TRUE PARTNERSHIP NEEDED TO ADDRESS POVERTY, SOCIAL INEQUALITY, JAPAN TELLS ECONOMIC AND SOCIAL COMMITTEE

6 October 1998

Press Release
GA/EF/2816

TRUE PARTNERSHIP NEEDED TO ADDRESS POVERTY, SOCIAL INEQUALITY, JAPAN TELLS ECONOMIC AND SOCIAL COMMITTEE

19981006 Committee Continues General Debate on World Economic Situation, Addressing Issues of Market Access, Declining Development Assistance

True partnership, dialogue and understanding was needed to address global issues such as poverty, environmental degradation and gross social inequalities, the representative of Japan told the Second Committee (Economic and Social) this afternoon as it continued its general debate on the world economic situation.

The stability of developing countries was essential to world peace and prosperity, he added. On moral grounds -- and as responsible members of the international community -- developed countries should aim to eradicate poverty.

The representative of Argentina said that growth and stability would result from open markets and the sustained availability of investment capital. A timely dialogue was needed, however, to achieve such goals. To that end, the current meetings of the World Bank and the International Monetary Fund (IMF) in Washington, D.C., would benefit from a United Nations presence to explain how small, weak and poor countries were being affected by the world economic crisis.

Several other speakers stressed the importance of reversing the downward trend in official development assistance (ODA) and increasing foreign direct investment. For example, the representative of South Africa said the lack of adequate financial resources was a key factor inhibiting development. Despite the increasing role of private investment in development, many developing countries could not attract adequate investment and required ODA. He hoped that the convening of a conference on financing for development would explore all available possibilities for mobilizing development resources.

Statements were also made by the representatives of the United Republic of Tanzania, Myanmar, India, Algeria, Bolivia, Tunisia, Senegal and Uruguay. A representative of the South Pacific Forum also spoke.

The Committee will meet again at 10 a.m. Thursday, 8 October, to continue its general debate.

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Committee Work Programme

The Second Committee (Economic and Social) met this afternoon to continue its general debate on the world economic situation.

Statements

MATHE DISEKO (South Africa) said the lack of adequate financial resources was a key factor inhibiting development today. Effective action and other complementary mechanisms must be put in place to support efforts by developing countries to extricate themselves from poverty, hunger and gross social inequality. He urged the developed countries to reverse the downward trend in official development assistance (ODA) flows, increase support for aid programmes and fulfil commitments made at conferences and other fora to provide financial resources for development.

He said despite the increasing role of private investment in development, many developing countries could not attract adequate investment and required ODA to eradicate poverty, protect the environment and develop their physical infrastructure. For those countries, ODA could not be replaced by private investment. Hopefully, the convening of a conference on financial development would be a forum for exploring all possibilities to mobilize adequate, incremental and assured development resources.

Urgent measures were needed to cancel the debt of developing countries, he continued. While welcoming the Heavily Indebted Poor Countries (HIPC) Initiative, his Government was concerned at the pace, eligibility criteria and the time-frame for eligibility before graduation to the Initiative. Africa was faced with deteriorating terms of trade and extremely limited access to foreign direct investment. Primary responsibility for the development of Africa lay with Africans. Despite challenges, there were plenty of regional initiatives to pull resources together to eradicate poverty, resolve conflicts and ensure sustainable development and growth. Hopefully, special efforts would be made to assist African countries in strengthening their domestic environment for investment.

DAUDI N. MWAKAWAGO (United Republic of Tanzania) pointed out that the extremely small increase world output from 1996 to 1997 had been caused by a continued decline in commodity prices, particularly the price of oil, and by the volatility of financial markets. Developing countries prospects for sustained growth and development continued to be dampened by their increased vulnerability to the unfavourable external economic environment.

He welcomed the results of the high-level segment of the 1998 substantive session of the Economic and Social Council on market access developments since the Uruguay Round, with specific attention to implications, opportunities and challenges, in particular for the developing countries. He also called attention to the high-level dialogue of the fifty-third General

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Assembly on the impact of globalization. He noted that ODA had continued to decline substantially and urged that the negative trend be reversed. Also, debt service payments consumed approximately one-third of export earnings, which had caused services to be reduced and poverty to intensify.

