The world economy cannot count on growth to solve the global debt problem - and stimulus measures are not a sustainable solution. In the third installment in their series “The Search for a New Global Equilibrium,” Dr. Alexander Mirtchev and Dr. Norman Bailey argue the time is ripe for a “new Magna Carta” - a redefinition of the social contract among the government, Main Street and Wall Street.

As always, the ultimate hopes of addressing the issue of debt appear to be pinned on growth as a way out of the rising waters of debt. Rightfully so. And yet, in the current economic circumstances, growth seems more likely to come from a divine miracle than from mere mortals making the difficult choices that must be made.

In reality, the prospects of global economic growth in the context of prevailing indebtedness are faced, on one side, by the Scylla of austerity measures and the Charybdis of stimulus packages that invariably lead to higher states of indebtedness. Essentially, a damned-if-you-do, damned-if-you-don’t conundrum.

The threat posed by Scylla entails accommodating, on one side, the imperatives for sometimes draconian austerity measures, which could, however, have a dampening effect on growth by restricting demand.

In Portugal, the government has cut state pensions by up to 10%, cut public sector salaries by 5% and increased the value-added tax to 23%, one of the highest rates in the world. Subsequently, the government fell.

Similar measures are being taken in Spain, Ireland, Greece and elsewhere. Furthermore, the reactions to such measures should not be overlooked - witness the demonstrations that regularly take over the streets of Athens, Paris or Lisbon (and Madison, Wisconsin).

On the other side is Charybdis - the prospects for inducing growth via stimulus packages confronted by mounting debt that can lead to stagnation. When total debt in Japan rose beyond 90% of GDP, for example, the effect of adding further debt was to restrict growth. In other words, in the current situation, chasing growth to breach the surface of the ocean of debt does not break the vicious circle - it reinforces it.

We are unlikely to navigate safely between these two ancient monsters. There is no evidence that the prospects for a debt tsunami would dissipate in their own right. Now that Social Security payouts exceed income - more than $200 billion this year and trending towards $1 trillion within the decade, according to the 2009 Financial Report of the U.S. Government - entitlement programs in the United States are reaching the point of no return, adding significantly to the debt service burden each year.

Many developed and developing economies are also exposed to increasing demands on the state to finance a range of social commitments, from pensions to infrastructure-development financing. U.S. states such as California, New York, Florida, New Jersey, Ohio, Indiana and Wisconsin are tackling budget shortfalls of up to 30%, and cities such as Chicago are facing deficits of close to 10%.

In Europe, cities like Lisbon, with its 7.3% deficit, are urgently looking for ways to cut costs, while entire regions in Spain, Britain, Belgium and elsewhere are themselves insolvent, adding their buckets of water to the debt ocean.

The examples of the devastating effect of the debt burden range from the unsustainable premiums countries like Greece and Portugal must incur when raising funds, to the case of Iceland, where the whole country went bankrupt.

Read the full article by Alexander Mirtchev and Norman Bailey

Roger Iredale:  the Friend, 21 October 2011

I have never had any difficulty with remembering United Nations Day, 24 October, since it coincides with my mother’s birthday! This huge organisation rambles like a rose bush over the globe, with its many offshoots involved in almost every aspect of human life in every corner of the world.

Some, like UNICEF, do outstanding work with children and mothers in slums and deserts, while others come to the aid of the beleaguered Gazans, or struggle to keep peace in the vast recesses of Central Africa. Friends have been able to make their influence felt through our offices in Geneva and New York.

The organisation was born of the idealism of the eccentric pacifist Goldsworthy Lowes Dickinson and his Bloomsbury circle, who began to create the League of Nations even before the First World War ended. While that organisation failed to prevent the next war, it created many agencies later inherited by the UN and provided a template for the present structure of seventeen elements, including UNESCO, the International Monetary Fund and the International Atomic Energy Agency.

