UNCTAD X HOLDS "WORLD LEADERS' FORUM", AS CONFERENCE BEGINS FINAL DAY IN BANGKOK

Press Release
TAD/1918

UNCTAD X HOLDS ‘WORLD LEADERS' FORUM’, AS CONFERENCE BEGINS FINAL DAY IN BANGKOK

Theme Is Development Experiences, Integration Of Developing Countries and Economies in Transition into Global System

(Received from a UN Information Officer.)

BANGKOK, 19 February -- The final day of the Tenth United Nations Conference on Trade and Development (UNCTAD X) began with a World Leaders' Forum, held this morning on the theme “Reflections on development experiences and the integration of developing countries and economies in transition into the global system”.

The forum, moderated by journalist Raghida Dergham, covered the specific development experiences of the States represented and the lessons that could be drawn from the recent financial crisis. It also dealt with the role of democracy and regional integration in development, the critical importance of finding ways to deal with developing world indebtedness and the brain drain from developing countries.

The President of Algeria, Abdelaziz Bouteflika, said the major problem facing Africa was indebtedness. Current debt relief measures were welcome symbols, but only applied to bankrupt States that could not pay anyway. For debt alleviation to go beyond the symbolic, it must be provided for middle- income African countries, as it had been to the Russian Federation.

The President of the Dominican Republic, Leonel Fernández Reyna, stated that preferential access to United States and European markets, along with sound monetary policies and an improved tax structure, had allowed his country to grow, despite the economic and natural disasters.

The Prime Minister of Mozambique, Pascoal Manuel Mocumbi, said southern African nations had learned that success could not be achieved without combined efforts. As during colonization, Africa’s people had been marginalized from political and economic participation in their own countries. It had been of primary importance to build institutions that would be felt by people to be as theirs.

The Prime Minister of Thailand, Chuan Leekpai, said that in the aftermath of the recent financial crisis that wracked Thailand, while government spending was severely limited, expenditures on education, public health or other services was not curtailed. This, and employment stimulation programmes, meant the social impact of the crisis was alleviated. Human resources remained central to Thailand’s efforts to improve its competitiveness.

Abderraham El-Youssouffi, Prime Minister of Morocco; Ricardo Marquez Flores, Vice-President of Peru; Jacob Zuma, Deputy President of South Africa; and Moses Ali, Deputy Prime Minister of Uganda, participated in the forum. The Secretary-General of UNCTAD, Rubens Ricupero also spoke.

UNCTAD X will meet again at 4 p.m. today, when it is expected to conclude work with the adoption of its Bangkok Declaration and Plan of Action.

Questions and Answers

Question: What principal policy measures did you undertake to bring Thailand out of financial crisis and on the road to recovery, what lessons have you learned in the process?

CHUAN LEEKPAI, Prime Minister of Thailand: In each South-East Asian country affected by the crisis, there has been progress, although measures undertaken differ because the causes in each country were not the same. In Thailand, the crisis was initially due to a fall in our international reserves, because they were used to fight an attack on our currency. Thus the source was external. The fall in reserves, and subsequently exports, led to changes to the foreign exchange system; the floating of the Thai currency. The currency was not expected to depreciate much, but it fell greatly -- so much so that no one was sure when the bottom would be reached. Investor confidence in the currency and the economy disappeared. This led to major capital outflows -- the “bleeding of the country”. In an attempt to prevent this outflow of capital, the government of the time tried many measures, but in the end sought assistance from the International Monetary Fund (IMF) in August 1997.

When I took office, my priority was to restore confidence in the economy and the currency. We were also aware from the beginning of the social impacts, which were severe, as companies collapsed and people were laid off. One of the first committees we convened was charged with preventing and alleviating unemployment. However, financial confidence had to be restored to alleviate the social impact. The agreement with the IMF was strict and limited fiscal spending, but the situation did not improve as expected. So we arranged to adjust the agreement from one requiring a fiscal surplus to one allowing a fiscal deficit. Clearly, the IMF’s initial assessment of the situation was wrong.