The third United Nations conference, on the least developed countries in the year 2001, would indeed be welcome, he said. He noted as a positive step the joint initiative by the World Trade Organization (WTO), the United Nations Conference on Trade and Development (UNCTAD), the International Trade Centre, the International Monetary Fund (IMF), and the United Nations Development Programme (UNDP) towards creating an integrated framework for trade related technical assistance to least developed countries. Africa was affected by a crippling debt problem, with deteriorating commodity prices, limited access to markets and negligible flow of foreign direct investment. In that regard, the Secretary-General's report on the causes of conflict and the promotion of durable peace and sustainable development in Africa was required reading.

U WIN AUNG (Myanmar), said appropriate macroeconomic policies were vital for continued development, but what was the appropriate policy for each country? All out liberalization as advocated by the International Monetary Fund (IMF)? Given the current situation, it was appropriate to ask if the guidelines set by the Bretton Woods institutions should be followed. The Asian financial crisis might not have been so serious or prolonged if certain national policies had been adopted according to national priorities, rather than those of outside organizations. It might be time to think of adding checks and balances to the process of globalization and liberalization, particularly for vulnerable economies.

He said sustained economic growth demanded adequate resources. Debt service burden was one of the most prohibiting factors in promoting sustainable development, particularly in the least developed countries. There were approximately 48 heavily indebted poor countries. Only a few, however, had been approved for the World Bank's HIPC Initiative, established in 1996, and some of them had only partially benefitted. That good programme needed to be energized, so that the worst affected might benefit before it was too late.

More attention must be paid to the effects of natural disasters, such as earthquakes, droughts and fires, he said. Public awareness of disasters would reduce casualties and costs. An effective early warning system was needed to minimize damage. The developed countries could help those developing that were incapable of establishing such systems.

DIGVIJAY SINGH (India) welcomed the high-level dialogue on trade, particularly the issue of market access for developing countries in the context of globalization. Most significant was the level of partnership between the United Nations Conference on Trade and Development (UNCTAD) and the WTO. That spirit of partnership should be further strengthened.

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He urged that market surveillance be focused not just on the financial systems of recipient countries, but also on financial institutions in the capital exporting countries. He also had several questions. Was the IMF sufficiently equipped to serve as a lender of last resort? Was the present system adequate for handling future crises or were new instruments needed for crisis management? How could problems of large private sector debt be handled?

Continuing, he said it was imperative that the terms of reference for the working group, established under General Assembly resolution 52/179, which concerns recommendations for intergovernmental consideration of financing for development, be as broad as possible. It should cover issues ranging from the measures to contain the volatility of short term capital flows to additional concessional financing for development. He added that the environment was a priority issue facing his country, and noted that the United Nations Conference on Environment and Development (UNCED) at Rio de Janeiro launched a global partnership on environment and development, which acknowledged that sustained economic growth, eradication of poverty and the attempt to meet the basic needs of the people, constituted overriding priorities for developing countries.

ABDALLAH BAALI (Algeria) said the IMF had confirmed the risks of a worldwide recession and future growth rates would be much less optimistic. In the current crisis, developing countries, particularly Africa, were the hardest hit. The growing interdependence of the world's economy had brought a new dimension to the Committee's work. Globalization and its impact would also be prominent on the agenda. A global response was needed to deal with the effects of globalization. Also, dialogue was needed to address the limits of the regulatory institutions.

The dialogue on proposals for a new architecture for international financial institutions must be democratic and transparent, he said. Developing countries must take part in the process. Attempts were being made to deprive the United Nations of its institutional capacity and its role in that area. It must be given the resources to respond to the needs in so many countries.

Although all items on the Committee's agenda were important, development financing was of major interest because of the impact on other areas of economic and social development. The United Nations must rethink and clarify its response to current international challenges, particularly the need to address the blatant inequities in such areas as trade, migration flows, the depletion of national resources and protection of the environment. The drop in ODA was a kind of performance indicator of the willingness of developed countries to participate in development. Donor countries tended to run to help only those economies that threatened their own interests.

