JEF in the Media

The session was introduced by Dr. Sulaiman Abdul Rahman Alsheikh, the Associate Dean of Development at the Faculty of Economics and Administration of King Abdulaziz University. There is widespread debate on the global financial crisis and the global financial system is currently undergoing a significant transition, which involves widespread restructuring. What are the proper mechanisms of this restructuring and what is the future of the global financial system? These are the important questions being addressed today and they should be addressed in such a way as to prevent future economic crises from taking place.

The first speaker, H.E. Neal Wolin, the US Deputy Treasury Secretary, indicated that the pre-crisis approach to governance of the global economy was an exclusive approach (G5) and that it was in fact antiquated. A more diverse approach was necessary which led to the G20 being initiated. The G20 has now become the premier forum for a more diverse and balanced coordination of the global economy and has responded quickly to help restore the global financial system. There is growth now in many parts of the world but considerable challenges still exist - market turbulence is still there and as yet there is no significant job growth. Mr. Wolin acknowledged that in the past, the United States bought too much and saved too little; this is no longer an option. In addition, US public finance must be put on a sustainable track; the US can no longer be the single driving engine for the world economy. The crisis has shown that the economies of all countries are intertwined and that all nations must do their part to build the new financial system, which must be stronger, safer and sustainable. In terms of the core reforms necessary to strengthen the global financial system, he mentioned: constrain risks, build strong supervision, reform compensation in the financial sector and put an end to the idea that any financial system is "too big to fail." While a strong regulatory framework is necessary, it should be clear that no nation can build this on its own and that all must contribute and work together for sustainable future development. The governance inherent in the IMF and the World Bank must evolve to reflect the new situation. Transparency must be improved and more innovation introduced. Progress through partnership with a common purpose must be pursued. It is only by this means that one will be able to create a new and more stable world economy.

Mr. Lee Richardson, Member of Parliament for Calgary Centre in Canada, presented the Canadian perspective on the recovery of the global economy. Canada is the co-chair of the upcoming 4th G20 Summit that will address recovery and new beginnings. "Enlightened self-interest" is perhaps the key to a successful and balanced solution but that solution will only be reached through shared responsibility. The critical areas for the G20 are financial sector reform involving balanced and transparent regulation; continuation of globally coordinated stimulus measures; and enhancement of global trade and growth through resistance to protectionism and the lowering of trade barriers. Narrow sovereignty must be reconsidered, and recovery must lift all countries together. This is possible only through global cooperation, according to Mr. Richardson.

Mr. Bader Al Dhafa, UN Undersecretary General and Executive Secretary of the Economic and Social Commission for Western Asia (ESCWA), discussed the role of ESCWA in regional Arab integration in a variety of fields with the goal of contributing to world economic recovery. The financial crisis is an excellent opportunity for the Arab countries of ESCWA to show their cooperation and contribute to the recovery because these countries are important to the world economy. Technical and economic cooperation on food issues, regional projects, effectiveness of financial frameworks and economic diversification, as well as more cooperation between governments and the private sector is very important in the ESCWA countries to contribute to solving the global financial crisis.

H.E. Asset Issekeshev, Minister of Trade and Industry of Kazakhstan, addressed the global financial crisis from the viewpoint of Kazakhstan. He indicated that a number of factors will allow Kazakhstan to contribute positively to the solution of the global financial crisis. These factors include: positive GDP growth; a new strategic plan introduced two weeks ago that focuses on diversification and new investments; initiation of Islamic financing in Kazakhstan; and a new customs union linking Kazakhstan, Russia and Belarus.