NEED FOR MECHANISM TO MITIGATE UNPREDICTABILITY OF GLOBALIZATION STRESSED BY SPEAKERS, AS ASSEMBLY HIGH-LEVEL MEETING BEGINS
Press Release
GA/9437
NEED FOR MECHANISM TO MITIGATE UNPREDICTABILITY OF GLOBALIZATION STRESSED BY SPEAKERS, AS ASSEMBLY HIGH-LEVEL MEETING BEGINS
19980917 Deputy Secretary-General Louise Frechette Says Stabilizing Financial Markets, Providing Protection for Most Vulnerable Are Urgent Tasks"Globalization is by no means an evil force but it is a blind one", Ali Alatas, Minister for Foreign Affairs of Indonesia, said as the General Assembly began this morning its high-level dialogue on the social and economic impact of globalization and interdependence.
Speaking on behalf of the "Group of 77" developing countries and China, he said there was no reason why there could not be a mechanism -- similar to the World Trade Organization for matters of international trade -- to monitor financial and monetary flows. That would help to mitigate the unpredictability and dire effects of globalization.
Brian Atwood, Administrator of the Agency for International Development of the United States, said there had been tremendous gains in the global economy over the past 50 years, which were the result of successful development efforts and globalization. The countries that embraced globalization most effectively were the ones that would prosper in the years ahead. However, he added, the mistake must not be made of seeing globalization as a purely economic process. It must take place in the right context, one in which people could express their social and political aspirations.
Georg Lennkh, Director-General of the Department for Development Cooperation of the Federal Ministry for Foreign Affairs of Austria said many feared that globalization endangered environmental and social standards and regional and cultural diversity. Speaking on behalf of the European Union and associated States, he also said market forces alone would not resolve the problems of globalization. Universal acceptance of certain societal values were also required, something that the high-level dialogue would facilitate, he said, adding that the United Nations provided a unique platform for such "global housekeeping".
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Deputy Secretary-General Louise Frechette said the world economy had entered uncharted waters and fear and anxiety about its future course were spreading. Globalization had brought about as many benefits as it had engendered new risks. At the present juncture, the most urgent tasks were: to restore market confidence; stabilize financial markets; support growth; endow international financial institutions with the means they required; and provide immediate protection for the most vulnerable.
Didier Opertti (Uruguay), President of the General Assembly, noted that within the present framework the dialogue reflected the need to coordinate new institutional mechanisms. It was obvious that international financial institutions had not been able to prevent the current crises and that other mechanisms, including those at the United Nations, had not been successful.
Statements were also made by the representatives of India, Germany, Japan, Ghana, Mexico, Egypt, Norway, Canada, Cuba and the Netherlands.
In other matters this morning, Helmut Schäfer, Minister of State of Germany, was appointed Chairman of the First Ministerial Round Table on National Responses to Globalization, and Percy Metsing Mangoaela, the Permanent Representative of Lesotho as the Rapporteur. For the Second Ministerial Round Table on International Responses to Globalization, Ali Alatas, Minister of Foreign Affairs of Indonesia was appointed Chairman, and Janis Priedkalns, Permanent Representative of Latvia, as the Rapporteur.
The Assembly will meet again at 4 p.m. this afternoon to continue its high-level meeting.
Assembly Work Programme
The General Assembly met this morning to begin its high-level dialogue on the theme of the social and economic impact of globalization and interdependence and their policy implications.
Discussions on the current theme began at the forty-eighth session of the Assembly and resulted in resolution 48/165, entitled renewal of the dialogue on strengthening international economic cooperation for development through partnership. By the terms of that text, the Assembly reaffirmed the need to strengthen constructive dialogue and partnership to promote further international economic cooperation for development.
It also reaffirmed that such dialogue should be conducted in response to imperatives of mutual interest and benefit, genuine interdependence, shared responsibilities and the partnership for sustainable development. The United Nations should also play a central role in facilitating such dialogue. The text further reaffirmed that the Organization had a key function in promoting international cooperation for development and bringing development issues to the attention of the international community.
The Assembly's fifty-second session, in resolution 52/186, entitled renewal of the dialogue on strengthening international economic cooperation for development through partnership, reaffirmed the continued need to strengthen constructive dialogue and genuine partnership to promote further international cooperation. The Assembly President was requested to start consultations with Member States to arrive at an early decision on the modalities, focus of the discussion and timing of a two-day high-level dialogue.
