EXTERNAL DEBT AND DROP IN DEVELOPMENT ASSISTANCE DISCUSSED AT HIGH-LEVEL SEGMENT OF ECONOMIC AND SOCIAL COUNCIL
Press Release
ECOSOC/5710
EXTERNAL DEBT AND DROP IN DEVELOPMENT ASSISTANCE DISCUSSED AT HIGH-LEVEL SEGMENT OF ECONOMIC AND SOCIAL COUNCIL
19970707 (Reissued as received.)GENEVA, 4 July (UN Information Service) -- The Economic and Social Council continued to debate issues related to "fostering an enabling environment for development" this morning, hearing calls for a reduction of the debt burden on poorer countries.
Speaking on behalf of the European Union, Georges Wohlfart, Secretary of State for Foreign Affairs of Luxembourg, said the least developed countries continued to suffer from marginalization and vulnerability. The problem of external debt remained a source of major concern and the reduction of the heavy debt burden was essential, he added.
Mr. Wohlfart's views were echoed by Patrizia Toia, Deputy Minister for Foreign Affairs of Italy, who also highlighted the relationship between financial flows, investment and trade and their increasingly vital role in development. She added, however, that developing countries needed to establish stable democratic conditions, rule of law and respect for human rights in order to realize sustainable progress.
Meanwhile, Frances Rodrigues, Deputy Minister of Foreign Affairs and Cooperation of Mozambique, urged the Bretton Woods institutions -- the International Monetary Fund (IMF) and the World Bank -- to "explore all available avenues that might lead to a coherent, consistent and durable solution to the external debt problem" to help boost the economies of the developed countries.
Another issue raised during this morning's meeting of the high-level segment of the annual Council session was the decline in official development assistance. Carol Bellamy, Executive Director of the United Nations Children's Fund (UNICEF), said that if all countries made good on the pledge to provide 0.7 per cent of gross national product in the form of development aid, $95 billion could be raised, $15 billion more than needed per year to eradicate extreme poverty.
Representatives of the Russian Federation, India, Holy See, Finland, Bulgaria, the former Yugoslav Republic of Macedonia, Cuba, Kazakhstan,
Argentina and Iceland also took the floor, as did representatives of the World Health Organization (WHO) and the European Commission.
The debate will resume at 4 p.m. today.
Statements
GEORGES WOHLFART, Secretary of State for Foreign Affairs of Luxembourg, speaking on behalf of the European Union, said the issue of fostering an enabling environment deserved special attention, and that the United Nations had a unique role to play to encourage international cooperation in the economic and social sectors. According to a recent by the Organization for Economic Cooperation and Development, least developed countries continued to suffer marginalization and vulnerability. The benefits of globalization would only materialize if all members of society, especially women, participated; development policies needed to integrate a gender perspective. Human capital was important and governments should develop human resources with effective health and education systems.
Mr. WOHLFART said the risk of marginalization was still all too real. Official development assistance would continue to provide vital support for least developed countries, but that should be accompanied by national sustainable development policies. The European Union was committed to strive to achieve the 0.7 percent of gross national product for official development assistance, but the more efficient use of available funds would also increase impact. The problem of external debt remained a source of major concern for the European Union and the reduction of the heavy debt burden was essential. There was also a need to pay attention to market access to least developed countries and the implementation of the World Trade Organization's (WTO) Action Plan to assist these countries.
PATRIZIA TOIA, Secretary of State for Foreign Affairs of Italy, said the relationship between financial flows, investment, and trade, had grown in the international context and played an increasingly vital role in development; enabling conditions must be created to allow developing countries to participate effectively in global markets. Those countries needed, for their part, to establish stable democratic conditions, rule of law, and respect for human rights to realize sustainable progress; the primary responsibility and scope for development rested with them. On the part of the international community, it was incumbent to offer macroeconomic stability and to provide, especially to the poorest countries, direct aid and predictable, stable flows of resources to allow them to develop their infrastructures and their health and education systems, and to lead the way toward healthy private investment in their economies. Emphasis also needed to be placed on improving the position of women in society, as they had a disproportionate influence on development -- they should be able to obtain credit and influence policy. In addition, extensive foreign debt placed unacceptably heavy burdens on many
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developing-country economies, she said, and Italy supported further measures by at debt relief by creditor countries.
