Download The global financial crisis and its potential impact for

The global financial crisis
and its potential impact for
multilateralism and UNESCO
Presentation by
Hans d’Orville, ADG/BSP
DIGE
12 January 2009
A quadruple global crisis unfolds
 In the prime of globalization, we are
experiencing an accumulation of four
interrelated crises, mutually feeding on
each other:
 Climate change crisis
 oil and energy (price) crisis
 Food (and hunger) crisis Financial and
economic crisis
A quadruple crisis unfolds
 The consequences of these crisis individually and even more so combined
- for development can be devastating
and hence there is an urgent need to
develop effective counter-strategies
The new global s(l)(h)owdown
 Profound and deepening financial and
economic crisis affecting all countries - a true
impact of global interdependency -, requiring
injection of (hundreds of) billions of US$ by
Governments into banking sector to maintain
liquidity of banks and uphold their ability to
provide credit - and to provide economic
stimulus programmes of a Keynesian nature
 Real estate/housing market meltdown - with
many foreclosures and personal bankruptcies
 Stock market crash (“krach”) as a result of
anxieties and shrinking confidence/trust depleting investments and collateral as well as
jeopardizing pensions
The new global s(l)(h)owdown
2
 Deep and long global economic recession
looms - with high unemployment, shrinking
tax receipts, lower exports and trade, gyration
of currencies, decreasing tourism, less
consumption and ultimately the specter of
deflation
 Oil and commodity prices are in a steep fall,
affecting the income of many oil-producing
(developing) countries - while lessening the
burden for the majority of the developing
countries, which had absorbed in many
African countries all ODA inflows
The new global s(l)(h)owdown 3
 All these pressures reduce the
manoeuvrability of Governments in
industrialised and developing countries alike,
as their budget deficits are rising again (in
the EU likely above the 3% Maastricht mark)
 Governments are forced to revisit their
budgets and make cuts to reach as balanced
a budget as possible, especially if they
require IMF standby credits
 The return of the virtue of deficit spending
 Moral hazard: Need for more equity in policymaking and allocation of public funds
The consequences
 Developing countries, the most defenseless - and
often times “innocent bystanders” - face a perfect
storm (WB) and for them the crisis may translate
into
 lower government budget allocations to social AND
productive sectors;
 Less (discretionary) funds for activities in ED, SC, CLT
and CI
 Lesser prospects for attainment of IADGs/MDGs by 2015
 rising poverty levels
 More demand for official development assistance (ODA)
and foreign direct investment (FDI), i.e. private sector
flows
 More demand for multilateral and NGO/foundation
funding
 More recourse to South-South cooperation
The consequences 2
 For industrialised countries, this may translate into
 Lower ODA earmarking and allocations, abandoning
commitments made only recently (especially for doublig
aid to Africa by 2010) - overall, more pronounced trend
towards lower ODA
 Kofi Annan recently denounced as “incredibly short-sighted
- as well as immoral for wealthy countries to use this
financial crisis to drop promises to help the poorest“ (IHT)
 Less ODA for select sectors like education, which are not
protected by specific international pledges or agreements
 Doubtful realisation of summit commitments (i.e. G-8
Gleneagles commitment for Africa) - at present US$ 30
billion short of 2005 G-8 Gleneagles Summit commitments
 Less discretionary funds and hence lower/stagnant levels
of extrabudgetary contributions to multilateral
organisations
 Lack of desire for new multilateral initiatives
The consequences 3
 For the private sector, this may translate into
 Lower economic growth
 Less trade with developing countries irrespective of
trade barriers and custom levels
 Lower levels of FDI flows
 Less loans for investment and trade in developing
countries
 Lack of interest in new public-private partnerships
requiring private sector funding
 Overall, reduced confidence in market forces
 Lower volume of donations to NGOs and charities (as
corporate donors in both developed and developing
countries slash social responsibility budgets, such as
in China with a 2008 record US$ 14.5 billion
donations of which 70% is due to corporations)
 Lower programme funds earmarked by foundations?
