The Economic and Social Council (ECOSOC) this afternoon held a panel discussion on the impact of the financial and economic crises on sustainable development, particularly their social implications.

Somduth Soborun, Vice-President of the Economic and Social Council, introducing the discussion, said this was an opportunity for the Council to examine short- and long-term implications of the current financial and economic crises on all dimensions of sustainable development, and to explore ways in which the United Nations and the international community could facilitate an effective and sustainable response to the crisis.

Panellists were Helen Clark, Administrator of the United Nations Development Programme; Juan Somavia, Director-General of the International Labour Organization; Antonio Maria Costa, Executive Director of the United Nations Office on Drugs and Crime; Noeleen Heyzer, Executive Secretary of the Economic and Social Commission for Asia and the Pacific; Harsha V. Singh, Deputy Director-General of the World Trade Organization; and Hilde Johnson, Deputy Executive Director of the United Nations Children’s Fund UNICEF.

Among the issues and topics raised by Panellists was that those least responsible for the crisis, the poorest and the most vulnerable, stood to bear the brunt of its effects, and were also the least able to respond. The reality was that the international community had been talking about and promoting sustainable development for a long time, but everybody knew that the world was far away from having a sustainable development paradigm or policies. Now more than ever, there was need for commitment to inclusive and sustainable development, focusing on low-carbon green growth, and placing high priority on reducing poverty and inequality. Developing the foundations for social protection needed to be seen by countries as an economic investment, rather than a social cost. The current crisis threatened recent and historic gains in the survival and well-being of the world's children, and was undermining the global effort to reach the Millennium Development Goals - urgent action was needed to preserve these gains, as well as to address the crisis.

There was a need for a global framework to respond to the crisis - no single country or organization could respond. Coordination was essential - between international organizations and secretariats, and within and between Governments. ECOSOC was the place to examine coordination. It was clear that if the problems were global and interconnected, then so were the solutions, and without recognising this, there was no way to exit the crisis. The economic crisis could be used as an opportunity to move from individual country responses to a more integrated and coordinated response that built upon collective regional strengths and resources. Karl Marx had proposed social revolution as the ultimate solution to crime, “get rid of inequality and you get rid of the motivation for crime”. More realistic was the approach advocated last week by another famous German, Pope Benedict XVI, who said “in an increasingly globalized society development depends on justice and the common good”.

During the interactive debate, delegates raised, among other things, the effects, implications, and responses required in order to deal with the problems resulting from the present global crises. These problems were increasingly interrelated and thus, within the framework of the United Nations system, efforts had to be better coordinated in order to better respond to these problems. The theme of coordination was central at a time when the multi-dimensional aspects of the crises had become ever more evident. The crises affected developed and developing countries, but the poorest countries would be hardest hit. The real economy had to play its role; job creation was an imperative; development and justice would lead to equality, and cooperation and counter-cyclical policies particularly in social areas were necessary. No one country alone and no one institution could deal with this crisis - global problems needed global solutions.

Delegations taking the floor included Malaysia, France, Namibia, Brazil, Pakistan, Sweden on behalf of the European Union, the Philippines and Algeria. Also speaking was a representative of World Alliance for Citizenship Participation (Civicus).

The next meeting of the Council will be at 10 a.m. on Tuesday, 14 July, when it will continue with its coordination segment and hear introductions to the report of the Secretary-General on the role of the Council in the integrated and coordinated implementation of the outcome of and follow-up to major United Nations conferences and summits, and the report on progress made in the implementation of and follow-up to the World Summit on the Information Society outcomes at the regional and international levels. After a general discussion on the reports, it will hold a round-table discussion entitled “Towards a UN comprehensive response to the challenges of climate change”.

Opening Statement

SOMDUTH SOBORUN, Vice-President of the Economic and Social Council, introducing the panel discussion on the impacts of the financial and economic crises on sustainable development, particularly their social implications, said the global financial crisis had not only led to the disappearance of immense financial wealth and capital assets, but had also caused the loss of millions of jobs and triggered the deepest global economic recession since the Great Depression. The social implications of this scenario were dire. People in all countries were faced with less job opportunities, greater income insecurity, and greater risks of falling into poverty. In the developing world, the social implications of the crisis were bound to be more severe due to the lack of the social safety nets that were available in developed countries. It was anticipated that a majority of developing countries could face a substantial rise in global poverty, leading to social unrest.