It is a pacifist concept born of a profound objection to war as a means of resolving disputes. That it is empowered to sanction military action in response to emergencies is a constant source of tension and contradiction.

A political organisation with an intergovernmental dimension, the UN inevitably attracts the power struggles and egotism that characterise politics. I have talked with a chief statistician whose job was threatened because of her unwillingness to distort the sensitive literacy statistics of an influential member state. I have unknowingly worked with an official who was secretly employed to follow the Cold War rivalries within one of the agencies. And I have seen the scrawled, defiant file notes of an autocratic director-general, written in pursuit of some private agenda, countermanding the considered judgments of a senior colleague.

In such a vast enterprise, aberrations are inevitable.The UN represents governments, and governments come in all shapes and sizes. Some agencies are more effective than others. All aim to help the poorest and most vulnerable.

The General Assembly and the Security Council are central to the UN. The latter is an absurd historical anomaly, with France and Britain occupying permanent seats – while India and Brazil have to take their turn with the rest of the world.

Does this jealously guarded status quo contribute to the belief of the British political classes that they have a right to fight other people’s wars? Did Tony Blair’s military adventures arise from Britain’s self-importance because it sits beside China, the USA and the Russian Federation at the top table? Is it fair that this small island can wield such influence over global decision making? Indeed, is it right that any country, particularly the USA after it misled the General Assembly on Iraq, can veto crucially important world events? Everyone agrees that there is a need for change, but then the Tower of Babel takes over.

So, we have this valued, ubiquitous entity embracing the globe and trying to spread flowers of peace in dangerous places, tackling poverty, refugees, health, agricultural, economic, cultural, scientific, financial and social issues.

Though it works from a script that was written some sixty years ago, in a very different world, it was conceived by people of peace and it remains the only sane barrier to the opposite.

Roger Iredale is a member of Mid-Somerset Area Meeting.  His work has involved close collaboration with UN agencies across the globe. He is emeritus professor of international education at the University of Manchester and former chief education adviser to the Minister for Overseas Development.

Palestine applies for UNESCO membership

The Inter Press Service reports that the 193-member General Conference, UNESCO’s policy-making body, is expected to ratify Palestine’s membership during the session beginning Oct. 25. The application was approved by the agency’s 58-member executive board earlier in the week. 

However the administration of President Barack Obama, under lobbying pressure from Israel and pro-Israeli members of Congress and senators, is threatening to cut off funds to the U.N. agency if it recognises the political legitimacy of Palestine. 

On October 6^th, Secretary of State Hillary Clinton said the United States may cut off funding to UNESCO if it moves forward on its recommendation to admit the Palestinian Authority as a full member. The U.N. culture and science agency stands to lose $87 million a year, or 22 percent of the total budget, without U.S. funding. 

Palestinian membership of the International Criminal Court could lead to restrictions on the movements of Israeli leaders 

Israel has accused the Palestinians of trying to “politicise Unesco”. It fears that recognition by affiliate UN bodies could lead to Palestinian membership of the International Criminal Court. If Palestinians were to lodge cases there against Israel, it could restrict the movements of Israeli leaders, at a time when even Washington has warned the Jewish state about its increasingly diplomatic isolation. 

Israeli officials expressed concern that Palestinian membership of Unesco, which recognises historically or culturally important places as World Heritage Sites, could be used to drag disputes over the cultural ownership of disputed holy sites in the region into the international arena. 

The question of historical sites is particularly sensitive in the area, since many of them are sacred to Jews, Muslims and Christians and have at times served as mosques, churches or synagogues. 

Yesterday, President Abbas flew to Strasbourg and asked Europe for its backing: “You supported the Arab Spring which was seeking democracy and freedom,” he said. “Now the Palestinian Spring has arrived, asking for freedom and an end to the occupation.  We deserve your support.”

The Luxemburger Wort adds that vote has not been scheduled, but will take place at UNESCO’s General Conference, which runs from Oct. 25 to Nov. 10. 