The multilateral fallout
 Global “collisions” and contradictions, which
are difficult to resolve - e.g., lower budget
allocations by developing countries makes
them look towards UN agencies which by
themselves my be hit by lower budgets - or
promote trade while credit dries up
 doing more with less: demand by developing
countries for assistance will increase while
contributions to agencies are likely to
decrease (zng or worse)
 It may also mean more focus on upstream
advice
The multilateral fallout 2
 Can there be additionality even for (UN)
reform frameworks and how long will current
commitments hold (e.g. MDG-F and its new
windows; support to One UN Funds; no
country left behind in EFA who has a credible
national plan)?
 How will IMF loans and the related
conditionalities affect UNDAFs and One
Programmes/Funds (e.g. Pakistan)?
 Will UN reform efforts at the country level be
affected - if additional donor funds are not
forthcoming?
The multilateral fallout 3
 Will governments and multilateral agencies be
able to maintain their professed commitment
to fight climate change and environmental
degradation - or will that be sacrificed for
straightforward economic survival action and
other more immediate priorities??
 Which (sectoral) priorities will be sacrificed or
pushed back?
 Overall - will there be a need to redefine
multilateralism - towards more collaboration?
 Danger: excessive focus on new, more
transparent and accountable financial
architecture, without regard to the level of
real needs of people and infrastructure needs
G-20 Summit Washington
15 November 2008 - signal of hope?
 The G-20 Declaration of the Summit on Financial Markets
and the World Economy on 15 November 2008 outlined a
roadmap for future action to stabilise and reform financial
markets, to preserve an open global economy, to promote
trade, to provide credit and liquidity and to restart
economic growth and overcome recession
 Major focus was on strengthening transparency and
accountability curbing speculation in currency, financial
and commodity markets; enhancing sound regulation
nationally and internationally; promoting integrity in
financial markets; and reinforcing international
cooperation
 But the summit also emphasized in the concluding section
on a “commitment to an open global economy” - though
almost as an afterthought and with rather weak and little
compelling language or conviction - on:
G-20 summit - a signal of hope?
 A commitment to free market principles which are
essential to economic growth and prosperity and have
lifted millions out of poverty;
 The importance of rejecting protectionism and not
turning inward in times of financial uncertainty;
 The impact of the crisis on developing countries,
particularly the most vulnerable;
 The importance of the MDGs, the development
assistance commitments the participants have made
 Urge both developed and emerging countries to
undertake commitments consistent with their capacities
and roles in the global economy
 Reaffirm the development principles agreed at the 2002
Monterrey Conference on Financing for Development,
which emphasized country ownership and mobilizing all
sources of financing for development.
The lacunae in the G-20 message
Sadly, no word about preventing a rollback in the
volume of development finance, the need for
investment in education and health precisely at the
present juncture to build the foundations for future
development and prosperity, or underlining the
critical role of and providing the necessary
resources to other multilateral organisations than
the Bretton Woods institutions…..
We are left simply with a statement that the
summitteers are confident that through
coordinated partnership, cooperation and
multilateralism (of an undefined type), the world
will overcome the challenges before it and restory
stability and prosperity in the world economy.
World Bank calls for aid boost
 The World Bank President called on donors to
boost financial aid to developing nations
which find themselves at the mercy of a crisis
that “is not of their making”
 Empowering developing and emerging
countries and economies is imperative
 Helping nations pursue economic
development and long-term prosperity should
be the goal of development finance.
Doha Follow-up International Conference
to the Monterrey Consensus 28 November - 2 December 2008
It adopted a voluminous Outcome Document containing
the Doha Declaration on Financing for Development,
now to be submitted to the UN General Assembly for
endorsement.
Highlights of this Declaration:
a) the reconfirmation by and large of the Monterrey
Consensus (insofar not breaking any new ground);
b) the emphasis, especially at the insistence of
developing countries, on the need to remain
committed to the current ODA targets, irrespective of
the fallout of the present crisis;
c) in addition to the traditional supply side concerns of
domestic resource mobilization, ODA, debt relief and
trade a strong focus on innovative financing
approaches;
Doha - cont’d
d) a strong section on gender equality and the
economics of gender;
e) an explicit focus on social investment, including
education not least driven and inspired by UNESCO’s
successful High-level event; and
f) a decision to hold a UN conference at the highest
level on the impact of the current financial and
economic crisis on development.
g) On the margins of the Conference, the President of
the General Assembly also launched a Commission
of Experts on Reforms of the International Monetary
and Financial System.
h) If anything, the continued absence of scientific,
cultural and communication issues on the agendas
and the outcome documents of conferences like the
one in Doha is a source of dissatisfaction and we may
need to reflect how to remedy this deficiency.
