinions. It is not at the heart of cooperation to resolve this crisis. Central bank governors and finance ministers from across the world have not headed straight for the headquarters of the IMF to find a collective solution. Why not?

The crisis exposes the extent to which the IMF mirrors a bygone era in which the United States was the world's largest creditor and led the G7 countries in giving strategic direction, headquarters and direction to the IMF. Left out of that directorate are emerging economies such as China, Russia, the Gulf States, India and Brazil, which, among other things, now sit on huge reserves (mostly dollar-denominated). These reserves give them a nuclear-like (mutually assured destruction) capability to create havoc in the global monetary system – but also the resources to help recapitalise broken financial sectors in the G7.

Most emerging economies have no more than a cursory interest in the IMF. Politely, they will send representatives to the organisation's meetings. But they do not see the organisation as theirs, nor even partially theirs. They do not trust it as a political forum within which to negotiate, nor as an institution that will establish and apply rules with an even hand.

Reinvigorating the IMF requires a transformation of the rules of headship, decision-making, staffing, the structure and workings of the board and the location and authority of the institution. If the IMF is to offer a forum for cooperation, it will need a dramatic overhaul, going well beyond what is to be discussed in Washington DC at the IMF annual meeting this week. This cannot be achieved without creating an institution that powerful reserve-holding countries come to see as "theirs".

(This comment has been published first in The Guardian.)

World Bank and IMF must tackle food and climate crises for world’s poorest

The World Bank and the IMF must cushion developing countries from the financial crisis that is threatening to hit them hard, while also tackling the challenges of food and fuel price increases, said Oxfam on the eve of the IFIs’ annual meetings. Nearly one billion people are now malnourished and 50 countries will remain at risk in 2009 due to price increases of fuel and basic food staples. This will make the effects of the financial crisis even more painful for poor countries. Oxfam also points to the Bank’s work on climate change and internal reform of its voting power as key issues for the four-day meeting that takes place in Washington DC from 9-13 October.

Oxfam calls on the World Bank to update its five-year old agricultural strategy to reflect the new reality of the food price crisis. In the past, the Bank has pushed for a decreased role of the state in agriculture. This has clearly failed and the Bank needs to set out a new vision. “The fight against global warming cannot be sidelined by the financial crisis either. The Bank has not thought enough about how to protect the most vulnerable communities from the impact of global warming,” Oxfam International’s spokesperson Marita Hutjes said.

The World Bank is also set to propose a new reform on the division of power - called the Voice Reform Package - within the institution. Although welcome and necessary, the reform falls far short of what is needed to make the Bank a truly balanced body. “Anything that comes up short of giving developing countries parity of the voting share will be insufficient. We need more than token change. Clearly, 21st century institutions cannot function on post-war rules,” Hutjes said.

Europe’s banking crisis: A call for action

In an open letter published today on VoxEU.org, a group of leading scholars call on Europe's leaders to unite immediately to address the global financial crisis head on before it spirals out of control. While actions by US policy-makers are welcome, a decisive and coordinated response from Europe's nations is required, or they may find themselves fighting over how best to salvage the aftermath. The letter was written by Alberto Alesina, Richard Baldwin, Tito Boeri, Willem Buiter, Francesco Giavazzi, Daniel Gros, Stefano Micossi, Guido Tabellini, Charles Wyplosz and Klaus Zimmermann. The letter says:

Europe is in the midst of a once-in-a-lifetime crisis. Every European knows what happened when financial markets seized up in the dark years of the 1930s. It is not an exaggeration to say that it could happen again if governments fail to act. We are not predicting that it will happen, but it is critical to know that this is what is at stake.
Trust among financial institutions is disappearing and there are risks that fear will spread more widely. Turmoil in financial markets must be stopped before it causes major damage to the real economy. The savings of hundreds of millions of Europeans are directly threatened. If the turmoil produces credit market paralysis, jobs and businesses will be destroyed on a massive scale. A further weakening of the real economy would put more loans at risk and create a vicious cycle of falling asset prices, deteriorating ability to repay loans, and diminishing credit flows.
Actions by US policymakers are welcome, but they are not sufficient. Decisive policy action is required in Europe as well.