The Palestinians are also seeking a foothold in the World Trade Organization and won partnership status recently in the Council of Europe, the continent’s leading human rights body.

The United Nations General Assembly adopted the 1998 Rome Statute by a vote of 120 to 7, with 21 countries abstaining. Seven countries voted against the treaty: Iraq, Israel, Libya, China, Qatar, Yemen and the US.

Following years of negotiations, the International Criminal Court was set up to prosecute individuals accused of genocide and other serious international crimes. The statute requires judicial candidates to have experience of criminal proceedings or of international law and qualifications that would enable them to take up a place at their country’s highest court. The ICC, based in The Hague, Netherlands, began work in 2002. 

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In terms not quoted verbatim on this site, the US Human Rights Watch spokesman, Richard Dicker, questioned the competence of the court’s judges and the polling process which appoints them.

Philippe Sands, a barrister specialising in international law, who has written a book on the election of judges to international courts found that ‘vote-trading, campaigning, and regional politicking’ was common. That is not surprising as this is the norm in national and international politics and sport.   

It has also been criticised for including candidates with insufficient qualifications. Japan, which contributed a fifth of this year’s annual budget of €103.6m ($142.7m), previously successfully nominated two judges who were not qualified lawyers.  

This criticism appears to be ill-founded as the Rome statute requires two categories of judges: those with experience in criminal proceedings as judges and prosecutors (list A) and those with expertise in international law (list B), in order to achieve a delicate balance between criminal law and international law.

Another concern flagged by the South Korean president of the court, Sang-Hyun Song in correspondence seen by the Financial Times is that some who are elected in December may not be able to start work straight away. The British candidate, Howard Morrison, is currently presiding over the trial at the International Criminal Tribunal for the former Yugoslavia which is not expected to finish until 2014.  

Masahiro Mikami, Director of the International Legal Affairs Division, Ministry of Foreign Affairs of Japan responded to the crtiscism of Judge Kuniko Ozaki of Japan, who serves at the ICC and is not a qualified lawyer. 

The ICC recognises that governance can be improved at the court and has set up a group studying the issue, which will report at the December meeting of member states and the election.

 Sources: http://www.ft.com/cms/s/0/96fbbd78-e529-11e0-bdb8-00144feabdc0.html#axzz1Ym9ICXlf 

http://www.ft.com/cms/s/0/21de35c6-def7-11e0-9af3-00144feabdc0.html#axzz1YXUCI8Gs

After the Deputy Lord Mayor’s welcome, an introduction to the Millennium Development Goals, was read by Bert Gedin. All speakers agreed that progress had been made, but the process has been slowing down and efforts should be renewed. Some points made at this meeting, facilitated by Ravi Kumar, chairman of B’ham UNA, follow.

Former DFID Secretary, Clare Short, listed major conferences which preceded the MDG agreement, including the Beijing event focussing on the empowerment of women, Cairo on reproductive health, Rio on the environment and several major political events, including the overthrow of apartheid and release of Nelson Mandela and the fall of the Berlin Wall.

Clare pointed out that the MDGs are related, for example education will be adversely affected if a child has no access to potable drinking water. To release resources, she suggested that some military spending could be transferred to education.

 She described a ‘high point’, when in 2000, 189 world leaders unanimously adopted the “United Nations Millennium Declaration” at the conclusion of their Millennium Summit on 8 September 2000, and concluded that the ‘Arab Spring’ and other changes of mood offer hope that more progress will be made towards achieving the MDGs.

Malcolm Harper, now an independent international consultant after long and distinguished service as director of the United Nations Association, looked back over improvements made since the ‘60s and focussed on the factors inhibiting the achievement of the MDGs: 

• the rich-poor divide – some multinational companies are far wealthier than some developing countries;
• poor rural infrastructure – for example, many needy people have to walk many miles to reach medical facilities;
• aid which is not focussed on quality – for example, increasing the number of children attending school, regardless of equipment provided and staffing levels;
• corruption – both corruptors and corruptees must be tackled. 

