The COVID-19 pandemic has unleashed the worst global crisis since the Second World War – a health, economic and social crisis, which could also exacerbate conflicts and retard action against a climate catastrophe.
The COVID-19 Crisis
Global health systems have virtually collapsed, even in some of the most advanced countries. The world economy has sharply contracted – by 5% in advanced nations and up to 20% in some poorer countries, which are close to economic collapse. Four hundred million jobs have been lost; nearly 120 million people in developing countries have been pushed back into extreme poverty ($1.90 per day), expanding the number of the poorest to 1 billion; 20 million face famine. The virus is still raging across the world. And, the vaccines developed to counter it are in short supply and may be unavailable for some time to the poorest and isolated countries.
The nations of the world were ill-prepared for such a vicious and pervasive global challenge. No one country or organization had the mandate or capacity to respond to the scope and complexity of the crisis except the United Nations.
The UN Response
Under the UN Charter, the World Organization has a twin mission: to preserve peace and security and to promote “better standards of life in larger freedoms” for all peoples through “international cooperation”. The latter responsibility is assigned to the UN’s Economic and Social Council, which is designed to frame international economic and social policy and coordinate the work of the UN’s Specialized Agencies and functional bodies and organizations.
Although this second mandate of the UN has been eroded over time by the organizations with financial authority, like the IMF and World Bank, it was only the United Nations, in collaboration with the WHO and related entities, that was able to conceive and build a coherent response to the COVID-19 crisis. As early as March 2020, the UN’s Office of Humanitarian Assistance established an interagency mechanism to provide emergency funding for health and livelihood support to the poorest countries.
Pakistan’s Early Response
The Prime Minister of Pakistan was one of the first world leaders to recognize the multi-dimensional nature and impact of the crisis – the need to save lives but also save livelihoods, especially in the developing countries. Within Pakistan, the strategy of selective and “smart” lockdowns, combined with $8 billion social support and economic stimulus package, were successful in controlling two waves of the pandemic and limiting the contraction of the national economy to around 5 percent.
Prime Minister’s Debt Initiative
As early as April 2020, Prime Minister Imran Khan proposed the launch of a Global Debt Relief Initiative to provide greater fiscal space to developing countries to finance their response to the health and economic emergency. This was widely supported. After consultations with the UN Secretary-General, Pakistan convened a group of 25 interested developing and developed countries to evolve agreement on some early debt relief measures.
Initial International Actions
One specific response was an agreement among the G-20 Finance Ministers meeting under Saudi Arabia’s chairmanship, to suspend the official debt of 73 low-income countries, including Pakistan. Around $800 million of Pakistan’s debt repayment was suspended under this arrangement. The so-called Debt Service Suspension Initiative (DSSI) has been extended until the end of 2021, which will provide additional relief.
Concurrently, the IMF, the World Bank and other multilateral development banks recognized the need to provide emergency support to the developing countries. Pakistan reportedly received support of around $3 billion from the international financial institutions.
UNSG - Canada, Jamaica Summit
Following on Pakistan’s debt initiative, the UN Secretary-General (UNSG), together with the Prime Ministers of Canada and Jamaica, launched high-level consultations on financing recovery from the COVID-19 crisis in May 2020. Prime Minister Imran Khan was invited as a co-sponsor of the Summit discussions on the debt issue. The high-level discussions led to the identification of a “menu of options” to finance recovery from the COVID crisis, covering debt liquidity and innovative, illicit and climate finance.
Pakistan’s Presidency of ECOSOC
Pakistan assumed the Presidency of the UN’s Economic and Social Council in late July 2020 and highlighted the need to simultaneously address the COVID crisis, the achievement of the UN-adopted 17 “Sustainable Development Goals”1 and implementation of the Paris Climate Agreements.2 To this end, we proposed that priority be given to action on 3 fronts: finance, sustainable infrastructure, and science and technology.
Prime Minister’s Priority Package
On finance, Prime Minister Imran Khan, in his address to the Special Session of the UN General Assembly last September, and later this January in the UN Conference on Trade and Development, identified the priority international actions required to respond the COVID crisis:
▪ one, equitable, early and universal supply of the COVID-19 vaccine, especially to all developing countries;
▪ two, additional debt relief through extended debt service suspension and debt restructuring;
▪ three, creation of new $500 billion in the IMF’s Special Drawing Rights: (SDRs) and re-allocation of unused SDRs of rich countries to developing countries;
▪ four, increase in “concessional” finance to low-income countries, including fulfillment of the commitment by developed countries to provide 0.7% of their GNI as development assistance;
▪ five, fulfillment of the similar commitment to provide US $100 billion in climate finance to the developing countries; and
▪ six, an end to illicit financial flows from developing countries and unconditional and immediate return of their stolen assets.
These proposals have evoked support from the international community. The U.S. Treasury Secretary of the Biden Administration supported the creation of $650 billion in new SDRs. The IMF Managing Director endorsed this and also agreed to present a proposal to re-allocate unutilized SDRs of richer countries to developing countries who need liquidity. The G-20 agreed to further extend its debt suspension until the end of 2021 and to provide further debt restructuring on a case by case basis under a “Common Framework”.