Despite limited assistance, Thailand decided to use the crisis as an opportunity to undertake measures to prevent a recurrence. Spending was reduced in many areas, but we did not touch education, public health or other services, the budgets for which were increased. Once stability started to return, we used policies to stimulate the economy using assistance from international agencies and bilateral partners, and undertook projects aimed at stimulating employment. Not all the consequences of the crisis are yet resolved but we have been able to alleviate the social impact. Production at the local level increased, and the cost of living was maintained. At the height of the crisis no one starved. We do not deny the weaknesses in Thailand that contributed to the crisis, and we have undertaken to revise and improve our legal and regulatory framework to international standards. We accept globalization, and so we have to liberalize trade, advantages and disadvantages. Good governance has been lacking in public and private sectors, and must be improved. Human resources remain central to our efforts to improve our competitiveness.

Question: In the last three years the international financial crisis has had strong repercussions on Latin American and the Caribbean. The region has also had its share of natural disasters as well. However, during the same period the economy of the Dominican Republic has registered significant growth. How was this achieved? And how do you believe your country will integrate better into the global economy?

LEONEL FERNÁNDEZ REYNA, President of the Dominican Republic: Our relative success has to be seen from the point of view that our country has not come within the purview of the Asian crisis. We depend on North American and European Union markets. As such, one external success factor is the fact that the economy of the United States has experienced the greatest economic expansion of its history -- over a period of 107 consecutive months -- 1991 to the present.

We also have preferential access to United States and European markets through the Caribbean Basin Initiative and Lomé IV. The repercussions have therefore been beneficial. Of course many domestic factors have also helped. We have had sound monetary policies and an improved tax structure with enhanced administration. This has negated the need to raise taxes. There is also stability in our exchange rates and sustained economic growth.

The growth rate of our gross national product (GNP) was 8.3 per cent. In 1998, despite hurricane Georges, the gross domestic product (GDP) registered a 7.3 per cent growth. This year we project between 7.3 to 7.5 per cent. However, we envisage that increases in oil prices may have adverse effects on our economy.

Another factor that helped us is the capitalization of State enterprises and increases in Foreign Direct Investment (FDI) to our country. In 1999 we had the greatest investment in our country -- $1.4 billion. Our telecommunication sector has also been growing by about 20 per cent annually. The Dominican Republic is currently the country with the greatest index on the consumption of concrete in the Western Hemisphere, after the United States. Both the North American and European markets have been performing very successfully and this has enabled us to overcome the international financial crisis without being affected.

Question: For Africa, globalization has increased marginalization. As President of the Organization of African Unity (OAU), what is your vision of the actions required to overcome current difficulties and improve the situation?

ABDELAZIZ BOUTEFLIKA, President of Algeria: Africa is completely marginalized. This was made clear in Seattle, where the dialogue was between the United States and European Union, while Africans were silent observers. Africa has split from the global development flows and processes of the rest of the world. Globalization at present can benefit only those with the requisite material, technical and scientific foundation. International efforts have not been taken by the international community for Africa and until they are, it will be left out of the process. Historically, Africa’s resources were used to improve the situation of other continents, through colonialism and slavery. This was to the detriment of schools and education and social development. Africa was impoverished. Once independence was obtained, Africa chose the wrong models and spoiled its chances. It lacked executive personal and infrastructure. The international system kept Africa as a source of resources and a market for developed country products, and this situation continues today. Trade liberalization cannot benefit Africa when the starting points are so unequal.

We are looking for palliatives, because there are no remedies. African countries must take responsibility to combat its marginalization, but the world cannot set aside such an enormous swathe of humanity and live with a clear conscience. African peoples are disappearing. Developed countries now have third-generation AIDS drugs, but no single African country has benefited yet from the first generation of such medicines. Africans have lost the every right except the right to dream.

The major difficulty now is indebtedness. The Group of 7 decision on debt relief is a step towards a possible solution, and debt alleviation is welcome. But the 33 countries that have benefited were bankrupt countries that could not pay. This debt relief is like saying to a dying man that you can die happy because you have no debt. Africa welcomes the gesture, but efforts should be taken to return these countries to dignity. Debt alleviation to middle-income African countries of the nature provided to Russia is recommended.

