'CONTRADICTORY' POLICIES OF INTERNATIONAL FINANCIAL INSTITUTIONS PERCEIVED AS UNDERMINING EMERGING ECONOMIES

Press Release
GA/EF/2862

'CONTRADICTORY' POLICIES OF INTERNATIONAL FINANCIAL INSTITUTIONS PERCEIVED AS UNDERMINING EMERGING ECONOMIES

As Second Committee Continues General Debate, Speakers Express Hopes for Upcoming International Economic Meetings

Globalization was neither good nor bad; it was like the weather, one had to adjust to it, said the representative of Singapore as the Second Committee continued its general debate this morning.

He said that those who saw globalization in negative terms often compared the phenomenon to powerful forces of darkness sweeping across the globe, leaving a trail of destruction behind them. The argument was that all benefits accrued to the rich developed countries, while the price was being paid by the poor.

Yet globalization had its good sides, he said. Global interconnectivity had in turn generated global interdependence. In the past, the rich could afford to ignore the poor because they were far away. Today, what happened in poor homes could directly affect rich homes. Globalization could provide direct access to the financial resources, technology and markets of the developed world. The ease of communication through modern technology had also enabled the transfer of jobs from developed to developing countries.

Turning to international financial institutions, the representative of Sierra Leone said that they engaged in contradictory and harmful policies that undermined young democracies and emerging economies. What was the point of warning Africa against AIDS if the continent could not subsidize condoms? Lack of sex education had increased HIV infection, especially among the most productive group: those between 15 and 50 years of age.

He said that rather than being exposed to the rigours of the world markets, it would be better for African countries to protect their own markets. Africa should delay participation in the globalization process until its countries were ready to compete.

Also this morning, many speakers expressed their hopes for the various upcoming intergovernmental economic forums. The representative of Cuba believed that the high-level meeting on financing for development, to be held in the year 2001, would provide the appropriate opportunity for debating such crucial developmental issues as strengthening differential trade treatment and increasing

Second Committee - 1a - Press Release GA/EF/2862 7th Meeting (AM) 8 October 1999

access to global markets for developing countries. While globalization was marked by strides in technology, only those who possessed the technology could participate and benefit. Rhetoric must yield to true global partnership. A new global economic order that involved developing countries in the decision-making process and an integrated approach to development was needed.

With regard to the upcoming Seattle Ministerial Meeting of the World Trade Organization (WTO), the representative of Egypt stated that it was illogical to continue to talk about international trade liberalization when such liberalization only served a few countries and led to the marginalization of many developing ones. The exports of developing countries had faced many non-tariff restrictions, which impeded their access to markets in the developed countries, especially in sectors where developing countries had a competitive advantage, such as textiles. Therefore, all existing agreements should be fully implemented before another round of negotiations began.

Statements were also made by representatives of the United Republic of Tanzania, Jordan, Saudi Arabia, El Salvador, Kazakhstan, Republic of Korea, Israel, China, Uganda, Cameroon and Ethiopia. The representative of the World Meteorological Organization also spoke.

The Second Committee will convene again at 3 p.m. to continue its general debate and to begin consideration of macroeconomic policy questions.

Work Programme

The Second Committee (Economic and Financial) met this morning to continue its general debate.

Statements

ALLIEU IBRAHIM KANU (Sierra Leone) said that last June, 95 African countries had agreed that there was a need for reforms. They called on the international community for support. The weak response to that call accounted for the marginalization of Africa in the world economy. International financial institutions engaged in contradictory and harmful policies that undermined young democracies and emerging economies. What was the point of warning Africa against AIDS if Africa could not subsidize condoms? Lack of sex education had increased the incidence of HIV infection, especially among the most productive group: those between 15 and 50 years of age. An increase in literacy could mean that most goods now imported from the developed world would be produced in Africa. Yet the literacy rate had dropped in Africa. Limitations in education and vocational training were an impediment to development.

In Africa, women made up 51 per cent of the population. Investing in women was therefore good for economical and sustainable development. But there were fewer schools for girls than for boys, and cultural barriers often prevented women from getting an education. It was clear, however, that birth rates among the poor declined when education was available. African countries should not yet be exposed to the rigors of the world markets, he added. It would be better for them to protect their own markets, delaying participation in the globalization process until they were ready to compete.