SERGEY ORDGIONIKIDZE (Russian Federation) said economic and trade globalization had become a dominant trend in international development. This multi-faceted global process could not be sustained unless the gap between the levels of development of groups of countries and certain nations was bridged. The key task should be ensuring an external environment conducive to development and overcoming the socio-economic backwardness of individual countries. Efforts to create an enabling environment should be based on the premise that countries themselves should assume the main responsibility for their own development. Thus, international efforts should play an important but complementary role. For its part, and considering the special and sometimes socially painful nature of its economic reforms, the Russian Federation counted on adequate understanding of its situation in the process of its integration into the world economy. It was unfortunate that the trade practices of some of Russia's partner countries contained discriminatory restrictions, including legislative ones, in respect of Russian exports.
MARJATTA RASI (Finland) said sustainable development should be the leading principle when trying to achieve an enabling environment for development; interlinkages between political, social, ecological, and economic issues were getting more intense, and trade and investments could not be pursued in a vacuum; globalization should be considered an opportunity for all countries, and steps should be taken to ensure that it in fact was an opportunity for all countries. The private sector should be provided with means and also charged with responsibilities; international institutions should have collaborative mechanisms to enhance cohesion at the policy level; special assistance and market-access arrangements were needed to integrate least-developed countries into global markets. Official development assistance still had an essential role to play in capacity building and construction of infrastructure, and there was also room for innovative mechanisms in such aid to leverage trade and investments -- support of small- and medium-sized businesses was one essential element.
ANTOINETTE PRIMATAROVA, Deputy Minister of Foreign Affairs of Bulgaria, said creating an enabling environment for development through the expansion of financial flows, investment promotion and trade facilitation was one of the main preoccupations of United Nations economic and social bodies. Bulgaria fully shared the view that fostering such an environment implied a concerted effort by governments in collaboration with other actors in pursing sustainable and broad-based development. The international capital flows and foreign investments were playing increasingly bigger and greater roles for economic growth around the world. The new Bulgarian Government attached primary importance to attracting foreign investments through a favourable investment climate. As a transition economy, Bulgaria stressed the necessity for bigger and more substantial contributions from international financial
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institutions and donor countries for the successful economic reform to ensure its integration in the global market economy.
BORIS RIKALOVSKI, Minister for Economy of the former Yugoslav Republic of Macedonia, said the country had taken numerous steps to strengthen democracy, the rule of law, the fledgling market economy, and civil society, all in the face of the difficult circumstances prevailing in the Balkans. The country had received positive responses from the IMF, the World Bank, and the European Bank for Reconstruction and Development, but not an appropriate response from the private sector, and hence it would not be realistic to say the Government was entirely satisfied; it would be extremely helpful, for example, to have several branches of world-renowned banks in operation in the country. As much as liberalization of world trade was necessary, along with an increase in investments, international efforts were needed to prevent marginalization of weaker economies; the United Nations and other organizations could greatly help development by establishing a favourable environment for it, and such issues should be a subject of further discussion and action by the United Nations.
Monsignor DIARMUID MARTIN, Secretary of the Pontifical Council for Justice and Peace of the Holy See, warned that the rapid pace of globalization meant that those who were left behind quickly became institutionally disadvantaged. The new situation required a new culture based on the interrelated roles of private investment and official development assistance to create an enabling environment for development. Official development assistance remained an essential part of the development equation and its decline was disturbing. Social development was important, and foreign private investors could be encouraged to extend the practice of socially productive investment. Ways had to be found to build into a process of "globalization with equity." The private sector bore responsibilities for achieving more equitable solutions.
