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S O C I A L W A T C H R E P O R T 2 0 0 9 product, BENIN: of thetotalpopulation). 31 million people in the region ARAB REGION: ... as a result of the food crisis, around food itemsbasicforsurvival. workers and peasants have become unable to afford where LDCs, 30 over shaken have riots”, “food to crises, triggered by soaring food prices and leading food Unprecedented COUNTRIES: DEVELOPED LEAST one dayjust Many most. the suffer will pollution, in least the contributed who Countries, Developed Least The CHANGE: CLIMATE mechanism. coping a as tomatoes and vegetables of trading informal petty in engaged themselves finding increasingly are and jobs their lose to first the AFRICA: SUB-SAHARAN SENEGAL: increased The more. or 80% of 50% of their income on food – the poorest spend DEVELOPING COUNTRIES: ... the poor spend upwards the population. for protein of sources main the of one and sector primary the for resources of source important an is Fishing (...) fishing reduced has warming global fulfilment ofnational,regionaland internationalcommitmentstoeradicatepoverty. SocialWatchholds governments, systemtheUN andinternational organizations accountable forthe not tobepoor. committedareWesocial, toeconomic gender andjustice, emphasize we andpeople allrightthe of the causes of poverty, to ensure an equitable distribution of wealth and the realization of human rights. SocialWatch isan international network ofcitizens’ organizations struggling toeradicate poverty and The price of soared 220%. The environmental crisis resulting from from resulting crisis environmental The notjustpoverty,butalso disappear fromthemap developing states developing island small maize increase in food prices has has prices food in increase , the most widely consumed ... women continue to be to continue women ... are are hungry (about 10% hunger . . may in the private service sector.in theprivateservice are more often engaged in low-paid jobs, especially economy will affect women more than men, as they – informal – grey the of growth the ... POLAND: value oftheirhouse. or are homes own to exports and remittances and exports included has damage Initial GHANA: be laidoff and work precarious and time ... CANADA: were women than More CAMBODIA: in personal and consumer and personal in INDIA: ... there has been drastically devaluation NICARAGUA: than thatof1997. MALAYSIA: ... the coming production. UNITED STATES:UNITED purchasing powerofwagesandsavings. PERU: from avoidablecausesasaresultofthecrisis. trapped in mortgages that now far exceed the as well as a fall in the in fall a as well as layoffs, 200,000 ... . . women ... more than fromruralcommunities. or most of their equity their of most or all lost have ... many are over-represented in part- in over-represented are workers the of 90% of those fortunate enough fortunate those of from abroad and abroad from 400,000 children could die recession could be worse and industrial industrial and loans are often the first to first the often are reduced growth decreasing decreasing galloping laid off laid People the O on povertyera dication andgederequity A citizens´glob al progressreport organizations and economiccrisisistoinvestinpeople. R E P O R T 2 0 0 9 ver only SIXTY Making financeswork: SOCIAL WATCH way reports out around of the

from the current world first civil ecological show

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that OVERVIEW

The full version of the Social Watch Report 2009 includes: Social Watch in the world

Voices that make a difference MEASURING PROGRESS Roberto Bissio Food security People first A fragmented scenario Roberto Bissio Education Differences become more noticeable

THEMATIC REPORTS Information, science and technology The fastest breach A human rights-based response to the financial and economic crisis Development assistance Aldo Caliari, Center of Concern Commitments undertaken are further and further away from being fulfilled Gender equality and the financial crisis Nancy Baroni, Canadian Feminist Alliance for International Action; Water and sanitation Mirjana Dokmanovic, Association Technology and Society, The gap is widening Serbia and Women in Development Europe (WIDE); Genoveva Tisheva, Bulgarian Gender Research Foundation Health and Bulgarian-European Partnership Association; SW National Coalition Unequal improvement Emily Sikazwe, Women for Change

Reproductive health The global food price crisis Marked polarization Sophia Murphy, Institute for Agriculture and Trade Policy SOCIAL WATCH Ratifications of fundamental ILO conventions Justice to cool the planet Coordinating Committee Isagani Serrano, PRRM, Social Watch Filipinas Ratifications of human rights Emily Joy Sikazwe (Zambia) and Jens Martens (Germany), co-chairs. Nancy Baroni (Canada), Leonor Briones (Philippines), Anas El Hasnaoui (Morocco), Javier Gómez (Bolivia), Energy challenges for Europe Arjun Karki (Nepal), Thida Khus (Cambodia), Edward Oyugi (Kenya), Iara Pietricovsky (Brazil), Ziad Abdel Samad (Lebanon), Areli Sandoval (Mexico), Alexandra Spieldoch international treaties Elena Triffonova, Bulgarian-European Partnership Association (United States), Genoveva Tisheva (Bulgaria), Mirjam van Reisen (European Union) and Roberto Bissio (Uruguay, ex officio). The International Secretariat of Social Watch is based in Montevideo, Uruguay, hosted by the Third World Institute (ITeM). How to read the Social Watch tables Holding transnational corporations accountable for human rights obligations: the role of civil society Jana Silverman, Social Watch; Methodological notes: thematic tables Editor-in-Chief Technical support Original layout: Roberto Bissio Arturo González MONOCROMO Álvaro Orsatti, Trade Union Confederation of the Americas Editor Web design and development Layout: Amir Hamed Andrea Antelo, Ximena Pucciarelli, Ernesto Rapetti FORMA ESTUDIO The global economic crisis and the least www.formaestudio.com developed countries: citizens’ concerns Production Manager Phone: +598 (2) 916 3273 Ana Zeballos © Copyright 2009 Arjun Karki, LDC Watch INSTITUTO DEL TERCER MUNDO Infographics redesign: Associate Editors 18 de Julio 1077/ 903, Montevideo 11100, Uruguay www.icodemon.com Karen Judd, Tina Johnson, Jon Steinberg [email protected] Mounting development challenges posed by Fax: +598 (2) 902 0490 ext.113 Printed by: the world economic crisis: policy options in the Arab region Research and Editing Gráfica Mosca Gustavo Alzugaray, Enrique Buchichio Made possible thanks to the funding and support of Kinda Mohamadieh, Arab NGO Network for Development; the European Commission, Oxfam Novib and the Ford Oliver Pearce, Christian Aid Social Sciences Research Team, Departamento de Foundation. Printed in Uruguay Sociología de la Facultad de Ciencias Sociales de la Edición hecha al amparo del Art. 79 de la Ley 13.349 (Comisión del Papel) Universidad de la República, Uruguay Gabriel Errandonea (Coordinator) Dep. Legal: Europe’s response to the global Gabriel Gómez, Daniel Umpiérrez, Ruy Blanco financial and economic crisis For orders and requests please contact: Mirjam van Reisen, Europe External Policy Advisors (EEPA); Advocacy Coordinator Natalia Cardona This publication has been produced with the assistance Social Watch Simon Stocker and Louisa Vogiazides, Eurostep of the European Union, Oxfam Novib and the Ford Casilla de Correo 1539 Campaigns and Communications Foundation. The contents of this publication are the Montevideo 11000, Uruguay Jana Silverman (Coordinator) sole responsibility of its authors and of the Social [email protected] Agustín Fernández Watch network and can in no way be taken to reflect www.socialwatch.org the views of the European Union, Oxfam Novib and the Phone: +598 (2) 902 0490 Fax: +598 (2) 902 0490 ext.113 Translation Ford Foundation. Soledad Bervejillo, Marcela Dutra, Bachir El Omari, Ana Fostik, Susana Ibarburu, Emilie Jung, Richard Manning, María Laura Mazza, Alexandra Potts, And national reports from: Álvaro Queiruga, Alejandra Trelles

Algeria, Argentina, Bahrain, Bangladesh, Belgium, Benin, Bolivia, Brazil, Bulgaria, Burma (Myanmar), Cambodia, Canada, Central African Republic, Chile, Costa Rica, Cyprus, Czech Republic, Egypt, El Salvador, Eritrea, France, Germany, Ghana, Guatemala, Honduras, Hungary, India, Iraq, Italy, Kenya, Lebanon, Malaysia, Malta, Mexico, Moldova, Morocco, Mozambique, Nepal , Nicaragua, Nigeria, Palestine, Paraguay, Peru, Philippines, Poland, Portugal, Romania, The content of this publication may be reproduced by non-governmental organizations for non-commercial purposes (please send us copies).

Senegal, Serbia, Slovakia, Slovenia, Somalia, Spain, Tanzania, Thailand, Uganda, United States Of America, Venezuela, Vietnam, Yemen, Zambia Any other form of reproduction, storage in a retrieval system or transmission by any means for commercial purposes requires prior permission from ITeM. Voices that make a difference

This Social Watch Report goes to print in September 2009, Thus, the convening at the heads of state level of the “G-20”, a year after the US Government failed to rescue Lehman an informal grouping of 22 economies from the North and Brothers from bankruptcy. The collapse of this global the South considered to be of “systemic importance” is a investment bank marked the peak of a crisis that started at welcome step towards recognizing the new realities in the the epicenter of globalized finance on Wall Street and soon world economy. But it is clearly not enough, for two main spread to national economies everywhere. reasons: first of all, because some 170 countries are left out, Since “crisis” has been the keyword for 2009, the as happened at the G-20 summits in Washington (November question that Social Watch asked its network of national 2008), London (April 2009) and Pittsburgh (September grassroots organizations to respond to in framing their 2009). And secondly, because the G-20 has no institutional country reports was obvious: What is the social and weight, no legal status, no accountability, no secretariat in environmental impact of the global economic and financial charge of following up on its resolutions and unknown rules crisis in your country? What is your Government doing about for reaching a decision in case the closed-door negotiations it? What proposals are being put forward by civil society? fail to reach an agreement. Each national Social Watch coalition, examining the Yet, it is argued that the advantage of the G-20 is that a situation in its own country, has identified a variety of reduced number of leaders meeting at the highest level is ways in which the crisis is affecting them. Those findings able to produce significant results, while a large meeting are the heart of this report and they provide the bottom- conducted in a transparent way could only produce inflamed up perspective of the people working with and from the speeches for political consumption but no significant grassroots. agreements. What happened over the last 12 months, This is not a commissioned report. Each national Social instead, was that the General Assembly of the United Nations, Watch chapter is made up of organizations and movements meeting in Doha in December 2008 and in New York in that are active year-round on social development issues. June 2009, managed to come out with a consensus of the Their findings are not intended as pure research. Rather, they “G-192” (the total number of members of the UN) that goes are used to draw the attention of the authorities to issues of deeper in its analysis of the global crisis than has any other concern and to help shape more equitable, gender-sensitive internationally agreed document. and pro-poor policies. Social Watch was an active participant in all the hearings Asked to comment on the crisis, the Social Watch national convened by Father Miguel D’Escoto, president of the chapters decided on their own priorities and emphases 63rd session of the UN General Assembly, and submitted and even on their own definition of what the current crisis recommendations to the commission of experts led encompasses. To make the report possible, each national by economist Joseph Stiglitz that advised the highest Social Watch coalition raises its own funds and defines its international body in its deliberations on the economic and own ways to consult with the grassroots to gather evidence financial crisis and its impact on development. Social Watch and validate their findings. They do not shy away from organized, together with dozens of local and international criticizing national authorities, policies, elites or governance civil society organizations, a “Peoples’ Voices” event in systems whenever they feel it is necessary. And the voicing New York that brought together local victims of the crisis of critical views helps strengthen democratic processes. But with activists and researchers from around the world. Our even when the reports find that much can (and needs to) network was also actively involved in the round tables during improve at home, these findings also point to international the June High Level Conference itself and even when only a constraints that cannot be solved at the country level. few of our recommendations actually found their way into There is little democracy in international decision-making the final outcome document, we publicly commended the either for civil society or for governments. Civil society government negotiators for having achieved a consensus organizations cannot attend, even as observers, many of that seemed impossible. the key decision-making fora and in many cases this is also Now it is time to put those agreements into practice; to true for governments of developing countries, especially transform the words into action. the least developed countries. The World Bank and the The whys and hows of bringing this about is what the International Monetary Fund, the two main pillars of global reader will find in this Social Watch Report 2009. n financial governance, are controlled by seven countries and the United States has veto power in both institutions (as does Ro b e r t o Bi s s i o the EU, if its member countries take a common position). Social Watch International Secretariat