The global financial crisis also risked undermining current progress and future prospects for a sustainable future. This was the time to take policy actions commensurate with the scale of the problem. Failure to find a sustainable way out of the financial crisis would have severe implications, not only on immediate economic prospects, but also on the ability to manage the costs of progressively deteriorating human and environmental conditions. The United Nations system had an important role to play in ensuring that the international response translated into policies that would focus on restarting economic growth in ways that provided clear, long-term incentives to build a sustainable future. This panel was an opportunity for the Council to examine short- and long-term implications of the current financial and economic crises on all dimensions of sustainable development, and to explore ways in which the United Nations and the international community could facilitate an effective and sustainable response to the crisis.

Statements by Panellists

HELEN CLARK, Administrator of the United Nations Development Programme (UNDP), said around the world the economic crisis had caused misery and hardship. Those least responsible for the crisis, the poorest and the most vulnerable, stood to bear the brunt of its effects. They were also the least able to respond. Forceful policy action, nationally and internationally, had prevented a collapse of the global financial system, and there were signs of stabilization and improved confidence, as the G8 leaders had noted. For many developing countries, however, the full impact of the crisis was only being felt, as they experienced steep declines in exports, investment, remittances, and, where relevant, tourism volumes and receipts. Faced with the resulting slump in revenues, Governments in many developing countries were less able to respond to their peoples’ needs at this time when social protection was most required. The United Nations development system had been articulating and supporting a coherent global response to the current global crisis.

In the United Nations Development Programme, for example, they were assisting programme countries to analyze the human development impact of the crisis, and to design appropriate programmes and policy responses on how to protect the most vulnerable through social protection initiatives. The United Nations Development Programme could advise on what had worked in other countries to mitigate the impact of severe economic shocks, and was sharing lessons and advising nations accordingly. The economic crisis had come on top of recent experiences of high food prices which placed great stress on poor and vulnerable countries and people. It also came as the world faced the first influenza pandemic in 40 years and the huge climate challenge. These complex and often inter-connected challenges threatened to overwhelm the already limited capacity of poor countries and their populations to cope. They reminded them of the importance of developing critical capacity needed to make nations and communities more resilient to shocks in the longer term. They also reminded them that they had to have integrated approaches to dealing with the multiple and interlinked challenges facing the world.

JUAN SOMAVIA, Director-General of the International Labour Office, said the fact was that the international community had been talking about and promoting sustainable development for a long time, but everybody knew that the world was far away from having a sustainable development paradigm or policies. Progress had been made in some areas, but the logic under which the international community had developed did not include sustainable policies, and this was why there were problems today. There was backsliding on Millennium Development Goals, and a general weakening of the middle classes that had begun before the financial and economic crises, and was continuing today. The social impact of the crises was thus very wide. By listing the types of problems, it was clear that they were inter-connected. It was clear that if the problems were global and interconnected, then so were the solutions, and without recognising this, there was no way to escape the crisis.

The sustainable development approach had two advantages. The longer-term advantage was that it could deal with crises before they arose. Inequality had grown due to the prevailing policies that had existed. At the same time as dealing with the crisis, the international community also had to change the prevailing situation. There were policies that overvalued the capacity of the markets to self-regulate, and undervalued the responsibility of the States, the dignity of work, the environment, and other social factors. The ILO had put together a global jobs pact that sought to see employment, social dialogue and social factors at the heart of solutions for the economic crisis. Coordination was essential, between international organizations, secretariats, and within and between Governments. ECOSOC was the place to examine coordination. The sustainable development approach was a good approach, and was a way to move forward. There was still a lot of work to be done at the Governmental level to ensure that international efforts were coherent, and this required a degree of national coordination that could be expanded further.

ANTONIO MARIA COSTA, Executive Director of the United Nations Office on Drugs and Crime (UNODC), said the social and economic crises were increasing the vulnerability and consequences to uncivil behaviours. In most cases, where his office was asked to intervene, Governments did not control the territory. Such activities included drug cultivation in Afghanistan and Colombia, drug trafficking in Western Africa, the Caribbean, or Central America, piracy in East Africa, illicit exploitation of natural resources in the Democratic Republic of the Congo or the Niger Delta, human trafficking and smuggling of migrants, grandiose corruption with national assets stolen, and violence in urban ghettos. The United Nations Office on Drugs and Crime helped Governments regain control of these areas. Development and economic growth were necessary in these parts of the world. Over the past two decades, since the collapse of communism, the world had been characterised by globalization, in the past 20 years the world had never seen such growth – it also facilitated the growth in organized crime and illicit activities.