Malcolm believed that less progress has been made towards the goal of gender equality and that this should be urgently addressed. 

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John Cooper, Christian Aid’s Regional Co-ordinator for the West Midlands, spoke next. Christian Aid thinks that the Declaration’s emphasis on empowering people living in poverty was translated into telling poor counties what their priorities should be. Its emphasis on powerful countries and companies meeting their responsibilities to others was translated into a system which fails to hold them accountable for their part in fuelling global poverty. 

Progress has been made with providing clean water but the other MDGs are significantly behind target level in areas, including maternal and child mortality, hunger and access to sanitation.

Christian Aid’s new report on progress towards the MDGs says that the fundamental reason for the failure of the MDGs to achieve more is that they are based on a flawed understanding of poverty – which ignores the root causes of the problem. They are blind to inequality, unsustainability and the importance of input by ordinary people to decision-making. The report argues that a successor to the MDGs after 2015, which truly reflects the ambition of the Declaration, is vital. 

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Rianne ten Veen, of Green Creation, examined assertions made about the MDGs: 

Too ambitious?

In 1996, the Rome Declaration on World Food Security aimed to halve the number of hungry people by 2015, but MDG 1 merely aims to halve the proportion of people in developing countries who suffer from hunger and has a baseline of 1990 instead of what would be a more ambitious 1996.

Too expensive?

The estimated cost of achieving the MDGs is $189bn but:

• Annual fossil fuel subsidies: $312bn
• Iraq War: $648bn
• Wall Street bailout: $8.5trn 

Lagging because of lack of effort from poor countries? 

No; because of the lack of a level playing field in terms of debt, trade and investment.The amount of debt relief is often deducted from the aid budget. Only 1% of foreign direct investment benefits the poorest and 82% FDI goes into the extractive industries.

The role of the WTO was questioned by Malcolm Harper – is it really acting in the interest of poor countries? Rianne points out that the Millennium Declaration had fair trade as its ambition, but MDG8 offers more obvious advantages for foreign multinationals, and trade liberalisation. 

A brief case study of Argentina was given to illustrate the uneven playing field.The ICSID Convention is a multilateral treaty formulated by the Executive Directors of the International Bank for Reconstruction and Development (the World Bank). ICSID’s website reveals that, in all but one of the first fifty pending cases, wealthy corporations are bringing charges against small developing countries – 24 against Argentina.  The MNCs usually ‘win’. 

MDG7 on environmental sustainability appears to relate only to poor countries, though the rich countries are responsible for the high greenhouse gas emissions and the poor suffer most of the consequences. Rianne concluded that Millennium Consumption Goals (MCG) could help make our development path more sustainable, by focusing on the 1.4 billion people in the richest 20 percentile of the world’s population. They consume over 80% of global output, or 60 times more than the poorest 20 percentile. Instead of viewing the rich as a problem, they should be persuaded to contribute to the solution.  

A vote of thanks was given by Gill Briggs.#

NOTE: The Millennium Consumption Goals proposal was made by Prof. Munasinghe in January 2011 at the United Nations in New York. The background paper for the original proposal “MCG: How the Rich Can Make the Planet More Sustainable” is available at: http://www.mohanmunasinghe.com/pdf/Island-MCG-1Feb20112.pdf. 

Boutros Boutros-Ghali, UN Secretary General 1992-1996, gave the keynote address at the opening plenary session.  He underlined the importance of re-thinking the links between the local and the global in an age of globalisation; and the urgent need to see democracy among states as well as within them.  He acknowledged the difficulties confronting the Forum: inadequate funding, logistical problems, the disappointing attitudes of some governments and international organisations, and the fundamental questions how to achieve a body which is representative, with a balance of North and South, independent and coherent.  There would be no value in an international civil society which reflected the existing inequalities among nations and reproduced the dominant models. 