Also by the terms of that text, the Assembly invited Governments to contribute to the dialogue and to participate in it. It requested the Secretary- General, in close cooperation with Governments, the United Nations system, intergovernmental organizations and other development actors, to initiate preparation for such a dialogue as well. It decided to include in the provisional agenda of its fifty-third session, the sub-item entitled renewal of the dialogue on strengthening international economic cooperation for development through partnership.
Statements
DIDIER OPERTTI (Uruguay), General Assembly President, said recent events showed that globalization and its consequences affected all countries. The forces of global integration, and the way they were dealt with or not dealt with, would affect the future of the twenty-first century. Financial crises were related to authorities and to market players who were not subject to certain rules of prudence that should be global. The current crises were not only limited to financial markets -- they affected the world economy, trade flows, put pressure on bank reserves and, to a lesser degree, influenced the political core
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of the States affected. Many economies had not been able to evade the contagion of the present situation, he added.
In many cases, countries affected by current crises had been carrying out anti-inflationary adjustment policies with real difficulty, he said. It could therefore be seen that such efforts could not be achieved in isolation. Presently, the world was witnessing responses from groups, countries and agencies. It was obvious that the international financial institutions had not been able to prevent the current crises. Mechanisms, including those at the United Nations, had not been successful.
Today, he stressed, it was not a question of discussing globalization in terms of hypothesis or doctrine. There was now a need to be imaginative where cooperation was concerned. That was the purpose of the current dialogue. Within the present framework and in the spirit of universality, the dialogue reflected the need to coordinate new institutional mechanisms. Monetary and financial discipline in countries would not be enough to deal with current international situations.
Deputy Secretary-General LOUISE FRECHETTE said even the largest economies today were increasingly influenced by events in the poorer parts of the world. Causality ran in both directions and as a result, self-interest on both sides called for cooperative responses to the threats which now confronted the world. At the present critical juncture, the most urgent tasks were: to restore market confidence; stabilize financial markets; support growth; endow international financial institutions with the means they required; and provide immediate protection for the most vulnerable. The problems being faced today were no longer national, nor regional, but global.
She said that while crisis management was crucial, it was not enough. The world economy had entered uncharted waters and fear and anxiety about its future course were spreading. In such an insecure climate, some people were tempted to view globalization as the root cause of crisis and insecurity, or even as the embodiment of economic and social evil.
The reality was more complex, she added. Globalization had brought about as many benefits as it had engendered new risks. The real question which confronted the world today was not whether to embrace or reject globalization. The questions were: "how can we retain and build on the growth-generating forces of the market while reducing the destructive effects of volatility"; and how could the benefits of globalization be extended to those groups and individuals who were at present being left behind.
She said that while markets and related problems had become global, the reach of governments struggling to address them remained strictly local. That mismatch was at the root of many problems being faced today. If domestic markets were to realize their full potential, and if their negative effects
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were to be contained, they must be underpinned by shared values that reflected the broader aspirations of society, with clear and equitable laws enforced by an effective public authority.
At the United Nations as elsewhere, a major effort was now in progress to re-think what had been termed the "architecture" of the international system for cooperation, she said. The present generation must be equally bold and creative in adapting organizations such as the Bretton Woods institutions to the realities of today. "We must come up with answers that reflect the broad consensus throughout the international community. Only institutions enjoying solid and widespread support could be effective in creating conditions of stable and equitable growth in every part the world."
Open and well-functioning markets were not an end in themselves, she said. They were a tool in the hands of society, a tool to achieve a broader purpose. The systems and the rules designed must facilitate, and not hinder, the attainment of higher goals.
ALI ALATAS, Minister for Foreign Affairs of Indonesia, speaking of behalf of the "Group of 77" developing countries and China, said the common message of all the major United Nations conferences and summits in the early 1990s was that development, to have any meaning at all, must be people-centred and people-driven. Work was under way to revitalize the United Nations in the social and economic fields so that it would remain a vital and effective instrument of international cooperation for development. Yet, despite those constructive steps, the cause of development had not moved substantially forward in recent times.