Monsignor Martin said the Holy See welcomed the initiatives taken by international financial institutions concerning the heavily indebted poorest countries. The problem of debt repayment still distorted the process of development in many countries. Increased corruption and the lack of adequate regulatory controls on international financial markets, and the need to reduce military expenditure, were also issues that needed to be addressed.
MIRTHA VILLANUEVA, Deputy Minister for Planning and Economy of Cuba, said development should indeed be at the centre of attention of United Nations work. Private interests had to be set aside, and common sense allowed to prevail; valid projects should be developed based on each country's individual situation, rather than simply by dictating rules. Cuba had been subjected to a series of tendentious and false ideas internationally; the Government in fact sought humane social and economic development, and there had been since 1989 a deep transformation of the country's economic structure. GDP had
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unfortunately fallen by some 35 per cent between 1989 and 1993 as a result of the collapse of the Soviet Union; the response had been a set of strong measures aimed at reviving economic activity, including steps to permit non-State businesses and other measures, and recently economic growth had resumed. Direct foreign investment had increased; but there also were difficulties imposed purposely from outside in the form of the senseless 37-year-old blockade inflicted by the United States; Cuba hoped for the prospering of new and better ideas internationally.
FRANCES RODRIGUES, Deputy Minister for Foreign Affairs and Cooperation of Mozambique, said the successful conclusion of the peace process in Mozambique, followed by general elections, had been an important achievement. However, formidable challenges still lay ahead, such as the strengthening of the institutions responsible for the promotion and consolidation of democracy; the provision of basic infrastructure; and institutional capacity building, both at the local and national levels. National efforts needed to be harmonized with economic initiatives at regional level. Mozambique believed that there would be no development without an adequate provision of financial resources in the form of official development assistance and foreign direct investment and trade. Yet it was heartbreaking to note a large number of African countries had undertaken painful structural adjustment programmes only to have their efforts countered by a real decline in financial flows. This was a clear indication that domestic policies alone would not be sufficient to reverse the critical economic situation many developing countries found themselves in. Mozambique added its voice to others urging the Bretton Woods institutions to explore all available avenues that might lead to a coherent, consistent and durable solution to the external debt problem to help boost the economies of countries concerned.
BAKYTBEK BIMANBETOV, Director of the State Committee on Investments of Kazakhstan, said numerous measures had been taken by the country towards structural economic reform, including emphasis on foreign investments in the oil, metallurgical, transport, and communications sectors. A Kazakstan Investment Summit had been held in June, with Chevron as the official sponsor, whose goal was to establish direct dialogues with major businesses around the world; in addition, a law passed in February on State support for direct investments guaranteed for such investments a system of privileges and preferences intended to create a favourable investment climate. A list of target industries included industrial infrastructure, processing industries, agriculture, and commercial housing, health-care, and educational establishments. It was hoped that a new business climate would result, with understandable principles and good long-term stability that would appeal to foreign investors; a considerable flow of such investments was needed for the country's economy, which was undergoing transition to a market system.
F.S. ANTEZANA, Deputy Director-General of the World Health Organization (WHO), on behalf of Director-General Hiroshi Nakajima, said health status was
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directly related to economic growth and to people's access to the benefits of that growth. WHO made a major contribution to ensuring safe, good quality, health-related products through its normative activities. It had built up its collaboration with the WTO and had been formally granted observer status in its committees on sanitary and phytosanitary measures and on technical barriers to trade. WHO's role was not only to provide and help apply much-needed standards for quality and health protection, but also to collaborate with health authorities so that new commercial activities contributed to greater equity in access to health care. Interaction between health and trade should be a two-way process from which both sides could benefit. Part of the gains from trade should be channelled to improving health and living conditions, especially of those people left out of the development process.
