GFDD and FUNGLODE Deliver Intervention on the Impacts of Financial Speculation of Basic Commodities on Global Development during High-Level Meeting of ECOSOC

Yesterday, March 13, Global Foundation for Democracy and Development (GFDD) and Fundación Global Democracia y Desarrollo (FUNGLODE) delivered an intervention on the impacts of financial speculation of basic commodities on global sustainable development during the 2012 High-Level Meeting of the Economic and Social Council with the Bretton Woods Institutions, the World Trade Organization and the United Nations
Conference on Trade and Development, “Coherence, coordination and cooperation in the context of Financing for Development.” The intervention of GFDD and FUNGLODE formed part of thematic debate 2: “Financing for sustainable development.”

The high-level annual meeting of ECOSOC convened executives from ECOSOC, the World Bank, the International
Monetary Fund, the United Nations Department of Economic and Social Affairs (DESA), the United Nations Conference on Trade and Development (UNCTAD), Member States, Observers, accredited intergovernmental organizations, civil society organizations and private sector entities.

GFDD Representative Kerry Stefancyk stressed that financial speculation poses serious risks to economic advancement, environmental sustainability and democratic governance. She argued that the rising
price of basic commodities like food and oil, as a result of financial speculation, has made it increasingly more challenging for nations and organizations to achieve the Millennium Development Goals, job creation, green growth, climate change mitigation and adaptation, and other international development targets, as it signifies reduced financing for priority public investments.

She argued that institutional investment firms take unfair advantage of economic, social,
political and environmental conditions in pursuit of increased profit margins, at the expense of the world’s most vulnerable.

“If we do not take immediate action to address excessive financial speculation,” declared Stefancyk, “sustainability, upward economic growth, poverty reduction and attainment of the MDGs, including Goal 7, will remain a distant dream for commodity-dependent developing countries.”

In conclusion, Ms. Stefancyk put forth four
recommendations on behalf of GFDD and FUNGLODE, aimed at eradicating excessive speculation: limits on the transactions of investors; margins higher than the premiums required for underwriting commodity futures contracts; limits on the volume of transactions of institutional investors; and banning financial speculation of food in futures markets.

GFDD and FUNGLODE were among seven other civil society organizations selected by the NGO Committee on Financing for Development
to contribute to high-level dialogues on financing for development.

Read Intervention

Critical topics debated
Executives from the World Bank and the International Monetary Fund outlined the services they provide to Member States in the form of financial support, technical assistance,
governance reform, policy analysis and advice.

Jorge Familiar Calderón, Acting Secretary of the Development Board of the World Bank discussed how the Bank is undergoing efforts to leverage the private sector to advance development, citing the critical importance of the private sector in job creation.

Jianhai Lin, Secretary
of the IMF, declared that the IMF is presently providing financial support to 51 member countries, and non-concessional support to 24 countries of the European Union. Lin ascertained that the Fund’s new precautionary and liquidity lines are better able to effectively respond to the liquidity needs of Member States. The IMF is also currently supporting the work of the G20 via the provision of analysis and recommendations aimed at ensuring that G20 measures will contribute to the enhancement
of a sustainable global economy.

Shishir Priyadarshi, Director of Development Division of the WTO, underscored the importance of trade for national, regional and international growth. He articulated the urgent need to move the Doha Round to an early conclusion, touting the trade potential for developing countries and Least Developed Countries. He warned that protectionist measures would inhibit global growth. The WTO Director insisted that the largest challenge facing the
global community today is the act of defining shared, but differentiated responsibilities, among countries at different stages of development. He also posited that socially inclusive growth must incorporate the three pillars of sustainable development – social development, economic growth and environmental sustainability.

Marianne Fay, Chief Economist of the Sustainable Development Network of the World Bank, called attention to the economic benefit of environmental
preservation, arguing that “Green growth is the efficient thing to do.” She spoke about the need to create new green markets for green exports and highlighted the inter-linkage between well-designed environmental policy and innovation. She discussed the work being realized by the World Bank with client countries to tailor innovation and industrial policies to local conditions.

In addition to the challenges of political acceptability and governance failures, Fay argued
that social acceptability and entrenched behaviors were also very real challenges to sustainable development. “We don’t have the land, space or water for 7 billion people to live lifestyles considered to be the norm of social success,” stressed Fay.

The Chief Economist also affirmed that the private sector possess the capital required to assume expenditures associated with environmental innovation.

The Group of 77 and China echoed the importance of
robust trade in the sustainable development of developing and Least Developed Countries. They called upon donors to fulfill their commitment to allocating 0.7 percent of their Gross National Income to developing countries, and urged that financing for climate change be new and additional, and not a substitute for Official Development Assistance (ODA). The Group of 77 and China also advocated for a complete overhaul of the current global financial system and architecture, characterized by
more equitable representation of developing and Least Developed Countries in decision making at the international levels in areas, in particular in the area of economics.

Consultative Status
GFDD and FUNGLODE actively support the work of the United Nations System. In 2004, GFDD and FUNGLODE were admitted to the United Nations System as institutions with consultative status, joining the Economic and Social Council (ECOSOC), the
United Nations Conference on Trade and Development (UNCTAD), the Department of Public Information (DPI), the Global Compact Office (UNGC), the Office on Drugs and Crime (UNODC) and the World Summit on the Information Society (WSIS).

Related links:
http://www.un.org/esa/ffd/ecosoc/springmeetings/2012/CivilSociety.pdf
www.worldbank.org
www.imf.org
www.wto.org
www.unctad.org
www.un.org/desa/