The first scandal in the road to the reform of the international monetary and financial system
Raúl de Sagastizabal
International Consultant
The international financial agencies reform bids have now been supplemented by an United Nations overhauling initiative. Additional resources, tougher powers for the Organization, are the scheme’s mainstay.
Strikingly enough, such idea stepped to the fore in a context where the developing countries were wondering whether it made any sense for them to keep making contributions to international political organizations, such as the UN, year after year, installment after installment, fund after fund, donation after donation, without getting anything in exchange –just for fear of becoming isolated and no longer being considered as members in good standing of the international community.
Such developing countries’ misgivings made themselves felt in Mexico in 2007, when the country was casting a critical eye on the alleged benefits of remaining a member of the two-hundred-and-forty-three international organizations it belongs –and makes financial contributions to. A prestigious Mexican ambassador suggested the inclusion in the final assessment report of “recommendations for the international organizations to jiggle up their flaccid, slothful bureaucracy and produce programs with tangible benefits.”
The developed countries, however, fail to recognize the new scenario, and stubbornly stick to a now defunct geopolitical order.
The four big emerging economies –Brazil, China, India, and Russia– keep working to build a new power space. The first BRIC summit, a few days ago, in Yekaterinburg, is to be the first one in a long series.
Having learned the lessons of the IMF–exacerbated Asian crisis, the ASEAN + 3 countries, in turn, are setting up their Asian Monetary Fund, and broadening the Chiang Mai Initiative.
And the developing and emerging countries, still in need of concessional assistance and international cooperation, demand a “responsible multilateralism” where each dollar be put to sensible use.
An outcome to be expected from such demands was a debate on the role of the “political” international organizations. It is been a long time since the reform of such bodies was first demanded: they are blamed for being too expensive, pursuing theoretical aims that are, to say the least, debatable, and enjoying boundless irresponsibility, sempiternally renewable resources, and license to waste public moneys ad libitum.
Unfortunately, the UN-renewal proposals point to another direction. Far from addressing the above issues, they recommend the creation of a Global Economic Council, on the one hand, and endowing the Organization with enlarged resources-cum-enhanced powers, on the other hand.
A few days ago, in a move consistent with German Chancellor Merkel’s proposal for “a United Nations Economic Council modelled on the UN Security” –including veto powers– the Stiglitz Commission called for the creation of a Global Economic Council under the United Nations, and seven new ministerial and technical groups.
Note that at the Follow-up International Conference on Financing for Development, held in December 2008 in Doha, Qatar, the Member States decided to hold a top-level conference on the world financial and economic crisis and its impact on development. As a result, the President of the General Assembly established a Commission of Experts chaired by Nobel laureate Joseph Stiglitz –and consisted of prestigious academics–, to produce recommendations for the International Monetary and Financial System reforms.
In the first draft of its report 1/, the Commission proposed eight new agencies and/or mechanisms: a new credit facility, an IPCC-type expert group on the global economy, an Economic Council under the UN, a financial products safety commission, an international bankruptcy court and a new system of global reserves.
The second paper, from the General Assembly President, also advocates for the creation of eight new entities (distinct from the aforementioned ones), to wit: the Global Stimulus Fund, the Global Public Goods Authorities (Sea, Space, Cyberspace). The Global Tax Authority, the Global Financial Products Safety Commission, the Global Financial Regulatory Authority, the Global Competition Authority, the Global Council of Financial and Economic Advisors, and the Global Economic Coordination Council,
The preliminary draft of the full report –a very restrained version of the previous ones— recommends the creation of a Global Economic Council and seven technical groups in the following areas: 1. Global Stimulus for Restructuring and Survival, 2. Finance for Restructuring and Survival, 3. Emergency Trade Stimulation and Debt Relief, 4. Global and Regional Reserve Systems, 5. Regulation and Coordination of Global Economy, 6. The restructuring International Institutions y 7. The role of the United Nations, in terms of keeping the Conference operative and establish the seven ministerial and technical groups.
And the Secretary-General report maintains the idea of a Global Economic Council or the reform of the Economic and Social Council (ECOSOC).
No one knows how the Qatar mandate on assessing the crisis effects on development ended up in a full-fledged international political and economic architecture overhauling program spearheaded by the United Nations, with unmistakable quasicolonial traits.
The first two documents have been shelved for the time being, but some of the bodies and ideas suggested deserve being borne in mind: an international sovereign bankruptcy court; regional/global reserve systems; an authority responsible for world public goods; another one dealing with world taxes, and a global economic board with veto powers. In sum, a super powerful organization that would take care of all world matters –including those of national sovereign jurisdiction— and financed by direct taxes.