Globalization had opened up tremendous opportunities for creating wealth, but its rewards seemed reserved for the strongest of economies, he continued. Even the more dynamic developing economies had seen the development gains that they earned over the decades crumble in the span of a few weeks. If the trend continued, globalization would further widen the economic gap between the developed and the developing countries. However, he firmly believed that even the most severely affected economies were capable of an early recovery.
The central challenge for the international community was to ferret out the root causes of the crisis, he said. He called for the development of reasonable but effective regulation of international money markets so that they would become more open and transparent, and the establishment of a mechanism to mitigate the unpredictability and dire effects of globalization.
Noting the existence of the World Trade Organization for matters of international trade, he said there was no reason why there could not be a similar mechanism to monitor financial and monetary flows. "Globalization is by no means an evil force but it is a blind one. Like the winds of change in the ocean of history, it can shipwreck us or carry us to our intended
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destination. The developed and developing countries are all in the same boat. Our fate depends on how well we work as a team in trimming the sails."
Teamwork meant partnership, he stressed, adding that the envisioned global partnership for development could be formed only when "we are able to accommodate one another's anxieties and aspirations as a result of a mutual understanding born of sincere dialogue, such as the dialogue we are holding today. Through this dialogue let us begin to tame the winds of globalization."
GEORG LENNKH, Director-General of the Department for Development Cooperation of the Federal Ministry for Foreign Affairs of Austria, speaking on behalf of the European Union and Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Iceland, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, said that globalization had generated positive developments for the world economy. It had promoted a more efficient allocation of resources and, thus, higher growth worldwide. Globalization led to rapid dissemination of information and technology and a proliferation of skilled jobs.
However, it also entailed risks, by increasing countries' vulnerability to financial instability, and posed challenges, he went on. Finding means to address the increased marginalization of the least developed countries and the increased income disparity within countries, were notable challenges. In addition, many feared that globalization endangered environmental and social standards and regional and cultural diversity. Market forces alone would not resolve the problems of globalization. Universal acceptance of certain societal values were also required -- something that the high-level dialogue would facilitate. The United Nations provided a unique platform for such "global housekeeping".
European integration should be viewed as a means by which European countries could more effectively influence their future in the global market, he said. It had acted as a "catalyst for openness", stimulated competition, accelerated industrial reform and provided benefits for consumers. The fight against unemployment remained a priority for the European Union, and the member States of the Union had intensified their efforts to address structural unemployment, in particular as it affected the young, the long-term unemployed and women.
The development of means to steer the international economy were still in their infancy, he said. Recent events had revealed severe weaknesses in the functioning of the international financial system. The increased integration of global capital meant that strengthened surveillance, crisis management and best practices for banking regulation and supervision at the national level, were necessary. Least developed countries could not attract foreign investment required to build the infrastructure they needed to reap the benefits of globalization. There was, therefore, a continued need for substantial official development assistance (ODA) flows so the reality of
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globalization would benefit all. The European Union would assist developing countries, with due regard to their choices and in full conformity with the provisions of the World Trade Organization.
MONTEK SINGH AHLUWALIA, Minister of State and Member of the Planning Commission of India, said the long-term development of a large part of the developing world had fallen below aspirations. The continuing financial crisis in East Asia, with its continuing ripple effect on other parts of the world made it difficult to claim that the system was working well to assure short-term stability.
As far as long-term development was concerned, although significant advances had been made, they did not tell the whole story, he said. There was a need to identify the underlying constraints which were holding up economic growth in large parts of the developing world. The domestic constraints had to be addressed by the countries themselves, while the external constraints had to be addressed jointly with the world community, making the continuing dialogue more important than ever before.
The concerns of such a dialogue needed to embrace a range of issues including the flow of external financial resources, he said. Official development assistance for developing countries and the flow of non- concessional resources from multilateral institutions such as the World Bank and the regional development banks had declined in real terms. In addition, developing countries trying to pursue open economic policies needed assured access to markets in industrialized countries.
Apart from those long-term issues, he went on, some urgent concerns raised by the Asian currency crisis, which had shaken confidence in the stability of the international financial system and its ability to manage crises once they erupted had to be addressed. Recognizing problems, the international community was currently engaged in defining an appropriate architecture for the international financial system which would increase confidence in the system.