Financing Education in ConflictAffected Areas to Achieve EFA Goals
 From UNESCO’s perspective, most significant
was the High level Side Event: Financing
Education in Conflict Affected Areas to Achieve the
Education for All Goals. It was organized by ED
and NYLO and held under the auspices of First
Lady Sheikha Mozah. The list of participants
further included the UN Secretary-General, the
President of Burundi, the Vice-President of El
Salvador, the President of the UN General
Assembly, numerous Development Cooperation
Ministers and Heads of bilateral agencies (e.g.
Netherlands, USA) as well as senior officials, NGO
leaders and senior colleagues from the UN system
(World Bank, UNICEF, UNFPA) and regional
Education in Conflict-Affected Areas cont’d
 The discussion resulted in the Doha
Statement on Financing Education in
Conflict Affected Areas. This event laid
an excellent foundation for the upcoming
spring 2009 discussion by the UN General
Assembly on the very subject.
High-level Group on EFA, 8th
Meeting - 16-18 Dec 2008, Oslo
The OSLO DECLARATION “ACTING
TOGETHER”, was adopted by the participating
Ministers, leading officials of multilateral and
bilateral agencies, senior representatives of civil
society and private sector organisations, gathered
at the invitation of the Director-General of
UNESCO and of the Minister of Environment and
International Development of Norway
Oslo Declaration - cont’d
The HLG noted that it took place in the context of a
global economic slowdown spurred by a financial
crisis unprecedented since the 1930s. The
Declaration stated that “It will be imperative to
protect and insulate the world’s poorest children,
youth and adults from the worst effects of the crisis,
as they carry the least responsibility for these
events. The crisis should not serve as justification
for any reduction in national spending and
international aid to education. Instead, steadfast
support for achieving the internationally agreed
development goals, including the EFA and
Millennium Development Goals (MDGs), is more
vital than it was before the crisis.”
Oslo Declaration - cont’d
Reaffirming the centrality of education for development
 (3.) … we reaffirm that education is a fundamental human
right, to be respected at all times. It is one of the most
effective tools for achieving inclusive and sustainable
economic growth and recovery, reducing poverty, hunger
and child labour, improving health, incomes and
livelihoods, for promoting peace, democracy and
environmental awareness. Education empowers
individuals with the knowledge, values and skills they
need to make choices and shape their future. Universal
access to quality basic education and better learning
outcomes are the drivers to achieve the IADGs, including
the MDGs. As reaffirmed at the September 2008 United
Nations MDGs summit, sustained investment in education
and health is essential for reaching the MDGs.
Oslo Declaration - cont’d
 (4.) We therefore agree to better plan and coordinate global advocacy
efforts for all six EFA goals. We task the EFA convening agencies and
interested EFA partners to further develop a joint EFA advocacy plan
of action and present its first results to the next meeting….
 (5.) Educational strategies need to be integrated within broader antipoverty and national development policy frameworks. The fact that
child malnutrition and ill health remain a major obstacle to educational
access and achievement for the poor highlights the intricate
connections among education, health and social conditions. It
underscores the need for stronger inter-sectoral policy coordination.
 (6.) We request the EFA convening agencies, to engage with relevant
UN agencies such as the WHO and the WFP as well as interested EFA
partners in order to better coordinate education, health and nutrition
initiatives in integrated programmes, targeting young children in poor
communities in countries far from EFA. We commit to support such
initiatives that should be country driven and backed by development
partners.
The UNESCO perspective
 As exemplified by the Oslo Declaration, critical
need for specific and effective advocacy for
maintaining or increasing ODA flows in time of
financial downturn with all relevant partners
(education, climate change).
 Multi-sectoral coordination, especially at the
country level, will be essential to attain IADGs
 Concentration+prioritisation in the face of lower
resource prospects and growing needs
 Need for even more sharpened and resultsoriented 35 C/5
The UNESCO perspective 2
 Need for more imagination and creativity in
delivery: focus on less costly initiatives - and
reorientation towards (cheaper but effective)
upstream initiatives - enhanced visibility
 Whither the UNESCO budget level: can zrg be
obtained for the 35 C/5? How can we
preserve current levels of extrabudgetary
resources critical for outreach and impact?
