ANALYSIS - West keeps U.N. at bay on financial crisis

By Patrick Worsnip

UNITED NATIONS (Reuters) - Western powers appear to have beaten off a bid by developing nations to assert a much greater role for the U.N. General Assembly -- in which they hold a majority -- in tackling the global financial crisis.

A contentious "financial summit" called by the 192-nation assembly's president, Miguel D'Escoto, produced on Friday only an anodyne declaration containing relatively timid proposals for reforming the world financial structure.

Even that proved a little strong for the United States, which took the floor to hammer home its view that the United Nations had no power to intervene in such issues as how the World Bank and International Monetary Fund (IMF) are governed.

The summit, to which all but a handful of countries sent low-level delegations, was for D'Escoto, a one-time foreign minister in Nicaragua's leftist Sandinista government, the centerpiece of his one-year term as assembly president.

Convinced that stewardship of the world economy should be switched from small groups of powerful countries, such as the G8 or G-20, to the "G-192" -- the General Assembly -- he drafted a document proposing sweeping changes.

These included "democratizing" international financial bodies, including abolishing U.S. veto power at the IMF, where the voting system is dominated by rich countries and which imposes conditions on loans some developing countries resent.

Another demand was to replace the U.S. dollar as a reserve currency with a system based on special drawing rights (SDRs) -- an IMF unit based on a basket of multiple currencies.

The draft went down well with many developing countries but set alarm bells ringing in Western capitals where, while the document was viewed as legally non-binding, officials feared the political message it could send if adopted.