HELMUT SCHÄFER, Minister of State of Germany, said that while market economics had won the day, if the necessary structural adjustments were not made in good time, it could easily lead to setbacks and crises. Upheavals of this nature were in fact a consequence of a dynamic process, making for enhanced efficiency and greater prosperity for the world as a whole.
Referring to ideas spelled out by the Group of Seven major industrialized countries, he said developing countries were held to have a fundamental responsibility for their own development, particularly in providing conditions conducive to sustainable development. There was also a recognition that the international community must support the efforts of developing countries in a spirit of common purpose and efficiency. As the world became increasingly globalized, promoting private enterprise had a
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pivotal role to play. Enhancing the productive skills of poor people and efforts to remove the structural causes of poverty, would, in the medium and long-term, help dismantle and overcome obstacles to development.
Heavy debt burden was all too often a serious obstacle for countries' development, he said pointing out that Germany had already implemented or pledged debt-cancellation of least developed countries in Africa. For Germany, the link between adequate economic policy reform and debt relief was of fundamental importance.
Questioning whether it was possible to establish better crisis- prevention mechanisms, he said the international community needed to consider in what areas international standards should be established or further developed. That was required not in order to curb the dynamism of economic forces or impose rigid rules, but to allow action to be taken to prevent crises from arising.
BRIAN ATWOOD, Administrator of the Agency for International Development of the United States, said that as the world contemplated such events as the crises in Asia and the Russian Federation, some were questioning the desirability of free markets and the increasing interdependence of national economies in the wake of globalization. The problems being faced today should not define the meaning of that process. The benefits still vastly outweighed the costs.
He said globalization meant: the availability of cheap and rapid communications; cost effective transportation systems; open markets that made possible the global dissemination of ideas; and technology and investment. It could also provide the spur of competition to become more efficient -- to develop human capacity and national financial, political and legal systems. That sense of the need to compete, when combined with more effective international efforts to help poor countries achieve sustainable development, could produce a growing and stable global economy.
In a globalized world, governments must recognize that they had less control over their country's economic trends, he continued. The current crisis must be placed in its proper perspective by understanding the tremendous gains in the global economy over the past 50 years -- the result of successful development efforts and globalization. No nation could isolate itself from those positive forces, nor should they want to. The countries that embraced globalization most effectively were the ones that would prosper in the years ahead.
The international community must not, however, make the mistake of seeing globalization as a purely economic process, he said. It must take place in the right context; one in which people could express their social and political aspirations and could shape the world their children would inherit. He added that President William Clinton had made clear this week in his
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remarks to the Council on Foreign Relations, that the United Sates remained ready to help countries that helped themselves. The United States was determined to remain fully engaged in the effort to achieve global economic well-being.
KOICHI HARAGUCHI, Deputy Minister for Foreign Affairs of Japan, said that the most important trends in the world today were globalization and increasing economic interdependence, which had become more pronounced as a result of the conclusion of the cold war. For example, today some $50 billion was transferred around the world every hour, $1.2 trillion every day, $300 trillion every year. Equally important was information technology, he said, noting that the number of host computers that supported the Internet had grown more than forty-fold from 1991 to 1997.
Noting that globalization freed people from the constraints imposed by national boundaries, he said it had also destroyed the balance between the drive to increase efficiency and consideration for the weak -- or, to put it in more general terms, between freedom and equality. Competition produced winners and losers in a much harsher manner and enlarged the gap between the poor and the rich.
In order to benefit from globalization while minimizing its damaging effects, internationally recognized laws must be introduced, such as democratic procedures, transparency, accountability, the rule of law, and the prevention of corruption, he continued. To address those damaging effects, his Government had put forth the idea of the New Development Strategy. At its core, the idea called for a partnership between recipient and donor countries and a wider range of international cooperation, while encouraging ownership of the development process by developing countries.
The Strategy advocated combining a comprehensive and an individual approach to development, he said. His Government, with others, would attempt to implement the Strategy in Africa, where the possibility of marginalization was most serious. To that end, the Second Tokyo International Conference for African Development (TICAD II), organized by Japan in cooperation with the United Nations and the Global Coalition in Africa, would be convened next month with the theme "Poverty Reduction and Integration of Africa into the Global Economy".