Counteracting high levels of drugs trafficking, crime and terrorism required within the United Nations system collective efforts to reduce corruption in countries, improve aid effectiveness and promote development. Access and treatment for drug addicts was also necessary. With respect to drug cultivation, it was not enough to eradicate cultivation, it was necessary to provide alternatives to illicit activity. For instance, in the case of a number of countries in West Africa, they relied heavily on the drug cartels: the Golden Triangle, parts of the Andean region, and poppy-free provinces of Afghanistan. Mr. Costa stressed that real solutions required shared responsibility within and among nations, and shared responsibility within and among United Nations agencies was ever more needed. Karl Marx proposed social revolution as the ultimate solution to crime, “get rid of inequality and you get rid of the motivation for crime”. More realistic was the approach advocated last week by another famous German, Pope Benedict XVI, who said “in an increasingly globalized society, development depended on justice and the common good”.

NOELEEN HEYZER, Executive Secretary of the Economic and Social Commission for Asia and the Pacific, said the economic crisis had rolled back the hard-earned development gains of the past several decades. Sustainable development was under threat with fewer resources available to deal with both development threats and challenges. The human costs of the crisis had been incredibly high, as millions lost their jobs and even more fell into poverty and income insecurity. Now more than ever, there was need for commitment to inclusive and sustainable development, focusing on low-carbon green growth, and placing high priority on reducing poverty and inequality. Developing the foundations for social protection needed to be seen by countries as an economic investment rather than a social cost. Fiscal stimulus packages needed to be engendered, if they were to deal with women in general and the manufacturing and agricultural sector in particular, where women played a significant role.

Besides job losses, another concern was the loss of development revenue due to the declining growth, capital outflow, loss of remittances and declining official development aid in Least Developed and Land-Locked Countries and Small Island States. Not all countries had the fiscal space to implement countercyclical measures, due to large existing budget deficits. The time had come to restore stability and sustainability into the economic and social order, and the economic crisis was a unique opportunity to do this. The huge scale of Government spending in the pipeline in many countries offered an unprecedented opportunity to design development policies that would bring about more inclusive and sustainable development. Green growth provided alternatives to traditional economic growth models, and could help lead the current climate change agenda. The economic crisis could be used as an opportunity to move from individual country responses to a more integrated and coordinated response that built upon collective regional strengths and resources.

HARSHA V. SINGH, Deputy Director-General of the World Trade Organization (WTO), said the World Bank had released its latest assessment and had estimated that global output would fall by 2.9 per cent in 2009, down from the previous estimate of 1.7 per cent decline. The Organization for Economic Cooperation and Development’s Economic Outlook released last week gave for many developed countries a similar picture of a greater decline in their Gross Domestic Product than estimated earlier. For international trade too, they had a similar situation. The World Trade Organization Director-General, Pascal Lamy, had announced that the forecast for decline in global trade was now 10 per cent instead of the 9 per cent estimated earlier by World Trade Organization. The forecasts of last week showed expectations of slightly higher than expected growth by 2010, but the recovery was expected to be weak. The global economic and financial crises had negative social implications, as was evident from the developments in various Millennium Development Goals. For instance, the number of persons hungry or with malnutrition rose above 1 billion. For Asia and the Pacific region, the Asian Development Bank estimated that the crisis had added 80 million more vulnerable persons in 2009 and for 2010 this would be 130 million more.

The crisis had shown very clearly that for sustainable development and dealing with social implications, various nations needed to work together. There was a need to take domestic policy measures including safety nets, improved regulatory mechanisms, capacity building, provision of finance for productive activities including international trade, and promoting a policy environment which allowed greater economic and social growth. Nations had to curb protectionist measures, because, as they remembered from the experience in 1930, such measures led to a domino effect of closing markets and strengthening a crisis, observed Mr. Singh. Policy makers today faced stakeholders that were extremely sensitive to news of trade barriers imposed elsewhere. Furthermore, with multiple areas of global concern and overlapping groups of countries which needed to address them, there was a special need to be very careful because actions taken in the area of international trade had major implications which went far beyond the area of trade. The speed of recovery from the crisis would depend crucially on the policies that were implemented during the crisis period and beyond.

HILDE JOHNSON, Deputy Executive Director of the United Nations Children’s Fund (UNICEF), said there should be no illusions - this was not a crisis that was only hitting emerging economies or the Organization of Economic Cooperation and Development economies or those who were subject to remittance cuts - it was a crisis that was hitting broader, harder, and deeper, all over. This was a global crisis, with global implications, and this should be grasped. On the Least Developed Countries’ low-income side, these countries were now suffering severe shortfalls in budgets. The fall in commodity prices was also having severe repercussions on budgets, with concomitant effects on medical and social spending. Export economies were faced with very big problems. This was having effects on stability. There were three typical trends when the crisis hit: there was more hunger, as people could afford less food; there was more disease, violence and stress; and there was less education and more child labour, as people took their children out of school to work. Acute malnutrition was on the rise, and this hit children the hardest, with a multi-generational impact. This would continue - the food crisis was not over.

