Amidst the worsening global financial and economic climate, the Regional Forum on the Economic and Financial Crisis organized by several leading Civil Society Organizations (CSOs)* from the Asia-Pacific region provided a timely discussion of its causes and impacts on the poor in Asia.

The forum was held in the Santhi Hotel Ballroom in Bali, Indonesia last May 4, 2009. This was attended by more than 150 participants from different sectors in Indonesia, as well as civil society leaders from Bangladesh, Hong Kong, Nepal, Pakistan, the Philippines, Sri Lanka, and Vietnam.

On the Causes of the Crisis

Starting from the Indonesian context, Mr. Don Marut of the International NGO Forum on Indonesian Development (INFID) described the current crisis as worse than the 1997 Asian crisis. Counting the issues of food and energy crises, and climate change, Marut cited some actions taken by governments in response to the current crisis but described these as palliative. The significance of the forum, according to Marut, is that it provides a venue for civil society stakeholders to critically examine the fundamental problems with the existing economic structures and formulate alternative and genuine pro-people solutions.

Dr. A. Prasetyantoko, economist and lecturer from Atma Jaya Catholic University of Indonesia, criticized the common notion that the current crisis originated in the subprime mortgage crisis and credit crunch in the US. He noted the structural imbalances within the US economy that was not limited to the housing and financial markets but also in other industries. He also pointed out the structural imbalances in the global economy that led to global financial and economic collapse, citing data from different countries across the world.

Like Marut, Prasetyantoko commented that the policy measures adopted by different governments and multilateral institutions to deal with the crisis -- such as fiscal stimulus packages and financial sector regulations -- are merely reactive and short-term responses. He warned that for as long as there is no strong initiative to correct “market fundamentalism” in economic policy, the world is likely headed for another series of downturns in the future. What is needed, concludes Prasetyantoko, is serious policy and structural changes in the global financial and economic architecture.

Mr. Antonio “Tony” Tujan, Jr. of IBON Foundation traced the global crisis to the failures of the neo-liberal tradition which began several decades ago. Going back to the 1970s, Tujan recalls the worsening crisis of overproduction that afflicted the world economy at the time. Imperialist “globalization” -- in the form of trade and investment liberalization, privatization of public services and assets, and deregulation of economies -- became the response of global elites to this crisis. He further explained that part of the globalization project of imperialists is the use of new technologies for artificial, speculative expansions. Moreover, neo-liberalism was promoted not just in the industrialized counties but also in the developing South, resulting in speculative profits from finance and trade liberalization.

Tujan argued that these schemes which were intended to forestall the crisis of overproduction further intensified the neocolonial exploitation of developing economies. The discrepancy between the massive growth in the digital “financial economy” versus the real economy has also exposed the crisis of over-accumulation of capital and concentration of profit. The soaring public and household debt, debt-driven consumption and the sub-prime housing loan crisis came at the expense of the people.

The failures in the US market have consequently affected its trading partners as well, citing Japan and the European Union (EU). It was also noted that the US, EU and Japan are among the biggest trading partners of most of the developing countries and those from the South. Indeed, since the three countries combined account for 52% of the total world gross domestic product (GDP), global turmoil has been the inevitable result. The actions taken in response to the financial collapse have not addressed the global issues of chronic exploitation, oppression and underdevelopment. Since the 1980s, poverty has increased and deepened, unemployment has risen along with the number of “working poor”, and inequality has sharpened acutely.

Tujan emphasized that the current crisis is an opportunity to expose not just neo-liberalism and globalization but imperialism itself. Like other speakers, he stressed the need for structural reforms to overhaul or replace the international financial institutions (IFIs) and other related multilateral and regional agreements and formations. He ended his presentation with a call for the promotion of economic independence and equity, debt cancellation and reforms in the aid architecture, more effective economic packages, social protection and support for social welfare.

The crisis hits the poor in Asia

Ms. Margarita “Maita” Gomez of IBON Foundation discussed the current financial and economic crisis in relation to other crises. Recalling the oil price shock of 2007 to 2008 and the recent food crisis, the impacts have clearly worsened the plight of the poor and fixed income earners in developing countries. Gomez elaborated on the effects of the oil crisis on the economy including the sky-rocketing price increase in food and other basic commodities.

Gomez cited studies indicating that a 10% increase in food prices translates to 2.72 million more Filipinos plunged into poverty; in Pakistan, the figure is 7.05 million. As the prices increase, there is an upward pressure on the cost of living and thus lower the overall standard of living of the majority.

Economic indicators confirm the economic contraction experienced all across Asia. Statistics show a downward trend in export growth and a corresponding upward trend in unemployment. There is a significant decrease in the availability of credit, foreign direct investment (FDI), foreign exchange flows (from exports and remittances), relative expenditure on social services, and effective demand in the market. Shrinking economies have aggravated debt, fiscal deficits, closure of business enterprises, underemployment, and ultimately, it has worsened poverty. Decline in GDP growth has been persistent in neighboring countries such as Pakistan, India, Thailand, Cambodia, Indonesia, the Philippines, China, and Korea. With each 1% drop in GDP, another 21 million people fall below the poverty line.