Question: What do you believe are the challenges of globalization for southern Africa as a region? Could you also touch on Mozambique’s development and economic strategies?

PASCOAL MANUEL MOCUMBI, Prime Minister of Mozambique: As we all came out of domination in southern Africa, we learned that success could not be achieved without a joining together of efforts. The Southern African Development Community (SADC) is 20 years old. We started off by trying to join efforts to coordinate development. We asked our different partners to help us move from colonial transition to a transition of countries with their own institutions.

We had previously been marginalized from political and economic participation in our own countries. The first question to be addressed in that context was how we could build institutions in our countries that would be perceived by the people as theirs. Also, how could we bring a better quality of life to those people? For the SADC, the response was therefore born of the will to join efforts in the search for development. Internally, the aim was to promote economic growth. In the last four years, we have achieved some positive results. In 1999 we expect 3.5 per cent growth.

How can we be part of the global picture when we have high poverty and weak institutions? How can we move people earning less than 50 cents a day up from that bracket and then go on to produce? The second challenge confronting us is the debt crisis that is an impediment to our sustainable growth. All that we have is used to pay off this debt. We are therefore happy that today there is agreement on the need for broader and deeper consideration of the issue.

The region continues to face the problem of conflict. Through the OAU and local and regional management mechanisms, we are addressing the challenge of maintaining peace and stability. As such, Angola and the Democratic Republic of the Congo are the top priorities of our leaders. Ensuring peace and stability is necessary if the region is to prepare itself to launch development programmes that will eventually lead us to participation in the global world that we are talking about.

We hope that the revolution in information technology can benefit our people. Yet how is this all possible when, in terms of education, there are still difficulties in providing access to all? We are happy that national strategies to face poverty are being developed so that it can be reduced. While each of us has a national strategy in this respect, solidarity is still required. Another question is how to transform the quality of living of our people. How do we improve homes, rebuild roads, advance communication and contribute to the free movement of men and women in the region? Without free movement, we cannot be expected to be players in the global world where the free flow of capital is a reality.

Question: Was regionalization an essential step in Morocco’s inclusion in the world economy, and what role do democratic values play?

ABDERRAHMAN EL-YOUSSOUFI, Prime Minister of Morocco: Globalization assumes regionalization. The Maghreb remains an area that is perhaps the least integrated in the world. Insulated economies hinder our incorporation in the world economy. Integration would raise investment and therefore give us the resources to improve human capacities. It would also increase our negotiating power with other groups, such as the European Union. It would guarantee peace, without which development is not possible. There is increasing awareness in the south Mediterranean region of shared destiny. Morocco is trying to open up the region’s economies through agreements, and to add value through joint marketing of its resources.

Regional integration must be based on the conscious and free support of the people of the region, and therefore presupposes democratic institutions. There is no doubt that delays in regional integration are linked to the “democracy deficit” affecting many developing countries. Regionalization must be based on common values, and those values today include freedom, tolerance, justice, solidarity, human rights and the integration of women into development. Democracy is a regional integration factor and a social development factor, thus a key to successful integration in the global economy.

The ultimate goal of agreements signed in 1995 is a Euro-Mediterranean free trade space that will cover all the European Union States and the countries of the Mediterranean. We are exploring and examining with interest and a little apprehension the consequences of the implementation of this space. The immediate consequences will be the customs “disarmament” of our countries -- resulting in the entrance of European industrial goods. Our agricultural goods do not yet have the access they deserve to European Union territories. This experience has to be carefully observed and monitored. We hope it will lead to an upgrade for our region in the longer term.

Question: What major impact has liberalization had on Peru’s social and economic environment?

RICARDO MARQUEZ FLORES, Vice-President of Peru: Medium-sized enterprises have had the greatest problems in the process of globalization. In Peru, the 1980s had witnessed a closed Peruvian market characterized by inefficiencies and deficits. Globalization has, however, produced results. This year, inflation is running at around 4.5 per cent of GDP. The economy has stabilized and we are aspiring to achieve fresh growth in exports.

