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Cablegate: Unrisd- Implications of Global Crisis On Developing

VZCZCXYZ0000
RR RUEHWEB

DE RUEHGV #0030/01 0151255
ZNR UUUUU ZZH
R 151254Z JAN 10 (TAO)
FM USMISSION GENEVA
TO RUCNDT/USMISSION USUN NEW YORK 0001
RUEHC/SECSTATE WASHDC 0004
INFO RUEHGV/USMISSION GENEVA

UNCLAS GENEVA 000030

SIPDIS
DEPT FOR IO/EDA AND EB/OMA
USAID FOR OFDA AND ODP

E.O. 12958: N/A
TAGS: EAID UN ECOSOC
SUBJECT: UNRISD- IMPLICATIONS OF GLOBAL CRISIS ON DEVELOPING
COUNTRIES

REF: GENEVA 927

1. SUMMARY: The UN Research Institute for Social Development
(UNRISD) held a forum November 12-13 on "Social and Political
Dimensions of the Global Crisis: Implications for developing
countries." The forum consisted of five sessions and 24
presentations by representatives from UNDP, ILO, CoopAfrica,
UNICEF, World Institute for Development Economics Research of the
United Nations University (UNU-WIDER), and 19 research centers,
institutes, and universities. In addition to identifying the
underlying social and political aspects to the global crisis,
speakers examined the cause of the crisis in terms of neoliberal
ideologies, which was defined as the reduction of state or
government intervention in economic and social activities.
Speakers concurred on the need for a policy reformation process.
END SUMMARY.

----------------------------

UNRISD - Background

----------------------------

2. The UN Research Institute for Social Development (UNRISD) was
created in 1963 as part of the United Nations' comprehensive
approach to development, which sought the inclusion of non-economic
factors of development in research. UNRISD is the only UN
organization that engages exclusively in research on social
development. The Institute conducts comparative research in
collaboration with scholars and activists, primarily in the
developing world, many of whose ideas are not generally reflected
in current debates. Strong ties to the global research community
and its proximity to the UN system help UNRISD to carry out
policy-relevant research on issues of social development.

3. The UNRISD research initiative aims to contribute to debates on
new policy approaches to poverty reduction by:

-- Assessing contemporary approaches to poverty reduction,
including the Millennium Development Goals (MDGs) and Poverty
Reduction Strategy Papers (PRSPs);

-- Identifying key institutional, policy and political issues not
being addressed in current poverty reduction strategies;

-- Examining contradictions, complementarities and synergies
between components of policy regimes, including social, labor
market and macroeconomic policies, and political and regulatory
institutions.

4. UNRISD research conducted on social policy in a development
context from 2000-2005 concluded that poverty eradication is always
embedded in social and development policy but that effective social
policy must also address issues of redistribution, production,
protection and reproduction of goods; and that policies related to
each of these aspects must work synergistically to promote
inclusive and equitable development.

---------------------------------

Dimensions of the Global Crisis

---------------------------------

5. Participants at the forum agreed that the global financial
crisis is one that was preceded by, and is concurrent with, several
other global crises, such as the growth in greenhouse gas
emissions, climate change, and food shortages propelled by
inflation in global food prices. Professors from the University of
South Florida argued that there are two more crises: an unworkable
paradigm rooted in global financial markets, and a political crisis
due to poor policy conflict-management.


6. According to UNU-WIDER's presentation on the Global Aid
Architecture and the Triple Crisis (financial crisis, food
shortage, climate change), developing countries are affected by the
financial crisis via lower commodity prices, reduced private
financial flows, and falling remittances. In Asian countries such
as Cambodia, China, Indonesia, Lao PDR, and Vietnam, women are more
likely to work in insecure jobs and sectors that are especially
exposed to the crisis. Yet, presenters argued that stimulus
packages pay insufficient attention to mitigating the impact of
crises on vulnerable women.

-------------------------------------------

Implications of the Global Financial Crisis

-------------------------------------------

7. According to Professor Ben Fine of the School of Oriental and
African Studies in the United Kingdom, the financial crisis was
largely due to global imbalances caused by the United States'
financial bubble and Chinese current account surpluses. Several
speakers concluded that the financial crisis has necessitated a
reevaluation of orthodox policies based on free market principles,
which is underpinned by "financialization." Professor Fine defines
"financialization" as the increasing role of financial motives,
markets, actors, and institutions in the operation of domestic and
international economies.

8. Manuel Riesco of Centro de Estudios Nacionales de Desarollo
Alternativo (CENDA), a national research center in development
alternatives in Chile, concluded that the financial crisis has

(i) retrenched the financial sector and its global political power
prompting the fall of neoliberalism;

(ii) discarded utopian ideas about the long-term stability and
profitability of financial markets, and the solvency of private
providers as substitute providers of public universal social
services; and,

(iii) re-asserted the historical unity between modern markets and
states, specifically regarding public expenditures and the need to
protect and regulate markets within spaces of national or shared
sovereignty.

Moreover, he thinks the financial crisis has provided an
opportunity to create a new progressive, inclusive, and
developmental policy paradigm in the North and South.

-------------------

New Opportunities

-------------------

9. According to most presenters, the financial crisis had provided
the opportunity to develop new policies based on principles of a
more regulated yet mixed economy. Fine concluded that de-centered,
regional solutions are optimal and that regionalism will be a key
element to social reforming international institutions like the
World Bank and IMF. Solutions range from the Green New Deal, an
economy based on environmentally-friendly concepts as an economic
recovery strategy. Other presenters suggested that the crisis
calls for a revival of Keynesian policies, which requires active
policy responses by the public sector and some regulation of the
business sector. Others proposed the developmental welfare-state as
an avenue for social and economic progress.

COMMENT

---------------

10. Predictably, there was no consensus reached by the conclusion
of the forum as to what would be the best strategy for global
economic recovery. There was however, a common assumption that the


global economy would not recover for another five to ten years if
neoliberal ideologies persist. The forum emphasized that "business
as usual" in terms of economic policymaking at a global governance
and national policymaking level needs to end, that blaming the
United States as the sole contributor to the global crisis would
not lead to a comprehensive recovery, and that regulatory change is
needed. The discussion was constructive although it did not
provide any specific policy recommendations besides a general
agreement among participants that greater government intervention
in economics is beneficial and necessary.
GRIFFITHS

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