Social Watch / 1 People first

calculated from global aggregates, not the results growth of the grey economy will affect women Roberto Bissio Social Watch International Secretariat of direct observation from the ground. The accu- more than men, as they are more often engaged mulation of findings from rich and poor countries in low paid jobs, especially in the private service of all continents show remarkable similarities and sector (e.g. in retail).” also a diversity of situations that enriches the pic- In France the global crisis has had a direct The bankruptcy of the Lehman Brothers investment ture available so far, makes it even more dramatic impact on the people, as it has in all the developed bank in September 2008 is seen by many as the and challenges decision-makers­ with the urgency countries where it began. The most obvious effects tipping point in a series of collapses in the bank- of implementing policies that put people first. It is have been rising unemployment and increased social ing system that spread like prairie fire through the not just a matter of social justice, but also of sound exclusion, and “sectors that not long ago were in a financial markets and stock exchanges of the richest economic policy, as a brief overview of the country comfortable situation are even suffering food short- economies of the world. Since then, the word “crisis” reports demonstrates. ages” according to the French Social Watch report. has dominated the media as well as political discus- Similarly, the German Government’s crisis manage- sion worldwide. The Great Depression that shook the Innocent bystanders ment strategy does not include social or indeed eco- world in the early 1930s is frequently cited as the only In capitalist finances, like in a casino, the riskier logical goals. Its stimulus packages and tax cuts are precedent and well-known historian Eric Hobsbawn the bets the higher the earnings. But risky bets also socially inequitable; layoffs and the rise in part-time has compared the fall of Wall Street to the fall of the means frequent losses. In that logic, the scandal workers are revealing the ugly face of deregulation. Berlin Wall. Regarded as the greatest historian of is not the bankruptcy of Lehman Brothers, but the Poverty is becoming “massive” in both Eastern and the twentieth century, Hobsbaum said, “the totally decision by US president George W. Bush and his Western extremes of Europe, report the Social Watch unrestricted and uncontrolled free-market capital- Treasury Secretary Hank Paulson to spend hun- coalitions from Portugal and Moldova. ist economy (…) that captured the world and its dreds of billions of dollars of taxpayers’ money to In the Czech Republic, “the global economic governments in the years since Margaret Thatcher rescue failed banks, such as Goldman Sachs, of crisis (...) is lowering the standard of living” mainly and President Reagan (…) is breaking down before which Paulson was Chief Executive Officer before because of increased unemployment. The Czech our eyes”, the same as “the centrally state-planned joining the Government, and insurance groups, Social Watch coalition challenges the official un- economies of the Soviet type broke down twenty such as A.I.G. When President Yayi Boni of Benin, employment figure, arguing that 178,000 people years ago”.1 elected owing to his solid reputation as a banker, who were considered to be not actively seeking The dust has not settled yet. While politically learned of this decision, he wondered publicly employment were left out and that adding this connected US investment banks such as Gold- where the trillions of dollars of rescue funds would group would have pushed the unemployment rate man Sachs, have started to make profits again and come from and concluded that the poor would end 50% higher. Foreign workers, particularly those reward their executives with multimillion dollar up paying for the crisis. The Belgian report for So- from Asia, are found to be those suffering the most bonuses, unemployment is still growing in most of cial Watch agrees: when the shares of banks and in the Czech Republic, but also the Social Watch the so called “advanced” economies and the tsu- the principal enterprises in the country collapsed, coalitions in Malta, Slovakia and Cyprus report on nami wave of the crisis is only now, one year after the Belgian Government went to the rescue of the rising difficulties for foreigners and even cases of the earthquake at the financial epicenter, starting to banks and provided deposit guarantees. The crisis xenophobia. hit more distant shores. In Bolivia, for example, the is still causing unemployment to rise, while the cost At the other end, economic difficulties derived local Social Watch coalition in its contribution for of the bank rescue is making itself felt in the drastic from diminishing remittances by exported workers this report writes that “as a cycle of world growth increase of public debt, with serious repercussions are reported from the Philippines, Morocco, Mex- roared past (previous to the crisis), Bolivia stood in the provision of social security. In Benin itself, ico, Nicaragua and many other places. In the case by and watched, unable to take advantage of the the local Social Watch coalition has discovered that of Egypt “the drop in remittances and the return of opportunity to establish its own rhythm of devel- in its efforts to stimulate the economy the State is émigrés has put pressure on a labour market badly opment. Its economy was just beginning to pick competing with the poor for scarce construction prepared to absorb more unemployed workers.” In up speed, when the global boom began to stall and materials and grassroots organizations are mobi- El Salvador, “more than 300,000 families − 26.7% then go into reverse.” lizing against the rising cost of living. of the population − receive money from abroad, The findings from civil society organizations in Many of the national Social Watch reports which helps defray the cost of food, clothing and over 60 countries are included in this Social Watch show how women tend to suffer the impact of the basic services.” Flows of remittances almost report, the first global bottom-up report on the so- crisis disproportionately. In the words of the Polish stopped growing in 2008 and it is estimated that cial impact of the crisis. UN agencies and other in- coalition, “the decrease in family incomes due to they will start falling in 2009. stitutions have reported estimates of the millions of the economic crisis might cause pauperization of The speed at which countries get affected by jobs that will be lost worldwide, the millions more whole social groups, particularly among the lower the tsunami is not related to its physical distance people who will be thrown into poverty and the ad- and middle classes. It is very likely that this will in to Wall Street, of course, but with how its economy ditional number of children likely to die as a result turn have a more significant impact on women, is linked to those at the epicenter. In Mozambique, of the inability of the markets to solve the problems since they traditionally are the main responsi- for example, which is one of the poorest countries they created (contrary to what was the prevailing ble for family well-being (this is particularly true in the world, the privately own Mozambique Inter- credo until last year). Valuable as these are, they are among the lower income groups). According to national Bank (Millennium Bim) has published a some analysts, crises amplify the grey (informal) report forecasting that the nation’s economy will sector in the Polish economy as many, especially shrink because of negative growth in donor coun- 1 See: “Socialism has failed. Now capitalism is bankrupt. So small entrepreneurs try to minimize labour costs tries that finance more than half the national budg- what comes next?” by Eric Hobsbawm, published by The Guardian on April 10, 2009. Available from: . formal employment. It seems very likely that the Social Watch-Mozambique reports that prices for

Social Watch / 2 aluminum, tobacco, sugar, tea, ­chestnuts and As Brazilian financial expert Fernando Cardim istries, increasing property taxes, taxing mobile prawns have fallen. Export revenues will be affect- writes in his analysis for the local Social Watch phone bills and new car purchases, introducing ed and this in turn will weaken activities that foster report: “increasing income and tax revenues (…) a luxury car tax, banning new employment in the economic growth and hamper efforts to promote is precisely what President Obama is trying to ac- public sector, limiting business trips abroad and re- tourism. With 42% of its budget funded by aid, complish in the United States. It is also what the ducing working hours. Yet, the Serbian “watchers” Tanzania is in a similar situation. The French Social Managing Director of the International Monetary note that if “the newly adopted Law on Confiscation Watch report shows that, because of the crisis and Fund (IMF), Dominique Strauss-Kahn, has defend- of Property Gained by Crime, the State could collect the country’s inability to create new resources for ed repeatedly since 2007.” Yet, “the Fund itself has USD 2.64 billion in one year, a sum equalling the Official Development Assistance (ODA), this aid resisted adopting this view, as demonstrated by one Serbia is asking for from the IMF.” has been cut back sharply and France will not fulfil the conditionalities imposed on the Central Euro- In Bulgaria NGOs and trade unions also do not its commitments in this area. By contrast, Spain pean countries that were bailed out by the IMF.” agree that reducing social expenditures is accept- has reaffirmed its commitment to channel 0.7% In the case of Romania, the national Social able in times of crisis. “Any further reduction could of its national income into ODA by 2012. But even Watch report notes that “the IMF loan seems to shatter the country’s social peace”, warns the local if all donor countries were to honour their commit- have been contracted under external pressures, Social Watch. Although NGO experts support the ments, those goals are expressed in percentages mainly to save foreign companies’ interests in increase in the share of investment going to trans- of the economy, and therefore the budgets for ODA Romania. It will not serve to repay the country’s port infrastructure, they are sharply critical of the are bound to decrease in times of recession. foreign debt but will cover the debts of local sub- Government’s failure to use EU structural funds Among developing countries, the greater the sidiaries of foreign banks. Public funds will thus be allocated to Bulgaria during its first two years of linkage with the globalized economy, the bigger used to repair the damage done by private capital.” full membership. “Only 0.6% of the EUR 2.2 billion and faster has been the impact. México and Chile, Instead of reacting to local needs, the IMF went to had been spent by the end of 2008. Lack of finan- two Latin American countries tied to the US econo- Romania as a result of “desperate calls from the cial capacity, excessive bureaucracy and scarcely my by free trade and investment agreements, were Austrian Government for EU and IMF intervention transparent procedures have all prevented the immediately affected. The price of copper, Chile’s to rescue its banks in Eastern Europe.” Austrian funds from reaching their intended beneficiaries.” main export, peaked at over USD 4 per pound in banks had lent the region an amount equivalent mid 2008, only to fall to USD 1.4 at the end of the to 70% of Austria’s GDP. Now, “the repayment of Slowing down can be dramatic year. Yet, the most noticeable impact of the crisis a loan that represents 40% of Romania’s annual When the financial crisis started, some economists is, according to the Chilean Social Watch report, budget will only be possible over the next years put forward the “decoupling” hypothesis, according the fall in pension fund holdings, which are in- through decreasing the population’s standard of to which emerging economies would be relatively vested in local and foreign financial assets. The living.” untouched by the global financial crisis owing to value of retirement savings suffered a loss of USD In Hungary, an IMF bailout was needed to their substantial foreign exchange reserves, robust 27 billion, more than 26% of the total funds, by avoid total collapse of the economy, but it led to corporate balance sheets and relatively healthy bank- the end of 2008. This is the reason why house- devaluation, tax increases, procyclical measures ing sectors. Yet they felt the impact anyhow. As So- hold wealth in Chile suffered the greatest losses in such as spending cuts and other unpopular meas- cial Watch-India observes, “the Government’s initial Latin America, yet despite repeated protests from ures. Prime Minister Ferenc Gyucsany was forced prediction that the country would emerge unscathed, the people affected, they were not as lucky as the to resign in March 2009. The new Government was shortsighted” and economic growth dropped shareholders of some of the big global banks and plans to cut pensions, public sector bonuses and from a healthy 9.3% in 2007 to 7.3% in 2008. For nobody came to their rescue or did anything to maternity support; to mortgage energy and trans- 2009, the IMF forecasts a growth of 4.5%. Similar compensate them. port subsidies; and to raise the age for retirement. drops from two digits growth figures to 5% occurred Falling commodity prices have caused the Similarly in Serbia, pressure by the IMF to in Vietnam, Peru and Cambodia. crisis to spread to many countries. In Uganda the decrease the state deficit led the Government to Five per cent growth can make finance min- local Social Watch coalition estimates that this announce in March 2009 the introduction of a tem- isters in OECD countries envious, since most of might reverse recent social progress and make it porary “solidarity” salary and a pension tax of 6% them are trying to emerge from negative growth impossible to achieve the Millennium Development for those who earned above USD 170. This created (i.e., recession), but the departure point should not Goals. Zambia suffers even more than Chile from discontent among workers and pensioners while be ignored. Five per cent growth per year in low- the drop in copper prices, on which the country trade unions announced protests. They argued that income countries means an increase of less than a is highly dependent. The Zambian contribution to the “solidarity” tax would hit the poorest, cause a dime a day for the average person. But a few cents Social Watch rightly notes that: “Unlike the United reduction in salaries and increase unemployment make enormous difference when you are poor. As States and other countries that have responded to and work in the informal sector, while the rich Social Watch Cambodia points out for example, the economic meltdown by providing financing to would remain untouched. Overnight, the whole the reduction of the growth rate by one half means failing banks and major industries to try to keep savings plan was revoked. According to the Ser- that “people living around Tonle Sap, the country’s them afloat, Zambian President Rupiah Banda bian Social Watch coalition, the Government “was major lake, are especially vulnerable, since they does not have any resources to give out.” caught between fear of social turbulence on one had already gone into debt to make ends meet. Last The report from Ghana comments on the side and pressure from the IMF on the other, and year they had to sell productive assets and pull same problem: “The question that citizens are try- the following weeks were marked by discordant their children out of school to go to work.” ing to come to grips with is whether the country voices from policy makers, who announced new should focus on aid from the international com- packages of saving measures in the evening that Permanent crisis munity to cope with the economic fallout, or resort were revoked the following morning.” The menu The term “crisis” refers to a turning point, a de- to harsh fiscal and monetary initiatives.” of new ideas included reducing the number of min- cisive moment, an unstable time, yet for many of

Social Watch / 3 the reporting Social Watch coalitions, the crisis In Vietnam, frequently quoted as an example tiations that shift the burden of the crisis onto the they are suffering is a matter of decades and did of a development model that lifted millions of peo- shoulders of their workers through layoffs and not start with the collapse of the financial markets. ple out of poverty, consumption by the richest 20% reductions in benefits and wages.” In the Central African Republic, poverty is seen as of the population accounts for 43.3% of total ex- In Slovenia, the local watchers also detected increasing and not diminishing since 1990, with penditure in the country, while the remaining 80% employers abusing the fear of the crisis to restruc- political instability and violence damaging an al- spends very modestly. Similar polarization is de- ture workers’ rights. In Guatemala, the Govern- ready weak economy. scribed by the Social Watch report for Honduras, ment measures aimed at confronting the food Eritrea is reported as having “a deep economic, where the confrontation between rich and poor is crisis, such as zero tariff import quotas, result in social and political mess of its own making” before clearly at the root of the coup d’etat that deposed benefits for one group but not to the consumers. being hit by the global crisis, while in Nigeria most President Manuel Zelaya in June 2009, reviving a From Paraguay, the local Social Watch coali- people “have been living for a long time in a situ- “regime change” practice that Latin America had tion reports that the first sectors to demand addi- ation of economic meltdown. Corruption is wide- seemed to have abandoned in favour of democratic tional support “were those that had benefited from spread, the country lacks electricity, education and methods two decades ago. the prior Government’s neoliberal policies and health are in a deplorable condition, and the armed In neighbouring Costa Rica, a traditional ha- market integration: agro-exporters, industrialists, fight for the control of oil resources continues to ven of peace and constitutional stability in Central importers and advertising executives. (…) The soy be intense.” In Yemen, the local Social Watch team America, the local watchers warn that “if the chal- producers, for example, insisted that the Govern- sees lack of rights as being at the origin of crisis lenges [of the crisis] are not dealt with on the basis ment not only to cover their losses, but also pro- after crisis since 1990, with 42% of the population of social dialogue and by means of a firm change vide enough funding to maintain their level of pro- living below the poverty line and an even worse of course, the persistence of traditional solutions duction and profit through public subsidies. They situation for women. In Burma there is a crisis in (one-time cash handouts and cuts in public spend- earned extraordinary profits in the previous cycle, every area, whether the economy, politics, food or ing, as well as the reduction of rights) will doubt- thanks in part to speculation in the futures market environment, with the Government showing itself less lead to greater inequality and poverty and to for agricultural commodities that accompanied the to be unable to support its own citizens in the af- the risk we have already pointed out of turning promotion of biofuels in many countries.” termath of a devastating cyclone and yet spending conjunctural poverty due to the loss of income, In Poland “the public believes that banks are nearly half of its budget on the military. into structural poverty, and increasing violence manipulating the exchange rates at the clients’ In Nepal the crisis is expected to hit soon, against women, children and the elderly.” cost. At present the difference between the pur- adding its effects to “other crises, related to the chase and the selling rate can reach as much as environment, food, energy, finance and politics The game of the ostrich 12%,2 while even the Office of Competition and [that] have been buffeting the society for a long “In Kenya the Government is in denial”, – write the Consumer Protection is unable to impose ex- time.” In Bangladesh, cyclone Sidr on top of two local watchers – “playing the game of the ostrich, change rate restrictions. Consumer groups are consecutive floods has shown the extreme vulner- burying its head in the sand. The governing elite therefore forming through the Internet in order to ability of millions of people threatened by climate argues that the crisis is circumstantial and that the purchase foreign currencies in wholesale quanti- change. A complete lack of governmental authority national economy is sheltered enough by its weak ties, hoping to negotiate the amount of spread and is at the root of problems in Somalia, while foreign ties with international capital.” sometimes even renegotiate terms and conditions occupation is the major concern in Palestine. Also Similar denials are reported from many coun- of credit agreements.” contributing from a critical conflict situation, the tries. In the case of Moldova, Social Watch found After having attended a seminar organized by Iraqi Social Watch decided this year to focus its out that before the elections in April 2009, the Third World Network on Asian responses to the report on the situation of women. Their findings Government vehemently denied the crisis would crisis, Social Watch advocacy coordinator Natalia have, however, universal value: “a culture of equal- affect the country and tried to artificially maintain Cardona wrote that there seems to be “an atmos- ity of access and opportunity is needed in addition the economic situation. The World Bank was not phere of defensiveness among governments in the to legislation.” so optimistic, and included Moldova among the region. Rather than a proactive and new approach developing countries with the highest level of vul- to changing the international financial system they Polarization nerability. After the elections, however, President are relying on old policy to try to deal with new and In March 2009, at the height of the crisis and the Voronin declared in a meeting with businessper- worsening economic problems.” political debate on how to cut expenses in Serbia, sons, members of the acting Government, con- Social Watch Argentina finds the Government an automobile fair was held in Belgrade. All the gresspersons and politicians that “‘the crisis is a to be similarly unprepared for the magnitude of the most expensive models were sold on opening day fire, a catastrophe.’ Government officials explained challenges posed by the crisis, while the Brazilian for a total of more than USD 2.6 million! that the downplaying of the crisis before the elec- coalition believes its leaders are “confusing the Polarization is being exacerbated everywhere tions has been aimed at not ‘creating panic.’” inability to act with financial and fiscal prudence.” by the crisis. The Social Watch report from Bahrain In other situations, not only did incumbent In times of recession, “tax revenues go down while describes “increasing numbers of millionaires, politicians downplay the importance of the crisis, social security spending rises. Fiscal deficits then and a shrinking middle class and impoverished but leaders of social organizations have adopted rise precisely because governments were not bold lower class.” The sense of unfairness, more than the same approach, afraid that the fear of a ca- enough to act against the contraction of the econ- absolute poverty, has led to “repeated confronta- tastrophe might lead decision-makers to accept omy. Paradoxically, the attempt to look prudent tions and tension between impoverished commu- opportunistic demands by the already privileged. nities and security forces, especially in the villages, Social Watch Bolivia reports that “Bolivian entre- 2 Online survey by Money.pl. Available from: .