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ROBERTO JORDAN PANDO (Bolivia) said his country had made great efforts to improve its economy despite the effects of El Niño. It had reduced inflation and kept the budgetary level low. Public investment was 25 per cent lower than last year, although the emphasis had moved to health and education. Bank portfolios had also improved and foreign trade had increased. The increase demand for raw materials had led to an increase in the trade deficit by 30 per cent. However, in May 1998, the level of foreign debt was $100 million less than last year. The economic situation was stable, there had been a reduction in poverty levels and an increase in jobs. To protect their economies, many countries had to adopt policies such as high interest rates which prohibited development and only added to speculative capital.

Actions by his Government reflected its efforts to counter the effects of the international economy, he said. The current crisis tended to snuff out the smallest and most vulnerable economies. There was a need for common discipline and procedures to address the crisis. Available ODA and other aid by IMF should be expanded to mitigate the knee-jerk responses of international financial markets.

International institutions had been criticized for failing to mitigate the impact of the financial crisis, he said. Poverty had been globalized and now global solutions were needed. The international community must come up with appropriate machinery for a new international economy based on solidarity. It was the only way to reduce poverty and lack of development. Currently, there was no way to measure the informal economy which had grown in every country as well as the illegal economy based on drug trafficking. He complimented the Nordic countries, which he said, were contributing more than other developed countries in ODA.

ABDERRAZAK AZAIEZ (Tunisia) said that an international economic climate favourable to the economies of countries of the South, which were more susceptible to changes in international markets, had always been a concern. Yet, having such nations move directly into international financial markets without a transition period was of even greater concern.

Globalization did not mean growth for all, but financial instability for many developing nations, he continued. Financial markets had shown an aptitude for destabilizing developing countries. That was inevitable because those markets were not designed to create wealth and jobs, but to make money. Today, the world economy continued to act in ways consistent with the interests of the developed countries and not the entire international community. The scope of the financial crisis in certain developing countries demonstrated that globalization had negative effects. He hoped that the IMF meeting this week would create an edifice that would take into consideration the needs of the developing countries.

While the past 50 years had been the longest period of sustained economic growth in history, the continued drop in ODA was significant. It

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represented the loss of an important source of external resources to countries, especially in Africa. On the other hand, after more than a decade of declining flows in Africa, private financing was beginning to be resumed. The trend in decreased ODA must be reversed. At the same time, developing countries must help break the vicious cycle of debt.

MASAKI KONISHI (Japan) said development should be pursued purely in order to eradicate poverty in developing countries and to guarantee a better life for all people. His Government's New Development Strategy emphasized the need for ownership of the process by the developing country and its people. Ownership of the development process meant a determination to achieve that goal by defining objectives with full respect for its people's rights and dignity, by mobilizing local resources and, then, by supplementing them with other resources.

On moral grounds, the goal of eradicating poverty should be the concern of developed countries as responsible members of the international community, he continued. The stability of developing countries was essential to world peace and prosperity. A true spirit of partnership would engender dialogue and understanding as the basis for concerted action to resolve such global issues as the environment and population.

Foreign direct investment and ODA was important, he continued. A comprehensive approach should be followed in tandem with an individual approach, which would take into account local conditions and locally owned development initiatives. All actors in the development process should remember that resources were public monies, which must be used in a transparent manner. Performance should be monitored and evaluated against various benchmarks and indicators. Result-oriented evaluation, programming and budgeting of development would bolster the effectiveness and efficiency of the entire process.

The second Tokyo International Conference on African Development, to be held from 19 to 21 October with the United Nations and the Global Coalition for Africa, was part of the effort to apply Japan's New Development Strategy, he said. The conference will address poverty reduction through accelerated economic growth and sustainable development. It will also focus on the integration of African economies into the global economy. Other issues will include education, health, private sector development, agriculture, good governance and conflict prevention.

IBRA DEGUENE KA (Senegal) said that recent socio-economic events left few opportunities for optimism. Globalization threatened to be a global creator of marginalization, as the ripples of the financial crisis spared practically no economy. The world consisted of so many disparities. Are we really living in one universe, when the cult of the Internet and space technology co-existed with hunger, disease and illiteracy? he asked. In light

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of that, the international community had a long way to go to give meaning to the United Nations Charter.

