NEW FINANCIAL ARCHITECTURE NEEDED TO AVOID POSSIBLE GLOBAL DEPRESSION FOREIGN MINISTER OF MALAYSIA TELLS GENERAL ASSEMBLY

28 September 1998

Press Release
GA/9455

NEW FINANCIAL ARCHITECTURE NEEDED TO AVOID POSSIBLE GLOBAL DEPRESSION FOREIGN MINISTER OF MALAYSIA TELLS GENERAL ASSEMBLY

19980928 Foreign Minister of Singapore Tells General Debate Rejection of Free Trade and Open Markets May Lead to Global Tension

The world could slide into a global recession or even depression, unless international collaboration and cooperation were undertaken to reverse that trend, Abdullah Haji Ahmad Badawi, Foreign Minister of Malaysia, told the General Assembly this morning, as it continued its general debate.

Stressing the need to revamp the international financial architecture, he said financial operators must abide by internationally derived regulations and accept closer supervision in order to distinguish between genuine investors and currency speculators. The few developed countries could not remain rich and prosperous forever if more than two-thirds of the world remained poor and unstable, he added. The time had come to enter into a genuine North-South dialogue.

Shanmugam Jayakumar, Foreign Minister of Singapore, said all of the world had been touched by globalization and its long-term benefits were obvious. Any attempt to walk away from free trade would result in domestic economic and political pressures. Nonetheless, an international response was needed to counter the vulnerabilities brought about by globalization. If countries could not gain access to raw materials, goods and services through peaceful and open competition, they would resort to other means. A return to global tension must be avoided.

Prince Mohamed Bolkiah, Foreign Minister of Brunei Darussalam, said for millions of people in developing nations, the end of the century was not a time for celebration. It was a time of enormous suffering, terror and despair. He questioned how that situation could continue in a time when technology presented unprecedented opportunities for human development and globalization offered unique chances for cooperation. The suffering of so many must be expressed, and the Assembly was the only forum in which their voices could receive the hearing they deserved.

The Prime Minister of Belize also addressed the Assembly this morning, as did the Foreign Ministers of the Philippines, Oman, San Marino and Tunisia.

The Assembly will continue its general debate this afternoon at 3. p.m.

Assembly Work Programme

The Assembly met this morning to continue its general debate. It was expected to hear from the Prime Minister of Belize; and the Foreign Ministers of Brunei Darussalam, Malaysia, Philippines, Oman, Singapore, San Marino and Tunisia.

Statements in General Debate

Prince MOHAMED BOLKIAH, Minister for Foreign Affairs of Brunei Darussalam, said that for many millions of people in developing nations, the end of this century was not a time for celebration. Instead, it was a time of enormous suffering, terror and despair. He asked how that could be possible, when technology presented greater opportunities than ever for human development and when the power of globalization offered unique chances for cooperation. Agreeing with the Non-Aligned Movement, he said the suffering of the billions must be expressed. The Assembly was the only forum in which that voice could receive the hearing it deserved.

United Nations leadership was necessary to focus the political will needed to end local hostilities, he said. National, regional or global policies must be translated into day-to-day benefits for ordinary people to ensure peace. The United Nations should encourage the acceptance of differences and stress the need to resolve all disputes peacefully. People must be placed at the core of policy-making. The international community must focus not on policy positions, but on ordinary matters including jobs, education, food and security.

In the context of United Nations reform, he said, the Organization must never weaken its work on behalf of ordinary people; it must obtain its meaning from its work in the field. The international community must ensure that the peoples' need for economic prosperity and social development remained firmly connected: thus ensuring peace and stability; rejecting violence and confrontation; and strengthening the foundation of social development.

ABDULLAH HAJI AHMAD BADAWI, Minister of Foreign Affairs of Malaysia, said that the world could slide into a global recession, or even depression, unless urgent steps were taken to reverse that trend through international collaboration and cooperation. The financial turmoil had been triggered by speculative attacks on the East Asian currencies and the resulting reversals of capital flows. The crisis had revealed flaws in the market mechanism and raised questions about the relative benefits of liberalization and globalization.

