PRESS CONFERENCE BY FOREIGN MINISTER OF ITALY

Press Briefing

PRESS CONFERENCE BY FOREIGN MINISTER OF ITALY

At a Headquarters press conference this morning, the Foreign Minister of Italy, Lamberto Dini, called for a fundamental review of financial institutions and the international financial architecture that governed the development of the global market.

Mr. Dini said there was apprehension the world over about the future, as people watched the performance of stock markets, internal instability in various regions, the failure of financial institutions, the rise and unpredictability of terrorism, unchecked waves of immigration, the constant flow of refugees and the resurgence of misplaced nuclear ambitions.

The financial institutions must rethink their roles, he said. When intervening to defend the market, they should not apply measures that damaged society and destabilized political systems. There was need for major reforms, particularly those that minimized the moral hazards involved in lending, as a last resort in rescue operations mounted by international financial institutions.

He said his reading of the present state of affairs was that no proper balance had been established between the force of the market and the power of institutions. The market had grown strongly, while institutions had not kept pace with its development. Like industrialization in its early days, globalization had produced great progress and dangerous imbalances. It required good governance, which no country could provide, however great its political, economic and military power. He agreed with Secretary-General Kofi Annan that globalization required good government. That responsibility fell on the richer countries, particularly of the Group of 7 industrialized countries.

There was a need for revitalization of institutions upon which the three pillars of economic prosperity, security, and respect for fundamental freedoms could be built, he said. He felt the time had come to improve the rules of conduct that guided the development of the global market.

There must be the realization that the forces that drive the global economy were the same forces that upheld fundamental freedoms. The crisis in South-East Asia had shown how much deeper and more severe the problem was in countries where there was less democracy and democratic institutions were weaker than they should have been. It was a dangerous illusion, he said, to think that the economic sphere could be separated from the political system. Recent experience had shown that the market did not always grow when the State shrunk. "There can be no healthy economy without a strong and solid State. That had to be realized", he added.

There were two pillars of stability in the world today, he went on. One was the United States, and the other, the new Europe. The creation of a

common currency in Europe demanded new responsibilities at the international level. The European Union was becoming a political subject, and it was time for it to assume more responsibilities and to participate in the sharing of world leadership. It had all the elements and strength to participate in that leadership role.

There was great support for United Nations peacekeeping missions, which should be made more efficient and effective, he said. The North Atlantic Treaty Organization (NATO) was rethinking its own mission and strategy and its membership too. Within NATO, a new strategic concept of defence and of alliance was being developed. It was looking to the United Nations for additional legitimacy to broaden the scope of its mission. Shared responsibility in the area of peace and security was extremely important. He said attempts by India and Pakistan to restore regional balance through recourse to weapons of mass destruction were a serious mistake. Efforts should be directed at pushing them to ratify and join the Nuclear Non-Proliferation Treaty.

He said the United Nations must receive the support of all. He was glad that it had been possible for the treaty on the establishment of an International Criminal Court to be signed in Rome last July. About 50 countries had done so, and he hoped the threshold of 60 signatories would be reached shortly so the treaty could enter into force.

Reform of the Security Council, particularly its enlargement, was necessary, he said. Italy would support any reasonable formula that opened the possibility of the establishment of a common European seat on the Council. There should be no increase in the number of countries "more equal" than others. One of the fundamental tenets of the reform of the Security Council was to make it more democratic and more representative. He said the simplest way to do that might be to enlarge it by increasing its non-permanent members, as had been done in 1963.

Was it possible for governments to combat terrorism without eroding fundamental freedoms? a correspondent asked. That was a difficult question, Mr. Dini replied, adding that it had been possible to do that so far. He did not think combatting terrorism should include infringement upon individual freedoms. That would not be accepted by all societies. Individual freedoms and democracy must be stronger than terrorism itself.

He was asked whether European leaders were frustrated by the paralysis in the United States political system over President Bill Clinton's personal problems, and whether that had made it difficult for them to get things done. He said, "We are all saddened by these events, but there is the realization in my country, and also in the other countries in Europe, that the democratic institutions of this country are very strong and are able therefore to withstand and overcome the difficulties that have emerged in one of the branches of Government, and so we are very confident that the President, whom

Italy Press Conference - 3 - 23 September 1998

we met last Sunday, is very much on the ball. He is very much involved in how to solve the key problems that are on the platter of the United States and also of the United Nations." Mr. Dini added that he had confidence in the strength of the democratic institutions of this country.

How were relations between Greece and Turkey affecting aid to Cyprus? a correspondent asked. Mr. Dini said there was continued concern among European Union members that a formula that could reconcile the differences between those two members of the European Union had not been found. Attempts were continually being made to achieve such a reconciliation and the problem had a bearing on Cyprus itself. Cyprus was one of the six countries that had been identified as being more ready than the others to become a member of the European Union. He expected and hoped that the formula -- of a federated State or federation -- being devised by the United Nations and others dealing with the Cyprus problem, would be achieved.

Asked whether Italy supported the use of force in Kosovo, Mr. Dini said he had impressed upon a Serbian official he had met at the United Nations that Belgrade must come out "loud and clear" that it would work for and support full autonomy and self-government for Kosovo. It was urgent that Belgrade took that initiative before the situation deteriorated further, including abstaining from further repression in Kosovo and by withdrawing its special forces. There was great concern in the international community, he said, about the large number of refugees and displaced persons in Kosovo. A humanitarian tragedy could develop as the winter approached.

The draft resolution before the Security Council dealt with that aspect of the problem and the kind of intervention that might be necessary, he said. He observed that the draft did not go far enough, and that it fell short of the call for direct intervention. The use of force was being evaluated carefully in the United Nations and at a NATO Ministerial meeting in Brussels. He considered the use of force extremely dangerous. At the same time, from a humanitarian point of view, he said military intervention might be necessary to support the population of Kosovo. He hoped military intervention of a different kind would not be necessary.

* *** *