DAUDI N. MWAKAWAGO (United Republic of Tanzania) said that industrialization played a crucial role in promoting sustained economic growth and sustainable development. In developing countries, industrialization could facilitate the process of poverty eradication and the integration of women in the development process. It was also a source of employment. However, low levels of technology, lack of capital and poor infrastructure had thwarted the process of industrialization in many developing countries. International cooperation and assistance for technology transfers, financial resources and capacity building were called for, if developing countries were to enhance their productivity and competitiveness in the world economy. Implementation of Agenda 21 could move forward only if the dual questions of financial resources and transfer of environmentally sound technology were resolved. The solution to those problems lay in the readiness of development partners to exert the political will needed to implement their commitments.

Africa was still going through difficult economic conditions caused by the crippling debt problem, deteriorating prices of commodities, limited access to markets, insufficient flow of foreign investment, declining Official Development Assistance (ODA) and, in some cases, the impact of internal conflicts. Those problems together posed a serious threat to prospects for regional rehabilitation and development. Collective action by the international community was therefore required to support African efforts to realize sustainable economic growth and development. Economic and technical cooperation among developing countries was a viable tool for the countries of the South in their pursuit of economic growth, expanded technological capacities and accelerated development. However, to secure those objectives, the international community needed to continue providing the necessary assistance, both financial and technical, as a backup to the region’s own efforts.

WALID AL-HADID (Jordan) said that two important meetings scheduled to take place in the near future were the ministerial-level session of the United Nations Conference on Trade and Development (UNCTAD) and the South-South Summit, which would be the first summit of its kind.

They would be timely encounters, he said, for the gap between developed and developing countries was growing inexorably. The increasing debt burden of the developing countries constituted a serious hindrance to development. Among root causes for that state of affairs were the price drop in commodities, lack of access to markets of developed countries, and lack of foreign investment. The downward trend in ODA had compounded that situation.

Globalization was a force that did not distinguish between strong and weak economies. Developing countries often did not have a properly adapted infrastructure. The role of the United Nations and other agencies must be revitalized to enable developing countries to adapt to the constant changes in the world economy. Jordan had a foreign debt that constituted 90 per cent of its gross domestic product. That fact discouraged foreign investment, despite the fact that Jordan had adopted successful policies of structural adjustment. Both the deficit and inflation had gone down, and the tax and banking system had been reformed. He expressed appreciation for the recent initiative by the Group of Industrialized Countries in favour of relieving Jordan’s debt burden.

FAWZI BIN ABDUL MAJEED SHOBOKSHI (Saudi Arabia) said that developing countries had undergone structural and economic domestic reforms to deal with the challenges of globalization. Yet the international community was still living in an awkward phase. It was regrettable that the current economic system was marked by the prevalence of double standards and biases. While developing countries were trying to catch up, many of them were living on the fringes of economic development. He hoped that the rich developed countries would implement their pledges to be full partners in securing the objectives of sustainable development. He called on the international community to deal with globalization in a manner that led to a more equitable and balanced world. The developed countries should show more flexibility over the conditions for membership of developing countries in the World Trade Organization (WTO). They should give them preferential trade treatment and access to markets for their goods. Saudi Arabia had applied for membership in the WTO, and hoped that other States would support it in that endeavour.

Saudi Arabia attached great importance to environmental issues, he said, both in its internal and external policies. A secure life for humankind was linked to the kind of environment humans lived in. His country had actively participated in various conferences on environmental protection. He hoped that international efforts to deal with environmental problems would be objective and based on well-researched data, and would take into account the special needs of developing countries. Developed countries should transfer environmentally sound technologies to developing countries.

AHMED ABOUL GHEIT (Egypt) said that current economic indicators showed that the global economy was returning to its usual growth rates following the recent financial crises. But it would be dangerous not to consider the lessons learned from those crises. Their volume and their impact pointed to inherent structural defects in the present international financial architecture. One such defect was the absence of developing countries at the decision-making levels of the international economic system. It was illogical to call for structural reforms only in the developing countries, while ignoring what needed to be done in the international economic regime. Egypt believed that the United Nations should assume its essential role, set out in the Charter, of making the necessary recommendations for dealing with the present imbalances in that regime. It should also help to the developing countries to undertake the reforms that would allow them to participate more actively in the international economic system.

He said that the high-level meeting to be held in Seattle in 2001 was a unique opportunity to examine the challenges facing financing for development. It would provide an important venue for dealing with the impediments that prevented developing countries from advancing the development process in their own territories. Implementation of the conclusions of the major United Nations conferences would also be a positive step towards that objective. It was vital that developed countries fulfil their commitments, particularly in the area of financial assistance. With regard to the upcoming Seattle WTO Ministerial Meeting, he believed it was not logical to continue to talk about liberalization of international trade, when such liberalization only served a few countries and led to the marginalization of many developing countries. The exports of developing countries had faced many non-tariff restrictions which impeded their access to markets in the developed countries, especially in sectors where developing countries had an advantage, such as textiles. Therefore, all existing agreements should be fully implemented before beginning another round of negotiations.