Social Watch / 4 puts a country in an even worse fiscal position Thai watchers fear that “this initiative, led by many But when funds are channelled to the poor it is than would be the case if its Government had acted of the same people involved in the 1997 financial spent immediately. Not because they have a better decisively to support demand.” crisis looking exclusively for short term gains, will understanding of their role in contributing to the pave the way for a new crisis as soon as the coun- recovery of global economy, but just because they Supporting the already privileged try is again on its feet.” do not have a choice. Further, not all attempts to stimulate the economy In Malaysia, which relies heavily on exports All around the world, civil society organiza- are successful, or even fair. The Canadian watch- for economic growth and imports most of its tions are demanding similar things in different ers believe that their Government’s “short-sighted food, socialwatchers report that the country “will ways. In Morocco, as reported by the local Social economic stimulus plan that does not meet the have to brace for years of economic difficulties. Watch coalition, “there have been several secto- needs of the thousands of citizens feeling the brunt There is a sharp fall in industrial production, the ral strikes (education, health, local communities, of the crisis. Jobs being created by Government unemployment rate is soaring and analysts warn etc.) and a general strike as well. Amongst other investments are in male-dominated industries, that the coming recession could be worse than particularly dynamic social movements, it should while women are over-represented in part-time that of 1997. The Government has been criticized be mentioned the various struggles fostered by and precarious work and are often the first to be for acting too late and for focusing on bailing out the Coordinating Committee against the High Cost laid off.” companies. Civil society organizations are holding of Living, as well as by the National Associations Those are almost the same words used by protests and public fora to raise public awareness of Unemployed Professionals. Several collective the Thai Social Watch report: “One of the most of the negative impacts of these crises, especially action strategies have been deployed, such as sit- controversial measures was the one-time THB on the vulnerable groups in society.” ins, spontaneous popular marches and national 2,000 (USD 57) cash handouts to government This is quite the opposite of the policies be- mobilization days against poverty. Demands make and private-sector employees earning less than ing implemented in Venezuela, where poverty reference to halting the increase of prices, sus- THB 14,000 (USD 397) per month. Even those reduction is explicitly sought through massive taining the Compensations Fund, applying a mo- eligible for the fund criticized the policy as blatant government spending, even when the policies are bile salary scale, bringing public services up to populism as opposed to a meaningful stimulus. not always as transparent as the local “watchers” standard, stopping the privatization of water and For example, by far the most workers in this cat- would like. electricity distribution, and claiming the right to egory are working in the informal sector, and are Algeria, on the other hand, seems to have work in the civil service.” thus ineligible; this also raises the issue of gender learned some lessons from the crisis. In Septem- In the United States, where the crisis started, discrimination, since the vast majority of women ber 2008 Sid Saïd, a leader of the General Union of and where the number of unemployed has risen are working in the informal economy.” Algerian Workers, announced that the Government to 13.1 million – 5.6 million more than at the start While Western economies inject massive had abandoned its “everything can be privatized” of the recession, the Republican Party was “pun- new bailout funds into their financial institutions, policy. The local Social Watch report estimates ished” by the electorate that elected Brack Obama and in some cases re-nationalize their banks, the that “220 public enterprises awaiting privatization on a platform of hope and change. Now, according parliament in Kenya, according to the local Social as soon as new regulatory measures were imple- to the American Social Watch report “movements Watch coalition, is legislating the privatization of mented were cut from the list of companies to be for human rights, green jobs, fair trade, healthcare the few remaining strategic public assets in order sold. In addition, the Government’s inter-ministe- and housing are advancing proposals and step- to provide a one-time government revenue injec- rial council applied in January 2008 on bank credit ping up demands for real and structural change. tion. Among the organizations set for privatization and financial clean-up of public economic institu- The U.S. cannot afford to squander this opportu- are the Kenya Electricity Generation Company; the tions by erasing the debts owed them by viable nity for real change.” Kenya Pipeline Company; the state-owned sugar companies. The Government has given responsi- In Ghana, Social Watch demands support for industries, hotels, banks and others. bility for supervising these clean-up measures to women farmers “in the form of investments in in- In Lebanon, both the Prime Minister and Min- an inter-ministerial working group for the finance puts, such as fertilizers, and also in training and ister of Finance have acknowledged the negative industry and investment promotion among small access to markets. These would boost agriculture impacts expected from the global crisis and the and medium enterprises.” while contributing to job creation, economic growth, need to protect the national economy. However, and the well-being of the population.” A similar de- the analysis by the local Social Watch concludes Invest in the people mand comes from Senegal, the most food-import that measures they are implementing speed up Many citizens from around the world can share dependent country in West Africa. Where civil so- the procedures needed for the country to join the conclusion of the Peruvian watchers: “When ciety proposes “returning to traditional agriculture, the World Trade Organization, which will mean times are good, workers are typically asked to wait duly encouraged and supported by the State.” liberalizing services and productive sectors of the patiently for the benefits of growth; in times of Real wage increase should be the stimulus, economy. crisis, they are expected to tighten their belts.” concludes Social Watch in Bulgaria. And in the Phil- Similarly, in Thailand “to complement its But this is not fair and, economists now realize, ippines, “A stimulus package is definitely in order stimulus plan, the Government is also working does not even work. Stimulus packages that have but, unlike the one outlined by the Government, it on a major overhaul of the regulatory structure relied on cutting taxes to the rich and subsidizing should be based on a clear national strategy that is for financial markets. However, contrary to many big banks and corporations have not produced the rights-based, pro-poor and sustainable that aims other countries that are establishing greater safe- desired results. Anticipating a prolonged reces- to strengthen domestic demand, especially in light guards to protect consumers and their economies, sion, the rich and the middle classes tend to save of the current economic climate that is hostile to Thailand is moving towards wholesale deregula- any additional money, instead of spending it, while exports. It should place a premium on food security, tion and liberalization to increase the role of the banks have used stimulus money to rebuild their on job creation by strengthening local enterprises capital market in developing the economy.” The assets instead of lending it. to benefit both male and female workers, and on

Social Watch / 5 ­investment in pro-poor and green infrastructure national production, as well as suspending free the signature of an agreement in order to promote projects (e.g., construction of a network of irrigation trade agreements (FTAs) that leave the Peruvian the Treaty for the Economic and Social Develop- systems, electrification of far-flung villages and de- market far too open at a time of shrinking interna- ment of North America.” veloping clean energy) as well as expansion of social tional markets.” The Mexican Social Watch coali- In response to the crisis, more and more ac- and economic security for the poor and unemployed. tion also wants a revision of the North American count holders in Italy are entering the world of (...) Finally, renegotiation of the national debt so that Free Trade Agreement: “the National Movement ethical finance. “The ethical finance client cares the bulk of the country’s revenues go to urgently for Food and Energy Autonomy, Workers’ Rights about how his own money is used, but also about meeting the basic needs of the people rather than to and Democratic Freedom – in a letter dated 16 April his bank going bankrupt. Many banks today are service the debt requires serious consideration.” 2009 addressed to Barack Obama, the President of thus multiplying their efforts to improve their repu- In Thailand, Social Watch advocates for a wide the United States – suggested initiating a dialogue tations. Returning to the original mandate of the alliance similar to the one that led to the “People’s at the highest level on items such as the urgent banking system to sustain the real economy has constitution” of 1997, in the aftermath of the South renegotiation of NAFTA and the safeguarding of to be a constant reference for finding a way out of East Asian financial crisis.In Peru watchers em- labour, social and human rights in the region. This the crisis”, argue the Italian watchers. Their con- phasize that “counteracting the damage caused by would include establishing an Asymmetrical Com- clusion has validity everywhere: “The key words this crisis requires boosting domestic demand by pensation Fund for North America, negotiating a should be fighting poverty and redistributing re- increasing workers’ consumption and protecting bi-national agreement regarding immigration, and sources.” n

Social Watch / 6 Peoples’ Voices on the Crisis*

Panel on Indigenous Rights.

On June 20 2009, at the Church of the Holy Trinity in New York, the “Peoples’ ment, which was the first truly multilateral forum to address the social impacts Voices on the Crisis” initiative brought together activists from over 30 civil so- of the current financial meltdown. The keynote speaker of the “Peoples´ Voices” ciety organizations, trade unions and grassroots groups on a local, national and event was Father Miguel D´Escoto Brockmann, President of the 63rd Session of international level to discuss the social and environmental consequences of the the UN General Assembly, who welcomed civil society’s support for the solutions financial and economic crisis for working and unemployed women and men all to the crisis taking shape in the heart of the UN, and exhorted the participants to over the world. At the event, advocates for social, economic, gender, labor and “inject a new spirit of responsibility and solidarity” with the people who are being environmental rights offered testimonials on how the crisis is impacting local disproportionately impacted by the crisis. The event concluded with a call by communities from Sudan to San Salvador to the South Bronx. Social Watch Coordinator Roberto Bissio to advocate for reforms to the current This forum was also an opportunity for civil society leaders to share ideas global financial architecture that would help lift people out of poverty, instead and experiences on how to construct a global movement with local roots that of reinforcing current economic and social inequalities both within and across can push for a new economic system based on human rights and environmental borders. sustainability. In the following pages you can read key interventions from participants in “Peoples´ Voices on the Crisis” was held in the context of the landmark UN this activity, together with some testimonials of the impact of the crisis in ordinary Conference on the Financial and Economic Crisis and its Impacts on Develop- people the Social Watch network gathered in countries of the South. n

* “Peoples´ Voices on the Crisis” endorsing organizations: Social Watch, Eurostep, LDC Watch, Institute for Policy Studies, Global Policy Forum, Center of Concern, ESCR-Net, Institute for Agriculture and Trade Policy, Global-Local Links Project, Jubilee USA Network, Jubilee South, GCAP Feminist Task Force, Alliance for Responsible Trade, Women’s Environment and Development Organization, International Council for Adult Education, UN Non-Governmental Liaison Service, Global Action on Aging, Latindadd, US Human Rights Network, CONGO Social Development Committee, Sub-Committee on the Eradication of Poverty, Hemispheric Social Alliance, Womens’ Working Group on Financing for Development, Medical Mission Sisters Miguel D´Escoto Brockmann at the Peoples’ Voices event. International, World Federation of United Nations Associations, International Youth and Student Movement for the United Nations, Enlazando Alternativas, Transnational Institute, Our World Is Not For Sale Network Video clips from “Peoples´ Voices on the Crisis” are available at the Social Watch YouTube channel: .

Social Watch / 7 The financial crisis has definitely affected Benin. Today many African-American people and indigenous peoples have a “ households can only afford just one meal a day. Forced mar- “ common history of exploitation and conquest, and are dis- riages have increased, as a way for families to sell their girls proportionately suffering the impacts of the crisis. Our cur- and to cope with the crisis. It has set back advances made to rent American Empire was built on the so-called American stop violence against women. Gender-based impacts of the dream, but we see that stolen land and stolen labor was also crisis are on the rise, for example, girls’ enrollment in schools used to construct this country, the wealthiest the world has and their presence in the formal job market is decreasing. ever known. From the outset, financial institutions aided and Women are the first to lose their jobs, and are often left to abetted profiteers seeking to build empire by any means nec- care for their families without any social assistance. essary. We must reject the neoliberal theology and construct ” more progressive theological theories. Sonon Blanche (Social Watch Benín) ” Jean Rice (Picture the Homeless, New York)

The Bulgarian Government only admitted that Bulgaria was “ being affected by the crisis in February of this year. As of now, In Peru, we cannot speak of rights when something so awful 44,000 people have lost their jobs due to the crisis, 96% of “ has just happened in the Amazon. What kind of rights can them being women. Many of the affected industries – such we talk about, when the Government of Peru is violating the as the garment, shoe, food service, and the public adminis- treaties they signed? The indigenous peoples know how to tration – are feminized. The crisis is also having an impact in work with the jungle and preserve it through valuing it, and violence against women. Usually there is an average of 17-19 these concepts are transmitted from generation to genera- cases per year presented to the court in my city; this year we tion. This is disrupted when transnational companies come have seen 42 cases so far. In many cases men are abandon- to exploit and destroy this delicate balance, turning the jungle ing their women and children when she have been fired, so into concrete. The Amazon was recently declared the world’s these families now have to survive on EUR 50 or less per lungs. What would it be like for it to be filled with skyscrap- month they receive as unemployment insurance. Many of the ers? When we say no to the transnational companies, a fight women interviewed had been sexually harassed in the work ensues. This battle taking place today in Peru, will happen place, and had suffered problems finding work in the formal tomorrow in Africa and Asia. sector. ” ” Washington Bolivar (Peruvian indigenous leader) Milena Kadieva (Gender Research Foundation, Bulgaria)

The United States labor laws are not up to the ILO standards. Sixty nine per cent of Sudanese are living under the line of “ We must recover the ability of workers to organize in this “ poverty, especially women working in the agricultural sector. country and democratic legislature needs to be passed at the In recent years, health services have improved, but the poor congressional level to bring power back to the labor move- are still suffering, due to the increase in food prices. The ment. With the financial crisis people shop less and pay fewer Sudanese civil society reclaims more financing for devel- sales taxes, so there have been massive job cuts in both the opment, but from a multidimensional – not just economic public and private sectors. Many unions have opened their – perspective. Development must be strategic, involving the contracts and renegotiated to cut salary levels. For example, participation of women at the grassroots level. the United Auto Workers opened their contracts and gave ” back a lot, but still experienced serious layoffs. Decisions Niemat Kuku (Gender Research and Training Center, Sudan) regarding the economy should not be made according to the interests of a select group of people who own the corpora- tions, but instead take into consideration workers’ needs.” Jose Schiffino(NYC Labor Council for Latin American Advancement)