The 2002 Forum was a success in terms of the number and diversity of its participants and the programme, which allowed a lot of information sharing and exchange of views.  But it didn’t develop sufficient momentum to remain in being; neither human nor material resources were available.   

In November 2002 the International Parliamentary Union/IPU – an NGO in Consultative Status with the UN’s Economic and Social Council – was granted Observer Status at the UN General Assembly with the right to circulate its documents to member states.  UNGA-Link has since then called for A World Civil Society Union to have Observer Status at the General Assembly, parallel to the IPU. One of our key documents (available from the Resources Page) is the Chronology of Calls for Non-Governmental Participation in Global Governance in the UN.  It concludes with our own, in 2003, and probably needs considerable updating. A likely candidate is Mark Malloch Brown, for many years a high-level UN official, whose book The Unfinished Global Revolution came out in February 2011.  What follows are notes from a discussion of his book on BBC Radio 4’s “Start the Week”, with Andrew Marr/AM the presenter in conversation with MMB, the author: 

“AM – do we start with a post-1945 world settlement that simply doesn’t work anymore? 

MMB – if you’ve been in the business I’m in, you’re still an optimist.  You’ve got to retain the ability to say, look, this isn’t working, how can we improve it? In 1945 an American leadership recognised that the consequence of WWII was that the world’s problems were going to be dropped into its lap and it still had a lot of domestic problems to deal with.  Roosevelt and Truman saw the UN above all else as a means of burden-sharing the problems of global security and global development.  It was a very pragmatic construct.  He hopes that emerging powers – like India and China – will recognise that a share of the world’s problems are about to drop onto their lap and see that a return to multilateral arrangements is in their interests as much as anybody else’s.    They may be the leaders in the renewal of these institutions because in recent years countries like Britain and France have become rather lonely champions of the UN.  The emerging powers have said they don’t have enough stake in it and look to other arrangements; the US has been a terrible a-la-carte user of the UN: when it wants to use it, it does; not when it doesn’t.  The whole system has sagged a bit, got demoralised and under-invested in. But there has been a quiet, creeping revolution in global governance for some time.  Problems have gone global – in the financial crisis, even America couldn’t fix the banks; it needed to appeal for a meeting of the G20. 

The UN reform movements can be found around different issues, with extraordinary coalitions of individual countries taking leads on, for example, landmines or climate change – governments combined with Foundations, Not-for-Profit organisations, Philanthropists and – strikingly – Businesses.  One of many examples he gives in his book is the coalition that broke the dramatic increase in the number of AIDS infections round the world was a very disparate bunch. Between families and the state you need civil institutions in a civilised society.   At the moment, the state is a passive, reactive follower if the analogy is that it’s “the United Nations”.  The Civil Society Institutions are very much the leaders.  The balance of power is different at the global level than the national.  He hopes the United Nations system will respond to the challenge and the opportunity and raise their game in response to what Civil Society is doing.  AM – put “a pessimist’s question” at this point.  As he sees it, part of the problem is that almost nobody feels any sense of Ownership of Connection with international bodies or international leaders because inevitably they will be from another part of the world for most people and politics has always been rooted in some sort of democratic connection between rulers and the ruled.  That “cannot happen at an international level; I see no way round this.  I see no mechanism by which we can feel more connected to international institutions.” 

MMB – accepted that they would always be institutions represented by Stakeholders – states primarily; also NGOs and Businesses and others.  He does not anticipate any globally elected parliament of any kind.  He envisions the strong national state looking after its people’s interests as “the absolutely critical connection”.  The United Nations would be “popular by secondary effect”: a British politician could come home from a UN Conference and say they had fixed that climate change or employment problem. And in someone like Kofi Annan, the Secretary-General he worked for, the UN had a Ghanaian who became a global figure with a real international celebrity to him.  It prompted some politicians round the world to want to take him down a notch. 

MMB’s book itself attempts to open up the little black box of globalisation and make it more personal while showing that nothing affects our lives more…”