* Policy spillovers: European-level actions to supplement and coordinate national actions
The US authorities learned last week that saving one bank at a time won't work; a systemic crisis demands a systemic response.
In Europe, saving one bank at a time means either a rescue effort mounted by one nation, despite important spillovers to neighbouring countries, or last-minute improvised coordination and agreement about fiscal burden sharing. The national responses and ad-hoc cooperative efforts to date have been useful. Yet interdependence among European banks is too deep and too wide-spread for national responses or case-by-case coordination to be enough. Each national policy intervention and each cooperative intervention by a small number of countries can have unpredictable implications for other European nations. It is critical that national authorities sit together and coordinate their responses, developing Europe-wide solutions where appropriate.
Now is the time to act while the situation still appears manageable. Last week's events in the US demonstrate that financial crises do not evolve smoothly and predictably. One unexpected event can trigger a cascade of failures and panics that become increasingly difficult to control.

* Solutions
Many solutions will be part of the answer. In the US, dealing with the immediate crisis requires restoring liquidity to money and credit markets, and creating the conditions for the resumption of the securitisation of prime mortgages and other illiquid but sufficiently homogeneous and transparent assets. In Europe, the key problem is high leverage among the internationally active large banks. Hence the EU contribution must be centred on a recapitalisation of the banking sector, through the injection of public equity or through mandatory debt-to-equity conversions. This has to be done at the EU level (e.g. through the EIB). The current approach of rescuing one institution after another with national funds will lead to a Balkanisation of the European banking sector. Agreeing a harmonised level for deposit insurance would also be important.
To prevent future crises of this nature, regulation of the European financial markets and institutions at the European level will also be required.
The problem is not a lack of understanding of how to stop financial crises. The problem is a lack of political will.
Unless European leaders immediately unite to address this crisis before it spirals out of control, they may find themselves fighting over how best to salvage the aftermath.

The model of globalization stands discredited: Time for change has come

Against the background of the ongoing global financial crisis the International Trade Union Confederation (ITUC) has published the following statement:

The political wrangling in the US Congress over a $700 billion bail-out plan may well reflect the disgust and anger of working people everywhere at their taxes being used to bail out those whose greed, irresponsibility and abuses have brought the world’s financial markets to the brink of collapse and raised the spectre of global recession.

But it has also deepened a crisis which threatens the jobs, homes and futures of billions of human beings – those who never drew profit from the years of excess, whose work has been underpaid and degraded and who bear no responsibility for what is now happening.

Having looked into the abyss they have helped create, policy-makers are waking up to the need for regulation of the world economy and for governments to finally take up the duties they have long abdicated - to set rules for markets, to protect and provide for their citizens, and to intervene to ensure socially equitable and sustainable outcomes.

This awakening comes late, but if it goes deeper than a passing concern to extinguish the fires raging in the financial markets which are threatening to engulf the real economy, then it is to be welcomed. Because only by breaking the habit of hanging on the coat tails of financial interests, abandoning their complicity in the generation of massive and growing inequality, and ending their underwriting of corporate greed and excess, can governments reconnect with the realities of the lives of working families, and begin to provide the leadership and the answers they demand.

The immediate task is to respond decisively and effectively to the financial crisis with assistance for its victims but without reward for its authors. But the scale of the challenge ahead goes far beyond even this massive task.

When the ITUC was founded in 2006, it highlighted the need for fundamental change in globalization and committed itself to bring it about.

The time for that change has come.

Resolving the financial crisis must go hand in hand with concerted international action to stimulate jobs and growth so that the imminent danger of world recession is averted, and economies are launched on paths of just and sustainable development.

The essential task of regulating financial markets, so as to shut down the option of a return to business as usual and a repetition of today’s debacle, must be one component of a wider agenda to reshape the management of the global economy.

The imbalances which have seen real wages fall or stagnate, at the same time as capital has reaped record profits, need to be redressed. Organising and bargaining rights, recognized internationally, must be enforced universally so workers can have real influence over their lives and their futures. The trade agenda, mired in the impasse of the Doha Round, can only move forward once it is based on the imperatives of decent work, development, rights and equity. The international community faces too the unavoidable obligation to agree quickly an effective plan to combat climate change, where failure would have consequences far beyond anything that financial meltdown might bring.

The bottom line is that the model of globalization which has reigned supreme for over two decades stands discredited. But in its failure are the seeds of opportunity for fundamental change.

The ITUC calls on all governments to seize that opportunity and to act with courage, vision and principle to reinstate commitment to social justice, decent work and sustainability at the heart of policy making and as the central objectives and rationale of economic activity.