INTERNATIONAL COMMUNITY MUST TACKLE WIDENING GAP BETWEEN RICH AND POOR BOTH WITHIN AND BETWEEN NATIONS, SAYS LOUISE FR+CHETTE
Press Release
DSG/SM/14
GA/9439
INTERNATIONAL COMMUNITY MUST TACKLE WIDENING GAP BETWEEN RICH AND POOR BOTH WITHIN AND BETWEEN NATIONS, SAYS LOUISE FRÉCHETTE
19980917 Deputy Secretary-General Tells Assembly High-Level Dialogue This Is Perhaps Most Important Challenge as New Millennium ApproachesFollowing is the statement of Deputy Secretary-General Louise Fréchette at today's high-level dialogue of the General Assembly on the theme of the social and economic impact of globalization and interdependence and their policy implications:
I welcome you all to this exceptionally timely session.
Less than two years ago, when the idea of convening this meeting was first mooted, we were all much more optimistic about global economic prospects than we are now. There were signs of improvement even in countries that had been struggling.
Since then, alas, the Asian downturn has triggered a far-reaching economic crisis, with devastating social consequences. Some of the most successful economies have been suddenly plunged into crisis.
All of us in the international community have been taken by surprise. And we seem ill-equipped to cope with the consequences.
The simple truth is that global markets, like domestic markets, can fail. Measures to correct market failure are of course needed from national authorities, not least those of developing countries. But the success of those measures in overcoming the crisis will depend -- and critically so -- on actions taken by the world's leading economic Powers.
And those Powers -- as the President of the United States acknowledged earlier this week -- cannot afford to ignore what is happening in developing countries. Even the largest economies today are increasingly influenced by events in the poorer parts of the world. Causality runs in both directions.
And so self-interest on both sides calls for cooperative responses to the threats which now confront us all.
At this critical juncture, the most urgent tasks are:
-- To restore market confidence;
-- To stabilize financial markets;
-- To support growth;
-- To endow international financial institutions with the means they require; and, last but not least,
-- To provide immediate protection for the most vulnerable.
We appeal to governments to live up to this challenge. The problems we are facing are no longer national, nor regional, but global. President Clinton's recognition of this fact in his statement on Monday is an important step forward.
But, while crisis management is crucial, it is not enough. The more fundamental challenge we face is to engage with the new realities of an increasingly interdependent world.
The world economy has entered uncharted waters; fear and anxiety about its future course are spreading. In such an insecure climate, some people are tempted to view globalization as the root cause of crisis and insecurity, or even as the embodiment of economic and social evil.
The reality is more complex. Globalization has brought about as many benefits as it has engendered new risks.
The volatility of short-term capital flows does not mean that other forms of capital flows, such as foreign direct investment, follow similar patterns or have the same economic impact. On the contrary, freer capital flows have provided a great stimulus to growth in many countries.
Yes, technology can be a threat to established cultures. But without it, there can be no growth, and no development.
Our ability to overcome this crisis depends crucially on markets remaining open. And the ability of developing countries to overcome it depends above all on markets remaining open in the industrialized world.
Thus, the real question we confront today is not whether to embrace or reject globalization. The questions are: first, how can we retain and build
- 3 - Press Release DSG/SM/14 17 September 1998
on the growth-generating forces of markets while reducing the destructive effects of volatility? And secondly, how can we extend the benefits of globalization to those groups and individuals who at present are being left behind?
We cannot predict the future, but we can learn from the past. Market forces are increasingly global in scope. In some areas, market integration has progressed at a rapid pace. But we have not yet developed institutions capable of dealing with the problems that globalization brings. Nor have we succeeded, to anything like an adequate extent, in providing real opportunities for those countries and peoples who risk being marginalized.
While markets and related problems have become global, the reach of governments struggling to address them remains strictly local. That mismatch is at the root of many problems we are facing today.
If domestic markets are to realize their full potential, and if their negative effects are to be contained, they must be underpinned by shared values that reflect the broader aspirations of society, with clear and equitable laws enforced by an effective public authority. On that we can all agree.
But, as markets go global, so the rules increasingly need to be global as well.
The creation of a rule-based international trading system has been one of the great successes of the last 50 years, and is generally acknowledged to have benefited industrialized and developing countries alike. This should remind us that multilateral cooperation, the existence of well-functioning global rules, and a level playing field that protects the weak against the strong, are necessary preconditions for spreading benefits and reducing risks. We should learn from this experience when searching for new answers to new problems.
Here at the United Nations as elsewhere, a major effort is now in progress to re-think what has been termed the "architecture" of the international system for economic cooperation.
More than 50 years ago, world leaders met at Bretton Woods and San Francisco to design new institutions for the post-war world. If those institutions have underpinned international cooperation ever since, it is because their founders were not afraid to take risks, or to challenge conventional ideas.
Our generation must be equally bold and creative in adapting those institutions to the realities of today. And we must come up with answers that reflect a broad consensus throughout the international community. Only
- 4 - Press Release DSG/SM/14 17 September 1998
institutions enjoying solid and widespread support can be effective in creating conditions of stable and equitable growth in every part of the world.
Open, well-functioning markets are not an end in themselves. They are a tool in the hand of society, a tool to achieve a broader purpose. The systems and rules that we design must facilitate, and not hinder, the attainment of higher goals.
Ultimately, the success and sustainability of market-based approaches will not be measured by stock market gains for the few. They will stand or fall by the degree to which they make possible the achievement of the promise of the Charter: social progress, better standards of life, and real freedom for humankind as a whole.
It is indeed one of the most tragic effects of the current crisis that the most vulnerable groups have been worst hit, both within countries and on the global scale.
In Indonesia alone, according to a recent International Labour Organization (ILO) study, 15,000 workers are losing their jobs every day.
The least developed countries of Asia are facing drastic reductions in much needed investment inflows from other Asian countries.
Commodity exporters in Latin America and Africa are struggling with falling prices.
Overall, it is the countries which had embarked on the most fragile economic recoveries that are now placed in the greatest jeopardy.
Each country's crisis has its own peculiar features and causes. Each country has to address its own specific problems and shortcomings. Much can, and must, be done at the domestic level.
Institutional reform, increased accountability and transparency, and the rule of law are indispensable if markets are to realize their growth-generating potential. Clear priority must be given to reducing poverty, not just for its own sake but because improving the health and education levels of the poorest means helping them to become autonomous, productive citizens.
Such domestic efforts are crucial. But even with the best policies in the world, many developing countries will not be able to improve the welfare of their population unless they also receive increased and sustained international assistance.
- 5 - Press Release DSG/SM/14 17 September 1998
The Secretary-General has repeatedly appealed for more vigorous action on debt, so as to free the most heavily indebted countries from a burden which they simply cannot carry.
Official development assistance (ODA) will also continue to be, especially for the poorest countries, an essential component of their development strategy. Both the level and the character of ODA must be improved. All partners in development -- recipient countries, multilateral institutions, bilateral donors and non-governmental organizations -- must ask themselves what forms international assistance should take, and where efforts should now be concentrated in this new era of globalization.
With over 1 billion people living in dire poverty, and the gap between rich and poor both within and between nations widening every day, the international community cannot afford to wait. This is perhaps the most important challenge we face as we approach the new millennium.
The United Nations has a duty to address it resolutely, with vision and determination. We can make a difference. I am convinced of that, and your deliberations over the next two days will help steer our work in the right direction. I wish you a very productive session.
* *** *