MINISTERIAL ROUND TABLE ON INTERNATIONAL RESPONSES TO SOCIAL AND ECONOMIC IMPACT OF GLOBALIZATION HEARS CALL FOR NEW FINANCIAL ARCHITECTURE
Press Release
GA/9441
MINISTERIAL ROUND TABLE ON INTERNATIONAL RESPONSES TO SOCIAL AND ECONOMIC IMPACT OF GLOBALIZATION HEARS CALL FOR NEW FINANCIAL ARCHITECTURE
19980918 A ministerial round table on the international responses to the social and economic impact of globalization heard a call for the rewriting of the global financial architecture, as the General Assembly this afternoon continued its high-level dialogue on the globalization question.Montek Singh Ahluwalia, Minister of State and Member of the Planning Commission of India, said financial fragility was one of the problems plaguing the economies of developing countries. The international financial system was inherently unstable and there was a need for new mechanisms to handle crises. There were no ready solutions, but a rewriting of the financial architecture was needed. A distinction should be made as to whether what was needed was a little patchwork or a reworking of the financial rules.
Brian Atwood, Administrator of the Agency for International Development of the United States, expressed the hope that many of the issues being discussed at the high-level dialogue would also be addressed during the International Monetary Fund (IMF) and World Bank joint meeting in October. It was essential to find ways to stimulate the global economy, he said, adding that the United States was considering lowering interest rates.
Georg Lennkh, Director General of the Department for Development Cooperation in the Federal Ministry for Foreign Affairs of Austria, said it had been recognized that globalization needed greater multilateral governance than it had at the moment, and it was necessary to build a global forum to deal with economic and social issues. Perhaps the solution lay in linking efforts between the United Nations and the Bretton Woods institutions, he said, as there had to be a forum where broad democratic debate was possible, and where civil society would be included.
Also participating in the ministerial round table were Mark Malloch Brown, Vice-President for External Affairs/United Nations Affairs of the World Bank; Constantino G. Jaraula, Member of the House of Representatives of the Philippines; Katherine Hagen, Deputy Chairman of the International Labour Organization (ILO); Dan Abodakpi, Deputy Minister of Trade and Industry of Ghana; Carlos Dotres Martinez, Minister for Public Health of Cuba; and Ali Alatas, Minister for Foreign Affairs of Indonesia, who was the Chairman of
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this afternoon's round table. The representative of Switzerland also spoke, as did the Under-Secretary-General for Economic and Social Affairs, Nitin Desai, and the Administrator of the United Nations Development Programme, James Gustave Speth.
The high-level dialogue will continue in plenary at 5 p.m. this afternoon.
Assembly Work Programme
The General Assembly met this afternoon to continue its high-level dialogue on the theme of the social and economic impact of globalization and interdependence and their policy implications. As part of that dialogue, a ministerial round table on the topic of "the social and economic impact of globalization: international responses" will be held from 3 p.m. to 5 p.m. (For further information on the high-level dialogue, see Press Release GA/9437 of 17 September.)
Statements
ALI ALATAS, Minister for Foreign Affairs of Indonesia and Chairman of the second ministerial round table, said national responses were not enough to manage the blind force of globalization, which did not distinguish between strong and weak countries. No country was safe from the process, hence the importance of the international response to it. A global government that would match the potency and scope of globalization should be established. It was necessary to determine what international measures should be taken to reverse the trend of marginalization.
The inadequacy of the Bretton Woods institutions in dealing with emerging problems was another issue before the international arena, he said. In that regard, the question to be asked was whether the proposal on an international conference on money and finance was viable. It was important to ensure the central role of the United Nations in global economic government, he added.
CARLOS DOTRES MARTINEZ, Minister for Public Health of Cuba, said globalization was linked to poverty and economic and social inequality. In poorer countries the effects of the process could be seen in the deterioration of trade through imbalance. Another effect was the reduction of State participation in national life. It was not easy to determine the effect of globalization on poverty, but liberalization was accompanied by great inequality -- a reduction of participation in a nation's revenue on the part of the poorest.
MONTEK SINGH AHLUWALIA, Minister of State and Member of the Planning Commission of India, said many of the issues pertaining to the international responses to the social and economic impact of globalization were long-term ones. He wanted to consider the issues that pertained to the international financial system and its system for crisis management. Financial fragility was one of the problems plaguing the economies of developing countries. The international financial system was inherently unstable and there was a need for new mechanisms to handle crises. There were no ready solutions but a rewriting of the financial architecture was needed. A distinction should be made as to whether what was needed was a little patchwork or a reworking of the financial rules.
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BRIAN ATWOOD, Administrator of the Agency for International Development of the United States, hoped many of the issues being discussed would also be addressed during the International Monetary Fund (IMF) and World Bank meeting in October. It was essential to find ways to stimulate the global economy. For its part, the United States was considering lowering interest rates. He added that there was a need to examine the capacity of the IMF and other financial institutions regarding capital accounts.
Another factor to consider was that the private sector was making decisions based on misinformation, he said. He was frustrated that there was not enough information available when the IMF made decisions. If countries were going to participate in the IMF system, they must provide true and factual information about their fiscal situation and capital accounts. Governments ought to take steps to look at the obstacles to investment and trade, and to work within the context of the World Trade Organization. It was also extremely important to collaborate to ensure that humanitarian relief was provided when it was needed.