The crisis was hard-hitting, and was hitting where it had not been expected. The poor and most vulnerable were taking a hit in private lives and families - they should not be hit twice by cash-strapped Governments making cuts in health and education budgets, or social protection programmes, nor a third time by other countries cutting aid. It was time to make a counter-cyclical investment, increasing aid so as to ensure achievement of the Millennium Development Goals and to create a buffer in people's lives. Some Governments were actually stepping up efforts to protect their most vulnerable groups, strengthening nutritional programmes, and making changes in tax policies. Most, however, were far from this, and the crisis should be used as an opportunity to create more resilient systems and to build up health, education and social protection programmes. There was a need for a global framework to respond to the crisis - no single country or organization could respond. The current crisis threatened recent and historic gains in the survival and well-being of the world's children, and was undermining the global effort to reach the Millennium Development Goals - urgent action was needed to preserve these gains, as well as to address the crisis.

General Discussion

During the general discussion on the impacts of the financial and economic crises on sustainable development, particularly their social implications, speakers raised questions and concerns on, among other things, the effects, implications, and responses required in order to deal with the problems resulting from the present global crisis. These problems were increasingly interrelated and thus, within the framework of the United Nations system, efforts had to be better coordinated in order to better respond to these problems. The theme of coordination was central at a time when the multi-dimensional aspects of the crisis had become ever more evident. Speakers raised questions on the broader issue of coherence; there was a lot of discussion on making the global economy greener; were there existing structures already in place that would enable, in particular, developing countries to move their economies to a more green economy? Developed countries were spending their way out of the crisis, however, when the crisis hit Africa, countries were advised to cut back on spending; what did that mean – spend their way out of the crisis or trade their way out of the crisis? There was no clear message out of the crises. The crisis affected developed and developing countries, but the poorest countries would be hardest hit. The real economy had to play its role; job creation was an imperative; development and justice would lead to equality, and cooperation and counter-cyclical policies particularly in social areas were necessary. No one country alone and no one institution could deal with this crisis - global problems needed global solutions.

Concluding Remarks

HELEN CLARK, Administrator of the United Nations Development Programme, responding to the questions and comments, said with regards to coherence of response to the crises, the work done by the Committee of the Chief Executives Board had been very important in coordinating a United Nations-wide response to the crises. It was encouraging to see so much action underway in a wide range of areas. Developing countries were hearing that they should not be spending their way out, but cutting their way out, a pro-cyclical response that was not very helpful with regards to employment, health, and other issues. UNDP saw its role as supporting the United Nations Secretary-General and helping to maintain focus on development issues within countries. Many countries did not have the ability to service loans, and thus aid was required also in this area. Pledges should be honoured with regards to aid - 90 per cent of what had been pledged for Africa had not been delivered.

UNDP intended to focus on a process around the Gleneagles scenario. With respect to the green growth agenda, and the issue of whether a crisis was the time to shift gears, it probably was, as a crisis was a time for fresh-thinking and innovation, to take the steps that would be transformational in the long term, and green growth filled these requirements. It was necessary to continue investment, and where that was possible, investment and green growth would bear dividends in the long term.

JUAN SOMAVIA, Director-General of the International Labour Organization (ILO), in his response to questions and concerns raised during the general discussion, said on the green growth question, in the developing world there was a strong consciousness that the green approach was sensible for the future. For instance in China and India, there were already such technologies in place. This required a better analysis. Most of those countries with a stimulus package decided to give a green package, which was new and needed to be taken into account. From the International Labour Organization’s perspective, anything negotiated in Copenhagen would take place in the real economy. As a result of negotiations there would be both negative and positive effects; a social dialogue was already taking place to address the possible negative effects. On funding, there were four types of countries; ones that had fiscal space and were now using that to deal with the effects of the crisis; countries which had no access to fiscal space and were utilizing the market; countries which did not have either and were negotiating with the International Monetary Fund; and Africa and Least Developed Countries. Within the budgets of each of the respective countries in the world, priorities needed to be identified which had political implications, and many tax structures had been subsidizing activities that would not be favourable in crisis mode. Transformational change was important, particularly in terms of ethics. There were no answers now, but there should be a discussion on ethics, what were the paradigms that would emerge? This would not be possible if the same ethical basis was applied that led the world into this financial and economic crisis.