Social Watch / 8 The fundamental human right to education has been im- The current crisis is global, so policies to end it must also “ pacted by the crisis, especially for young girls who are not “ be global but linked with local movements. We believe that sent to school as a result. It is important to remember that stimulus packages should be invested in things like green education is an enforceable human right, not limited by age infrastructure and social infrastructure, which would allow or gender and must be accessible to all. States should take af- for the creation of green jobs, an acknowledgement of the firmative and positive action to overcome inequality in educa- disproportionate impacts of the crisis for women workers, tion. Statistics show there are still millions of illiterate people and the recovery of the care economy. These kind of policies - two thirds of them women. How can we have information are spelled out in the ILO Global Jobs Pact. The UN is the technologies and computers, yet still have illiterate people? only place for the countries bearing the brunt of the crisis to Besides being a human right, from an economic perspective, have a representative voice. The labor movement is working investment in education contributes to economic growth. within the framework of the UN and trying to bring in the Currently IMF conditionalities require countries to freeze in- Decent Work and Green Jobs Agenda. It is not just a question vestment in education, and this should be challenged. ESCR, of increasing development aid and being a bit more gener- especially education, should be at the center of any develop- ous – as some industrialized countries would like to assert. ment paradigm. There is a need for social transformation. Multilateral institu- ” tions need to be systemically reformed and we need specific Marcela Ballara (International Council on Adult Education, Chile) mechanisms to ensure that we have enduring solutions to the financial and economic crisis.” Gemma Adaba (International Trade Union Confederation) In Colombia, there are about 84 indigenous tribes with 64 dis- “ tinct languages, who live in the border regions of Colombia with Venezuela, Peru, and Brazil, precisely where the most precious reserves of natural resources are located. We fight In Kenia we began to see impacts of the crisis late in 2008: for the defense of our territory and the preservation of our “ reduced tourism followed by unemployment. Many Kenyans culture. Due to this fight, since the 1970s, more than 1,400 of also rely on remittances from the U.S., which fell sharply. our leaders have been killed. Right now, many indigenous re- Due to the crisis, more families can not afford to send their gions are militarized and where they aren’t militarized, there children to school, and foreign investors are moving projects are paramilitary forces present. The Government is trying to out of the country. Much of the land is going fallow and there displace our communities so they can negotiate with tran- were water shortages during the past year. All these factors, snational companies to exploit the natural resources, such combined with the high levels of income inequality and cor- as timber and oil, in these areas. Indigenous peoples in Co- ruption that were already present, are a recipe for disaster for lombia are opposed to free trade agreements, because these Kenya’s people and economy. treaties cause greater displacement of our communities and ” instead of opening markets, only increase the frontier of US Edward Oyugi (SODNET, Kenya) power.” Jesús Avirama (Regional Indigenous Council of Cauca, Colombia)

Social Watch / 9 We are seeing that older workers are staying in the work- This crisis is not just a financial crisis but a systemic crisis. “ force, even if their legs hurt or if they have arthritis, since they “ The response to it must be based on human rights and soli- cannot afford to retire. Many older workers have borrowed darity; this is what we are trying to push for in Bolivia. We money on their homes and are losing them to foreclosures must return to Mother Earth – what our indigenous com- because they cannot pay high interest rates. And another munities call the Pachamama – in order to renew our society. group of older workers are supporting their adult children As part of this renewal, Bolivia and Ecuador are working to or grandchildren who have been laid off. The attack on pen- construct a new financial architecture. They are no longer sions is a global phenomenon. To address this problem, the participating in the international dispute-mechanism tribu- UN must begin very soon to work on an HR convention to nals such as the International Centre for the Settlement of address the needs of the oldest citizens, so that in the future Investment Disputes that are used by the rich countries to people do not have to fear old age.”” punish the poorer ones.” Suzanne Paul (Global Action on Aging, New York) Elysabeth Peredo (Hemispheric Social Alliance and Fundación Solon, Bolivia)

The impacts of the crisis are evident in the massive lay-offs “ taking place in foreign banks such as the BBVA, Santander, We should form an international watchdog coalition to moni- and HSBC. Our rights as workers have been taken away. “ tor what is going on with the stimulus packages, and be able Debtors are also feeling the impacts, it’s already happening. to have rapid responses if governments do not use this mon- They are being evicted because for different reasons they ey properly. Rights based approaches to trade and finance cannot pay anymore. What is worse, especial military forces must be constructed in order to end the crisis, above all by of the state are being used to carry out the evictions; those reconstructing safety nets in the North and South. We don’t forces are there for the security of all, not to throw poor peo- want to just “tweak” the economic model in order to fix it, but ple in the streets because they cannot pay. instead to reconstruct it completely. In order to advocate for ” this, political moments such as the UN Conference and the Janio Romero (union leader of the Unión Nacional World Social Forum must be taken advantage of, in order to de Empleados Bancarios, Colombia) bring people and social movements together at this critical time.” Tanya Dawkins (Global-Local Links Project, Miami) Three million people in New York are food insecure and the “ purchasing of cheap unhealthy food has risen since the finan- cial crisis in 2008. Many neighborhoods in Brooklyn and the Bronx have few supermarkets with fresh food. One solution to this problem is Community Supported Agriculture, which brings together family farms, which produce organic agricul- ture with the consumers, thus helping to increase inner-city access to healthy food.” Nadia Johnson (WEDO and Just Food, New York)

Social Watch / 10 In El Salvador, we have been facing for years now the impact While industrialized Northern countries are mainly respon- “ of climate change, suffering floods and droughts, hurricanes, “ sible for greenhouse gas emissions causing climate change the drying of major rivers, the collapse of communities. Each especially in per capita terms, countries of the South, and year the material costs are high, and so is the loss of human the poor and women in particular, will bear a bigger burden lives and the emigration of our people, especially the youth. of the adverse environmental effects of climate change and We must work for a new era in which development is meas- its socio-economic impacts. Some of these effects are the ured by the well-being of humanity and that of Mother Earth, displacement of people living in low-lying coastal areas; the and not just by material wealth. loss of sources of livelihood; food insecurity; and reduced ” access to water. From an ecological debt perspective, rich, Marta Benavides (GCAP Feminist Task Force, El Salvador) industrialized countries do not only have the responsibility of drastically cutting greenhouse gas emissions down, but they also have an ethical and moral obligation to provide compen- When we look at the welfare state and social protection satory and reparative finance to developing countries to fund “ systems the capacity of the EU Member States to address climate change mitigation and adaptation efforts. the rising demand for social security varies greatly. Thus in ” Athena Peralta (World Council of Churches) some cases we have increased social and unemployment benefits, extension of coverage for unemployment as well as social benefits, tax rebates or exemptions for specific groups including pensioners. On the other hand, other States are I began working with a major Spanish advertising and film cutting back benefits. Hungary is reducing subsidies and “ producing company, which opened a division here in Argen- private sector wages, as well as cancelling pension expendi- tina in 2007. When the crisis broke in earnest, everything ture plans, and Finland is also expecting a reduction in social started to get complicated. Work decreased a lot, and we service spending. To offset the effect on the labor market, spent up to a month without filming. In January they told some countries also try to pursue active employment policies me that they had to fire me. I received the severance pay and by maintaining workers through flex time, but despite these started looking for work. Since then up until today, I haven’t efforts the effects are still very drastic. been able to find any decent job. What little work exists is ” practically slave labour: 8 or 9 hours, with very poor salaries. Verena Winkler (Eurostep, Belgium) I have almost spent all my savings and I live alone in a rented flat, so I need to get something urgently. What else am I going to do?” Young woman from Buenos Aires

Social Watch / 11 NATIONAL REPORT

SW09 encartes_ing_v2 vietnam.indd 1 8/31/09 7:17:15 PM 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 96 96 99 94 99 83 72 76 62 56 55 53 54 44 38 22 19 18 23 0 0 0 0 0 0 6 0 0 0 0 0 0 0 0 0 0 0 0 0 0

20 39 99 34 93 92 95 96 99 98 99 54 85 55 54 94 97 98 99 99 44 100 99 62 61 66 65 72 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 86 100 100 74 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 84 78 100 100 100 100 74 100 97 99 98 95 97 96 96

BCI of Argelia = 95,7 IEG of Algeria = 52,7 BCI of Argentina = 97,8 IEG of Argentina = 72,3 IEG of Bahrain = 46 BCI of Bangladesh = 56 IEG of Bangladesh = 52,7 BCI of Benin = 76,9 IEG of Benin = 42,1 BCI of Bolivia = 79,4 IEG of Bolivia = 66,1 BCI of Brasil = 90,2 IEG of Brasil = 68,2 BCI of Bulgaria = 97,3 IEG of Bulgaria = 73,4 BCI of Camboya = 66 IEG of Cambodia = 61,6 BCI of Canadá = 99,3 IEG of Canada = 74,5 ICB de Bahrein = 99

100 100 100 98 100 100 100 100 100 98 100 100 97 100 100 100 100 100 100 98 100 100 100 100 100 89 74 73 68 59 60 52 43 43 29 25 24 11 15 11 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

25 28 83 99 100 100 100 88 41 37 54 56 100 99 46 97 98 51 93 54 100 96 50 96 70 68 64 69 62 68 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 74 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 83 79 100 100 100 100 100 97 98 97 91 99 94 94 BCI of BCI of Alemania = 99,3 IEG of Czech Rep. = 68,1 ICB de Egipto = 89,1 IEG of Egypt = 43,9 IEG of Germany = 78,2 IEG of Ghana = 57,6 BCI of Guatemala = 68,3 BCI of República Centroafricana = 65,2 IEG of Central African Republic = 45,8 BCI of Chile = 99 IEG of Chile = 61,9 BCI of Chipre = 99,6 IEG of Cyprus = 65,1 República Checa = 99,2 BCI of El Salvador = 80,1 IEG of El Salvador = 67,5 BCI of Eritrea = 60,2 IEG of Eritrea = 47,1 BCI of Ghana = 75,5 IEG of Guatemala = 51,3

100 100 100 99 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 99 100 92 92 83 83 81 IEG of = 47,3 66 54 45 42 30 29 8 11 6,2 0 0 0 0 0 0 0 NO 0VA0 0 0 NO0 VA NO0 VA 0 0 0 0 0 0 0 0

97 100 99 92 37 42 36,2 99 54 47 89 95 99 100 55 88 98 97 100 47 100 99 50 67 68 100 100 100 100 100 100 100 100 100 100 100 78 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 81 85 100 100 100 100 100 100 100 100 100 100 100 100 100 99 96 97 98,4 99 97

BCI of Honduras = 82,4 IEG of Honduras = 68,9 BCI of Hungría = 99,3 IEG of Hungary = 69,8 BCI of India = 68,5 IEG of India = 40,7 BCI of Irak = 88,4 IEG of Iraq = 0 BCI of Italia = 99,5 IEG of Italy = 64,5 BCI of Kenya = 71 IEG of Kenya = 59 BCI of Líbano = 95,6 IEG of Lebanon = 46,9 BCI of Malasia = 96,9 IEG of Malaysia = 58,3 BCI of Malta = 99,5 IEG of Malta = 58,2

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 95 93 84 83 88 73 77 64 62 65 52 47 47 39 34 21 23 9 0 0 NO0 VA 0 0 0 0 0 0 NO0 VA0,0 0 0 0 0 0 0 0 0 0 0 19 29 35 94 97 44 96 48 86 90 94 47 100 98 98 97 63 68 57 57 56 63 60 64 100 100 100 100 100 100 100 72 100 100 100 100 84 100 100 100 100 100 100 100 100 100 100 100 100 74 100 100 81 100 100 77 100 100 100 100 100 100 73 100 100 100 100 100 100 100 99 98 92 98 99 99

BCI of Marruecos = 81,1 IEG of Morocco = 44,8 BCI of México = 95,2 IEG of Mexico = 60,5 BCI of Moldavia = 0 IEG of Moldova = 73,9 BCI of Mozambique = 66,1 IEG of Mozambique = 64,4 BCI of Myanmar, IEG of Burma = 0 BCI of Nepal = 58,4 IEG of Nepal = 51,2 ICB de Nigeria = 66,3 IEG of Niger = 44,4 BCI of Paraguay = 95,3 IEG of Paraguay = 66,8 BCI of Perú = 87,8 IEG of Peru = 69,7 BCI of Filipinas = 78,1 IEG of Philippines = 75,6 Birmania o Burma = 73.2

100 98 100 100 99 100 100 100 100 96 100 100 98 100 100 99 100 100 100 100 100 100 100 100 100 100 91 87 91 vietnam 74 74

53 51 45 42 42 43 41 National progress hampered by global crises 25

0 0 0 0 0 0 0 0 0,0 0 0 0 0 0 0 0 0 0 0 0 0 NO0,0 VA Vietnam has translated socialist principles into action by achieving most of the Millennium Development 33 100 99 100 99 98 99 99 100 99 100 100 86 100 43 88 100 58 99 58 97 99 69 69 67 71 72 100 100 100 100 100 100 100 100 100 100 100 75 Goals (MDGs)100 well ahead100 of time. However, it is not10 immune0 to the100 multiple global crises. There100 is an 100 100 100 100 100 100 100 82 100 100 100 100 100 100 100 100 100 100 100 100 84 81 100 100 100 100 100 96 98 97 97 98 98 98 increasing gap between the rich and the poor, and rising sea levels due to climate change are already BCI of Polonia = 99,1 IEG of Poland = 70 BCI of Portugal = 99,4 IEG of Portugal = 73,1 BCI of Rumania = 96 IEG of Romaniahaving = 71,3 negative impacts. AlthoughBCI ofcivil Serbia society = 98,1 organizations still do not haveIEG muchof Serbia of =a 0 presence in BCI of Eslovaquia = 99 IEG of Slovakia = 68,8 BCI of Eslovenia = 99,5 IEG of Slovenia = 65,1 BCI of Somalia = 47,8 IEG of Spain = 76,9 BCI of España = 99,6 IEG of Spain = 76,9 BCI of Tanzanía = 72,7 IEG of Tanzania = 71,9 BCI of Tailandia = 95,6 IEG of Thailand = 70,2 the country, some groups have taken the lead to respond collectively to the issues.