While world ideological conflict had effectively dissolved, the idea of sharing the peace dividend had fizzled, he continued. Since then, ODA had declined and the problem of debt remained as a source of concern. Perhaps the idea of ODA must be redefined, which could be examined in the course of carrying out Assembly resolution 52/179 and studying in-depth financing for development. In addition to external forces, however, each State must find its own way to develop in a way that encompassed social justice and environmental protection. Laissez faire had its limits.

The perception of Africa as a place of crisis and conflict was unfair, he continued. Still, that perception had diminished foreign investment. While it was certainly too late to correct the problems of the past, the creative genius of man could address them, if only he had the will. For truly innovative solutions to be devised, minds must be decolonized.

BORIS SVETOGORSKY MARINO (Uruguay) said, given the fallout from the recent financial crisis, his Government was focusing its efforts on improving sustained economic growth and the well-being of its people. It had streamlined tariffs on imported goods and improved trade with its neighbours. Through the Southern Cone Common Market (MERCOSUR), the process of regional trade integration had increased and led to improved participation in global trade. The United Nations Development Programme (UNDP) had given vital advice and support to projects in his country. The programmes were among the largest in the region in per capita terms.

As for trade and environment, he said he did not agree that environmental issues should be used as a tool by the WTO. Trade was a driving force behind economic growth and sustainable development. The refusal to reduce agricultural subsidies was inhibiting efforts to stress the agricultural agenda and freeze the subsidies agreed on in the latest Uruguay Round of the General Agreement on Tariffs and Trade (GATT).

Eradicating poverty would be one of mankind's greatest achievements, he said. The international community had the means to do it. Economic success was linked to industrial development and access to the latest technological advances. Developed countries should close ranks with developing countries and share technological resources. More efficient use of resources would help eliminate disparities, which were jeopardizing opportunities for sustained economic development.

NOEL LEVI, the Secretary-General of the South Pacific Forum, said rapid changes around the world presented a challenge to the many countries, particularly small, isolated communities. With few natural resources and inadequate infrastructure, how were they to achieve meaningful participation in the world economy? he asked. How could the members of the Forum adapt the

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advances in technology education, medicine and commerce to suit their particular circumstances?

He said the current use of a purely economic-based index to measure vulnerability did not adequately measure vulnerability to natural disasters and the fragility of the natural environment. Furthermore, it did not measure vulnerability to external threats, such as the increasing use of small islands to transport drugs or for money laundering. In 1997, the leaders of the Forum adopted the Aitutaki Declaration on Regional Security Cooperation, which called for a regional approach to security threats emanating from natural disasters and unlawful challenges to national integrity and independence.

He welcomed the initiative by the Commonwealth Secretariat and the World Bank in setting up a task force to further develop the vulnerability index in the context of small island developing States. Hopefully, those developments would encompass such factors as environmental and capacity considerations, which could be broadly applied and then included among the criteria for determining least developed country status.

FERNANDO ENRIQUE PETRELLA (Argentina) said that growth and stability would result from open markets and the sustained availability of investment capital. To sustain those goals, however, a dialogue must be created and it must take place in a timely fashion. To that end, the voice of the United Nations would be beneficial in Washington, D.C., where the World Bank and the IMF were holding their annual meeting. For example, the IMF had expressed support finding ways to limit the volatility of international financial markets and that was an area that should be examined.

He said that to date, international finance had not been working in concert with the United Nations, because all members of the international financial community did not recognize that all sectors of the world community were part of the whole. For that reason, the United Nations must explain how small, weak and poor countries were actually being affected. His own region had sought to limit the fallout from the crisis. Human rights, democracy, sound government policy and fiscal discipline must continue to be the backbone of policy in Latin America and the Caribbean.

Given a rather disadvantageous international context, his country remained dynamic, and would likely have to revise its expected growth figures the least, he said. His country's strategy of diversifying sources of finance and stretching due dates had added to its success, but those strategies were not transferable. Globalization could not be addressed by a single fiscal strategy. Each country must devise its own. While the international community attempted to determine the causes of the fragility of the international economy, governments remained duty bound to ensure that wealth reached all sectors of society.

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