On the role of the ADB

Mr. Rashed Al Mahmud Titumir of Action Aid zeroed in on the role of the ADB in promoting development in the region as the impact of the “triple crises” of economic, food, and climate change hit more and more of the poor in Asia. He presented evidence showing that the ADB’s policy and programs actually exacerbate rather than mitigate climate change impacts in terms of the destruction of livelihoods, environmental degradation, and greater water and food insecurity. He also cited a number of ADB projects in the social sectors and utilities which created more barriers for poor people to accessing essential services.

Titumir called for changes in the ADB’s development strategies and poverty reduction programs, particularly its policies on liberalization, privatization and deregulation. Given all the adverse impacts of ADB’s policies on the poor, the speaker asserted that the Bank must be made accountable to the peoples of Asia and the Pacific. He called for changes in the ADB’s governance structure, ending policy conditionality and a tripartite review of ADB strategy. With respect to the triple crises, Titumir called for:

Financial and Economic Crisis

• Additional, permanent and stable sources of condition-free funding for developing countries
• Debt cancellation
• National stimulus package
• Social security and social protection
• Expansion and improvement on the delivery of essential services

Food Crisis

• Increased public investment in agriculture
• Sustainable food production and innovative technologies
• Impose restriction on speculation and moratorium on bio-fuels
• Regional cooperation to fight against food crisis

Climate Crisis

• Stop financing fossil-fuel extraction
• Pledge new and additional resources for mitigation and adaptation purposes, accountable to the United Nations Framework Convention on Climate Change (UNFCCC)
• Agriculture should be recognized as most vulnerable sector to climate change and farmers should be given adequate support
• Active participation of women from affected communities and civil society

People’s Response to the Crisis

To round up the overview session, Mr. Jose Enrique Africa of RESIST! (International People’s Campaign to Confront Crisis and War), criticized the imperialist powers, governments and domestic business elites for passing on the burden of adjustment onto the people. According to Africa, this situation confirms that nothing more can be expected of monopoly capitalism but more hostile competition between and among the ruling elites. On the other hand, he described this as a favourable situation to draw more of the basic masses into the struggle for change. He then shared the response of the people’s movement in the Philippines to confront the global economic crisis which include:

1. more vigorous education campaigns among activists, communities and basic masses, and the broader public;
2. better and more aggressive organizing, more mass mobilizations of basic sectors on economic demands covering
   1. immediate relief, as well as
   2. basic reforms such as genuine agrarian reform and national industrialization;
3. more aggressive and effective broadening of alliances between the different sectors.

Africa concluded his input by saying that the people’s response must be within the framework of the struggle for the fundamental long-term social transformation of society towards a more just, equitable, humane and peaceful world.

Civil Society in the Frontline of Pro-People Development

During the afternoon, participants at the Forum formed workshop groups where they shared the concrete implications of the global crisis on particular sectors and identified key advocacy points and possible strategies for action at the national, regional and global levels. Participants underscored the role of civil society in advancing pro-people and pro-poor solutions in response to the global crisis, and in taking the lead in formulating and promoting alternative development strategies. This recognizes the crisis as an opportunity to expose the inherent defects of the prevailing global market economy and to put forward the aspirations of the people for genuine development.

The workshops focused on the importance of effecting changes in the real economy to respond to and reflect the actual situation of the people. Participants reaffirmed the necessity of ensuring sustainability and conservation of resources since this directly affects the lives of the people in the community. They insist that projects and programs to develop and utilize such resources do not and should not necessitate enormous loans. Attaining economic independence and self-determination would uplift the lives of the people.

Capacity-building among grassroots organizations remain essential to effectively promote advocacies at the community level. Alliance-building among organizations sharing the same causes and those in the other sectors is critical to launch an effective movement to respond to the crisis at the national level. As the global crisis continues to unleash it harsh impacts on people’s lives, it should be dealt with at the global level as well. Regional events such as the forum serve as a venue to bring together peoples from various countries to strengthen unity in promoting and advocating a pro-people development framework across the region and the rest of the world.

* The forum was organized by the alliance on Agrarian Reform Movement of Indonesia (AGRA), Asia Pacific Research Network (APRN), IBON Foundation-Philippines, the Institute for National and Democratic Studies (INDIES - Indonesia), the International NGO Forum on Indonesian Development (INFID), and RESIST! in line with the Peoples’ Week of Action on Asian Development Bank (ADB) carrying the theme “Oppose the Neoliberal Framework! Assert the Genuine and Pro-people Development Framework for the People of Asia and the Pacific!”