ActionAid International Basic Capabilities Index (BCI) Gender Equity Index (GEI) Oxfam Great Britain 100 100 100 95 100 100 100 100 100 100 100 100 100 100 100 100 100 91 BCI = 93 92 GEI = 74 89 Children reaching Empowerment As the global crisis began to be felt in 2008, Vietnam 5th grade 66 66 52 49 witnessed an inflation rate of4 414.1% in February – 44 37 an all time high in East Asia, almost twice that of 26 Indonesia (7.4%) and more than twice that of China 13 0 0 0 0 0 0 0 0 0 0 6 0 0 0 0 s/d 0 0 (6.5%). This led to a price hike of 24% for foodstuffs NO VA 20 15 compared to the same period in 2007 and a 17% 34 42 87 100 99 95 98 88 98 90 49 43 83 80 increase in electricity,61 water and gasoline compared 64 57 65 100 100 100 100 100 100 100 72 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 79 100 100 100 100 100 100 100 100 100 81 83 1 81 82 97 to the previous year. Around the time of Tet, the98 Viet- Births attended by 97 99 namese new year, in 2008 the price of rice fluctuated skilled health personnel Survival up to 5 Economic activity Education between VND 5,000 and VND 7,000 (about USD 0.30 BCI of Uganda = 59,2 IEG of Uganda = 67,2 BCI of Estados IEG of Usa = 73,8 BCI of Venezuela = 94,5 IEG of Venezuela = 67,7 IEG of Vietnam = 73,9 BCI of Yemen = 58,7 IEG of Yemen = 30 IEG of Zambia = 56,2 BCI of Cisjordania y Gaza o Palestina = 0 Cisjordania o Palestina S/D (español) BCI of Rep. Dem. del Congo = 76,3 IEG of Rep. Dem. del Congo = 45.1 and 0.40, respectively) per kilogram. Since then, the total expenditureICB in the de country, Viet Nam while = 92,8 the remaining A 2008 report by ActionAid revealed that the BCI of Zambia = 71,3 Unidos de América = 98.1 price has increased to over VND 10,000 (USD 0.60). 80% spends modestly. The situation has created urban poor and migrants, as net consumers, were The Consumer Price Index hit a record high of 28.9% two disparate groups: a minority with “voice”, repre- the worst hit by price hikes. They have also been the in December 2008, though it stabilized in the first sented by emerging capitalists, and a voiceless ma- first and worst affected by the impact of the recent four months of 2009 and is currently at 11.6%. jority made up of rural communities, wage labourers, economic crisis. The majority of migrants work on a Economic growth during the first quarter of small farmers and those being left out of the race. short-term basis and are the most vulnerable group 100 96 100 100 100 100 98 100 100 100 100 100 100 100 88 2009 was fairly high at 3.4% but far lower than the during the economic downturns affecting the em- Poverty and rural-urban dynamics targeted annual plan. The worst hit have been the ma- ployment sector. According to the Ministry of Labour, 65 56 48 jor export-oriented sectors (agriculture,48 garments Since 2005 Vietnam has witnessed47 a blossoming of War Invalids and Social Affairs in January 2009, ap- and textiles). This has added more pressure to the industrial zones and urbanized areas, with more than proximately 67,000 workers, mostly migrants, had 27 macroeconomy in general and to the most vulner- 190 industrial zones and clusters built on land recov- lost their jobs. The number20 is predicted to rise to 0 0 0 0 0 able wage-earning groups in0 particular. Diminishing ered from over 100,000 households.0 This is leaving 150,000 by the end of 2009.0 Since the unemployed 0 0 NO0 VA 0 n/d demand is affecting industries and causing unem- rural areas with limited livelihood resources. Ap- do not have insurance, this crisis is pushing rural 15 94 99 100 96 36 88 99 100 54 99 ployment. Nguyen Phu Diep, head of the Labour proximately 90% of the poor depend on agricultural migrants into extremely difficult situations. 52 61 100 100 100 64 100 100 100 100 100 100 100 100 72 100 100 67 100 100 100 100 100 100 76 100 100 100 100 100 96 98 Management Department in Hanoi’s Industrial97 Parks production – which is distributed in a relatively even 99 99 (IPs) and Export Processing Zones (EPZs), says that fashion. Only 4% of rural households have no agricul- Agriculture 19 enterprises there cut 4,300 jobs, which is approxi- tural land of their own, which may be considered as an Vietnam has become the world’s second largest rice ICB de Belgica = 98,3 IEG de Belgica = 72,2 ICB de Costa Rica = 93,5 IEG de Costa Rica = 66,8 ICB de Francia = 98,8 IEG de Francia = 72 ICB de Nicaragua = 70,1 IEG de Nicaragua = 51,5 ICB de Senegal = 68,5 IEG de Senegal = 54,9 Cisjordania o Palestina N/D (inglés) mately 20% of workers in these sectors. It is esti- advantage for ensuring household food security.2 exporter, largely by maintaining an annual agricultur- BCI of Cisjordania y Gaza o Palestina = 0 mated that 10,000 workers in Thang Long IP will lose An estimated two-thirds of displaced households al sector growth rate of 4% for the last two decades. their jobs in 2009. Declining purchasing power leads benefit from greater job opportunities and the chance This was a major factor in helping the country to families to cut essential expenses such as health and to realize the cash value of their land holdings. Equal avoid being trapped in the economic crisis of 1997. education; the current rate of out-of-pocket health property (land) rights have become a very important Almost 70% of the labour force works in farming. expenditures is approximately 62.8%. issue as strong gender stereotypes still exist. Though The Central Committee of the Communist Party there has been legislation to promote equal access to aims to industrialize and modernize the country by Causes and impacts of the crisis land for women, the implementation of these laws is reducing the farming labour force to 30% by 2020. Over the last decade, Vietnam has stood as an ex- very limited. As a result, women are the worst affected However, the current crisis is making it difficult to ample of a development model that lifted millions of during transitions. Large numbers of people are try- achieve these goals, despite the introduction of sev- people out of poverty while trying to ensure that the ing to find an opportunity to earn a living in the cities. eral modernization programmes in the sector. More benefits of its vibrant market economy were fairly In Hanoi alone, the annual population growth is 3%. than 75% of the labour force has not yet undergone and evenly distributed across society to maintain It is estimated that by 2010 there will be 120,000 to any vocational training, and adult education still re- the Government’s socialist orientation. However, 130,000 people migrating to the capital city. quires a lot of reinforcement. the aim of reducing poverty is still a challenge, as Membership in the World Trade Organiza- is the increasing gap between the rich and the poor. 2 ActionAid Vietnam (n.d.). “Food Security for the Poor tion (WTO) has widened Vietnam’s opportunities According to the World Bank, the consumption of the in Vietnam in the Context of Economic Integration and for economic growth but also introduced a number richest 20% of the population accounts for 43.3% of Climate Change”. Available from: . tham%20luan%20AAV-En.doc>. increasing drive of market forces and capital accu-

Social Watch II

SW09 encartes_ing_v2 vietnam.indd 2 8/31/09 7:17:17 PM mulation, poor farmers currently face a severe risk its own mechanisms to adapt to climate change, of USD 1 billion (1.1% of GDP), the World Bank, the of impoverishment. At the same time, increased use such as modifying cropping patterns and animal Asian Development Bank (ADB) and the IMF have of chemical fertilizers and pesticides has already husbandry practices. However, these locally initiated released analyses of projected economic growth caused serious damage to the local environment adaptation tools do not receive any support from the rates for 2009. The ADB’s is the most cautious at and undermined the indigenous knowledge of local Government or donors. 4.5%, which still leaves Vietnam in better shape than economies. Farmers have become more vulnerable Although human development indicators have most Asian economies despite the global downturn, during the transition, particularly in the absence of shown spectacular progress during the last 15 years, while the IMF and the World Bank project a growth of a Law on Agriculture, due to lack of formal credit climate change poses an imminent threat to achiev- 4.75% and 5.5% respectively. facilities and of insurance to protect them. On a more ing the MDGs, particularly in the Mekong Delta re- positive note, farmers have been introduced to more gion. The United Nations Development Programme’s The role of civil society advanced practices and high-yield crop varieties that poverty report notes that natural disasters constitute Although the presence of civil society organizations have contributed to increased production. a major cause of poverty and vulnerability in the (CSOs) in Vietnam is still tiny, some groups have country The poverty alleviation strategy requires a taken the lead in collectively responding to the crisis. Climate change, food security reduction of the rural and agriculture sector’s vul- For example, in response to the South East Asian Call and human development nerability to these by mainstreaming disaster risk to Action, a report on the food crisis was prepared Vietnam will be severely affected by climate change. reduction strategies into the national plan. by CSOs and presented during the ASEAN People’s As a large section of the population lives within the Forum in Bangkok in February 2009. global low-elevation coastal zone, it is particularly Responses and policy commitments In addition, the Vietnam Academy for Social vulnerable to rising sea levels.3 During a seminar Since the beginning of the global crisis, the Gov- Science is currently collecting evidence and solicit- on climate change organized by the Ministry of Ag- ernment has applied strong economic measures to ing inputs on the social impacts of the financial crisis. riculture and Rural Development in January 2008, combat inflation and maintain sustainable growth. The findings are to be presented to the National As- the Minister, Cao Duc Phat, acknowledged that 73% The main focus has been on key issues such as strict sembly, whose members will discuss short-term and of the population, especially poor people, are al- financial policy implementation, a boost in produc- long-term strategies to cope with economic fluctua- ready suffering from the negative impacts of climate tion, export increases and reduction of excessive tion and its social impacts. CSOs were given an op- change and environmental degradation. Statistics imports. As the economic crisis unfolds, the Govern- portunity to participate in this exercise through the show that storms, landslides and floods in 2007 ment has made commitments to ensure the rights of incorporation of the WTO monitoring process. caused damage that exceeded 1% of the country’s vulnerable groups through appropriate mechanisms Gross Domestic Product (GDP). of social protection. It has also played a leading role Conclusion A study conducted by ActionAid and experts in mobilizing to achieve the MDGs. However, as a Governments should use the opportunity presented from the Rural Development Centre of the Institute signatory to most of the international human rights by the current global economic crisis to address of Policy and Strategy for Agricultural and Rural De- conventions, it must ensure stronger compliance other crises – including food, climate change, jobs velopment shows some clear evidence of the impact with the International Covenant on Civil and Political and poverty – and to develop long-term sustain- on climate change and disasters in Ha Tinh Province, Rights and the International Covenant on Economic, able strategies for solving them. The global crisis where food productivity has been reduced by up to Social and Cultural Rights in order to protect the should be seen as a chance to develop a green global 40% in some communes. Poor households are the rights of the affected population through appropriate economy that will respect and preserve common most affected due to the fact that cropping patterns policies and programmes at the local level. global goods, prevent further global warming and are not diversified. The study also revealed that the While the Government is energetically address- ensure a sustainable, safe and clean environment for local community has been proactively developing ing the issues, adopting an economic stimulus plan future generations. n

3 IHDP. IHDP Update: Magazine of the International Human Dimensions Programme on Global Environmental Change. No. 2, October 2007. International Human Dimensions Programme. Available from: .

National report III

SW09 encartes_ing_v2 vietnam.indd 3 8/31/09 7:17:17 PM Basic Capabilities Index (BCI) and Gender Equity Index (GEI)

BCI of other human capabilities that reflect the social The GEI gives a simple and direct reading so The Basic Capabilities Index (BCI) is an index-sum- development of countries. countries can be compared easily. For the purposes mary developed by Social Watch1 that compares Each country is assigned a value on the BCI, of measurement, proportional relations have been and classifies countries in accordance with their and then its evolution over time can be evaluated and ascertained, in other words the ratio between the progress in social development. This is a useful tool comparisons with other countries can be made. The sexes, so the structure of opportunities as regards for monitoring the evolution of basic indicators and BCI indicators attain their maximum level when all gender inequity can be inferred. to make comparisons between and within countries. women receive skilled health care during childbirth, The index measures the gap between women The BCI evaluates society in different countries as when no child drops out of school before completing and men, not their well-being. Thus, for example, a regards some basic minimum capabilities that are the fifth grade and when infant mortality is reduced country in which young people of both sexes have the essential starting conditions to enable people to to its minimum possible level of less than five deaths equal access to university education receives a value have an adequate quality of life. among children under 5 per thousand live births. of 100 on this point, and a country in which girls and The index uses three indicators to identify These indicators are closely connected to the ca- boys are both equally impeded from completing their situations of poverty: survival until the age of 5, the pabilities that the members of a society must have. primary education would also receive a value of 100. percentage of children who reach the 5th grade at These capabilities mutually reinforce each other to This does not mean that the education is of adequate school and the percentage of births attended by make greater individual and collective development quality but that, in this case, girls do not suffer from skilled health personnel. These indicators express possible. Particularly important in this context are inequity in participation. different dimensions that are included in internation- the capabilities that facilitate the incorporation of The GEI is calculated to respond to the need ally agreed development goals (education, infant young people into society, as this is essential to pro- to reflect all situations that are unfavourable to health and reproductive health). mote the future development of countries. women. Therefore, when there is a proportional Unlike other poverty indicators, such as those Note that a BCI value of nearly 100 does not relation disadvantageous to women in comparison used by the World Bank (which consider the number necessarily mean a high level of social development; to men, the GEI does not register its maximum of people living on less than one or two dollars per it merely means the country has achieved universal value of 100 points. Thus the final value attained day) or the classification developed by the UNDP coverage in the essential minimum requirements to depends on the degree of negative inequity for based on the Human Development Index (which be able to progress towards improved well-being. women in a given country or region, because it combines income figures with health and education This is the starting point, not the finish line. reflects inequity in an inversely proportional way: indicators) the BCI is based on the latest information the greater the inequity the lower the value on the available for each country and is easier to construct. GEI index, and vice versa. It can be applied on the sub-national and municipal Social Watch developed the Gender Equity Index No indicator value can exceed 100 points levels and does not depend on costly household sur- (GEI) to make gender inequality situations in coun- (complete equity in participation)2 even if there are veys, which indexes based on income require. tries visible and measurable, and to monitor their inequities that are positive for women. This asym- The BCI does not use income as an indicator. It evolution over time. The GEI is based on information metry means the GEI cannot and should not be employs a definition of poverty which considers the that is available and comparable internationally. It read as a percentage of participation of the popula- level of development of a person’s capabilities and makes it possible to position and classify countries in tion in gender relations because the proportion of the possibility to exercise and enjoy his or her human accordance with a selection of important indicators participation may ultimately register as being very rights to a greater or lesser extent. This index has of gender inequality in the dimensions of education, different if some of the indicators are favourable proved to be highly correlated with measurements economic participation and empowerment. to women. n

2 The relative participation of women in one specific area (for example ‘university professionals’, which is one of the four indicators in the ‘empowerment’ dimension) is divided by 1 The BCI was originally based on the Quality of Life Index the relative weight of men in that situation. The ratio obtained developed by the non-governmental organization Action is multiplied by 100. If the resulting value is over 100, for Economic Reforms-Philippines, which in turn was indicating that women’s participation exceeds that of men, derived from the Capability Poverty Index proposed by the value is taken as 100. This is done so that, in the final Professor Amartya Sen and popularised as the United value on the index, participation rates that are favourable to Nations Development Programme (UNDP) Human women in some specific situations shall not conceal negative Development Index. participation rates in others.