Pakistan’s plan was presented by the Prime Minister in his inaugural address to the ECOSOC’s Financing for Development (FfD) Forum on April 12. Following intense negotiations, the Prime Minister’s proposals were endorsed in the Forum’s Outcome Document.
This consensus on financial support measures will be implemented in the IMF, the World Bank and the Paris Club. From the $650 billion in new SDRs, Pakistan is likely to receive around $2.7 billion in additional “reserves”. It could also benefit substantially from the anticipated US $100 billion that may be voluntarily transferred from developed country quotas to help poorer countries, especially if the World Bank’s IDA concessional “window” is significantly enlarged. And, the G-20’s debt service suspension could provide further temporary relief.
A Vaccine for All
However, as pointed out in Prime Minister Imran Khan’s address to the FfD Forum, global recovery is contingent on the equitable and universal availability of the COVID-19 vaccine. Since vaccinations commenced over 4 months ago, 832 million doses have been administered globally, of which 82% have gone to the high or upper middle income countries.
As ECOSOC President, Pakistan convened a Special Meeting of the Council on “A vaccine for all” on April 16, 2021, bringing together the WHO Director-General and all relevant UN organizations, Member States, scientists and civil society representatives, to press for the COVID-19 vaccine to be treated as a “global public good”. The Presidential Statement issued after the meeting opposed “vaccine nationalism” and outlined the steps needed to enlarge the production and equitable distribution of the vaccine to all countries and peoples to ensure that “no one is left behind”. Further efforts are needed at the political level to ensure implementation of the principles of solidarity, equity and global cooperation endorsed at the Special Meeting.
Building Back Better
The UN Secretary-General has led the way in promoting the view that the devastation caused by the COVID-19 pandemic also offers the opportunity to “build back better”. There is growing consensus that the 17 SDGs, together with the climate and environmental goals of the Paris Agreements and the biodiversity and ocean conventions, provide the best blueprint for a resilient recovery and a “sustainable” and equitable global economy and society.
Pakistan has pointed out that to achieve the SDGs by 2030 and “net-zero” carbon emissions by 2050, the world will need to invest $100 trillion in sustainable (or green) infrastructure in energy, transport, housing, communications, industrial and agricultural production. At least $1.5 trillion each year needs to be invested in developing countries. At present, such sustainable infrastructure investment is minuscule and declined by $50 billion last year. Yet, the money is there. An estimated $378 trillion is held in private assets earning no or low returns.
Pakistan has proposed a multi-stakeholder facility, under UN auspices, that could bring together private asset managers, development institutions, donors and developing country governments to promote public and private investment in sustainable infrastructure, especially in developing countries. A dialogue on this proposal is underway within ECOSOC.
An Equitable Global Architecture
As ECOSOC’s President, Pakistan has stated that in building back better, we need to holistically reorient our development strategies to address the systemic challenges in our global systems and establish a more inclusive and equitable global financial, trade and technology “architecture”. The COVID-19 pandemic has revealed the stark inequalities of our world. The poorest countries and the poorest people within countries have suffered the most. The rich and advanced countries have been able to inject $17 trillion in financial stimulus to revive their economies, preserve jobs and support their poor. The developing countries’ financial needs have grown from $2.5 trillion annually to $4.3 trillion post-pandemic. Yet, they have been unable to mobilize even a fraction of this amount. Forty countries are in debt distress; seven have defaulted on their debt payment and more may be obliged to do so.
An Equal Financial System
Beyond debt relief, it is vital to restructure the world’s financial system in ways that all countries are equally able to respond to natural or man-made emergencies, including through equitable debt management, liquidity creation and access to financial markets.
An Open Trade Regime
International trade has declined due to the disruptions in the supply chains induced by the pandemic and the unilateral trade restrictions imposed by some of the major economies. A revived, development-oriented trading system must be evolved at the World Trade Organization.
Fair Tax Regime
This should be accompanied by a fair international tax regime, particularly to prevent multi-national corporations from shifting profits to low-tax environments and robbing developing countries of tax revenues. Likewise, the profits from e-commerce and digital transactions should be taxed where revenues are generated.
Bridging the Digital Divide
In the modern, digitalized world, the “digital divide” between developed and developing countries must be bridged to create a level-playing field for trade and investment. Pakistan has initiated a dialogue in ECOSOC to implement the UN Secretary-General’s “road map” to bridge the digital drive.
Utilizing Advanced Technologies
Developing countries also need access to advanced technologies especially as they transition to more resilient and sustainable development models. Pakistan has proposed the creation of a UN database of all available open source technologies and identification of a set of scientific objectives that can advance the implementation of the SDGs.
The Compulsion to Cooperate
The COVID-19 pandemic has driven home the reality of the unity of humanity. “No one will be safe until everyone is safe” is not a slogan; it is the world’s reality today. This reality of interdependence should drive home the imperative of promoting collective security and socio-economic development. It should impel international cooperation, rather than great power rivalry and competition. Such international cooperation can be best promoted through the United Nations.
The writer is presently serving as the Permanent Representative of Pakistan to the United Nations and President of the Economic and Social Council. During his long career he has served as Pakistan’s Ambassador to various countries, different intergovernmental organizations and the UN including Permanent Representative to the United Nations in New York, after serving as Ambassador and Permanent Representative to the United Nations in Geneva.
E-mail: [email protected]
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