Over the last year, Malaysia had been highlighting the need for change, he continued. The situation had now clearly gotten out of hand. There must be change and improvement in the international financial architecture. Rules must be introduced to encourage greater transparency, and financial operators

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must abide by certain internationally derived regulations. They must accept closer supervision, which would clearly distinguish between genuine investors and currency speculators.

The few developed countries could not forever remain rich and prosperous if more than two thirds of the countries of the world remained poor and unstable, he said. Time had come to enter into a genuine process of North South dialogue. Malaysia welcomed the call by United States President Bill Clinton for holding a special discussion in Washington D.C., on the financial and economic crisis the world was facing. The Assembly and the Economic and Social Council (ECOSOC) could, and should, consider that important issue. The United Nations should support the call for regulating the financial market activities, to protect the vulnerable developing economies.

Turning the United Nations reform, he said financial support for the Organization must be secure. The establishment of the proposed revolving credit fund might help ease the financial crisis of the United Nations temporarily, but in the long term, the only effective way of resolving the problem was through the timely payment, by Member States, of their dues.

Malaysia continued to advocate the enlargement of the Security Council in both categories of its membership, and of circumscribing, if not totally abolishing, the use of the veto. It also called for increased transparency, accountability and the participation by the larger membership of the Organization through more open debates.

DOMINGO SIAZON JR., Secretary of Foreign Affairs of the Philippines, said the Association of South-East Asian Nations (ASEAN) had not only increased its membership but also had expanded its work from the purely economic and social to the security and political fields. It had taken the lead in creating the ASEAN Regional Forum (ARF) -- the only regional security dialogue mechanism that brought together all the powers with a stake in the peace and stability in East Asia and the western Pacific. However, the Asia- Pacific region was not tension free. Territorial disputes and leftover issues from the Second World War, and even before, festered. The Philippines hoped that as the new millennium dawned, meaningful action towards the resolution of such issues as peace in the Korean peninsula and the South China Sea would commence among countries concerned.

Although the growing number of signatures to and ratifications of the Comprehensive Nuclear-Test-Ban Treaty (CTBT) and the review of the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) raised hopes that nuclear weapons were becoming obsolete, nuclear weapons states had yet to live up to their commitments to the NPT, he said. The recent nuclear tests in South Asia were a destabilizing development, and a nuclear arms race in that region, or anywhere, entailed great peril for regional security and stability. His country was also deeply committed to the banning and destruction of anti- personnel landmines, which retarded socio-economic development and caused vast

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human suffering and tragedy. He urged all to assist in landmine clearance and the rehabilitation of landmine victims.

Political instability and the collapse of peace and order in any State produced deleterious effects -- including security threats -- on others, he said. For that reason, the Philippines contributed where it could to the establishment or restoration of political stability in other countries, particularly in support of democracy. Cambodia's recently held elections had been judged free and fair, but as recent developments there had shown, democratic elections, while necessary, were not a sufficient condition for democracy, peace and stability. Cooperation by all parties, prompted by a deeper love for the nation's good, was required. The efforts of the ASEAN troika, the Friends of Cambodia and the United Nations had not been in vain, they had just not been enough. Much more had to be done by the Cambodians themselves to pull their country from the brink. The Philippines hoped to see a fully stable South-East Asia, where all people enjoyed peace and national reconciliation, and to see all ten countries in the region working together for a united and outward-looking South-East Asia, bonded in a partnership in dynamic development and in a community of caring societies. His country was also committed to assisting Myanmar and the Lao Democratic People's Republic in their integration in a peaceful, prosperous, humane and just ASEAN.

It was now clear that the methods and resources of the Bretton Woods institutions, particularly that of the International Monetary Fund (IMF) were sorely insufficient, he said. The IMF resources had to be replenished and new remedies had to be developed for the new problems of a globalized economy. The United Nations could play a significant role in fostering international cooperation and action to solve the global crisis. The significant decline in official development assistance (ODA) from donor countries had to be reversed. Now, more than ever, social amelioration programmes and safety nets had to be enhanced. The Philippines had long recognized the need to recast the global trading regime and make it responsive to the requirements of the time. His country welcomed President Clinton's eight-point action agenda to lead the world out of the current global economic and financial instability. Real action was what the world, not just Asia, needed urgently.