Social Watch IV

SW09 encartes_ing_v2 vietnam.indd 4 8/31/09 7:17:17 PM A failed financial architecture… and how to build a new one

PRIVATE PUBLIC

Social Watch / 12 inances are usually explained in Fwater metaphors: money “flows”, benefits from growth “trickle down” to the poor, capital “leaks” out of countries to tax havens… From a first glance at this construction, most people will see a waterfall, in the same way that most residents of rich countries think that an enormous flow of their tax contributions is directed to poor countries, in the form of aid, loans, trade benefits and frequently talked about debt cancellations. But the water cascading down doesn’t quite reach the poor… Instead it is diverted and –against all logic– it flows up instead of down. In 2006, Social Watch used this illustration, inspired by the famous “Waterfall” etching by MC Escher, as a metaphor for the global financial architecture. This structure prominently features the Bretton Woods institutions (the World Bank and the International Monetary Fund - IMF), despite the fact that they had The need for substantial reform to lend to businesses with uncertain clearly failed to achieve the objectives is now widely acknowledged, but a futures, and likewise, consumers are they were created for: to ensure common understanding of what went preferring to save instead of spend. financial stability, full employment wrong still needs to be achieved, But people living in poverty, whether and development. We argued then before a blueprint for a new financial in developing countries or in rich that a mechanism that mobilizes architecture can be agreed upon. countries, will spend every single capital from where it is scarce (the On the other hand, there is a penny that they receive. Since the poor low and middle income countries) to growing consensus on the immediate do not have the option of postponing where it is abundant is “impossible, need to compensate for decreasing consumption, the best stimulus plan both in the sense of impractical and private sector activity and failing to address the global economic crisis in the sense of intolerable” and that markets with stimulus “packages.” is to invest in them. This is not merely the international financial architecture More than USD 10 trillion has been a basic principle of justice; it also “badly needs to be redesigned.” spent worldwide on subsidies or tax makes good economic sense. Two years later, the international cuts benefiting corporations, banks financial system collapsed, credit and affluent individuals, but those sources dried up and recession have largely not resulted in renewing spread like a pandemic from the credit or in stimulating countercyclical richest economies to the poorest. spending. The banks are reluctant

Social Watch / 13 PRIVATE PUBLIC

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1 1 COMMODITIES SPECULATION 2 HEDGE FUNDS AND THE 3 CREDIT RATING AGENCIES “CASINO ECONOMY” The build-up and eruption of the crisis in the financial Finch, Moody’s and Standard and Poor’s, among system was paralleled by an unusually sharp increase Common sense and basic math say that you cannot others, are companies that assign grades (ratings) and subsequent strong reversal of the prices of pri- sustainably make money betting in a casino. In the for bonds and other debt obligations issued by big mary commodities. The price boom between 2002 same way, in no market can everybody earn above companies or governments and traded on the mar- and mid-2008 was the most pronounced in several average profits, and no financial investment can pay ket. The issuer’s credit worthiness (i.e., its ability to decades in its magnitude, duration and breadth. in the long term more then the real economic ac- pay back) affects the interest rate. Risky “papers” pay The price decline since mid-2008 stands out for its tivities on which it is based. Yet, as investors always more interest while obligations graded AAA pay less sharpness and the number of commodity groups af- want to believe they can defy the laws of gravity, huge but are supposed to be safe. Long term investors like fected. The price hike for a number of commodities amounts of savings were attracted by hedge funds pension funds are frequently required by laws and puts a heavy burden on many developing countries and other “innovative financial instruments”, backed regulations to only buy AAA-graded papers. relying on imports of food and energy commodities, by irresponsible triple-A credit ratings. The better The credit rating agencies totally failed, as the and contributed to food crises in a number of coun- returns achieved by hedge funds for a while came at financial crisis of the sub-prime mortgages in the tries during 2007-2008. In the same way, the drop the cost of higher risk. This higher risk is generated US demonstrated, and many investments graded in commodity prices in the second half of 2008 was by the use of leverage – the degree to which an inves- as safe were actually worthless. With the collapse one of the main channels through which the dramatic tor is utilizing borrowed money – oftentimes several of Wall Street in September 2008, an estimated slowdown of economic and financial activity in the layers of it. In this regard, for example, investors USD 50 trillion of wealth was “destroyed” as savings major industrialized countries was transmitted to the could borrow to invest in funds of funds which, in in shares, investment funds and other obligations developing world. turn, borrow to invest in hedge funds which, in turn, lost value dramatically. The Securities and Exchange The strong and sustained increase in primary use derivatives to leverage themselves. This whole Commission of the US Government is investigating commodity prices between 2002 and mid-2008 was pyramid, not completely different from the fraudulent anti-competitive practices of credit rating agencies accompanied by a growing presence of financial “Ponzi schemes” of Bernard Madoff, fell like a house and conflicts of interest, as they were grading the investors in commodity futures exchanges. This of cards in September 2008 and, with it, the belief debt of the same companies that were the source of “financialization” of commodity markets has raised that unregulated liberalization and non-intervention a large part of their income. concerns that many of the recent commodity price by governments would bring prosperity. developments – and especially the steep increase in 2007-2008 and the subsequent strong reversal – was largely driven by financial investors’ use of commodities as an asset class.

1 (Extracted from UNCTAD’s report The Global Economic Crisis, 2009)

Social Watch / 14 PRIVATE PUBLIC

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nantly through the IMF, rather than proposing a more Board (FSB), expanded its membership to all G20 4 THE INTERNATIONAL MONETARY FUND diverse allocation of funds, is a narrow mechanism countries and mandated it with monitoring global AND THE WORLD BANK1 through which the developing countries may be im- financial stability and promoting medium-term re- The London summit of the G20 (an ad hoc group posed with the same type of procyclical and con- form. Some critics fear that this task would unduly of the 22 most economically important countries) tractionary policies that contributed to creating the violate national sovereignty, while others argue that promised to repair the global economy by taking crisis. the FSB has no real power to accomplish anything. action in major areas such as restoring growth, jobs, The capital refurbishment of both the IMF and In the recent past, BIS and its Basel Committees confidence and lending, strengthening financial the World Bank comes without any upfront reform have been responsible for drafting the standards and regulation, funding and reforming the international requirements for the institutions. Instead, the only codes for the financial and monetary spheres that financial institutions (IFIs), rejecting protectionism key reforms outlined are to end the Europe-US mo- dramatically failed to ensure financial stability. and pursuing recovery through a green economy. nopoly on the leaders of the Bank and Fund, and gov- 2 However, the only apparent financial commit- ernance reforms to increase quotas and participation 6 WORLD TRADE ORGANIZATION (WTO) ment made was to announce the injection through by developing countries, which, however, are not to The current Doha Round of trade negotiations in- various ways of USD 1.1 trillion into the IMF, the be reviewed and implemented until 2011 for the IMF cludes financial services. Developed countries and World Bank and regional development banks. Due to and 2010 for the World Bank. their financial institutions are pressing a group of de- the glaring absence of a political consensus among While the Fund and Bank get away without veloping countries to open up their financial markets, key G20 members on a coordinated fiscal stimulus deeper reform requirements, these very institutions i.e. by allowing the establishment of foreign banks, plan, or regulation of cross-border financial flows, almost always require policy reforms from their and by allowing freedom of cross-border financial the only agreement on immediate action was to member country borrowers upon obtaining loans. flows and services. If the negotiations conclude boost the resources of the international financial along the proposed lines, the developing countries institutions, whose decision-making has been con- would have to adopt the type of financial liberalisa- trolled by the US and European countries since their 5 THE BANK FOR INTERNATIONAL tion that makes them more vulnerable. creation. SETTLEMENTS (BIS) It would also mean that countries that may wish However, the benefits of this significant fund- Based in Basel, Switzerland and with a staff of over to abide by policies proposed by the Stiglitz Commis- ing increase, particularly for the IMF, which will be 500 people, the BIS is largely ignored by the public, sion to regulate financial flows and institutions and endowed with an extra USD 750 billion, cannot be even when it was the first international financial -or instruments may be violating their new WTO com- compared to the potential positive repercussions of ganization (established in 1930) and is currently a mitments. It is a paradox that G20 leaders simultane- a coordinated fiscal stimulus. As economic experts key pillar in the international financial architecture. ously call for better regulation of global finances and have pointed out, IMF funds only help the world’s As a bank, the BIS only provides services to its mem- for the “success of the Doha Round”, which would economies if countries borrow from the Fund, bers, which are the central banks of 55 developed and entail exactly the opposite. whereas fiscal stimulus efforts bolster global de- middle income countries. As an informal “forum” it is mand overall. a key place to agree on banking rules, which is done The G20’s decision to channel funds predomi- through the Basel Committee on Banking Supervi- sion and the Financial Stability Forum (FSF). The G20 1 (Extracted from an analysis by Bhumika Muchhala) Summit upgraded the FSF into a Financial Stability 2 (Extracted from an analysis by the Third World Network)

Social Watch / 15 PRIVATE PUBLIC

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1 7 CAPITAL FLIGHT only liquid investment capital” and therefore money 10 TAX HAVENS Each year developing countries miss out on up to made in illicit drug trade has been used to keep banks Tax, the foundation of good government, is a key to USD 124 billion in lost income from offshore assets afloat in the global financial crisis. the wealth or poverty of nations. But tax havens, which held in tax havens. At least USD 6.2 trillion of devel- offer secrecy, low or zero taxation, and lax regulation oping country wealth is held offshore by individuals, 9 THE DEMOCRATIC DEFICIT (or a combination of all three) allow big companies depriving developing countries of annual tax receipts Less than one third of the countries of the world are and wealthy individuals to benefit from the onshore of between USD 64-124 billion. members of the Basel institutions, but their deci- benefits of tax – like good infrastructure, education If money moved offshore by private companies sions become de facto international financial rules and the rule of law – while using the offshore world was included, this figure would be much higher. The that apply everywhere. Most countries are members to escape their responsibilities to pay for then, the scale of the losses outweighs the USD 120 billion in of the Bretton Woods institutions, but the votes are rest of the world shoulders the burden. Calculations overseas aid that developing countries received in assigned by quotas largely based on the relative eco- made by the Tax Justice Network suggest that around 2008. And capital flight is a growing problem, with nomic power they enjoyed decades ago. The US, USD 11.5 trillion of the private wealth of “High Net an additional USD 200-300 billion being moved off- with 16% of the votes, has veto power, as decisions Worth Individuals” alone is currently held in tax ha- shore each year. require 85% of the votes. In the WTO every country vens, largely undeclared – and therefore probably has one vote, but key decisions are taken by a “con- untaxed – in their countries of residence. The benefits 8 CRIME PAYS sensus” mechanism which gives real bargaining from taxing just this individual wealth – let alone the The cross-border flow of the global proceeds from power to the major traders and leaves small coun- undoubtedly larger sums lost through tax evasion and criminal activities, corruption, and tax evasion at tries powerless. avoidance by corporations – would far outweigh any USD 1-1.6 trillion per year, half from developing and In the wise words of Amartya Sen: the “central realistic increase in aid budgets. The annual worldwide transitional economies. issue of contention is not globalization itself, nor is income earned on these undeclared assets is likely Antonio Maria Costa, head of the United Na- it the market as an institution, but the inequity in the to be about USD 860 billion. Taxing this income at a tions’ crime and drug watchdog has found evidence overall balance of institutional arrangements – which moderate 30% rate would produce around USD 255 that “in many instances, drug money is currently the produces very unequal sharing of the benefits of billion annually, enough to finance the MDGs in their globalization.” entirety. Put simply, making just the very rich pay their 1 (Extracted from Oxfam International, “Tax haven crackdown due taxes could immediately fund measures to halve could deliver USD 120 billion a year to fight poverty”) world poverty.

Social Watch / 16 PRIVATE PUBLIC

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11 REMITTANCES 13 WOMEN AND THE POOR ARE HIT THE remittances sent back by family members working in Since 1995, remittances contribute more money HARDEST the developed world are declining. than all official development assistance programs The world’s poor are being hard-hit by a crisis for combined. In Mexico, remittances sent by emigrants which they are not responsible. According to es- 14 SMALL TAXPAYERS IN POOR have become indispensable for 21% of families. Re- timates, 53 million people are falling into extreme COUNTRIES CARRY THE BURDEN mittances to Mexico were down nearly 6% in January poverty in 2009 and 200,000 to 400,000 babies are If low-income countries were to revise their taxes, 2009 as a result of the downturn in the US economy dying, because of the drop in growth. Women are strengthen their financial administrations and abol- and anti-immigrant policies. affected disproportionally. They are the first to lose ish tax exemptions for transnational investors so their jobs and the last to recover them, are required that the proportion of public revenues within gross 1 12 JUST DROPS OF AID REACH THE POOR to compensate for the reduction of health and educa- domestic product (which was 12% in 2003) was Almost 40 years ago, rich countries agreed to give tion services provided by governments, and suffer brought to the average level of the rich countries 0.7% of their GNI as official aid to poor countries for increased domestic violence proportional to the rise (26% in 2003), their governments’ income would development assistance. The average aid delivered in unemployment. increase by approximately USD 140 billion per year. each year never surpassed 0.4% and the shortfall Low income countries face a financial gap rang- has accumulated to over USD 3.6 trillion, while total ing from USD 270 to 700 billion this year. However, aid delivered in that same period reached a mere while more than USD 2 trillion were found to boost USD 2.7 trillion. Moreover, official Overseas Devel- Northern economies and emerging markets, richer opment Assistance (ODA) figures tend to include countries committed just over 5% of the additional debt relief and support for students and refugees in development finance required to compensate low- donor countries, thus distorting the real value of the income countries. African countries alone will face aid claimed: ODA performance, excluding debt relief a real drop in income of USD 49 billion between the and support for students and refugees, has been un- start of the crisis in 2007 and the end of 2009. Al- changed at 0.22% of GNI in 2005, 2006 and 2007. ready hard-hit by soaring food and energy prices that pushed up inflation, as well as caused food shortages and widespread hunger, poor countries are seeing 1 Sources: OECD (April 2009) and The reality of aid 2008 how the demand for their exports is dropping and vital

Social Watch / 17 Thematic reports. Executive summaries

A human rights-based response to the financial and economic crisis

Poverty is expected to increase worldwide by as not only necessary as a matter of justice; it will also Aldo Caliari Center of Concern (COC) much as 53 million people. Even this figure may be make reforms of the financial and economic system optimistic as it is based on the World Bank’s widely more sustainable and resilient to future crises. questioned definition of poverty and is likely to un- Basic human rights principles include social The magnitude of the crisis is shedding an altogether derstate the real number of the poor. The decline in participation, transparency, access to information, new light on the consequences of the traditional ap- nutritional and health status among children who judicial protection and accountability. proach to human rights and the regulation of finance. suffer from reduced (or lower quality) food con- The UN, as the guardian of the international Under this paradigm, human rights advocates are sumption can be irreversible, and estimates suggest legal framework, is the most appropriate and most told that matters of financial regulation are entirely that the food crisis has already increased the number legitimate forum to discuss the reforms that are nec- technical and to be left to the experts, while human of people suffering from malnutrition by 44 million. essary to restructure the international economic and rights policy and concerns should either be ad- Looking at these impacts, and accepting the financial system on a human rights foundation. dressed independently from financial regulatory is- consensus about the sources of the crisis, one has We should expect a gloomy legacy to the ongo- sues or simply circumscribed by whatever approach to conclude that choices made on financial regula- ing financial crisis, more so than to any other crisis financial experts decide to take on such issues. tion have tangible consequences for the enjoyment that the current generation has seen. But alongside At the same time, it is not hard to find support of rights. this, there is a legacy of important ideas that can no for the notion that the enjoyment of human rights will A response to the financial and economic reces- longer be dismissed and that should be at the heart of be significantly affected by the crisis everywhere. sion that places human rights norms at its centre is the restructuring of the global economic system. n

Gender Equality and the Financial Crisis

Nancy Baroni The reactions to the economic crisis involve cut- tation of this approach by UN agencies shows that it Canadian Feminist Alliance for International Action backs in financing for gender equality mechanisms can be effective in eradicating poverty, developing Mirjana Dokmanovic, PhD and the implementation of gender equality legisla- democracy and human rights, and supporting vul- Association Technology and Society, tion, which will jeopardize gender equality gains and nerable groups, particularly women, to participate in Serbia and Women in Development Europe (WIDE) inevitably reinforce existing gender stereotypes. decision-making. Genoveva Tisheva Bulgarian Gender Research Foundation At the UN High Level Conference on the Glo- However, there is a need to improve this ap- and Bulgarian-European Partnership Association bal Financial and Economic Crisis and Its Impact proach in order to address effectively the needs of Emily Sikazwe on Development (24-26 June 2009), the Women’s women and to improve gender equality relations. Women for Change Working Group reminded UN Member States that There are a number of shortcomings that derive from women cannot wait, and that this is the time to act excessive generality, weak implementation mecha- on fundamental reform of the global financial ar- nisms, and insufficient application of the human Women in the developing world are particularly dis- chitecture.1 Despite the unanimous call to action by rights concept. advantaged due to the financial crisis. Their weaker civil society organizations, the conference outcome A gender analysis shows that such an approach control over property and resources, over-repre- document did not meet expectations. requires developing good analytical tools for under- sentation in piece-rate or vulnerable employment, Civil society organizations, including women’s standing the inequalities inherent both in the neolib- lower earnings and lower levels of social protection organizations and networks, call for a rights-based eral market economy and in gender relations. n make them, and their children, more vulnerable to approach to development. A review of the implemen- the financial crisis. Government approaches to addressing the eco- 1 Women’s Working Group on Financing for Development (WWG-FfD). “Time to Act: Women Cannot Wait. A call for nomic and financial crisis are not, for the most part, rights based responses to the global financial and economic based on human rights or equality principles. crisis,” June 2009.