DAN ABODAKPI (Ghana), Deputy Minister of Trade and Industry, said the process of globalization had become irreversible, and had affected all sectors of the global economy. As the trend towards greater interdependence increased, developing countries had no choice but to integrate into the world economy. They must acknowledge that their destinies were linked to those of other nations. The beneficial link of the global economy to developing countries was a broader-based development over the medium to longer term.
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However, potential benefits would not come easily, and there were considerable risks involved, he said. The increasing flow of foreign direct investment played a crucial role in the global economy, but it was not evenly distributed. Sub-Saharan Africa had largely been bypassed, and the benefits of globalization, as far as Africa was concerned, appeared an illusion.
Similarly, the benefits of the Uruguay Round of Multilateral Trade Negotiations would not automatically flow to all countries, he said. Sub-Saharan African economies were not dynamic enough to adjust to the new order. Their trade structures were characterized by a high dependence on a narrow range of primary commodities as their main export items, persistent balance of payment deficits, and mounting foreign debt -- combined with fundamental development issues.
Yet African countries remained optimistic about the long-term benefits of globalization, he said. They had acknowledged the need to invigorate their development, and most sub-Saharan African countries were pursuing growth- oriented adjustment programmes to insure their early integration into the global economy. Although it was a Herculean task to maintain the momentum of those efforts, they could facilitate the continent's growth if they were spurred on by specific programmes by the developed partners. Sub-Saharan African countries required a major push to supplement their efforts at reversing the downturn of their economies.
ROGELIO MARTINEZ AGUILAR (Mexico) said developed countries should take all needed measures to reactivate the world economy with stability in the financial markets. Also, the Bretton Woods institutions, particularly the International Monetary Fund (IMF) and the World Bank, must adapt themselves to be in a position to confront, in an effective and timely manner, the monetary, financial and developmental challenges prompted by the crisis induced by large-scale capital movements. Transparency and governance of the monetary, financial and trade systems at the international level were of the utmost importance. International institutions must match the efforts of countries by launching a fundamental review of their organizations, policies, procedures and financial capabilities.
Mexico had reiterated its commitment to continue handling its economic policy in a responsible manner to ensure stability and growth, he said. The international community should also act decisively so that the international financial crisis did not deteriorate into a world recession. Parallel to that urgent and decisive action, was a need to continue working in the following areas: strengthening North-South cooperation and South-South cooperation; reversing the decrease of core resources for development and ensuring predictable, continuous and reliable assistance flows; enhancing access of developing countries to global markets, direct investment flows and technological transfers; and providing a lasting solution to the external debt problems of the developing countries.
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He said high priority should be attached to the systematic, comprehensive and high-level international intergovernmental consideration of financing for development, as proposed by the General Assembly. That would provide the opportunity of ensuring the necessary means to promote international cooperation in a context of solidarity and shared responsibilities.
DAWLAT HASSAN (Egypt), Assistant Foreign Minister for Economic Affairs and International Cooperation, said the meeting was an excellent opportunity to exchange views and foster fruitful and constructive dialogue based not on confrontation, but on shared responsibilities and genuine partnership. The forces of globalization had brought changes on the global economic scene, giving rise to vast opportunities and grave challenges and risks. For the majority of developing countries that were not competitive to integrate their economies with the global economy, globalization represented enormous uncertainties to their endeavours to achieve social and economic progress. With their access to markets, financial flows and technology severely limited, their economic growth had been stifled. Moreover, in the process of international economic decision-making, where their participation would enable them to obtain redress for their deprivations, developing countries were marginalized. That trend had to be rectified.
To adjust to the new focus of integration, developing countries had recognized that self-reliance and national effort were imperative in the global context, she said. A wide range of reforms and structural adjustment policies had been adopted, often at high social costs. In addition to pursuing economic growth, priority was given to people-centered development, reducing poverty and increasing productive employment, particularly in Africa. It was necessary to resist the protectionist demands of those opposed to competition and fully preserve the letter and spirit of multilateralism.
LEIV LUNDE, State Secretary for International Cooperation and Human Rights of Norway, noting the large number of developing countries who were marginalized and thus unable to share the benefits of the global economy, said it was clear that so far the greatest benefits of globalization had been garnered by a small minority, while many were worse off than before. "The assumption that globalization is a process that benefits everyone has proven to be utterly untrue", he said. "The Asian crisis clearly illustrates the shift in economic powers away from national governments to stockmarkets and other actors with little or at least unclear responsibility for the common good."