The poorest, who got hit first and hardest in any economic downturn, would always be restive if development yielded dividends only for the rich, he said. The fruits of prosperity and the shares in sacrifice must be enjoyed or borne equitably. Also, the continuing exploitation of children for pornography, prostitution and drug trafficking, not to mention the suffering of displaced and refugee children, was a global problem. At the regional level, the Philippines and the United Kingdom, under the aegis of the Asia- Europe Meeting, had launched a joint initiative on child welfare to create better mechanisms for international cooperation on that endeavour. The Philippines also attached great importance to the promotion and protection of the rights of migrant workers and their families, including their protection from exploitation, abuse and violence. Sustainable development continued to

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be an important focus of Philippine foreign policy. As Chair of the Sixth Session of the United Nations Commission on Sustainable Development, the Philippines emphasized the role of civil society in the implementation of cooperative activities in key areas such as freshwater resources, the role of industry, technology transfer and capacity-building in development.

Addressing global challenges and problems required international action and cooperation, and the United Nations remained the principal multilateral forum for that, he said. As a founding member, the Philippines recognized that the Organization must have the active support of all its Members and adequate resources to be effective and relevant. Since the overwhelming majority of United Nations Member States were from the developing world, the United Nations reform process had to restore development issues to the centre of the agenda. There was a need to modernize and reform the Security Council. As the United Nations organ with the primary responsibility for maintaining international peace and security, the Council's decisions had to be viewed as serving the collective interest of all United Nations Member States. The Council's membership had to be enlarged to include more key global players and developing countries. Its working methods had to be reformed to make its decision-making process more transparent and democratic. In conclusion, the Philippines was convinced that global efforts and cooperation to achieve peace, prosperity and development could only succeed if democracy thrived within nations, and served as the basis for relations between and among them.

YOUSEF BIN ALAWI BIN ABDULLAH, Minister for Foreign Affairs of Oman, said that despite 50 years of dedicated work and a legacy of dealing with various global crises, the United Nations remained incapable of dealing with many regional crises that had emerged following the cold war. The fact that most of those crises had been on the Organization's agenda for a number of years was a reflection of the negligence on the part of Member States to fully use the available means and act in accordance with the Charter. As conventional mechanisms fell short in dealing with regional crises, a new approach should be elaborated to find their root causes and prevent their likely recurrence.

The high-level working group of the Assembly had suffered a setback, during its previous session, in attempting to restructure Security Council membership, he said. The group must redouble its efforts to expand the Council, so that contemporary changes in history would be better reflected. Nations, big or small, should be allowed to participate in the resolution of international crises, particularly those having a direct bearing on their interests.

The greatest dangers facing the Organization, he stated, were worldwide economic stagnation and the spread of terrorism and ethnic wars. Those crises threatened the progress achieved by the international community in all areas of technological, scientific, economic and social development. The new wave of terrorism demanded that the international community work together in a more

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responsible manner to secure peace and stability. In that regard, he supported the proposal made by Egypt to convene an international conference, endorsed by the Organization, to address that phenomenon. His Government believed that those responsible for terrorist crimes should be brought to justice under the United Nations umbrella. Member States needed to work in complementarity with the newly-established International Criminal Court in harmonizing their national laws and jurisdictions.

Incoherence between macroeconomic policies in developed and developing countries had emerged as a serious problem, he said. Even the success of global efforts to reduce the Asian financial crisis, despite help from the IMF and the World Bank, had been hampered by the absence of sound macroeconomic policies to address the matter. In order to prepare the world for future changes, it was necessary to make a concerted effort to establish a global economic order that was just and equitable. If the international community were to look at root causes, it could easily discover that control of most of the wealth by a few nations was behind today's ethnic, political and social conflicts, including terrorism.

