UNITED NATIONS (Reuters) - U.N. Secretary-General Ban Ki-moon on Wednesday urged 20 of the world’s most powerful economies to support a $1 trillion stimulus plan for developing countries when the 20 meet in London next month.
That figure is based on an estimate of the “total financing needed to support developing countries through the (financial) crisis” in 2009 and 2010, Ban said in a letter to leaders of the so-called Group of 20 nations, seen by Reuters.
“A prolonged and severe recession, if not addressed boldly with urgent attention given to the needs of the vulnerable, could likewise affect countries and regions with profound consequences for the security and stability of us all,” Ban wrote in the letter.
Ban’s proposal, first reported by the Financial Times, will be discussed at the G20 summit meeting in London on April 2. He also discussed it on Wednesday with British Prime Minister Gordon Brown during a meeting at U.N. headquarters.
After the meeting, Brown and Ban told reporters that it was unclear how much money G20 leaders would pledge for any stimulus package. That would be the subject of bilateral discussions ahead of the summit, they said.
U.N. diplomats said not all of the $1 trillion would be new financial aid. Some of it was available in existing programs but has not yet been tapped into.
In the letter, Ban made clear that his plan was intended to provide liquidity and prevent social unrest in developing countries due to a deepening of the credit crisis.
Ban emphasized the importance of securing a new global agreement on reducing greenhouse gas emissions during a U.N. conference in Copenhagen at the end of the year.
The secretary-general also called for review and reform of international financial regulatory and reserve mechanisms as well as a better early-warning system.
BRIDGING LIQUIDITY GAPS
Ban said a quarter of the funds should go to the poorest countries where the most vulnerable people are living. Another quarter should go to critical investments, such as infrastructure projects, in order to stimulate growth in line with the U.N. fight against poverty already underway.
The other $500 billion should be used to bridge liquidity gaps and keep trade flows active, his letter said.
Much of the financing, Ban argued, could be done through already existing international organizations like the World Bank and International Monetary Fund, as well as through funding of U.N. development projects.
In his letter Ban also warned G20 leaders against what one U.N. official described as “knee-jerk protectionism.”
Approval in London is not assured. U.N. officials said a split in the European Union might be emerging after at least one key EU member expressed reservations about additional spending to combat the recession.
They noted comments on Wednesday by Czech Prime Minister Mirek Topolanek, whose government holds the rotating EU presidency but lost a confidence vote in Parliament on Tuesday. Topolanek said U.S. President Barack Obama’s stimulus policy was the “way to hell” and the EU had not agreed to follow it.
“I think we’ll have to wait until April 2 to gauge acceptance,” a U.N. official said.
Separately, a group of economic experts convened by the president of the U.N. General Assembly, Miguel d’Escoto Brockmann, recommended in an 18-page document that a more inclusive global economic council than the G20, G7 or G8 could be created under U.N. auspices.
International regulatory bodies would also be advisable, including global regulatory bodies to cover financial markets and competition, the panel said in the document.
Editing by Eric Beech
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