KISHORE MAHBUBANI (Singapore) said that those who saw globalization in negative terms often compared the phenomenon to powerful forces of darkness sweeping across the globe, leaving a trail of destruction behind them. The argument was that all benefits accrued to the rich developed countries, while the price was paid by the poor. In theory, bodies like the WTO and the Bretton Woods institutions were set up to create a level playing field for all countries in the world. But the perception among many developing countries was that those institutions seemed to promote and respond only to the interests of the major developed countries.

Yet globalization also had its good sides. Global interconnectivity had in turn generated global interdependence. In the past, the rich could afford to ignore the poor because they were far away. Today, what happened in poor homes could directly affect rich homes. Nothing demonstrated that more clearly than the recent Asian financial crisis. Hence, interdependence could paradoxically empower the weak. Globalization could provide direct access to the financial resources, technology and markets of the developed world. The ease of communication through modern technology had also enabled the transfer of jobs from developed to developing countries.

Globalization could not be seen as inherently good or bad, he concluded. It was like the weather: one had to adjust to it.

SERGEY B. AGEYEV (Kazakhstan) said that the process of globalization, one of the factors impacting economic development today, was subjective in nature. It required a new approach and new methods to manage it. That responsibility fell on the United Nations, and the high-level event to be held in 2001 on financing for development would be a good step in that direction. He also welcomed the holding of the second joint meeting between the United Nations and the Bretton Woods institutions in April. Kazakhstan had a transitional economy, and valued United Nations efforts to integrate such countries into the international economic system. Bearing in mind that they continued to experience serious social and economic obstacles to their integration, continued cooperation with the United Nations was crucial. Kazakhstan was a land-locked country, he said. The issue of access to world trade routes, including the transport of coal-based materials, was vital for his country. He attached special importance to cooperation with the United Nations in developing a transit transportation system in the region.

Kazakhstan strictly adhered to policies favouring increased regional cooperation. He was gratified by the cooperation undertaken with regional United Nations institutions in preparing and carrying out United Nations programmes and projects. He also attached great significance to regional economic cooperation. Kazakhstan would continue to promote the further strengthening of its relations with the regional organizations it belonged to. He added that one negative aspect of globalization was the deterioration of the environment. Ensuring sustainable development and preserving the environment had become especially important problems. They required immediate solutions. The economic and environmental problems discussed in the Committee were of special concern for his country, and he looked forward to working together to achieve common goals.

RICARDO D. CASTANEDA-CORNEJO (El Salvador) said that the free market economy was driving the world economy into the new millennium. The international system had changed over the last decade. Traditional methods of policy-making or doing business had been influenced by globalization. The changes were asymmetric in their consequences, but also brought benefits for all countries. On the national level of developing countries, macroeconomic efforts -– such as promoting the private sector, maintaining low inflation, diminishing state bureaucracy, limiting restriction on foreign investments, stimulating exports, opening industries, opening banking and telecommunications systems to private investors -– were major premises underpinning the new international system.

To lend a human face to those developments, it was indispensable to foster democratic change. There was a need to promote and build a genuine culture of peace. It was important for developing countries to forge the capacity for speedier responses to natural and environmental disasters. The global village had become a reality, he said, and the world must learn how to operate in that environment.

LEE SEE-YOUNG (Korea) said that throughout this year most of the crisis- stricken countries had been showing clear signs of recovery. It was not the time, however, to be complacent. Ever-deepening interdependence had made international cooperation more vital than ever. There was strong pressure on the international community to work towards enhancing transparency and good governance, as well as establishing an early-warning system for regulating short-term capital flow. Poverty eradication and strong social policies must be the centrepiece of crisis management and economic reform.

Korea strongly supported the Heavily Indebted Poor Countries (HIPC) Debt Initiative, and was considering making a contribution to the HIPC fund. In the spirit of South-South cooperation, Korea, in an effort to facilitate the transfer of environmentally sound technologies, would host a high-level forum on South- South cooperation in science and technology transfers in Seoul next February.