Some instances seem to be pursuing a world-changing agenda of their own. Not without a measure of alarm in some circles. Press reports mention a last-minute summit postponement until end-June, in the wake of “disagreements” which unleashed chaos and produced a new “blame game.” Diplomats of some G-20 countries termed the summit a "joke", a "tragedy", a "waste of time.” Confirmed no-shows are said to have contributed to the summit postponements.
Last April, coinciding with the work of this Commission, UN Secretary-General Ban Ki-moon made the following call for a new multilateralism – a UN with enhanced resources and enlarged powers.
“The Imperative for a New Multilateralism
For the world and its peoples, 2009 could be a make or break year
We need a new vision, a new paradigm, and a new multilateralism.
A multilateralism with institutions that have the necessary authority and resources
We know what we have to do. We know who has to do it. The question is, how do we do it?
Strengthening the United Nations must also be part of the picture. The financial crisis led G-20 leaders to provide new authority and resources to the International Monetary Fund. It also prompted calls for reforms of both the IMF and the World Bank -- calls heard for years but galvanized only now. The United Nations must also be strengthened and reformed.
In recent years, Member States have given the United Nations and the Secretary-General increased mandates. However, they have not provided us with the commensurate authority and resources. Very bitter and serious budget battles in recent years have taken us further from what we need: an effective and empowered instrument of service capable of meeting the dominant global challenges of the twenty-first century.”
Regarding the peacekeeping missions, he said:
“And in the area of peacekeeping, the members of the Security Council have the primary responsibility for the maintenance of peace and security. But they also have a responsibility to ensure that the resources --human, financial, material, technical and political--will be available to meet the Council's mandates.
A decade ago, when a new blueprint for peacekeeping was developed, the UN fielded less than 20,000 civilian, military and police personnel. Today, that number exceeds 110,000.
This year, we will spend nearly $8 billion in peacekeeping.”
Leaving aside any political consideration –political influence of the dominant countries, voting- and veto powers, etc.-- we see only three (3) examples of tangible activities that call into question they really know “what to do” and “who has to do it.”
Task No. 1 - Renovation to the residence of the Secretary-General (Resolution A/61/523, Agenda item 117)
In 2006 the General Assembly approved a $4.49 million renovation project for the residence of the Secretary-General, in addition to another $202,500 for temporary accommodations for the incoming Secretary-General Mr. Ban and his family, at the New York Waldorf-Astoria.
The following table itemizes the project’s bill all of us taxpayers of the richest and poorest nations are supposed to foot for the renovation works:
(United States dollars)
Particulars | A/61/377 Infrastructure and aesthetic costs |
Architectural and engineering fees | 397 000 |
Central heating, ventilating and air conditioning system | 2 100 000 |
Electrical system upgrade | 250 000 |
Kitchen upgrade | 200 000 |
Entry hall restrooms refurbishment | 100 000 |
Public areas repairs and upgrade | 425 000 |
Phone systems replacement and upgrade | 65 000 |
Miscellaneous landscaping | 100 000 |
Total infrastructure/aesthetic breakdown (aesthetic: 245 000) | 3 637 000 |
Temporary accommodation costs | 202 500 |
Access control package | 85 000 |
Physical control system and alterations | 263 500 |
Digital video recording systems and additional cameras | 137 700 |
Specialized monitoring sensor system | 148 800 |
Time device and replacement monitors | 8 900 |
Fire system upgrades with Headquarters connectivity | 7 900 |
Security upgrades | 650 900 |
Total cost estimate | 4 490 400 |
Over half a million dollars for public areas refurbishment and landscaping!
Another US$250,000 for aesthetic expenses.
A little bit too much, even for a crank who paid the works with his own monies.
Task No. 2 - Capital Master Plan, Renovation of the United Nations New York Headquarters
The UN-building renovation works were officially initiated in Turtle Bay, NYC, on 5th May, 2008, at an estimated cost of US$1.9 billion. By now costs for the 4-5 year project have been growing, and the total currently exceeds US$2.0 billion.
By mid-2005 the 1.2 billion dollar price tag for the project appeared exorbitant to many New York real estate developers.
Concerned about the waste of American taxpayer funds, a Senate Subcommittee required explanations on project funds and the absence of audit reports and a cost breakdown.
At the hearing before the Subcommittee, the developer Donald Trump said: "In my real opinion, it should cost around $700 million", and predicted the results of following the approach of the United Nations in the following terms: “It will cost over $3 billion because they just don't know what they're doing.”
Nonetheless, the project was approved just as planned by the UN, and the 192 Members are willy-nilly responsible for the costs.