The Asian crisis did have an adverse effect on Peru since capital flows plummeted and there was less available for enterprise and export. How did Thailand emerge from the crisis without using subsidies or having recourse to enormous sums of money? The answer is feasible if you give better service as governments to medium-sized enterprises.

If we want to be part of the global environment and not experience the associated adverse effects, the advantages of electronic and digital technology have to be seriously addressed and harnessed. How do we get rid of poverty? To do this, we need more trade and investments.

In the Andean Pact nations, we are still trying to cooperate amid our difficulties. What matters is the will of every national leader to achieve integration. And all the Andean Presidents are determined to achieve integration, in not only tariffs and customs, but also in education, transport and other major areas. Despite the internal differences, there is political will on behalf of the leaders to make sure that things work.

We need an integrated policy that is complementary, not just in terms of trade but in terms of equity. We welcome Colombia’s efforts to put an end to its internal problems.

Question: South Africa’s major changes took place at the same time as globalization and South Africa’s integration into the region. What was the country’s experience?

JACOB ZUMA, Deputy President of South Africa: Six years ago, with the birth of a democratic South Africa, we had to transform a divided and polarized country -- to create a new country. The means of doing this are reflected in our Constitution and our Bill of Rights, so we will never go back to apartheid. However, that system is still reflected in the standards of living of South Africans and in the way the economy functions. We have consolidated democracy through dialogue and consultation and now have a culture of consensus. Our social development is linked to the region and to Africa as a whole. The new South Africa had to become an African country. Everything we now do is dependent on the interests of Africa.

Clearly, if conflict dominates a country or a region, then democracy is threatened. Stopping wars and supporting democracy are priorities for us. But we also cannot sustain peace and stability in a sea of poverty, and therefore addressing poverty is critical. The emerging consensus of UNCTAD X that poverty is a threat against humanity is welcome. If globalization is looked at squarely, the issues of poverty and development are critical.

For African countries, trade negotiations are not a luxury. The delay in the World Trade Organization (WTO) negotiations is a delay in addressing poverty. The WTO needs to take a fresh approach to the developing world, and to take account of the needs of developing countries. A consensus is emerging in this Conference on the need for a holistic approach to development, and it is clear to all that trade and development cannot be separated. This emerging consensus must result in action. The final test will be at the WTO negotiations. The second round must come immediately. Globalization must not globalize in two different directions, and technology must not be used to disadvantage those already disadvantaged.

Question: Uganda has been pursuing active liberalization reforms. Tell us about its experience with the role of the State in the liberalization process and about the problems encountered?

MOSES ALI, Deputy Prime Minister of Uganda: My country is both a landlocked and a least developed nation. By virtue of it being surrounded by a number of countries, it is also unavoidably a transit country. The result: there is a spillover of problems which are not ours into the country.

The present Government came to power in 1986 after two decades of self- destruction and self-inflicted conflict. It took office promising to make fundamental changes. However, it inherited a ruined infrastructure and economy. There was no obvious direction to follow.

We needed help from entities such as the World Bank and the IMF. In the end, it was our own decision to invite the IMF in and not an imposition. That decision had the support of the population. This is why we can absorb the stringent measures required by the Fund. To date we have gone through three stages of structural adjustment.

Our present liberalized economy is encouraging investors to come into the country. The once monopolized coffee industry, for example, has now been opened up. Farmers also have the opportunity to earn more money because middlemen have been eliminated. Price lists have been abolished and the market now sets the prices. We also belong to several regional cooperatives and actively fight corruption.

RUBENS RICUPERO, Secretary-General of UNCTAD: This was a conference about three things. It was a reflection on development. It was a healing process after Seattle. And it was an exercise in participation and openness. Its result was an amazing convergence of views, and it is to be hoped that things can now go forward from there. It was here that developed partners of developing countries responded to the new non-confrontational and constructive approach of the developing countries.