Social Watch / 18 The global food price crisis

Production costs Biofuels Sophia Murphy Institute for Agriculture and Trade Policy Fertilizer, oil, pesticides and seed prices rose very Biofuels (also called agrofuels) are liquid fuels made steeply between 2007 and 2008. from plant matter. Most commercial biofuel today is made from sugarcane, corn, canola, palm oil or Starting in 2005 and peaking in July 2008, many agri- Drought soy oil. cultural commodity prices on world markets reached Droughts appear to be more frequent and more their highest levels in 30 years. widespread today than at any time in recent history, Speculation The poor spend upwards of 50% of their income exacerbated by desertification and deforestation, Most agricultural commodities are traded on inter- on food, while the poorest spend 80% or more. poor urban planning, and the overuse of ground- national exchanges. Supply shortfalls are a normal part of agriculture. water supplies. Typically, a supply shortfall triggers increased produc- Investment tion through higher prices as more farmers are drawn Climate change Governments worldwide have liberalized investment to plant the crop that is fetching the higher prices. Climate change is affecting rainfall and tempera- laws considerably since the advent of structural ad- tures, both vital to agricultural productivity. justment programmes and the proliferation of re- Water gional and bilateral trade agreements. Irrigated agriculture accounts for almost 70% of world Population water use. Irrigated agriculture produces 40% of glo- Each year, another 78 million people are added to the Trade bal food on 20% of the world’s agricultural land. earth’s total population. Global and regional trade agreements have changed the way world prices interact with domestic food Stocks Diet markets. World food stocks have halved since 2002. The world More importantly, what people eat is changing. Each The failure to eradicate hunger is the result of is now estimated to have roughly two months re- year, more people eat like rich Westerners. political choices. We know how to practice more sus- serve, which is the minimum cushion recommended tainable agriculture. We know how to better regulate by the FAO in case of supply disruption. markets. We know that food security must be built from a strong local base. n

Justice to cool the planet

A more even-handed world stands a better Developing countries have a right to develop- PRRM/Social Watch Philippines Isagani R. Serrano chance of surviving and adapting to climate change. ment, but this right should not be taken as a license Setting limits to growth (regardless of whether to pollute the environment. feared thresholds may have been crossed), and es- Sustainable agriculture and fisheries, sustain- In the 1880s, after we started burning fossil fuels and tablishing equity between and within nations and able forestry and watershed management, and eco- had built today’s industrial society, the concentration communities, between women and men, present logical waste management are adaptation paths that of carbon dioxide (CO2) in the atmosphere was 280 and future generations, should make the world more can help cool the planet. Ensuring food security calls parts per million (ppm). By the 1950s, it had already resilient. for a radical change in the way farming is done, a reached 315 ppm. When NASA scientist James Although climate change spares no one, rich or view that has long been advocated by farmers’ move- Hansen first sounded the alarm on climate change in poor, it has a greater impact on the poor even though ments worldwide. the late 1980s, he established 350 ppm as the high- they have less to answer for. Oddly, the current global recession may turn est affordable level “if humanity wishes to preserve a To avert catastrophe the deal is fair and simple: out to be a blessing in disguise. Perhaps the deeper planet similar to that on which civilization developed the rich in both rich and poor countries must give up it cuts and the longer it lasts, the better it will be for and to which life on Earth is adapted”. much more so that the poor and all of us may live all of us. Less growth implies less emissions and Meanwhile, the signs are mounting that the worst- sustainable lives. less stress on the environment. Cleaner production case scenario may come earlier than imagined. Extreme High-emission countries must commit to dras- and universal reduction in per capita consumption events such as storms, floods and droughts have dev- tic, deep and binding cuts on their GHG emissions means less carbon footprint and – maybe –healthier astating impacts on water resources, food security, agri- from their 1990 levels and help developing countries living. n culture, ecosystems, biodiversity and human health. with “soft” money and clean technology.

Social Watch / 19 Holding transnational corporations accountable for human rights obligations: the role of civil society

mulated their own guidelines, according to the Busi- simply as a good business practice that can minimise Jana Silverman Social Watch ness and Human Rights Resource Center and more risks and enhance company performance. Alvaro Orsatti than 5200 companies are listed as active members of The experience of trade unions in the use of cor- Trade Union Confederation of the Americas the UN Global Compact, a multi-stakeholder initiative porate social responsibility instruments is based on that commits businesses to respect universal princi- a strategy that was previously defined in the interna- pals relating to human rights, labour rights, environ- tional arena by the International Trade Union Confed- Business enterprises, particularly transnational mental issues and anti-corruption practices. eration (ITUC). This strategy asserts that companies companies, are typically private, non-governmental The changing relationship between businesses have an “internal responsibility” for their workers entities subject only to national laws in either the and human rights is intimately linked to the rise of that should be regulated and enforceable. Mecha- country where the company has its headquarters or corporate social responsibility, defined by the Eu- nisms for accomplishing this include the Tripartite in the host countries where the company has invest- ropean Commission as a “concept whereby com- Declaration of the ILO and the OECD Guidelines for ments. panies integrate social and environmental concerns Multinational Enterprises and bilateral global frame- This interpretation is gradually being revised in in their business operations and in their interactions work agreements (GFAs) negotiated between Global practice, however. with stakeholders on a voluntary basis”. Although Unions and multinational corporations. Today, the obligations of non-state actors such some companies have implemented philanthropic Although not all of the mechanisms profiled as business enterprises to protect and promote hu- programmes to benefit their employees, local com- above have been equally effective in protecting and man rights are becoming more explicit in both theory munities and society in general since at least the promoting the fundamental human and labor rights and practice. 1950s, the current notion is different. It promotes the that companies are obligated to uphold, they at In addition, a growing number of corporations incorporation of human, social and environmental least begin to address the weaknesses inherent in are designing and implementing specific human rights as an integral part of corporate strategies, not the unilateral, voluntary model of corporate social rights policies. More than 240 enterprises have for- to comply with any moral or ethical imperative but responsibility. n

The global economic crisis and the least developed countries: citizen’s concerns

pia, Madagascar, Mauritania and other parts of Africa sion in the countries that provided employment. IMF Arjun Karki LDC Watch and a hungry children’s march in Yemen are some predicts a drop of between 4% and 8% in 2009. examples. The above situation, which is pushing millions Because the majority of poor people in LDCs of people in the LDCs towards increased poverty and As defined by the United Nations, there are 49 Least spend 70-80 per cent of their income on food, they vulnerability, demands immediate and urgent action. Developed Countries (LDCs) in the world, which are are very hard hit by the sharp increases in domestic In order to overcome the global economic crisis and home to about 750 million people. food prices. create an enabling environment for development The current global economic crisis has not only The concerns of LDCs about food, water and in the LDCs, it is crucial that the international com- shaken the foundations of the largest economies, energy security are deepened by the climate crisis munity and the LDC governments come together to stock markets and the most influential financial insti- that challenges the goals of inclusive and environ- combat the impacts of economic crisis in the LDCs. tutions around the globe, but also has put the already mentally sustainable economic growth. This will only be achieved with a fundamental fragile small economies of the LDCs into peril, push- Official Development Assistance (ODA) flows transformation of the global financial architecture. ing millions of poor women, men and children into in the LDCs are also predicted to decline as govern- The globalized world we live in demands new glo- poverty and hardship. ments in developed countries use resources to pro- bal approaches. If we are to achieve the goals to which Unprecedented food crises, triggered by soar- vide stimulus to their own economies and continue we all claim to aspire, we need to make sure that, as we ing food prices and leading to “food riots”, have to bail out the financial institutions that have been at work to mitigate the devastating consequences of this shaken over 30 LDCs, where workers and peasants the centre of the economic crisis. global economic crisis, we use it as an opportunity to have become unable to afford food items basic for Remittances to the LDCs from people work- bring about real transformation in the global system survival. Protests over grain prices in Haiti, Cam- ing in other countries are also declining, as migrant so that everyone on this planet gets better opportuni- eroon, Senegal, the Ivory Coast, Mozambique, Ethio- workers lose their jobs due to the economic reces- ties to lead meaningful and secure lives. n

Social Watch / 20 Mounting development challenges posed by the world economic crisis: policy options in the Arab region

essentially remained stagnant into the 21st century, unemployment. In fact, even during those years in Kinda Mohamadieh Arab NGO Network for Development with only a very gradual decline. which economies were growing and individual in- Oliver Pearce Moreover, if the poverty threshold is raised a comes also seemed to be on the rise, unemployment Christian Aid little – for example from USD 1 to USD 2 a day or was high and increasing. from USD 2 to USD 3 or 4 a day – the numbers rise The crisis has exposed the fluctuating nature substantially. of aid and remittances as well as the limited returns The global economic and financial crisis comes at a Measurements related to higher poverty lines from trade liberalization. These policy options cannot time when countries and citizens have been trying to do matter, particularly at a time when families across be considered factors of a stable nature on which adjust to wildly fluctuating food and fuel prices. the region have recently had to absorb much higher long-term sustained growth policy is built. Past economic crises have had disproportion- costs for basic goods, including both food and fuel, As regional and bilateral trade agreements pro- ate impacts on the poor, and this one will be no dif- which account for a large proportion of their expen- liferate, trade policy tariffs have been significantly ferent in that regard. This means further stress on ditures. UN sources note that, as a result of the food reduced in almost all the region’s countries, with communities that have already been suffering due to crisis, around 31 million people in the Arab region are most non-tariff barriers eliminated or significantly climate change and fluctuations in food and energy hungry (about 10 % of the total population). reduced. prices. The high degree of inequalities between coun- It is evident that Arab governments need to pri- The Arab region witnessed a noticeable reduc- tries, as well as sustained inequalities within many oritize long-term structural changes while address- tion in poverty levels from the 1980s to the early countries, is another notable feature of the region ing short-term needs in light of the crisis. n 1990s. During the mid 1990s, however, the propor- that has to be taken into consideration. tion of people living in poverty – at the most basic One of the reasons for the persistent proportion USD 1 and USD 2 per day benchmarks – rose and of people living in poverty in the region is chronic

Europe’s response to the global financial and economic crisis

Model under threat. In this new paradigm the welfare The EU is also claiming leadership in efforts to Mirjam van Reisen Europe External Policy Advisors (EEPA) of citizens is increasingly provided by the market mitigate the social effects of the crisis in developing Simon Stocker, Louisa Vogiazides rather than the State, resulting in a progressive re- countries. As EC President Barroso argued, “Europe Eurostep treat of the state from several social and economic has taken the lead in ensuring that the G20 lays foun- spheres. dations for a fair and sustainable recovery for all, The economic recession resulting from the cri- including developing countries”. Europe’s leaders readily recognize that there have sis further threatens Europe’s approach to social Another impact of the crisis on Europe’s relation been failures in the global financial system. It ap- welfare. with developing countries appears to be the accel- pears, however, that the measures they envisage What is Europe’s response? From the outset of eration of controversial measures such as budget to address these failures fall far short of a radical the crisis the European Commission and its Member support and the conclusion of Economic Partnership transformation of the system. States have taken a variety of measures to coun- Agreements (EPAs). The EU position certainly includes a commitment ter the effects of the economic downturn, largely Despite these concerns, the EC argues that in the to strengthening financial supervision and regulation, through recovery plans and rescue packages. The current crisis, EPAs will contribute to promoting eco- with various levels of support going towards improved bulk of these have focused on the financial sector. nomic growth and development in partner countries. monitoring of credit rating agencies, the establish- The growing unemployment crisis argues that João Aguiar Machado, one of the Commission’s chief ment of regulatory standards to end tax heavens and more emphasis be given to addressing the social im- EPA negotiators, explains that the agreements would banking secrecy, the need for new accounting norms pacts of the crisis. Measures to integrate those who support development by creating a predictable trade for placing bonuses under guardianship. are excluded from the labour market, invest in social environment which, in turn, would spur investment In recent years, increasing financial deregula- and health services and improve social protection and create employment. n tion and privatization has put the European Social systems are needed.

Social Watch / 21 Social Watch: promoting accountability

Social Watch, a network that today has members in over 60 countries around the world, was created in 1995 as a “meeting place for non-governmental organizations concerned with social development and gender discrimination, ” responding to the need to promote the political will required for making the United Nations promises come true. Since then, this network, which is continually growing both qualitatively and quantitatively, has published 14 yearly reports on progress and setbacks in the struggle against poverty and for gender equality, which have been used as tools for advocacy on a local, regional, and international level.

