ASSEMBLY PRESIDENT STRESSES TIMELINESS OF HIGH-LEVEL DIALOGUE ON ECONOMIC AND SOCIAL IMPACT OF GLOBALIZATION

17 September 1998

Press Release
GA/SM/61

ASSEMBLY PRESIDENT STRESSES TIMELINESS OF HIGH-LEVEL DIALOGUE ON ECONOMIC AND SOCIAL IMPACT OF GLOBALIZATION

19980917 Didier Opertti (Uruguay) Says There Is Need to Articulate New Institutional Mechanisms for World Economy

Following is the statement, translated from Spanish, delivered by the President of the General Assembly, Didier Opertti (Uruguay), at the high-level dialogue on the theme of the social and economic impact of globalization and interdependence and their policy implications:

The General Assembly will today consider an issue that is on the minds of leaders and policy-makers throughout the world. Recent events have demonstrated that globalization and the consequences of globalization affect all countries. The forces of world integration and the ways in which we deal with them, or fail to deal with them, will affect the future of the world in the twenty-first century. This Assembly, which is a kind of world parliament, has a special responsibility to include everyone and to ensure that the international dialogue on this critical issue, is indeed, universal.

Every day we hear disturbing reports concerning the situation which the various financial markets are experiencing.

The instability of the stock markets reflects, within individual countries, the specific and dramatically tangible effects of a crisis resulting from a combination of many factors -- some domestic, peculiar to each State, others external.

Some of these factors stem from decisions taken by the competent authorities, others from the actions of market operators who, in most cases, are not subject to certain universally applicable rules of prudence.

The globalization of the market, which is generally regarded as having resulted in an improvement of the global economy, nonetheless demonstrates that there have been some negative implications, some of which remain localized, but nearly all of which have had effects and repercussions of

greater or lesser -- but always significant -- importance far beyond a State's own boundaries.

We need only to refer here to the so-called "tequila effect" or to the crisis in South-East Asia.

As for the first, we need only recall that it led to the direct involvement of international financial institutions such as the International Monetary Fund, the World Bank and the Inter-American Development Bank, all of which provided assistance in addition to that provided by sympathetic countries.

As for the South-East Asian crisis, which was originally diagnosed as a short-term crisis, the recovery has yet to materialize; what began as a national problem, turned into a regional one and has now taken on international dimensions the effects and even the outcome of which is, as yet, hard to predict.

Naturally, the crisis is not confined only to the financial markets, but spills over into the economy as a whole, having a negative impact on investment flows, putting pressure on central banks' reserves, causing trade to contract, producing unemployment, exacerbating the resulting social problems and influencing to a greater or lesser degree the political discourse in the affected States.

The economies of even the largest States have not escaped this ripple effect, or contagion as it is often called.

This is to some extent logical and to be expected in a world in which the market has been transformed and is no longer subject to any limits other than those of free competition, and where unrestricted circulation of assets and securities has become the prevailing paradigms or models.

If to this we add that, in many cases, the affected countries have gone to great pains to pursue anti-inflationary adjustment policies, it becomes obvious that the solution to this financial and economic problem cannot be achieved by the economies concerned on their own.

This has been made evident by the recent measures adopted by the Group of Seven and the steps taken by the Government of the United States in order to lend its financial assistance.

Consistent with the position of the Ministers of Finance of the region who met in Washington, D.C. two weeks ago, the Rio Group at its most recent summit, in Panama, focused its attention on this matter and called for a specific answer from the competent bodies.

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We have thus far witnessed spontaneous or institutional responses from ad hoc groups of countries or from these bodies within their ability to act.

It has in any event become clear that the international financial system has not been able to avert the current crisis situation, that the United Nations and other international mechanisms for cooperation have not been able to act on the causes of the problem with complete efficacy, and that, ultimately, the Bretton Woods institutional construct has not been up to the task of countering these negative effects, which were not engendered at the international level by globalization, but are closely associated with it.

So now we must not cry over spilt milk, or, still worse, rely on everyone's individual efforts acting alone.

In our view, this is not a matter of debating globalization from a theoretical or doctrinal standpoint.

That might be of relevance as a theme for academic debate, which is always welcome.

Yet it is clear that that would not really help us at this moment, when the challenge facing us is to devise and adopt concerted systematic measures on the basis and cooperation, needed now more than ever.

This dialogue is thus very timely.

It may lead to new ideas about United Nations programmes -- the United Nations Development Programme (UNDP) and other agencies such as the United Nations Children's Fund (UNICEF) and the United Nations Population Fund (UNFPA), International Fund for Agricultural Development (IFAD) and others -- as well as about the need to devote sufficient attention and resources to them to make an impact in the creation and deepening of the so-called "international enabling environment", to which the United Nations has assigned particular importance, and which today has a broader scope than previously within the framework of the principle of universality.

This dialogue may also produce suggestions and recommendations for the focusing of future activities by the Organization in this area.

Perhaps the most important aspect, however, will be the need to articulate new institutional mechanisms, able to anticipate and, where necessary, avert, through effective tools for the monitoring and assessment of cross-border transactions, which, as they grow and become more sophisticated, require, like urban traffic, new systems of signalling with warning lights and signals, and, in some extreme cases, stop lights, as has rightly been pointed out by a distinguished international analyst.

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Fiscal and monetary discipline by countries will not suffice to avert situations such as those afflicting the international economy today.

We will have to think of the adjustments needed in the post-war institutional frameworks, and the United Nations, with the active participation of all its Member States, cannot be absent from this undertaking. Its accessibility, its universality and responsibility within the process of ordering international political, economic and social relations, make it uniquely qualified for this endeavour.

Of course this need to find new patterns and better instruments to promote the functioning of the international financial system is not fundamentally different from the reform-minded and modernizing inspiration for the current exercise to revamp the United Nations Security Council.

I earnestly hope that, at the conclusion of this meeting, every participant here will feel that we are capable, between us all, of coherently resolving the problems attending the dynamic imposed upon us by events, without sacrifice of the fundamental principles and values of our Organization.

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