Mr. MARQUEZ FLORES of Peru, reporting back from yesterday’s round table on the human dimension of development: The round table’s main conclusion was that private initiative is the force that will maintain globalization. The need for a microeconomic approach to globalization was also discussed. It was necessary to find ways to adapt small enterprises so they can be part and beneficiaries of globalization. These have suffered most in the liberalization process. The discussion revealed that the small enterprises that were able to best adapt were those that made a technological adjustment and modernized. These had derived benefit. Creation of more adaptable enterprises was an important development aim, as these enterprises would create jobs, and jobs are a key to poverty reduction.

The round table also noted that entrepreneurs all have something in common -- their initiative. Contemplating the role of the State, participants concluded that cooperative relationships between the State and private enterprise, rather than those that were solely the initiative of the State, were most likely to achieve positive results.

Interactive Segment

During the interactive segment of the debate, a number of key issues were put to the panelists. One question concerned the current absence of leadership at the current Conference by industrialized countries. Was that accidental or was a message, such as “Deal with your own problems”, being sent by those countries?

One response to that question was that the greatest number of delegates in its history -- 159 countries -- had attended UNCTAD X. Even though the Conference was traditionally a ministerial one, 16 countries still sent heads of State and government. In addition, Japan and Singapore, which were considered developed countries, had sent their leaders.

The proposal put forward by the former head of the IMF, Michel Camdessus, that a “Group of 30” be created, was praised as a possible means of bringing together international debtors and creditors. It was noted that developed countries’ economies had been shrinking for four decades. Opening up those economies to the developing world might bring about a real global recovery.

That developing States must be part and parcel of the new digital global economy was also stressed. Action on debt, new sources of funding for development, facing up to technological challenges and trade liberalization were also cited as key outcomes of the current Conference.

Commenting on the importance of UNCTAD X, one leader noted the WTO negotiations format did not allow for the exchange of views, as States’ stances were determined in advance. UNCTAD X had provided the first real chance for States to listen to one another.

Another leader suggested that the “Group of 77” developing countries and China would, as a result of UNCTAD X, be more able to work towards international consensus. He also noted that there might be a role for the Group in mediating the settlement of conflicts.

Commenting on the brain drain from developing countries, some believed that policies that involved the State in higher education, perhaps through international scholarship programmes, might help keep trained people at home. Others said that serious international efforts to deal with poverty would help. If people believed issues were actually being addressed, they would identify with the process.

One panelist asked how trained overseas persons could be induced to return when developing countries could only afford to pay them a pittance. In that respect, he stressed that the first priority for the developing world must be to get rid of indebtedness. Yet another panelist noted that however much people were paid, they would still leave because of insecurity.

It was stated that Thailand had passed through the brain drain problem 20 years ago, at a time when primarily medical school graduates, who had been trained in the country, went to live in the United States. The problem faced then was that there were not enough doctors. Today the problem is that there are not enough positions in the public sector to give to graduates. In Thailand, the important issue now was the distribution of wealth and authority in rural areas. There should not be different standards of living in urban and rural areas. Some years ago there was also a brain drain from rural to urban areas. Professors of rural universities, for example, would inevitably request a transfer to urban areas.

One leader warned that poverty was the main threat to mankind in the twenty-first century. If the developed countries could not achieve technology transfer, and if economic strategies were not linked to technological innovations, the gap between the rich and the poor would widen. The problems had to be addressed collectively. There was only one world. “We either save ourselves or sink together”, he said. AIDS now was as global as were social and economic problems. Both responsible for massive migrations. The marginalization of the third world would finally affect the markets of the industrialized world.

Another panelist said there was no point in training people unless they could see that they could overcome their prevailing poverty. Scientists and experts could go to developing countries, spend three months, and pass on their technological know-how. He also stressed the need to focus on technological and vocational training, as that would help to alleviate poverty.

One leader observed that UNCTAD now had increased legitimacy and weight, providing the opportunity to rethink the principles and guidelines of the multilateral system. It should now proceed to consolidate the definition of development policies. It should also encourage cooperation and complementarity with the WTO.

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