NOELEEN HEYZER, Executive Secretary of the Economic and Social Commission for Asia and the Pacific, said one issue was how to ensure that the world walked towards a more stable and more supportive financial system for sustainable development. In the past, Asia had traded itself out of the crisis, but this would not happen again. Many shifts would have to occur, including greater intra-regional markets and South-South markets, as well as greater social protection, creating mobility and greater security so that people could provide the impetus for greater and increasing domestic demand. This was a time to discuss how to address the issues of inequality in societies, regions, and across the world. The economic imbalances and all that created, the social imbalances and other imbalances all needed to be addressed. The decline in aid and development revenue needed to be examined. There was a need for a debt moratorium. It was time to rethink the deeper transformation, so that countries did not create a crisis of this impact or extent. It was time to shape the global agenda to eliminate the incredible disparities in the world today with so many millions suffering hunger and disease.

It was not just an issue of emerging from the crisis, but also preventing a crisis of this magnitude from hitting humanity ever again. This was why the climate change agenda was important, as it was an inter-generational crisis, and could be a long-term crisis. Small Island States were losing the possibility even of survival - for them, climate change was not a long-term issue, but one of survival or extinction. These imbalances required examination, and a strategy that provided greater stability, including ecological stability, was what was required, so that things were more equal. A true strategy that addressed poverty reduction and closed gaps in equality whilst being sustainable was the only true solution.

HARSHA V. SINGH, Deputy Director-General of the World Trade Organization (WTO), in response to the questions and concerns raised during the general discussion, said in terms of the definition of protectionism, in the report the phrase “trade restricting” or “trade distorting” was used to describe protectionism. The Director General of the World Trade Organization said as far as the issue of climate change was concerned, the solution needed to come from the climate change fora first. The time taken in order to contain or move to recovery was much greater than that of past crises. If the answers received from some of the panellists were taken into account one would see that there were a number of initiatives already taking place to address the crisis. With regard to the questions raised on how to finance one’s way out of the crisis, he said they had to keep in mind that the emphasis was not just on ‘finance’, but also ‘how’. The finance aspect, together with desirable policies would give a bigger thrust out of the crisis, along with short and long-term initiatives, and coordination with other organizations.

HILDE JOHNSON, Deputy Executive Director of the United Nations Children’s Fund (UNICEF), said this crisis had hit broader, harder and deeper than had been predicted. It was all about scale – this was a scale that was unprecedented. It seemed that, with the significant bail-out policies on the table, there was the death of the Washington Consensus, and this was interesting, as it showed that all international players had not understood what had happened, and that policy advice given was worthless. All had been taken by surprise, especially economists. There was a policy change, therefore, but how this looked was still unclear. What had been learned was that there was a need for adjusted policies, suitable to the relevant countries.

One clear change was to make counter-cyclical investments - there was no sense in cutting health and social spending as this undermined future investment. Domestic resources had to be used to meet the needs of the poor, and at times of crisis, there should be more investment in poor and vulnerable people. The least developed countries were now in a position with more room to manoeuvre in their economy. This was a transformational situation, with economists searching for the right policy solutions, the G8 developing into a G20 environment, and with the need to search for the right solutions for countries in crisis with very different problems. There was an essential need for a commitment by rich and middle-income countries to deliver for their own poor. Without delivery of human and financial resources, matching the situation on the ground, then the world could not emerge from the situation and escape from the crisis, and this was the time to ensure this delivery.

THOMAS STELTZER, Assistant Under Secretary-General for Policy Coordination and Interagency Affairs, said that six key players had this afternoon shared their insights and analysis of the crisis and how to get out of it, which might help provide a coherent United Nations response, and therefore help Member States in their policy formulation. The start of recovery and the perception would be important for the solution. A huge crisis might also provide huge opportunities, to re-think the future of the system and to do away with the root causes. A year following the start of the crisis, had this been achieved? While the spreading of the crisis was uneven in speed, how would the recovery look? Some economies had injected funds into the economies to deal with the adverse effects of the crisis, did this help? Did they have the means to inject another set of funds? Where did the world stand now, and where was it headed? Fractions of certain sectors of economies were seeing recoveries. A comprehensive strategy needed to be created, and hopefully the United Nations would play an important role here. What was the role of the United Nations institutions? What could the reformed ECOSOC do? This was a real opportunity, if taken.


For use of the information media; not an official record

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