WASHINGTON – As the participants in the Group of Eight summit gathered in L’Aquila, Italy, July 8-10, the economic crisis gripping the world was getting lots of attention.
The worldwide recession not only has taken a toll on developed nations, but has been even more devastating to countries with high levels of poverty, according to leading development agencies.
Developing nations will be watching the G-8 meeting for signs that the world’s leading economic powers will continue working to alleviate poverty, reduce hunger and maintain their commitments under the U.N. Millennium Development Goals, aimed at significantly reducing poverty by 2015.
The summit follows a late June U.N. conference that looked at the crisis and its impact on poor nations. The conference released a statement from the 192 participating delegations acknowledging that all nations must work together to address the challenges of an economy gone awry so that developing countries are not forced to bear the brunt of the crisis.
Aldo Caliari, director of the Rethinking Bretton Woods Project at the Center of Concern in Washington, has tackled global development issues and the role developed nations can play in addressing the needs of undeveloped countries. As a faith-based organization with strong Catholic ties working for social and economic justice, the center is the U.S. partner with the International Cooperation for Development and Solidarity, known as CIDSE, an alliance of 16 Catholic development agencies headquartered in Brussels, Belgium.
Caliari recently spoke with Catholic News Service about the U.N. conference and its possible implications for the G-8 summit.
Q. What was the result of the recent U.N. economic conference on the impact of the worldwide recession on developing nations?
A. It was an important moment to reinforce the role that the U.N. can play in the development of a global response to the financial crisis. You had the 192 countries coming together on a consensus statement which at some point it seemed to be very difficult to arrive at. But in fact it was achieved. You can actually note the difference between such a document where the poorest countries in the world participated and other documents only coming from rich countries.
There was very detailed recognition that the developing countries are going to suffer most from the crisis and the crisis did not originate in the developing countries. You have a linkage between the economic crisis, the food crisis and the climate crisis. And it makes it very difficult to address it by solving only one crisis.
Q. Why is this important?
A. As a Catholic organization, we highlight this as a matter of justice. It used to be believed that financial reform was for the experts. Now with this crisis, what we have seen, first, the experts didn’t really know what they were talking about. And second, the poorest countries were really the ones suffering.
The poor countries should have a seat at the table because ultimately what is decided is going to affect (them). This is right from a justice perspective.
And for effectiveness, from the local level, we have the need for ownership by all of the countries. If you have ownership, the reforms stay. The same thing on the economic level. If you try to effect the reform from the top down, the reforms may not stay. A joint response to the problem generates more sustainability for the outcome.
Q. What was the role of CIDSE in these meetings?
A. We were there at the conference, building coalitions with various organizations. Our main goal was to provide some assessment and make some public presentation of what the conference achieved and messages about what was happening, what was important for our constituencies and the general public.
In part we wanted to highlight Catholic social teaching … because we do have some faith-based basis on which to build our position. We bring the Roman Catholic perspective to the situation and what needed to be achieved at the conference.
Q. How do the results from the U.N. conference lead into the G-8 summit July 8-10 in Italy?
A. I am not sure. My feeling is that the agenda for the G-8 is very much set, usually by the host country. And usually the host country likes to play up what are their pet issues into the agenda. It seems to me we’re not going to see a lot of discussion on the issues discussed at the U.N.
I imagine some of the messages that appear from the conference might appear in this (summit’s concluding) statement. I don’t think the perspective we saw (at the U.N.) will be the one that will be served at the G-8 meeting.
Q. What can the leading economies of the world do to help developing nations and the world’s most vulnerable people?
A. I think there is one clear area that was pushed in the U.N. conference. If there was political will it could be achieved. The political will has the use of the Special Drawing Rights of the International Monetary Fund. It could play a role as a development and financing tool.
Special Drawing Rights is a special reserve asset the IMF issues. Countries that receive it can actually swap it for any currency. So if you are a country in need of dollars for example you can use the SDR and exchange it for dollars that you borrow. If you had to get those dollars in the market it would cost you more. So you pay a limited interest rate.
The problem is the … richest countries would be getting most of it. This is not the purpose. There is no reason why the U.S. would need them. The discussion going on is if the SDRs would be allocated on the basis of need.
Q. Could they do it?
A. This is something they can do tomorrow. They could decide if the SDR is allocated on the basis of need and the interest rate is going to be waived for the poorest countries.