 Need for a revision of 34 C/4??
Specific action by UNESCO
 Urgent need for sustained monitoring of
trends in the spheres of competence of
UNESCO:
 In developing countries as regards budget
allocations to education, the sciences, culture and
communication and information and continuation
of multi-donor programmes and projects
 In industrialized countries, flows of ODA, sectorally
broken down (data by OECD), and of
extrabudgetary resources to UNESCO and other
multilateral organizations
 In case of negative trends, launch global alerts
and design proactive counter-strategies
Specific action by UNESCO 2
 Strengthen critical areas where UNESCO can
make a difference:
 Advocacy for EFA and preservation of national budget
allocations to education
 Accelerate education for sustainable development - in
creative and effective ways to induce behavioral
changes with long-term effects
 Build capacities for operating national scientific
knowledge basis
 Inure policy initiatives and investments in
strategically important sectors like education,
science, culture as well as communication and
innovation
 Preserve resources for culture as a critical element of
sustainable development and education
Specific action by UNESCO 3
 We must mobilise our efforts in packaging
and sharing knowledge and information as
well as policy advice that can help countries
to cope with the multiple crises
 Paradoxically, this will also need an immediate
infusion of resources - not a cutback
 It is not charity, it is investment in the world’s
immediate future
 Action in the social sectors is critical for future
global stability and prosperity
The crises: moment for global
reflection and stocktaking
 Almost exclusive emphasis on
macroeconomics and on supply side of
development: ODA flows, FDI, debt relief
 Insufficient focus on sectoral demand side,
like resources required for EFA, SC, CLT, CI or
agriculture, health, industrial development,
labor
 No effort is apparent to link supply and
demand sides of the equation - need for
closer coordination between Bretton Woods
institutions and UN system organizations
A moment for stocktaking and action
 This might change if there were solid
strategies and calculations for the various
sectoral areas - this could be a challenge but
might also be a survival necessity/opportunity
for UNESCO
 Even the only available current estimate of
US$ 11 billion annually for EFA may well be
outdated and too low, as it was produced
some 10 years ago
Next UNESCO initiatives:
sensitisation - awareness advocacy - building new coalitions
 On 27 January 2009, there will be a “60 minutes to
convince” session focusing on the global financial
and economic crisis and their potential fallout for
the UN and UNESCO - ADG/BSP and ADG/ED to speak
 CEB/HLCP will - with UNESCO part.-discuss the issue
at its next session 26-27 February 2009, Geneva
 As agreed by the Intersectoral Platform for
Anticipation and Foresight, on 2 March 2009,
BSP/FOR (Foresight Programme) will organize a
daylong workshop session on the “The Global
Financial and Economic crisis – its parameters
and potential impact on multilateralism”
Workshop - 2 March 2009
The Director-General will open the conference, at
which several well-known international experts
will speak on the following four panel subjects:
 THE IMPACT OF THE GLOBAL FINANCIAL AND
ECONOMIC CRISIS ON DEVELOPING COUNTRIES, IN
PARTICULAR IN AFRICA, AND THE PROSPECTS FOR
ATTAINING THE INTERNATIONALLY AGREED
DEVELOPMENT GOALS, INCLUDING THE MDGs
 INVESTING OUT OF THE CRISIS – IN EDUCATION,
SOCIAL SERVICES, SCIENCE AND KNOWLEDGE
 THE POTENTIAL IMPACT OF THE GLOBAL
FINANCIAL AND ECONOMIC CRISIS ON WOMEN AND
GENDER EQUALITY
 WHAT IMPACT OF THE GLOBAL FINANCIAL AND
ECONOMIC CRISIS ON CLIMATE CHANGE AND
PROSPECTS FOR A GREEN ECONOMY?
We will remain in the eye of
the storm
Calm inside
Heavy storm outside
Debris all around us
And then: what will be the fallout for us?
How can we react and counter any potential
negative impact?
 How can we anticipate the expectation of
Member States, the needs of developing
countries and proactively deliver?
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