SECRETARY-GENERAL CALLS MULTILATERAL DEVELOPMENT COOPERATION CRUCIAL PATH TOWARDS SAFE AND STABLE WORLD

9 February 1999

Press Release
SG/SM/6890
DEV/2198

SECRETARY-GENERAL CALLS MULTILATERAL DEVELOPMENT COOPERATION CRUCIAL PATH TOWARDS SAFE AND STABLE WORLD

19990209 Kofi Annan Says Development Challenges Growing Ever More Urgent and Complex

Following is the text of an address by Secretary-General Kofi Annan to the ad hoc open-ended working group on financing for development, which was delivered today in New York on his behalf by Under-Secretary-General for Economic and Social Affairs Nitin Desai:

Thank you for inviting me to participate in this session of the ad hoc working group on financing for development. As you know, the development challenges we face today -- whether age-old or new -- are growing ever more urgent and complex. There is fatigue, and frustration that we have not made greater progress. And the gains we do make are fragile, often surprisingly so. Against this difficult backdrop, let me stress how much I share your hopes for positive results from this important intergovernmental dialogue.

Development cooperation emerged during the early years of the United Nations as a way of expressing a global commitment to economic and social progress. It was, in essence, an idealistic impulse. But in practice it came to be influenced by political and strategic considerations and also by the residual responsibilities of colonialism.

Today, the cold war is long gone and the post-colonial era is also ending. New generations of citizens are electing new leaders who will not be held prisoner by old ways of thinking. Still, one thing remains the same. The people of the developing countries are impatient for development.

And that, of course, is where multilateral development cooperation comes in. For it remains a crucial path towards the safe and stable world to which we aspire: a world not only of competition but of solidarity; a world where we not only support each other in emergencies, but work collectively and preventively to improve standards of living and bring peace and opportunity to all the world's people.

To succeed in this endeavour, however, we need to rethink development cooperation and the role the United Nations should play in it. We need to find a basis for development cooperation today that is relevant for realities of tomorrow. Therein lies the challenge for this forum: to bring forward ideas that are promising but have not yet been adequately developed; and to breathe life into the cause of development cooperation in a way that will capture the imagination of the world community.

Towards this end, we will need to involve more stakeholders than has been typical in the past. And we will need to devise innovative mechanisms for dialogue with the business community and civil society. Private sector resources can make enormous contributions, and certainly we can do more to mobilize them more effectively. But let us have no illusions here: private resources will not and cannot do everything.

The universe of finance is changing, and changing in ways that have significant political, social and economic consequences. In this new context, the United Nations will continue to advance new ideas for identifying new and additional resources for development. Let us not be discouraged that the proposals and policies of the past did not yield the desired results. Let us instead take advantage of the new opportunities of the present, at both the domestic and international levels.

Domestic resources are the overwhelming source of financing for development. In many instances, however, domestic savings have not increased in recent years. At the same time, public resources for development purposes have also declined. These trends must be reversed.

Increasingly, domestic resources are complemented by international capital flows: official, private and a mixture of the two. Official development assistance has been the backbone of international finance for development, but is now in absolute and relative decline. The good news is that some countries that have needed development aid in the past will need much less of it in the twenty-first century. But the vast majority of developing countries, especially the least developed countries, still require considerable assistance if they are to avoid marginalization and compete in the global marketplace.

Official development assistance can be a catalyst for economic development, a mechanism that helps countries to reach the stage at which they can take advantage of potentially larger and more dynamic private capital flows. And for many of the poorest countries, official flows are necessary because they do not succeed in attracting foreign private investment and other financing.

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A key related issue is debt relief: the need to help the poorest countries find a way out of the debt trap so that they can reduce poverty and pursue sustainable development. I have been encouraged by recent efforts to give high-level political impetus to the search for solutions.

Chancellor Gerhard Schröder of Germany has put forward the Cologne Debt Initiative, which aims to speed up and broaden the application of the Heavily Indebted Poor Countries (HIPC) Debt Initiative.

And United States Vice-President Al Gore, at the World Economic Forum in Davos earlier this month, pledged that the United States would provide "significant new funding for poor, highly indebted nations", and he called for "decisive progress towards debt relief". It is my sincere hope that these initiatives will translate into tangible results before too long.

The United Nations has a central legitimate interest in questions of international finance. This mandate derives from the Organization's overriding concern with development, and because of the international financial system's great influence on the development process and on peace and security.

In recent months, many countries have found themselves extremely vulnerable to violent swings in global flows of private capital. As we have seen time and again, the main victims are the poor, the weak and the vulnerable. Moreover, economic disruptions, distortions and imbalances can be root causes of social distress and political instability. These are sufficient reasons for the United Nations to step in.

It follows that we must work with finance ministries and central banks, and with our own specialized international institutions, to strengthen the international financial environment so that it better promotes development.

In doing so, we would only be doing what we have always done. Indeed, ideas launched in the United Nations over the years have been adopted and implemented by the Bretton Woods institutions.

The most prominent were the International Development Association, the concessional financing facility at the World Bank, and the concept of "adjustment with a human face". This is an area in which we can improve our contribution. As one example of the Secretariat's efforts to advance the debate on current concerns, I would draw your attention to the report on the global financial architecture just issued by the Executive Committee for Economic and Social Affairs.

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Throughout its history and especially in the 1990s, the United Nations has been a forum for the elaboration of international norms and goals on critical aspects of economic and social development. All too frequently, however, such declarations and plans of action have been followed, several years later, by disappointed appraisals attributable in no small part to a lack of financial resources. We must do better.

The General Assembly has agreed by consensus to begin a process of extensive discussions on financing for development. Already, you have improved upon earlier such efforts. You have expressed a constructive willingness to engage in dialogue. The President of the General Assembly and the Vice-Chairs of this Group, Ambassador Sharma and Ambassador Sucharipa, are exercising able leadership. The Secretariat at large -- and I personally -- will do all in our power to assist you in ensuring a constructive result.

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