RODERICK ABBOTT, of the European Commission, said that participation of least-developed countries in international trade and investment remained worrisomely low, and for the European Community this was a serious issue which went to the heart of the credibility and effectiveness of the multilateral trading system. For its part, the Community was ready to make commitments with a view to further opening its markets to imports from all least-developed countries and in this regard had studied the different options advanced so as to help define possible steps in a coordinated way within the framework of the WTO and UNCTAD. If the international community was to provide such countries with a coherent and credible international framework against which national responsibilities could be discharged, then the role of market access became significant because it provided a stable, predictable framework within which the private sector could plan investment, production, and trading strategies. At a political level, least-developed countries should be given a clear sense of ownership and participation in the global trading system, and market access for such countries should take place within a framework of coherent policy responses.
PRAKASH SHAH (India) said that a large number of developing countries had embraced liberalization in their economies and adopted a market-oriented approach. The sad fact was that the international community had failed to deliver on their promises of creating a favourable external environment so necessary for the new philosophies of globalization, liberalization and market-oriented approach to succeed. The task was to create a favourable and supportive environment for the large number of less privileged countries to achieve growth and development. A mere enabling environment would not suffice. It was ironic that at a time when the markets of developing countries and their emergence as future potential growth areas were the focus of attention of the North, their voice in global policy making was actually diluted. Globalization had increasingly shifted the centres of power to the richer industrialized countries, a fact that was particularly evident in the deliberations of the Bretton Woods institutions and in the WTO.
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JUAN CARLOS SANCHEZ ARNAU (Argentina) said Argentina's imports between 1990 and 1996 had recorded the highest rate of growth in the world, while inflation had fallen significantly. But unsought secondary effects had spread along with world trade: patterns of consumption and social aspirations had emerged that not all countries were in a position to finance in the short term, and low-yield forms of production that could not survive in the face of strong foreign competition had disappeared. That had led to unemployment. Thus, despite growth rates in Argentina of more than 6 per cent a year, and despite the dynamism of the country's foreign-trade sector, the unemployment rate had risen over the past decade from 6 or 7 per cent to around 17 per cent. Did international financial cooperation not require instruments to confront such secondary effects as well as an improvement of labour standards to ensure that international competition did not overly penalize some countries? It was getting to the point in some cases where the negative secondary factors could outweigh the benefits of globalization. Greater emphasis was needed on global responsibility and global economic stability, and on avoiding economic policy changes in advanced countries that had drastic negative effects on developing countries.
BENEDIKT JONSSON (Iceland) said the United Nations system for economic and social policy making needed to be strengthened; promotion of free trade and the abolition of trade barriers were imperative for a just and equitable economic and social situation around the world; Iceland now chaired the Group of the Nordic and Baltic countries in the World Bank's Development Committee, and emphasized the importance these countries attached to development cooperation; it was also essential to focus strongly on human development strategies, such as the strengthening of education systems, health services, and women's rights. It was further essential to broaden the coverage of private financial flows. Iceland believed that it was in the interest of developing countries to support an effective and sensible governing of fishing on the high seas, as States which used the same stocks of this resource must agree on a total allowable catch and divide it among those coastal States which had a real interest and depended heavily on fisheries.
CAROL BELLAMY, Executive Director of UNICEF, said there was no economic issue more pressing than poverty. The world had begun to understand that unless it was eradicated, much of humanity was doomed to perpetual misery. The inequities were appalling: in a $25 trillion global economy, a quarter of humanity, including some 650 million children, was living in conditions of unspeakable squalor and duress. Dramatic progress had been made, but much more needed to be done. Progress in eliminating the worst aspects of poverty had been anything but steady, and there were ominous countervailing trends. At a time of vastly expanded trade and investment, the least developed countries, with 10 percent of the world's population, had seen their share of world trade drop by half in two decades to 0.3 per cent. The Human Development Report suggested that extreme poverty could be eradicated over the next 10 years at the cost of $80 billion, half of which would cover universal
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access to basic social services, the other half transferred to raise people's incomes to a level high enough to bring them out of extreme poverty. This was an encouraging view. If all countries carried through on the pledge to earmark 0.7 per cent of gross national product for development assistance, that would produce $95 billion, $15 billion more than needed per year to eradicate extreme poverty.
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