MARTIN BELINGA-EBOUTOU (Cameroon) said the dawning of the twenty-first century brought with it much hope and many concerns. There was hope for a more prosperous and equitable world. Thanks to new information technology, humankind was drawing closer to a more unified world. But many areas of concern remained. The already great gap between rich and poor countries was growing. Would globalization be translated into growth and development for the countries of the South? What future was there for the people of the Southern hemisphere, who represented the majority of humankind? Those were issues to be addressed in preparing for the Millenium Assembly. The challenges of eradicating poverty, protecting the environment and the struggle against major pandemics, such as AIDS, required more concerted efforts.

There were many reasons for poverty, among them an insufficient economic growth rate. In Africa, that rate was estimated at three per cent per annum. In the best-case scenario, it might reach 3.5 per cent in 2000. That was very far from the seven per cent growth rate necessary to reduce poverty in Africa to the target levels by 2015. Increased international solidarity, in the form of increased ODA and investment flows, better access to world markets, and fair and urgent handling of the debt problem, were all needed.

In a spirit of solidarity, Cameroon and other central African countries had committed themselves to work together to protect the environment and safeguard natural resources. To that end, they had decided to create protected trans-border areas to preserve biodiversity. Forests were a considerable source of revenue. There was increasing awareness of the need to work together. In return for the sacrifices made by African countries in the name of world environmental balance, the international community should establish a fund to support policies for the preservation and sustainable management of forests and biodiversity in Africa. The process would require the mobilization of resources and other measures which would involve difficult burdens for already fragile African economies.

ZVI GABAY (Israel) said that the issues confronting the Second Committee affected the well-being of mankind and the future of the planet. Hunger, malnutrition, water scarcity and economic deprivation were likely to impair that well-being. The basic goals of international cooperation to achieve sustainable development were elimination of poverty, access to secure food supplies, eradication of diseases and finding global solutions to combat the effects of climatic change and preserve biodiversity.

Israel had decided to focus its contribution to that goal on enhancing food production in semi-arid and arid zone conditions; developing agricultural-based communities; and improving water management by applying new technologies of irrigation and recycling. “The notion that water is a free source will not ‘hold water’ anymore”, he said. Israeli expertise could help optimize plant-soil-water relationships in areas with scant water. Israel was also cooperating with other countries towards developing “desert margin” areas, which were likely to become future economic frontiers.

Israel’s international development programme was designed to share know-how and exchange ideas with its Arab neighbours. In the spirit of cooperation and goodwill, Mr. Gabay expressed Israel’s confidence in further progress towards achieving the goals of sustainable development. “May this spirit rise above any irrelevant political issues which may have been introduced in this Committee’s agenda”, he said.

BRUNO RODRIGUEZ PARRILLA (Cuba) said the paradox of a technologically advanced and developed world living alongside a poverty-stricken and developing one was growing. The ideals of the free market and liberalization had imposed high costs on developing countries. Stronger governments were needed, equipped to regulate and control their nations and economies. The world had entered into a crisis of the paradigm of neo-liberal development. Globalization had offered many illusions to the developing world. It was ironic that those who suffered most were countries that had liberalized their economies to adjust to the global economic system. What vision of development would emerge to enable humanity to better fight poverty and marginalization? How would globalization be managed in the next century?

A new global economic order that involved developing countries in the decision-making process was needed. So was an integrated approach to development. In addition, the growing gap between rich and poor countries must be reduced. In that context, Cuba recognized the special developmental role played by the United Nations and the Second Committee. The upcoming conference on financing for development would be an appropriate forum for debating crucial developmental issues. Equally important was the strengthening of differential trade treatment and access to global markets for developing countries. While globalization was marked by strides in technology, only those who possessed it could participate and benefit. More resources for operational activities for development were needed in developing countries. Rhetoric must yield to true global partnership. A better understanding of globalization and its associated challenges were central to the agenda of the South Summit, to be held in Havana next April.

HAROLD ACEMAH (Uganda) said that for globalization to benefit everyone, several factors must be taken into account. First, it must not degenerate into a runaway private-sector-driven process that had no human face. Second, the major actors in the process must accept their responsibility to ensure that globalization did not adversely affect unsuspecting countries. Third, all countries must participate effectively in international economic and financial policy decision-making. Fourth, international development cooperation must be reinvigorated, especially in areas such as trade, investment and institution building, that would help build the capacity of developing countries to benefit from globalization. In addition, national capacities for governance must be strengthened: countries must be better equipped to make policy choices minimizing the risks of globalization and coping effectively with its challenges. Thus beneficial participation of all countries in the global economy could come about.

