Countries that support poor people have recovered faster from the crisis

Watch and listen to Roberto Bissio's
press conference at UN headquarters
in this webcast.

Countries like Brazil, and also China and India, in “which stimulus packages were basically directed to support the poor in different ways,” have actually recovered faster from the crisis than industrialized countries, which bailed out banks and rich people, said at UN headquarters in New York Roberto Bissio, Coordinator of Social Watch, when he launched the most recent edition of the annual report of this international network of civil society organizations.

Showing sad parallels with the climate crisis, the effects of the financial and economic crisis had been felt most seriously by those in no way responsible for it, he remarked at a press conference sponsored by the UN Department of Economic and Social Affairs.

Bissio explained that the world’s most vulnerable groups in its poorest countries, such as women, poor farmers and indigenous populations, had been affected in multiple ways, including through retraction of credit availability, recession and by reduced official development assistance from countries seeking to protect their own budgets.

However, some developing countries had actually recovered faster from the crisis than industrialized countries, he said, citing Brazil, China and India as examples that stood out.

“There is a link in many ways with the fact that many of those countries – like Brazil and also China and India – their stimulus packages were basically directed to support the poor in different ways,” he pointed out. They had focused on protecting jobs and wages, expanding social services or, in Brazil’s case, direct cash transfers to the poor.

Where stimulus money reached the poor, it was spent because poor people had no other choice, he continued. Stimulus packages given to banks or to the rich and upper-middle class would be saved because that was a natural response to excess money — the fear of continued crisis and a lack of confidence in recovery.

The reaction to speculation and skyrocketing food prices had had now become increased austerity, demanded by the same financial markets that had originally been rescued, he noted.

He said there was a worrying trend whereby even countries enjoying economic growth and budget surpluses were implementing austerity packages, with 70 per cent of 128 countries studied by the United Nations Children’s Fund (UNICEF) either implementing or considering the implementation of austerity measures that would impact children directly.

One quarter of them were even cutting expenditures to pre-crisis levels, although they faced no fiscal debt problems. That was a horrible fashion that was being followed, “maybe because that’s what Paris and other fashion centres are doing, and therefore we all follow the fashion and do it even if we don’t need it,” he said, describing the trend as “tragic”.

Referring to Social Watch’s annual report, he said 66 countries had reported on the question of sustainability ahead of the Rio+20 United Nations Conference on Sustainable Development in June 2012.

When the question of sustainable development was put to people working at the grass-roots level, it did not refer only to environmental sustainability, but also to financial and political sustainability, because the financial crisis was disrupting the social contract around the world.

Such issues had featured during the recent High-level Dialogue on Financing for Development, he said, adding that a key advantage of the United Nations was its capacity to integrate the various aspects of sustainable development within a human rights framework, which was the cornerstone of the organization and its main image around the world.

He said Social Watch demanded the right to a future because many people around the world, especially young people, were finding themselves without one. Future generations also needed protection, he emphasized, noting that no one was taking responsibility for defending the rights of future generations.

Some countries, like Bolivia and Paraguay, had enshrined the rights of nature in their constitutions, which was another way to approach the same issue after concluding that economic growth, when left on its own, did not provide the answer. Instead, the answer lay in equity and justice, in a world where growing inequity and injustice was the trend.

Asked how the contagion of austerity could be broken and whether the United Nations could promote global agreement on the need for stimulus policies, he said the “austerity epidemic” had been attacked from two sides — first, from a human rights standpoint that stressed the responsibilities of Governments, under the United Nations Charter, to use all available resources to ensure the human rights of their populations, and equated the cutting of basic services with a violation of those human rights.

The second aspect stressed the poor economics of austerity policies, he said, warning that if countries kept lowering costs in competition with others, there would be a “race to the bottom, submerging the entire world economy”. And if the G-20 was to formulate a plan to stop States from racing to the bottom, the United Nations needed to take the reins, he added.

When asked whether the rule that “the polluter pays” should be applied to the financial sector, he said the principle was understood in environmental matters, but things worked the opposite way when it came to the financial sector. Those responsible were bailed out because the alternative would have been worse. After the bailout, the debt was held by the taxpayers, while the speculating financial markets held Governments to ransom and enjoyed “unconstrained political clout”.

That was making people angry and driving them into the streets, he continued, stressing the need for regulation of market forces. The political decision made 20 years ago to follow the market-led experiment had failed, and it was time to take prudential measures to curb speculation and avoid criminal conduct. “In all sports, from cricket to football to boxing, players are not allowed to bet against themselves, but you can in financing,” he pointed out.

Asked whether any institutional mechanisms within the United Nations could be used or put in place to enhance human rights in that regard, he said the International Monetary Fund (IMF) had been empowered by the G-20 to act as a lender in crisis situations. Financial influence over Governments meant that their capacities to discipline the markets were not being used, he said.

The Basel Accord among central banks established laws for the banking industry, he said, noting that the problem was not so much the absence of institutions as a lack of enforcement and institutional regulatory capacity. Off-shore banking and fiscal havens meant that unregulated money was flowing around somewhere, contributing to the race to the bottom, but that did not mean there was no authority, he said.

Decisions and decision-making were of key importance, and better governance was needed in terms of the future. “That’s what sustainable development is all about – governance of the sustainability part.”

More information
Press conference by Roberto Bissio (webcast): http://bit.ly/uK2NQo
Social Watch Report 2012 website: http://bit.ly/skL4l4

Source
Department of Public Information (UN): http://bit.ly/sgDQc4