The time had come for all peace-loving nations to implement the Universal Declaration of Human Rights by supporting the Palestinian cause and rejecting the hostile and aggressive policies of Israel towards the Palestinian people, he continued. He appealed to the international community to extend every possible assistance to the Palestinian National Authority, and its various educational, health and social institutions, to safeguard achievements through the peace process. He also called on the Government of Iraq to comply with the Council's resolutions to eliminate its arsenal of weapons of mass destruction and called on the international community to lift the hardship placed on the shoulders of the Iraqi people.

In the Gulf region, he said, a new era of positive cooperation between the Gulf Cooperation Council and Iran had been established. That significant development should enable the United Arab Emirates to attain its sovereign rights on the islands of Greater Tunb, Lesser Tunb and Abu Musa. His country fully supported efforts to make the Gulf area free of weapons of mass destruction, including nuclear weapons. To that end, his Government had joined the NPT in 1997. He announced that Oman would also accede to the CTBT. He also urged Israel to take part in efforts to make the Middle East a region free of nuclear weapons.

In addressing regional economic cooperation, he said Oman was determined to diversify its natural resources in harmony with international economic competitiveness. In the context of the Gulf Cooperation Council and in the spirit of partnership with other countries, Oman had increased the ratio of growth in non-oil sectors of its economy. Also, Oman was working positively towards becoming a member of the World Trade Organization. His Government had also submitted a proposal before the regional Organization for the Protection of Marine Life to establish a bunkering port for oil tankers in order to

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preserve the territorial waters, and the marine life in the region, from pollution.

SHANMUGAM JAYAKUMAR, Minister for Foreign Affairs of Singapore, said there was no part of the world that had not been touched by globalization. The long-term benefits of free trade, and the free flow of capital and information were obvious. East Asia, for example, had enjoyed two decades of unprecedented growth. One major force of globalization -- the Internet -- had tied everyone together like a global family. However, economic problems also developed quickly, spreading into full-scale social and political problems.

The way ahead, however, demanded that the world not turn its back on globalization, he said. Any attempt to turn the clock back and walk away from free trade would result in domestic, economic, and political pressures. If countries could not gain access to the raw materials, goods and services through peaceful and open competition, they would resort to other means. A return to global tensions must be avoided. Solutions must be found to counter the vulnerabilities brought about by globalization. Efforts should begin to formulate a global response to such challenges facing the international community.

At the domestic level, higher standards should be promoted, while government interference in market decisions should be avoided. Sound macro- economic policies and strong regulatory structures should be established to ensure economic resilience. On the international front, the United Nations could help countries reap the benefits of globalization. The developed world should be encouraged to assume the primary responsibility to bring the world out of crisis.

He said United Nations Member States had a common interest in revitalizing and reforming the major multilateral institutions, including the World Bank, the International Monetary Fund and the World Trade Organization. Although those institutions had made significant contributions to development and to poverty alleviation, recent shifts had shown their weaknesses.

SAID W. MUSA, the Prime Minister of Belize, said the "overwhelming mandate" given to his newly-elected Government was a directive to transform the country's institutions and political culture into more democratic, open and just mechanisms working in support of the welfare of the people. Belize was committed to pursuing policies which lead created an economic and social climate that nurtured development of children and young people. In so doing, the Government hoped to offer real opportunities for the youth of Belize to be creative and productive, to develop self-respect and reliance, and to create a sense of community.

Although it was the fiftieth anniversary of the Universal Declaration of Human Rights, millions of people continued to fall into poverty, he said. This trend continued even in the midst of technology which could make poverty

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eradication possible. Clearly, something was terribly wrong with the way the economy was managed. The instability of the present world financial market was proof that unbridled globalization could have serious negative effects on developing and developed countries alike.

The international community must create a new and fair regime for managing the world economy, he said. Belize supported the proposed United Nations conference on financing for development. That forum should also address social factors and seek to bring about comprehensive reform of the international financial system.

Belize, he said, had seen its prospective base of prosperity whittled away over the last few years due to misguided economic policies, predatory politics and financial mismanagement. His Administration had inherited a country where nearly 40 per cent of the population lived in poverty, nearly half of its children did not complete primary school, and where preventable diseases and infant mortality were on the rise. In response, the Government had committed itself to an intensive programme to eliminate poverty. That programme focused on growth economics to restore investor confidence and stimulate economic activity and employment, while attracting more revenue for development.