From its number 0, published in 1996, to this 60 countries around the world, and membership In addition to national coalitions, the network present issue, the 14th, the Social Watch Report grows each year. is structured around three bodies: the General has brought to light more than 600 reports from Assembly, the Coordinating Committee and the civil society organizations, all of them sharing the A flexible network International Secretariat. In recent years, some aim of reminding governments of their commit- As the “meeting place” has grown, several aspects regional and sub-regional coordination structures ments and tracking their implementation, both of it have evolved, but the founding ideas and ob- were established as a space for articulation–not as country by country and at the international level. jectives remain. In preparing for their participation a necessary intermediate body to link the national The present issue, featuring contributions in the Copenhagen Social Summit, civil society with the global. from 61 national Social Watch coalitions, sustains organizations adopted flexible and ad hoc ways The Social Watch network is not an incor- the flame that brought the network into existence in of organizing as a network. No formal governing porated entity and it did not start by drafting its 1995: the need to generate tools and strategies to structure or steering committee was created and governing bylaws. Instead, a short Memorandum rectify the lack of accountability mechanisms and no stable coordinating group was established. of Understanding between national groups and ensure compliance with international commitments Non-governmental organizations (NGOs) pre- the network became the basic framework estab- related to social policies and development goals. ferred to inform each other and coordinate ac- lishing mutual expectations, respecting both the In the decade Social Watch was created, a tivities in horizontal open spaces, an approach autonomy of national coalitions and democratic series of high-level United Nations conferences, that some analysts regard as a forerunner of the horizontal decision-making. A key principle that starting with the ‘Children’s Summit’ in 1990 and organizational format later adopted by the World distinguishes Social Watch from other interna- ending with the Millennium Summit in 2000, rede- Social Forum. Many of the NGOs that took part in tional civil society networks is that no central body fined the global social agenda. In 1995, the Social the Social Summit later formed the backbone of provides funds for its members. These operational Summit (Copenhagen) and the Women’s Confer- Social Watch. As a result, the structure and func- principles help avoid the tensions associated with ence (Beijing) defined, for the first time, the eradi- tioning of the network preserves much of original donor/recipient relationships within the network – cation of poverty and gender equality as common flexibility and openness. since there aren’t any – and also the loss of energy universal objectives, setting concrete targets and timelines to achieve the goal vaguely formulated in 1946 in the UN Charter as “dignity for all”. To pro- mote the political will needed for those promises Memorandum of Understanding between to become a reality, the Social Watch network was created as a “meeting place for non-governmental national groups and the Social Watch network organizations concerned with social development 1. Coalitions must be based in the country and be active in social development issues in that and gender discrimination” (Social Watch No. 0, country (not exclusively as academics or consultants). 1996), by a group of civil society organizations. Thus, the Social Watch Report was formulat- 2. Their basic commitment to the international network is to provide a national report, with their ed as a powerful tool for the presentation of inter- own conclusions and determination of priorities, to be included in the annual publication. nationally available statistical information and for 3. They are expected to use their national report and the global report in lobbying activities at reporting on qualitative aspects of the issues ad- a national level. dressed through analyses by social organizations working at a national level. A yearly publication, 4. They must be open to the incorporation of other organizations, work actively to broaden the Report is devoted to progress and setbacks in awareness of Social Watch and encourage the participation of other organizations. the struggle against poverty and for gender equal- 5. They are responsible for raising funds for their activities. National coalitions are not dependent ity, two largely overlapping objectives, since the absolute majority of the persons living in poverty for funds on, or financially accountable to, the Secretariat or any other international Social are women. Watch entity. The Social Watch yearly reports, while add- 6. Each coalition determines its own organizational structure. ing an international dimension to local efforts and 7. Social Watch membership and the exercise of governmental functions are absolutely in- campaigns, became the first sustained monitoring initiative on social development and gender equity compatible. at a national level, and the first to combine both in 8. Cooperation with other national platforms should be encouraged at sub-regional, regional one international overview. and global levels. The report Nº0, published in 1996, featured contributions from 13 organizations; since then, The Memorandum of Understanding was adopted during the 1st General Assembly, Rome, 2000. Available from: the network has been steadily rising. Currently, . Social Watch has members (“watchers”) in over

Social Watch / 22 that could result from lengthy discussions about Coordinating Committee The local, the global and the Report money, budgeting and reporting, as well as pro- The Coordinating Committee (CC) is the key politi- Every year Social Watch chooses to analyze a dif- cedural matters. It has also resulted in members’ cal body for the ‘daily’ work of the network, with an ferent subject in depth through its Report, usu- strong sense of tenure over the network. organizational structure which requires fluid com- ally focusing on topics under discussion on the National coalitions organize the way they munications, facilitated principally through an email international agenda that can be addressed from want – or can – according to the conditions in each list, plus biannual face-to-face meetings and regular a local perspective. Experts from diverse origins country. The membership of Social Watch coali- telephone conferences to discuss specific issues. and disciplines contribute alternative views on the tions is very diverse, including research institutes As the CC’s task is to “ensure the political vis- issues through thematic articles. This international or centres, NGOs, grassroots organizations, trade ibility and participation of the network in relevant perspective is complemented with national and unions, women’s groups, rural organizations and spaces and processes,”2 its composition endeavours regional reports through which member organiza- others. Since the international Social Watch report to represent a geographical and gender balance, as tions contribute a local perspective, reporting on can only devote a couple of pages to each country well as considering the contribution, in terms of ex- the state of affairs in their countries in relation to and is only available in English and Spanish, the perience and capabilities, that members can provide each year’s specific theme. local coalitions publish more extensive national re- to the whole network. In general, the CC’s decisions In addition, Social Watch produces indexes ports in national languages in Benin, Brazil, Czech are adopted by consensus, and every single decision and tables with comparable international infor- Republic, Germany, India, Italy, Poland, the Philip- (and discussion) is communicated to the watchers mation, presenting a macro-perspective of the pines, and the Arab region. in a timely manner. The constant participation of situation related to certain dimensions of develop- two Secretariat members as ad hoc members of the General Assembly CC ensures coordination between the two bodies, The General Assembly is the Social Watch net- the function of the Secretariat being to support and work’s highest directive body. Policy discussion implement the strategic decisions made. and medium- to long-term strategic planning hap- pens in its realm, which serves as a decision-mak- International Secretariat ing forum. However, it is also a space for reinforc- The Secretariat is the main executive body of Social ing the sense of belonging and strengthening the Watch. The first external evaluation of the network network’s identity and unity. It takes place every (1995-2000) noted that, “Of the various roles in three years and up to now has been held three the Social Watch network, that of the Secretariat times: in Rome 2000, Beirut 2003 and Sofia 2006.1 has changed the most” (Hessini and Nayar, 2000). This year, the General Assembly will meet for the Originally the Secretariat’s function was limited to fourth time in Accra, Ghana in October. In addition responsibility for the production of the Report, but to setting medium- and long-term priorities and due to the network’s growth it has subsequently identifying potential alliances in advocacy strategy, incorporated a series of new functions, including the Assembly elects members of the Coordinating research, capacity building, campaigning, pro- Committee to whom coordination and political motion of the network and its representation in leadership between assemblies are delegated. international forums.

2 The document describing the nature and mandate of the Coordinating Committee was agreed at the 2nd General 1 Final reports, working papers and other materials from these Assembly, Beirut 2003. Available from: org/en/acercaDe/beirut/documentos/SW_PrinciplesCC.doc>

Social Watch / 23 ment while also providing national level readings. regional training workshops have been organ- Assembly and other intergovernmental bodies on Social Watch has developed alternative indicators ized, and position papers have been produced. behalf of the network or wider civil society con- to measure progress or setbacks in gender equity For example, this year Social Watch drafted rec- stituencies. n and the meeting of basic human capacities, which ommendations on issues related to the financial are now used as reference points for both civil architecture and its impacts on development References society and international institutions. for the Commission of Experts of the President Friedlander, E. and Adams, B. (2006). Social Watch external Although members use the document for ad- of the UN General Assembly on Reforms of the evaluation 2001-2005. Available from: . es are key opportunities for dissemination of its In addition, in order to share best practices Hessini, L. and Nayar, A. (2000). A Movement Toward Social contents, taking place both in relevant spaces of related to the work of national Social Watch groups, Justice. An Evaluation Report. Strategic Analysis for Gender international and national debate and decision- the publication Learning from Successful Experi- Equity (SAGE). New York. Available from: . making. This year, some preliminary findings from ences: Summary of the Analysis Four Case Studies Social Watch No. 0 (1996). The starting point. Instituto del Tercer the 2009 Report were showcased in the publica- from the Social Watch National Coalitions was Mundo. Montevideo. Available from: . 3 to Be Done, which was presented in June in New blog, and presence in social networking platforms, Social Watch (2006). Strategy and Framework of Activities 2007- York at the UN Conference on the Financial and Social Watch is also utilizing new multimedia tools 2009. Available from: . which brought together over 100 civil society ac- sions among fellow civil society practitioners, and Van Reisen, M. (2001). The lion’s teeth. The prehistory of Social tivists from around the world. conduct outreach to policymakers and journalists. Watch. Instituto del Tercer Mundo. Montevideo. Available from: . help build the capacity of member coalitions,4 spokespersons have addressed the UN General

3 Social Watch (2009) Who Pays? The Global Crisis and What Needs to Be Done, available from:. 4 The first Occasional Paper by Mirjam Van Reisen,The Lion’s Teeth, examines the political context in which Social Watch was created. The second, by Ana María Arteaga, Control Ciudadano desde la base, analyzes the democratization of international human rights instruments experience in Chile in 1997. The third, a compilation by Patricia Garcé and Roberto Bissio, introduces the experience of monitoring Copenhagen goals through the concrete example of Social Watch. Papers 4 and 5, coordinated by the Social Watch Social Sciences Research Team, address poverty and inequality in Latin 5 Social Watch (2009) Learning from Successful Experiences: America and the links between poverty and human rights. Summary of the Análisis of Four Case Studies from the Occasional Papers available from: . socialwatch.org/en/informeImpreso/publicacion09.html>.

Social Watch / 24 The full version of the Social Watch Report 2009 includes: Social Watch in the world

Voices that make a difference MEASURING PROGRESS Roberto Bissio Food security People first A fragmented scenario Roberto Bissio Education Differences become more noticeable

THEMATIC REPORTS Information, science and technology The fastest breach A human rights-based response to the financial and economic crisis Development assistance Aldo Caliari, Center of Concern Commitments undertaken are further and further away from being fulfilled Gender equality and the financial crisis Nancy Baroni, Canadian Feminist Alliance for International Action; Water and sanitation Mirjana Dokmanovic, Association Technology and Society, The gap is widening Serbia and Women in Development Europe (WIDE); Genoveva Tisheva, Bulgarian Gender Research Foundation Health and Bulgarian-European Partnership Association; SW National Coalition Unequal improvement Emily Sikazwe, Women for Change

Reproductive health The global food price crisis Marked polarization Sophia Murphy, Institute for Agriculture and Trade Policy SOCIAL WATCH Ratifications of fundamental ILO conventions Justice to cool the planet Coordinating Committee Isagani Serrano, PRRM, Social Watch Filipinas Ratifications of human rights Emily Joy Sikazwe (Zambia) and Jens Martens (Germany), co-chairs. Nancy Baroni (Canada), Leonor Briones (Philippines), Anas El Hasnaoui (Morocco), Javier Gómez (Bolivia), Energy challenges for Europe Arjun Karki (Nepal), Thida Khus (Cambodia), Edward Oyugi (Kenya), Iara Pietricovsky (Brazil), Ziad Abdel Samad (Lebanon), Areli Sandoval (Mexico), Alexandra Spieldoch international treaties Elena Triffonova, Bulgarian-European Partnership Association (United States), Genoveva Tisheva (Bulgaria), Mirjam van Reisen (European Union) and Roberto Bissio (Uruguay, ex officio). The International Secretariat of Social Watch is based in Montevideo, Uruguay, hosted by the Third World Institute (ITeM). How to read the Social Watch tables Holding transnational corporations accountable for human rights obligations: the role of civil society Jana Silverman, Social Watch; Methodological notes: thematic tables Editor-in-Chief Technical support Original layout: Roberto Bissio Arturo González MONOCROMO Álvaro Orsatti, Trade Union Confederation of the Americas Editor Web design and development Layout: Amir Hamed Andrea Antelo, Ximena Pucciarelli, Ernesto Rapetti FORMA ESTUDIO The global economic crisis and the least www.formaestudio.com developed countries: citizens’ concerns Production Manager Phone: +598 (2) 916 3273 Ana Zeballos © Copyright 2009 Arjun Karki, LDC Watch INSTITUTO DEL TERCER MUNDO Infographics redesign: Associate Editors 18 de Julio 1077/ 903, Montevideo 11100, Uruguay www.icodemon.com Karen Judd, Tina Johnson, Jon Steinberg [email protected] Mounting development challenges posed by Fax: +598 (2) 902 0490 ext.113 Printed by: the world economic crisis: policy options in the Arab region Research and Editing Gráfica Mosca Gustavo Alzugaray, Enrique Buchichio Made possible thanks to the funding and support of Kinda Mohamadieh, Arab NGO Network for Development; the European Commission, Oxfam Novib and the Ford Oliver Pearce, Christian Aid Social Sciences Research Team, Departamento de Foundation. Printed in Uruguay Sociología de la Facultad de Ciencias Sociales de la Edición hecha al amparo del Art. 79 de la Ley 13.349 (Comisión del Papel) Universidad de la República, Uruguay Gabriel Errandonea (Coordinator) Dep. Legal: Europe’s response to the global Gabriel Gómez, Daniel Umpiérrez, Ruy Blanco financial and economic crisis For orders and requests please contact: Mirjam van Reisen, Europe External Policy Advisors (EEPA); Advocacy Coordinator Natalia Cardona This publication has been produced with the assistance Social Watch Simon Stocker and Louisa Vogiazides, Eurostep of the European Union, Oxfam Novib and the Ford Casilla de Correo 1539 Campaigns and Communications Foundation. The contents of this publication are the Montevideo 11000, Uruguay Jana Silverman (Coordinator) sole responsibility of its authors and of the Social [email protected] Agustín Fernández Watch network and can in no way be taken to reflect www.socialwatch.org the views of the European Union, Oxfam Novib and the Phone: +598 (2) 902 0490 Fax: +598 (2) 902 0490 ext.113 Translation Ford Foundation. Soledad Bervejillo, Marcela Dutra, Bachir El Omari, Ana Fostik, Susana Ibarburu, Emilie Jung, Richard Manning, María Laura Mazza, Alexandra Potts, And national reports from: Álvaro Queiruga, Alejandra Trelles

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S O C I A L W A T C H R E P O R T 2 0 0 9 product, BENIN: of thetotalpopulation). 31 million people in the region ARAB REGION: ... as a result of the food crisis, around one dayjust Many most. the suffer will pollution, in least the contributed who Countries, Developed Least The CHANGE: CLIMATE mechanism. coping a as tomatoes and vegetables of trading informal petty in engaged themselves finding increasingly are and jobs their lose to first the AFRICA: SUB-SAHARAN increased The more. or 80% of 50% of their income on food – the poorest spend DEVELOPING COUNTRIES: ... the poor spend upwards the population. for protein of sources main the of one and sector primary the for resources of source important an is Fishing (...) fishing reduced has warming global SENEGAL: food itemsbasicforsurvival. workers and peasants have become unable to afford where LDCs, 30 over shaken have riots”, “food to crises, triggered by soaring food prices and leading food Unprecedented COUNTRIES: DEVELOPED LEAST fulfilment ofnational,regionaland internationalcommitmentstoeradicatepoverty. SocialWatchholds governments, systemtheUN andinternational organizations accountable forthe not tobepoor. committedareWesocial, toeconomic gender andjustice, emphasize we andpeople allrightthe of the causes of poverty, to ensure an equitable distribution of wealth and the realization of human rights. SocialWatch isan international network ofcitizens’ organizations struggling toeradicate poverty and The price of soared 220%. The environmental crisis resulting from from resulting crisis environmental The notjustpoverty,butalso disappear fromthemap developing states developing island small maize increase in food prices has has prices food in increase , the most widely consumed ... women continue to be to continue women ... are are hungry (about 10% hunger . . may in the private service sector.in theprivateservice are more often engaged in low-paid jobs, especially economy will affect women more than men, as they – informal – grey the of growth the ... POLAND: value oftheirhouse. or are homes own to UNITED STATES:UNITED purchasing powerofwagesandsavings. PERU: from avoidablecausesasaresultofthecrisis. NICARAGUA: than thatof1997. MALAYSIA: ... the coming production. consumer and personal in INDIA: ... there has been drastically devaluation remittances and exports included has damage Initial GHANA: be laidoff and work precarious and time ... CANADA: were women than More CAMBODIA: trapped in mortgages that now far exceed the as well as a fall in the in fall a as well as layoffs, 200,000 ... . . women ... more than fromruralcommunities. or most of their equity their of most or all lost have ... many are over-represented in part- in over-represented are workers the of 90% of those fortunate enough fortunate those of from abroad and abroad from 400,000 children could die recession could be worse and industrial industrial and loans are often the first to first the often are reduced growth decreasing decreasing galloping laid off laid People the O on povertyera dication andgederequity A citizens´glob al progressreport organizations and economiccrisisistoinvestinpeople. R E P O R T 2 0 0 9 ver only SIXTY Making financeswork: SOCIAL WATCH way reports out around of the

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