Because of the pivotal role played by multinational corporations in the process of globalization, the United Nations Commission and Centre on Transnational Corporations should be revived. With the benefit of hindsight, it had been a mistake to abolish the Commission. The financing-for-development process was an important one, he said. The convening of a stand-alone event on that question would afford a unique opportunity for reinvigoration of international cooperation for development. It was in the world’s collective interest to avert the potential risks of polarization and ultimate conflict of economic interests, which could result in negative social and political consequences.

At the upcoming third conference of least developed countries, the emphasis should be on helping those countries to bolster their capacities to benefit from trade and investment opportunities. Concrete action should be taken in the areas of guaranteed and duty-free market access, and of special and differential treatment as integral components of the multilateral trading system. Such action would do much allow least developed countries to build their capacities.

D. D. C. DON NANJIRA, representing the World Meteorological Organization (WMO), said that future WMO activities would continue to focus on building a world in which nations recognized the inherently cooperative nature of international meteorology, and worked closely within the framework of cooperation which underpinned the WMO Convention. The potential of meteorological and hydrological early warning systems to reduce loss of life and property in severe weather, flood and drought situations, developed through the International Decade for Natural Disaster Reduction and its follow-up activities, should be fully realized and implemented early in the twenty-first century. Increasing cooperation between the meteorological, oceanographic and hydrological communities and institutions would lead the way towards an integrated global environmental monitoring and service system, built on the foundations of the WMO World Weather Watch. It would serve the needs of the full range of national and international users of meteorological, hydrological and related environmental services.

The WMO would continue to participate actively in the efforts of the international community to save coming generations from the scourges of environmental deterioration, the effects of global warming, damage to the ozone layer, water scarcity, pollution and natural disasters and other disaster situations. It would continue to work towards the improvement of the adequacy, efficiency and effectiveness of national and global meteorological and hydrological capacities, infrastructures, networks, observing stations and services to assist human activities. All of which were vital pre-requisites for sustainable development, especially for developing countries. In that context, the WMO strongly believed that the international community needed to re-assess the contributions of science and technology to development, with a view, among other things, to enhancing the applications of advances in science and technology (including those of the geo-sciences) to sustainable development.

SHEN GUOFANG (China) said that globalization should bring prosperity to all. That was a key to healthy global economic growth. To achieve that goal required global cooperation, a global sense of responsibility and the establishment of a new world economic order. There could be no global prosperity without the growth and development of developing countries, home to 90 per cent of the world population. Developed countries should demonstrate their political will and sense of responsibility towards the global economy, and contribute to the realization of a fair and equal world.

After years of arduous efforts, developing countries had perfected a range of products that were quite competitive, but they had consistently suffered from all kinds of trade protectionism. While protecting their own markets, developed countries were forcing developing countries -- under the pretext of trade liberalization -- to open up their markets. Quite a number of developing countries were still being excluded from the WTO. Yet joining that organization was a major step towards integration into the world economy. Relevant negotiations should be conducted on the basis of a balance between rights and obligations, he said.

Though democracy was equally important on the global and national levels, the former was more often than not overlooked. Developed countries, claiming to be upholders of democratic values, often excluded developing countries from the international decision-making process. While new rules in the international economic field were being formulated, full involvement by developing countries must be guaranteed. That would make the process truly democratic, ensure developing countries’ equal rights, and reverse the existing situation where developed countries laid down rules at will, and developing countries were left with no choice but to follow.

BERHANU KEBEDE (Ethiopia) said that international cooperation in the last three decades had failed. It had never enjoyed the volume of resources that was promised, not to mention the volume needed to make an impact. Most development partners were far from the agreed target of 0.7 per cent of Gross National Product (GNP). Indeed, in some cases, their contributions had been shrinking. The trickle of developmental assistance reaching developing countries was hedged about with different forms of conditionalities. There was a critical need for a more transparent and predictable partnership between developed and developing countries, on the basis of clearly understood rules. In that context, practice had shown that steps envisaged by the HIPC Initiative were half-hearted and far from adequate. The total debt stock of developing countries, especially of the heavily indebted poor countries, was beyond sustainability. The international community had to take radical measures, such as debt cancellation and conversion of official bilateral and multilateral into grants.

Effective integration of African countries into the multilateral trading system and their full participation in the WTO process needed priority attention in the upcoming UNCTAD X and WTO Ministerial Meeting, he said. Opening markets in the North to the products of those countries should be a major goal of those conferences if the multilateral trading system was to be strengthened. Immediate priority must go to implementing the special and differential treatment provisions. In addition, supply-side weaknesses caused by the problem of diversification on the one hand, and by the fall of commodity prices on the other, were issues demanding an immediate response in upcoming trade and development negotiations.

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