SECRETARY-GENERAL STRESSES PROMOTING ECONOMIC AND SOCIAL PROGRESS AS SHARED OBJECTIVE OF UNITED NATIONS AND BRETTON WOODS INSTITUTIONS
Press Release
SG/SM/6528
ECOSOC/5751
SECRETARY-GENERAL STRESSES PROMOTING ECONOMIC AND SOCIAL PROGRESS AS SHARED OBJECTIVE OF UNITED NATIONS AND BRETTON WOODS INSTITUTIONS
19980418 CHECK AGAINST DELIVERY In Special Meeting of Economic and Social Council, Kofi Annan Calls For Keeping Benefits of Open Financial Markets while Reducing Risks of CrisesFollowing is the text of Secretary-General Kofi Annan's statement to the special high-level meeting of the Economic and Social Council with the Bretton Woods institutions, today at Headquarters:
I am delighted to see you all here. I know you have had a busy few days in Washington, D.C. and I should like to thank our very distinguished group of panelists for taking the time to join us here at the United Nations.
I would like to express my appreciation for the excellent relationship that I have enjoyed with both Michel Camdessus and James Wolfensohn since I assumed my responsibilities as Secretary-General.
I am grateful to both of them not only for their friendship, but also for the cooperation they have fostered between the United Nations, the International Monetary Fund and the World Bank. Both of them have addressed the Economic and Social Council in the past and I am delighted that Michel Camdessus is with us once again.
Many of you are returning from the spring meetings in Washington. This interchange between the diplomatic, financial and developmental cooperation communities will enrich us all. This will help break the more strait-jacketed ways of thinking and move us forward in the search for the common good, in the eradication of poverty and the creation of conditions of stability and predictability.
Finance is central to the development process, but development finance is also an area where, in recent years, the thinking has changed fundamentally; and where, at the same time, dramatic developments have taken place. There is now universal recognition of the developmental role of
- 2 - Press Release SG/SM/6528 ECOSOC/5751 18 April 1998
private international capital flows. They have brought with them tremendous benefits. Big strides have been made in improving the lives of millions of people.
Yet, as the recent financial crisis in Asia has shown, there are huge risks involved.
There are, as I see it, three main areas of concern in the implications of the recent crisis in Asia. First and foremost, there is the situation of the crisis countries themselves.
One might ask whether the penalty imposed on these countries in terms of lost output and lost jobs is commensurate with the failings of omission or commission they may have had.
I think we are all preoccupied by the harsh toll these crises impose on an entire citizenry. Those hardest hit are usually the most vulnerable. Job seekers who have migrated during the good times; the poor who can no longer pay for the higher priced basic necessities; those groups which are employed in the least organized sectors of the economy. Beyond this is the continuing threat of social strife, breakdown of law and order and loss of self-esteem.
Macro aggregates do not capture the trauma that individuals and families have to undergo as a result of crisis of this nature.
It is not only the countries and their citizens directly concerned that bear the consequences, but the world at large. And here again, I perceive a major area of concern.
The precise impact of the Asian crisis cannot be separated from all other independent developments affecting the world economy. Yet it is becoming increasingly apparent that other developing and transition countries -- far removed geographically and even economically from their Asian colleagues -- will be affected more severely by the crisis than their developed counterparts. In other words, the collateral damage is greater in developing countries than elsewhere.
A third area of concern can be found in the speed of deterioration and recovery.
A perceived failure to adhere to externally determined standards of creditworthiness can lead to instant loss of international confidence.
There are signs that such confidence can be regained surprisingly rapidly; but not nearly so quickly as it is lost, nor to the same degree. The ensuing short-term losses to an economy not only undo previous gains; they
- 3 - Press Release SG/SM/6528 ECOSOC/5751 18 April 1998
also harm growth prospects in the longer term. And there is a real risk that successes built up over years in reducing poverty will be reversed.
I see these fundamental issues arising from the way the current international financial system itself operates, and they way risks and rewards are balanced.
The question to be addressed is whether we can find ways to preserve the benefits of open financial markets while reducing the risks of crises and designing tools to deal with them that will be less costly in human terms. This is a matter on which our institutions -- among many others -- should pursue a wide-ranging exchange of views.
The United Nations has a role to play both in easing the impact of such crises and in the longer-term preventive aspects. Short-term concerns can lead to a neglect of the fundamentals of longer-term development. These must be built around human capital investment and broader dimensions such as respect for human rights, institutional development as well as participatory democracy.
When the General Assembly took the decision two years ago to hold this meeting, it could not have known how timely the event would prove to be. The financial turbulence in Asia has presented an enormous challenge to the international community and to the countries directly involved.
However, the ensuing economic, social and developmental -- as well as political -- consequences of the crisis have served as reminders of the interrelationships between the responsibilities and work of our three organizations. Moreover, the international ramifications are becoming more apparent every day. They are vivid proof of the risks that come with the benefits of globalization. They are also stark evidence that closer cooperation between the United Nations and the Bretton Woods institutions is imperative.
In Washington, the Interim and Development Committees and the Group of 24 consider global financial issues. These intergovernmental mechanisms have different purposes and involve different actors from the processes here in the United Nations. But they are not unrelated. Our organizations share the objective of promoting economic and social progress throughout the world.
We bring to our work different capacities and, in some areas, different perspectives. Yet these differences are rapidly diminishing. The United Nations is no longer constrained by the East-West rivalry of the past, while membership of the International Monetary Fund (IMF) and the World Bank is becoming increasingly universal. Even more important, there is now far greater consensus on the nature of the development process.
- 4 - Press Release SG/SM/6528 ECOSOC/5751 18 April 1998
Known by relatively few but affecting so many, cooperation between our respective institutions is strongest where it counts most -- at the field level. I firmly believe we have made great progress -- and continue to do so -- in ensuring that the operational activities of the Bank, the Fund and the United Nations system are mutually supportive.
This has been most evident in post-conflict peace-building; but increasingly, the Bretton Woods institutions, the United Nations and the specialized agencies are working together to enhance coherence and impact across the full range of our development efforts.
I look forward to the discussions here today and, even more importantly, to their continuing in the future.
With our overriding commonality of concerns and approaches, it is only appropriate that we should join forces to pursue our common objective. So much more can be achieved by acting together than by acting alone, or separately.
* *** *