Thursday, September 25, 2008

Upheaval on Wall St. Stirs Anger in the U.N.

Upheaval on Wall St. Stirs Anger in the U.N.

By NEIL MacFARQUHAR

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Wall Street and the Bush administration’s record of financial oversight came under attack at the United Nations on Tuesday, with one world leader after another saying that market turmoil in the United States threatened the global economy.

“We must not allow the burden of the boundless greed of a few to be shouldered by all,” said President Luiz Inácio Lula da Silva of Brazil in an opening speech that reflected the tone of the gathering.

The annual opening of the General Assembly habitually casts a shadow over New York every September, snarling traffic and tempers. But this year it is New York, or at least Wall Street, projecting its shadow back across the United Nations. Virtually every president or monarch from around the globe made some reference to the financial upheaval, and the looming cloud was also the buzz of the back corridors.

With a pillar of American power — its financial leadership — so badly shaken, there was a certain satisfaction among some of the attendees that the Bush administration, which had long lectured other nations about the benefits of unfettered markets, was now rejecting its own medicine by proposing a major bailout of financial firms.

But there was also serious concern that the United States had not policed its markets carefully enough to prevent the damage to its economy and others, making it much harder to raise money for the world’s most vulnerable people.

“The global financial crisis endangers all our work,” said the secretary general, Ban Ki-moon, who used his opening remarks at the General Assembly to question the reliance on free markets. “We need a new understanding on business ethics and governance, with more compassion and less uncritical faith in the ‘magic’ of markets.”

President Bush, making his eighth and last address to the United Nations, with which he has had a troubled relationship, sought to reassure world leaders that his administration was taking “bold steps” to stanch the economic crisis in the United States, which, he said, “would have a devastating effect on other economies around the world.”

Amid a long ode to the importance of continuing the fight against terrorism, he devoted one paragraph to the rescue plan. “We’ve promoted stability in the markets by preventing the disorderly failure of major companies,” Mr. Bush said. He noted that many were watching how the United States responded because economies were “more closely connected than ever before.”

But for some leaders, the Bush bailout plan seemed hypocritical given the tough course Washington has often advised struggling nations to take.

“What you are seeing here is the letting off of some political steam,” said Mark Malloch Brown, a British cabinet minister and former senior United Nations official. “They are all remembering the very hard, unforgiving advice that they got from American financial institutions” to “deflate your economy, let your banks go to the wall,” he said. “There is a resentment at what they would see as a further evidence of double standards.”

The General Assembly has long served as a handy megaphone for American foes like Fidel Castro of Cuba or President Mahmoud Ahmadinejad of Iran — who this year delivered his standard diatribe against the evils of America and Zionism. The extraordinary nature of the outpouring on Tuesday, however, was that it came from some of America’s closest allies and trading partners — not from those the United States would label political outcasts, but from mainstream countries in Europe, Asia and Latin America.

President Nicolas Sarkozy of France described the crisis as the worst financial mess since the Depression of the 1930s and the financial system as “insane.” He called for a summit meeting in November to determine how to address the problems and to develop greater international regulations of financial markets. Many leaders echoed that latter demand.

Mr. Sarkozy also said that at a news conference he had talked with Wall Street bankers, but that they claimed not to know who was responsible for the mess. When banks and hedge funds hand out fat bonuses, they are all willing to gloat about their success, Mr. Sarkozy said, “but when there are deficits we don’t know who is responsible.”

During a brief appearance with Pakistan’s new president, Asif Ali Zarbari, Mr. Bush acknowledged that world leaders gathering in New York had questioned him about the turmoil and the administration’s response to it, “wondering whether or not the United States has the right plan to deal with this economic crisis.”

The American ambassador to the United Nations, Zalmay Khalilzad, said he was not hearing complaints about the financial crisis at his meetings, and suggested that the world leaders accepted that the United States was facing the issue. “We are very agile and we are moving very quickly to deal with it,” he said.

Mr. Malloch Brown, the British minister, also noted that if the leaders lambasting the United States from the podium consulted with their finance ministers, they would be likely to find them very happy that Washington was planning a huge bailout.

Yet doubts were being raised not just at the United Nations but farther afield, with Germany’s chancellor, Angela Merkel, among the most outspoken. She said that at last year’s meeting of the Group of 8, she had strongly urged both the United States and Britain to be more rigorous in supervising financial activities, and even offered specific proposals to be applied to banks and other institutions.

But the United States was not interested, she said. She also seemed to express a certain exasperation that the United States was now asking Europe for help, after inflicting damage on the rest of the world that could have been avoided.

“We did what we were supposed to do,” she said in an interview with Münchner Merkur, a German newspaper. “We adopted a decent E.U. regulation on the national statute books,” but “when it came to it, the Americans said, ‘That’s not for us.’ ”

The theme promoted for this year’s General Assembly is the development of the world’s poorest nations, laid out in eight targets, including universal primary education and the elimination of maternal mortality, known collectively as the Millennium Development Goals.

Mr. Ban had been hoping that member states would renew their commitment to the tune of $72 billion annually, and evidently the turmoil in the markets threw that into question. He told a meeting of business executives on the side of the General Assembly that if the United States could promise $700 billion for Wall Street in one week, then $72 billion should not be such a stretch.

There was a certain amount of shellshock left from the wave of bad financial news, but African leaders in particular were holding out the importance of continuing aid.

“You cannot but talk about it,” said Elizabeth Ohene, Ghana’s minister of state for education, science and sport, trying to remain optimistic that the huge bailout plan for Wall Street meant there would be plenty of money to go around.

It would be far better to invest in the education of children, she told a luncheon gathering, than to use a bunch of fancy financial engineering to bail out Wall Street and other global financial centers. “Believe me,” she said, “it will be much cheaper.”

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