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U.N. Finance Summit A Bust

This story was filed by CBS News foreign affairs analyst Pamela Falk, reporting from United Nations Headquarters.
The United Nations' three-day Head-of-State Summit on the global financial crisis had promise. The goal was to convene a summit of world leaders at U.N. Headquarters in New York to assess the worst global economic downturn since the Great Depression. Over 100 million people per year, the summiteers noted, will fall into extreme poverty.

On the first day, the message was clear: developing countries are the victims of the financial crisis and they need money. U.N. Secretary General Ban Ki-moon said, "surely, if the world can mobilize more than $18 trillion to keep the financial sector afloat, it can find more than $18 billion to keep commitments in Africa."

Security ahead of the "United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development" was tight. New York City Police blocked the perimeter of the U.N., and plans were readied for the red carpet treatment of presidents arriving at the General Assembly.

The problem was, almost no one showed up. Of the 140 nations participating, only a dozen presidents and prime ministers are attending, and it was postponed from early June because the "outcome document" – a set of proposals for the reform of the world financial system – had no consensus.

Some world leaders may have been put off by the event's organizer; Assembly President Miguel D'Escoto, a former Nicaraguan Sandinista foreign minister and currently a senior advisor to Nicaragua's leftist President Daniel Ortega. Also a potential problem: the anticipated participation by fiery Venezuelan President Hugo Chavez, who was scheduled to arrive on day-one (and is still holding out the possibility of showing up by the end of the summit).

Or, perhaps it's just that many Western powerhouse nations are still in the thick of the crisis and have put development assistance on the back burner.

"Since the crisis broke," former U.S. Treasury deputy secretary Roger Altman wrote in the July/August issue of Foreign Affairs magazine, "global financial institutions have reported $1 trillion of losses on U.S.–originated assets. And the IMF recently estimated that ultimate losses will reach a staggering $2.7 trillion."

The Obama administration was represented by U.N. Ambassador Susan Rice, who acknowledged a collective responsibility and said that the U.S. supports substantial increases in resources to boost the emergency lending capacity of the International Monetary Fund.

The draft outcome document proposes debt relief and increased aid to poor countries, "fast-tracked" reform of the Bretton Woods institutions (in particular the IMF), and it calls for expansion of the regulation of credit rating agencies and hedge funds.

Much of the brainpower for the final document came from Joseph Stiglitz, winner of the 2001 Nobel Prize for Economics, who headed a Commission of Experts on Financial and Monetary Reform, who warned of "another debt crisis further along" if industrialized nations do not help poor nations, but his comments were muted compared to his proposal a few months earlier, when he called for a drastic overhaul of the international financial system. (See: "U.N. Recommendation On World Economy: Replace The Dollar")

Most of the ministers and ambassadors took their best shot at the United States on the first day of the summit for Washington's lack of regulation and proposed an overhaul of the international financial system in coordination with the United Nations.

China weighed in, still concerned that the possibility of U.S. inflation will reduce the value of its $700 billion dollars in U.S. Treasury obligations. Minister of Foreign Affairs Yang Jiechi also called for more representation for developing countries at the IMF.

Thursday, day-two, we should hear from Bolivian President Evo Morales and Ecuador's President Rafael Correa. On the schedule for the third day is Iran's first vice president, Parviz Davoudi, who may avoid the event considering the pro-democracy protests both in Iran and scheduled for Thursday and Friday outside the U.N.