The project involves emptying the whole UN complex, renting buildings for the personnel for as long as the works last 2/ and building a temporary conference room. The Temporary North Lawn Conference Building will cost about US$150 million 3/, and be demolished in 2013, as soon as the works are completed! 4/. …
While this is being written, the UN speaks out about the plight of the world’s 1 billion+ hungry ones.
Task No. 3 - Haiti – United Nations
In 2004, “having determined that the situation in Haiti continued to constitute a threat to international peace and security in the region and acting under Chapter VII of the UN Charter, the Security Council, by its resolution 1542 of 30 April 2004, decided to establish the United Nations Stabilization Mission in Haiti (MINUSTAH).”
This mission, staffed with three Special Representatives of the Secretary-General and 498 international personnel, has just being reinforced with the Special Envoy of Ban Ki-moon -- former President Bill Clinton.
A few facts and figures on MINUSTAH:
Location | Haiti |
Headquarters | Port-au-Prince |
Duration | 1 June 2004 to present |
Current authorization | Until 15 October 2009 (S/RES/1840) |
Strength | Current strength (31 March 2009): 9,055 total uniformed personnel, including 7,044 troops and 2,011 police, supported by 506 international civilian personnel, 1,255 local civilian staff and 194 United Nations Volunteers. |
Financial Aspects Chiefs | Method of financing: Assessments in respect of a Special Account Approved budget: 1 July 2008 - 30 June 2009: $601.58 million (A/C.5/62/30) Special Representative of the Secretary-General and Head of Mission Principal Deputy Special Representative of the Secretary-General Deputy Special Representative of the Secretary-General and Humanitarian Coordinator, Resident Coordinator and Resident Representative for UNDP Force Commander Police Commissioner * Bill Clinton, Special Envoy of the Secretary-General |
MINUSTAH total costs from 2004 to June 2009 (the costs of the extension to October 15, 2009 are yet to be published):
United Nations Resolution | Duration | Cost in United States dollars |
A/RES/59/17 | 1 May - 30 June 2004 1 July 2004 - 30 June 2005 | 49.259.800 379.046.800 |
A/RES/59/17 B | 1 July 2005 - 30 June 2006 | 494.887.000 |
A/RES/60/18B | 1 July 2006 - 30 June 2007 | 489.207.100 |
A/RES/61/284 | 1 July 2007 - 30 June 2008 | 561.344.900 |
A/RES/62/261 | 1 July 2008 - 30 June 2009 | 601.580.100 50 millions/month |
Total | 2.575.325.700 | |
Between 1993 and 2000 the United States deployed other missions in Haiti (MIPONUH, UNTMIH, UNMISH, UNMIH). According to data published just for some periods, such missions cost over US$427.9 million. | ||
Haiti is the poorest country in the region of Latin America and the Caribbean, and one of the poorest countries in the world. Around 54 percent of Haitians live on less than US$1 a day, and 78 percent on less than US$2 a day (WB/IDA, 2008).
According to IMF and Word Bank data, Haiti’s external debt was US$1.257 billion in 2004 and US$1.714 billion in 2008, and its gross domestic product was about US$6.000 billion in 2008.
As apparent from the table, the six-year (2004-2009) costs of UN Haiti missions amounts to US$2.5 billion – far exceeding the country’s external debt and almost one-half of its GDP.
Justification for this massive waste exercise? The Security Council remains convinced that Haiti has remained “a threat to international peace and security in the region.”
The OAS, the Region’s political organization, has been visiting Haiti and “reporting on its situation” for 50 years, fielding scores of delegates, special missions, and high-level missions, including a Special Mission for Haiti. In turn, the Inter-American Commission on Human Rights has published eight country reports, paid 15 in situ visits and hundreds of other visits.
Haiti has been assiduously “visited” for half a century now. Curiously enough, no one seems to come to the common sense conclusion that something is not being done the right way. Or that Haitians deserved more respect.
Admittedly, some of such fora will still continue to exist even unreformed, simply because –at this level– power spaces are not easily abandoned. They, however, will have to coexist with mighty new political ones.
Montevideo, June 2009
____________________
1/ http://www.un.org/ga/econcrisissummit/
4/ The figures have had to be taken from The Wall Street Journal, since the project Master Plan web sites http://www.un.org/cmp/uncmp/english/d.asp; http://daccess-ods.un.org/access.nsf/Get?Open&DS=A/63/477&Lang=E) denies access to the itemized budget.
____________________
____________________
This article has been posted at the following links:
Global Crisis News
Huffingtonpost
IDN – In Depth News
ASEAN Society
Affiliate Marketing Reviews