In addition to the uneven results of globalization, Belize faced the negative impact of globalized crime and mindless violence resulting from drug trafficking and money laundering. He said Belize would do everything possible to fight such scourges and would cooperate fully with regional and international efforts to curb the drug trade.

GABRIELE GATTI, Minister for Foreign and Political Affairs of San Marino, said that in its more than 16 centuries in existence, his country had always promoted respect for human rights. Concerning the fiftieth anniversary of the Universal Declaration on Human Rights, he said his Government would finance the global dissemination of the Declaration project, which was aimed at making the Declaration accessible and understandable to a wider number of people.

Experience had taught that when there was no peace, there could be no human rights, he continued. The United Nations should play an active role in the maintenance of peace, especially where it was weaker and more precarious. Nuclear tests in Asia were a new and worrying problem, and could represent the beginning of a new season of anxiety and danger for humanity if the international community, and the United Nations in particular, were not able to have an impact.

Unfortunately, the current international legal instruments were not sufficient to fight the proliferation of nuclear weapons, he said. The United Nations should lead the international community to strengthen those

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instruments to prevent and repress international crimes that, until now, had merely been the object of moral condemnation.

Continuing, he said San Marino had contributed to the Rome conference on the establishment of an international criminal court because it believed such a court would represent an effective and strong deterrent for crimes against peoples or ethnic groups. It also closely followed the debate on the death penalty. In 1865, San Marino became the first country in Europe to abolish capital punishment, which by then had not actually been applied for centuries. The Government and the people of San Marino deeply believed that death imposed by law could not represent a valid protection for society nor a deterrent for crime.

SAïD BEN MUSTAPHA, Minister for Foreign Affairs of Tunisia, said the need to revitalize and enhance the General Assembly's role stemmed from that body's unique character, for it represented universality and democracy. Strengthening its effectiveness and its efficiency should go hand in hand with reform of the Security Council, to confirm the principles of transparency, pluralism and democracy. Those values should guide the Organization and enhance its role, the importance of which had increased in recent years.

The Council must expand its membership to all regional groups, he said. He reiterated Tunisia's support for the request by the African Group of States, calling for the allocation of two permanent seats for that continent. Those seats would be occupied alternately by African States, with the same privileges as those enjoyed by the current permanent seats. The veto also needed to be reviewed, to limit its use to the areas mentioned in Chapter VII of the Charter. His country also believed that the sanctions regime practised by the Council should be reviewed to ensure the protection of populations.

On the other hand, he continued, the interests of neighbouring countries and of those that had commercial relations with a country on which sanctions had been imposed, should be taken into account. A specified time-frame should be established for the implementation and lifting of sanctions. In that regard, his Government stressed the necessity of respecting Iraq's sovereignty and territorial integrity and the necessity of implementing the relevant Council resolutions on the problems of Kuwaiti prisoners and missing persons. Further, he believed it would not be possible to reach a lasting and comprehensive solution to the Middle East issue without Israel's compliance with relevant United Nations resolutions and such principles as "land for peace".

Regarding security, he said that the best solution was to anticipate crises through preventive diplomacy. In that way, the causes could be eliminated in the fastest and most effective way. He also welcomed the Council's initiative regarding the situation in Africa and believed that the report of the Secretary-General in that connection was well-timed. He hoped that the current orientation would be confirmed by continued United Nations

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support for the Organization of African Unity (OAU) Mechanism for Conflict Prevention, Management and Resolution, as well as through the adoption of practical measures designed to help integrate African nations into the world economy.

World peace and security could not be established without achieving economic and social development for all peoples, he said. Meeting the major challenges confronting developing countries began with the establishment of a world economic order founded on equality and solidarity. In that way, those countries could be integrated into the world economy and the flow of capital and direct investment needed to support their development efforts could be mobilized. He called upon the United Nations and the Bretton Woods institutions to accelerate provisions that would diminish the negative impact of globalization.

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