The reduced significance of national boundaries also represented a challenge to national identities, traditions and culture, he continued. While there was no way back to yesterday's world, the globalization process could and must be managed. At the national level, there must be investment in both human resources and physical infrastructure and promotion of good governance, democracy and human rights. "The forces of globalization may reduce the
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sovereignty of individual States, but they will never make them redundant," he added.
Internationally, there was no alternative to strengthening multilateralism, he said, adding that international debt relief schemes must be improved. His Government was actively seeking to counter widespread "donor fatigue" and striving to make the multilateral organizations more sensitive to the needs and aspirations of the developing world.
HUGUETTE LABELLE, President of the International Development Agency of Canada, said globalization was the most important socio-economic phenomenon of the current generation. Despite the immense wealth that it had generated, globalization was also characterized by profound contradictions. While the world was becoming smaller, it was not more equitable or economically and socially secure. It was also clear from recent events that even for those who had benefited from it, the penalties of rapid globalization could be heavy and swift.
Another profound change wrought by globalization was the reduction in the power and relevance of the nation State, and in its ability to effect change and guide the course of human events, she said. She supported the establishment of mechanisms to protect economies from the volatility of global financial markets, and called for the international community to seriously address the troika of poverty, conflict and environmental degradation.
Developing countries had been working hard to create a situation that would be favourable for investment, and Canada would continue to support countries in those efforts, she said. Sources other than public funding should be sought for countries developing their physical infrastructure. Developing countries should guide their development with the help of developed countries.
CARLOS DOTRES MARTINEZ, Minister of Health of Cuba, said the recent Non-Aligned Movement Ministers' Statement for a New Millenium adopted at Durban, South Africa, rightly indicated that "we must be careful about the forms of globalization that impose solutions that pay no heed to historical, cultural and psychological elements" of national economies. He also went on to say that "globalization cannot wash away everything it finds along the way, that it must not entail uniformity, and that its effects must be channelled, not only by the big and powerful nations but also by the representatives of the majority of humankind".
He said the most dangerous element in the current globalizing process lay in its selectivity. It helped certain economies, but a large part of the world remained in abject poverty, getting little or no profit from the increased exchanges and flourishing markets so talked about by the apologists of neo-liberalism. A typical example was Africa, where many of its countries were absent from the flows of growth that other areas benefited from. In
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other third world regions, where progress was statistically enthroned, and where economic growth rates were high, a large segment of the population living life under poverty levels was an ordinary phenomenon.
He said the North-South developmental disparity showed shocking differences in the 1990s and always to the detriment of the South. Another major aspect of developing countries was undeclared war and conflicts fuelled by an unjust economic and political order capable of destabilizing and ruining a country. A clear instance of that was the United States blockade on Cuba, which had cost his country's economy billions of dollars. Quoting his President, Fidel Castro, he said that the bottom line was "not the struggle against globalization as an unavoidable phenomenon, but the struggle for a human and fair globalization".
JAAP RAMAKER (Netherlands), reading the statement of the Minister for Development Cooperation, Eveline Herfkens, said that today multilateral cooperation had come under pressure. Instead of a policy goal in its own right, it had become one of many policy instruments, one that was to be used when conducive to the national interest, representing what could be referred to as a "shopping mall mentality".
In a globalizing world, peoples were faced with problems that could not be tackled single-handedly, even by the most powerful of nations, he said. The Netherlands sought to promote the institutions of world-wide cooperation, with the United Nations system at its core. However, agencies should no longer think in terms of their own territory, and should not be driven by donor envy. The World Bank, the United Nations Development Programme (UNDP) and the Food and Agriculture Organization (FAO) should pool their forces without reservation.
He said Member States, particularly the affluent ones, must breathe new life into multilateral cooperation. Those who could, should secure that all developing countries, especially the poor ones, could take part in the process of global integration on equal terms and also ensure that development be sustainable. It should not just be sustainable in terms of ecology, but also in a wider sense. He advocated development that included basic human needs, that respected human rights, that built human capacities, that was socially responsible and that did not mortgage the choices of future generations. Multilateral cooperation must be able to bridge the gap between the ever richer and the eternally poor. That concept lay at the core of the discussion.
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