15 APRIL 2009

Michelle Obama was Queen of the World in London April 1 until she met Her Majesty, the Queen of England, who gently for a quick second stroked the U.S. First Lady's back. The royal touch was a master stroke. In the midst of a media carnival with scripted P.R. moves and prescribed arrangements, the greatest impact was human.

Efforts by G-20 leaders have been fairly well received. An initial welcome by the markets have inspired a sense of movement that reassured a jittery public.

A hands-on approach by President Obama, President of the major country where the crisis was most apparent, did help though not enough to win approval of Nobel Laureate Paul Krugman of The New York Times. Britain's Prime Minister Gordon Brown has been a pillar of strength in dealing with unpredictable repercussions, although his claim of starting a new world economic order is exaggerated. The dynamism of France's President Sarkozy and the determination of German Chancellor Merkel pulled the group of powerful leaders closer together. The down to earth approach by Brazilian President Lula and the availability of King Abdallah of Saudi Arabia to work with the rest on both finance matters and the price of oil injected a more practical element to the outcome. Regrettably there was no sign of substantive activity by the U.N. Secretary General, supposedly the symbolic representative of the collective international community. There were well-prepared proposals that placed the International Monetary Fund in the mainstream of the response. That will certainly help its Executive Director Dominique Straus-Kahn to regain the Fund's role, together with his own personal reputation. But it constitutes only one aspect of the response, where the comprehensive U.N. Galaxy with the aims prescribed by the U.N. Charter, could play a central role with special attention to Human Development.

Some in London started talking about Bretton Woods Two. Many pundits joined a growing chorus. However, they overlook the fact that the Bretton Woods agreement, which generally guided the global economic/financial order after the Second World War, was a "United Nations" Financial Conference. President Nixon took measures to break out of it in the mid-Seventies under the financial pressure of the Vietnam War, but Bretton Woods maintained its pillars until the recent crisis uncovered the obscene extent to which that framework had been violated with impunity. A nostalgic imitation of the original, if at all attainable, would not produce the same results. To begin with, the 1944 agreement was drawn after a world war. Even then it took at least two years to shape it. There was a consensus on all points. The U.S., its host country, offered the main premise. Today, the U.S. economy is part of the problem. Sixty-four years ago, a very few number of countries, mainly the winners of the war, decided. Now there is a wider number of interested and effective players like China, Brazil, Indian, Saudi Arabia, Qatar, Algeria, Nigeria, South Africa, Australia, among others.

Another qualitative difference is in the calibre of the main players. At the time there were government leaders like Franklin Delano Roosevelt and Winston Churchill working on advice from economists like Henry Morganthau and John Maynard Keynes. They dealt with current issues of the day not with long press communiques. As Keynes would quip: "In the long term, we'll all be dead"! British current Prime Minister Gordon Brown seems to agree. He is playing a real leadership role in dealing urgently with the expanding crisis.

The most likely consensus, then, would be to review, improve, regulate, stimulate, inspire and generally build on the basic pillars within the widest available framework. That normally would mean the United Nations.

The International Bank for Reconstruction and Development, popularly known as the World Bank, and the International Monetary Fund (IMF) were created at Bretton Woods as an integral part of the U.N. system. They have their own governing bodies and specific objectives, yet they fell within that international galaxy. That connection was deliberate, not haphazard. The Founding Fathers sought to highlight without any doubt the link between international peace and security and economic/social development, as was inscribed in the U.N. Charter. They also realized that a unified approach will be more effective than a fragmented one.

The problem is: What happened to the World Bank and IMF? And how could they recover their formerly impeccable reputation? By the time the controversy about Mr. Wolfowitz in the Bank was about to be forgotten, the new IMF Director hit the ground running with a sexual scandal for which he publicly apologized to the world and to the Fund's female staff. However, he worked hard on regaining his professional stature, at least as participating heads of state were concerned. It is generally forgotten that the U.N. Secretariat has a substantial Department of Economic and Social Affairs. There are also other programs and funds like U.N. Development Programme and several others -- they vary from 35 to 55 whose budget is devoted to financial or human development issues. Naturally, the Millennium Goals sections should have a clue. Our inevitable Professor Jeffrey Sacks is always active in spots like Davos or in the company of Bono; he must be able to contribute something beyond that photo-op meeting between the Secretary General and Nobel Laureate Joseph Siglitz.

A leadership role by the U.N. would be welcome by most countries. Actually, the attitude of our distinguished Secretary General became a puzzle. He initially was outspoken from day one. He raised the issue with heads of state and went to the first G-20 meeting in Washington especially to press his urgent views on the needs of the developing countries and the commitment to the Development Goals. He spoke with conviction and clarity on general principles. However, when it mattered most, when G-20 leaders were gathering in London to take decisions with lasting impact, he was conspicuously almost invisible. A headline in The London Times was painfully embarrassing. Obviously, the Secretary General is limited by the need to deal with so many pressing issues at the same time. Hence the need for all those other senior officials, a working group, or at least a key solid focal point in his office to focus fully and entirely on that daunting global crisis. He could not and is not expected to do it single-handedly. He will need to mobilize the U.N. system in order to demonstrate it could play a vital role to fill an ascertained need. To talk repeatedly about the need for leadership is fine. But now is the time to ACT as a leader.