JAMES GUSTAVE SPETH, Administrator of the United Nations Development Programme (UNDP) said globalization was a technology-based phenomenon that was also fuelled by powerful incentives. It was therefore up to the people to inject certain values into the process, while government and civil society provided rules of the road to ensure that the weak were protected, and that marginalization was avoided. More attention needed to be given to establishing norms that would make globalization supportive of human development. The United Nations was the ideal organization to take up that challenge; it should provide normative leadership. If it did not, someone else would, and would do it less efficiently. A major opportunity to address a range of critical issues would then be lost.
GEORG LENNKH, Director General of the Department for Development Cooperation in the Federal Ministry for Foreign Affairs of Austria, said it had been recognized that globalization needed greater multilateral governance than it had at the moment. There was a need to establish rules of the game, as well as a level playing field. While there were new proposals on the table, there was a need to ensure that they would be democratic enough. It was necessary to build a global forum to deal with economic and social issues. Perhaps the solution lay in linking efforts between the United Nations and the Bretton Woods institutions, as there had to be a forum where broad democratic debate was possible, and where civil society would be included.
MARK MALLOCH BROWN, Vice-President for External Affairs/United Nations Affairs of the World Bank, said that one clear lesson that had emerged during the crisis of globalization was that good policies mattered. Cases where governments had opened up their economies within a context of transparency and accountability had paid off. However, there had to be a global policy consensus on how to address globalization's risks while sustaining its benefits. The international community must come together to decide how to regulate volatile international capital flows, contain moral hazard, and
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improve transparency and governance. Most importantly, it must decide on measures to protect the world's most vulnerable citizens from the worst effects of future economic upheavals and provide relief for those currently suffering. Inclusion was an essential part of that consensus. More countries and their peoples must be included in the debate.
CONSTANTINO G. JARAULA, Member of the House of Representatives of the Philippines, said coming from a developing country, he was impressed at the intelligence displayed in finding solutions to the current problems. It could not be forgotten that real children and real people were being discussed. He stressed that a mockery would be made of the commitments undertaken at Copenhagen, Cairo and Beijing if the international community failed to show solidarity with developing countries and those countries currently experiencing economic crisis. While the Philippines had not been hit by the current crisis as seriously as others, it faced a very bad situation. It was doing its utmost to stem the tide of the turmoil by focusing on protecting the social conditions of its population. The Philippines was emphasizing agriculture because, ultimately, it was the only real resource people could rely on.
The contagion of the crisis in his region was overwhelming, he said. It was a time when the assistance of the international community was urgently required. The decline in official development assistance was unfortunate and he hoped that more countries would see to it that there was a reversal in the downward decline. The time for assistance was now, not tomorrow.
KATHERINE HAGEN, Deputy Chairman of the International Labour Organization (ILO), said the world was currently experiencing more of the negative effects of the social and economic impact of globalization. Solutions put forth during the round table provided encouraging momentum for reforming the infrastructure of the international financial system.
There was a need to restore the legitimacy of local politics and give up the notion that the "one size fits all" approach could be applied to all countries, she said. The issues of jobs, education and training; job security; and providing safety nets needed to be addressed locally and not globally. She added that deliberations for a revision of the financial architecture should involve everyone, and not be limited to finance ministers and bankers.
JENO STAEHELIN (Switzerland) said that in spite of recent dramatic setbacks, the liberalization of global markets had contributed to improving the welfare of most people around the world. The most startling exception to that was Sub-Saharan Africa which had been left behind. The international community had to support all the efforts of developing countries in the globalization process. Sound policies were not enough. The process of adaptation to social changes produced winners and losers in every country. Individuals would measure improvements by real improvements in their standards of living. There was a need to develop sound economic policies and
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sustainable social programmes. The United Nations could play a greater role if it adapted its structure to address those issues. A universal social conscience was needed. In the year 2000, the effects and consequences of the current crisis on the individual and society would be fully known.
DAN ABODAKPI, Deputy Minister for Trade and Industry of Ghana, said the developing world had lived under the threat of attempts by developed countries to reduce the importance of United Nations agencies, such as the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Industrial Development Organization (UNIDO). From the current dialogue, it was clear that the United Nations system had a crucial role in helping developing countries to play meaningful parts in the globalization process. He reiterated the need for special programmes for Africa in critical areas like technology transfer and development related issues. While there had been great efforts in Africa to implement sound macroeconomic policies and to empower the private sector, it was clear that certain endeavours could not be effected without outside assistance, including official development assistance. It was also important to emphasize trade over aid.
NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said that in the context of the economic dialogue the focus was on the interaction between trade and finance. The reason was the explosive growth in world financial markets. That was why there was concern about having mechanisms to manage that market. There was also an increase in the flow of savings across boundaries. Where did that money come from and why was it happening? was the question to be raised. One reason was that the technology of financial trading had vastly improved. What was also being witnessed was a situation in which industrialized countries had an ageing population with a stock of savings who were looking for higher returns.
He said that in Japan, for example, the yield on long-term savings bonds was 0.8 per cent. On the other hand the developing countries offered significant opportunities for high returns. That was the real reason for the flow of savings. There were other dimensions that had to be grasped, such as the delinking of the real and the financial economies that was taking place. The reality was that the assets and liabilities of a country were shaping its position.
Mr. ALATAS said the Association of South-East Asian Nations (ASEAN) and the developing world drew a lot of encouragement from the fact that the international community was engaged in trying to define what the globalization crisis was and establishing what needed to be done both nationally and internationally.
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