PRESS CONFERENCE ON FINANCING FOR DEVELOPMENT

PRESS CONFERENCE ON FINANCING FOR DEVELOPMENT

With the rapid advance of global interdependence, problems of poverty and underdevelopment had become global problems for which the world must exercise global responsibility, Ernesto Zedillo, former President of Mexico and Chairman of the Secretary-General’s High-Level Panel on Financing for Development, told correspondents this afternoon at a Headquarters press conference to launch the Panel's report.

He said he had presented the Panel's report (document A/55/1000) earlier today to Secretary-General Kofi Annan.  Last December, he said, the Secretary-General had convened a group of people with different backgrounds to explore the many dimensions of the financing for development challenge and recommend ways of meeting it successfully.  After several months of frequent consultations among Panel members, they had produced the report.  It consists of two documents:  a self-standing recommendations paper, and a technical paper that details the wide variety of issues explored by the Panel. 

Mr. Zedillo then highlighted the Panel's recommendations.  Poverty and underdevelopment posed severe threats to stability and peace.  Eighty per cent of the world's population lived on less than 20 per cent of the income, and increasing polarization between the "haves and have-nots" had become a world feature.  Reversing that shameful trend was the preeminent moral and humanitarian challenge of the era.  For people in the rich world, elementary self-interest was also at stake.  In today's global village, someone else's poverty very soon became one's own problem:  a lack of buyers for one's products, illegal immigration, pollution, contagious disease, insecurity, fanaticism and terrorism.

Against that background, he went on, Panel members used as their starting point the Millennium Declaration produced by the Millennium Summit in September 2000.  That had committed all governments to work to free the world of extreme poverty and, to that end, to achieve precise international development goals by the year 2015.  The report looked at ways to ensure that developing countries receive the financial resources they need.  It also considered what policies to adopt, what kind of help from the industrialized world would be most useful; whether the world had the right international institutions, and if so, how to ensure that they played their proper role. 

He detailed the report's findings in the following areas:  domestic policies in developing countries, fiscal discipline, foreign investment flows, trade, international development cooperation, further debt relief for highly indebted poor countries, systemic issues and the need for innovative sources of finance.  The Panel concluded that by taking action to make markets function better –- through better domestic policies, more open trade, more international investment, more diffusion of knowledge –- and thus creating more wealth, shared opportunities, and common interests, the nations of the world could do much to defeat the evils of poverty and conflict in the new century.  More open trade, in particular, was vital.

Markets had important limitations, however, even when they functioned well, he added.  Thus, panellists had stressed the continued need for sound government

policies, political solutions, and public funds.  Presently, huge needs for public funding had gone unmet.  The report outlines an ambitious agenda to raise the necessary financial resources.  Undertaking it required public education and political courage, but the effort was more than warranted by the scale of development challenges throughout the world.  Self-interest alone should impel all parties to consider the agenda without prejudice.

Replying to a series of questions, he said that some countries felt they gave away too much, but the truth was they gave away too little.  Most people were not aware that there were reasons to give that went beyond the moral ones.  There was self-interest.  It was paradoxical that the money that rich countries spent in defence was many, many times higher than what they provided in aid.  Free trade and foreign aid was the best way forward.  One of the report's central recommendations, therefore, was to launch a campaign to make people in rich countries aware that they were giving too little and that they had an enormous interest in providing more aid out of morality, security, and self-interest.

He said that, little by little, there had been an increasing awareness about a host of problems that had not previously been considered relevant.  In the past few years, the United Nations had held a number of conferences on some central issues for humanity.  The United Nations had not only agreed on goals, but had looked at ways to pay for and achieve them.  That fundamental question had never before been considered.  Developing countries had the primary responsibility for moving ahead and they had to have their "house in order", but there were other instruments that must be provided by rich countries, namely free trade for developing countries and more aid for development.

A correspondent referred to a statement made two months ago at the United Nations by a Panel member, Jacques Delors, former Finance Minister of France and President of the European Commission.  Mr. Delors had said that five months was not long enough to address the very serious issues and evolve an optimum solution.  He said he had proposed reviving his idea of creating an economic security council to do some experimenting.  The correspondent had not seen any mention of that in the Panel's Executive Summary and asked Mr. Zedillo to comment on both of

Mr. Delors’ points.

Mr. Zedillo said he thought that Mr. Delors was right in saying that the process required more time.  It had already taken several years.  The process of considering financing for development had started at the United Nations some four or five years ago.  An important step would be completed next year with the upcoming Financing for Development Conference in Mexico.  The present report was just an input for the benefit of the Secretary-General, and the delegates, if they so wished.  It was a very modest input into a process that had taken many years and would take many more to complete.  The Panel had taken, very faithfully,

Mr. Delors’ proposal, which had appeared in the two documents that constituted the report, both in the recommendations section and the technical report.  Thus, that proposal had been very well reflected.

Another correspondent noted Mr. Zedillo's acknowledgement of the "enormous critical difficulty" of launching a global council, and asked if that difficulty had referred mainly to the United States in terms of its opposition to creating new bureaucracies.  Also, how did he propose to overcome that?

Mr. Zedillo said he was not proposing the creation of a new bureaucracy.  The economic security council, or the global governance council, as it was called in the document, was not a bureaucracy.  Rather, it was a proposal that both developed and developing countries meet to discuss openly the issues raised by globalization.  The Panel was not looking to create a new organization, but to convene a meeting of heads of State that could discuss those very important issues of globalization and financing for development, critical to humanity.  That was feasible and had not implied any additional bureaucracy.

Replying to questions about the proposal for creating an international tax and how tax reform in developing countries would prompt foreign investment, he said that the proposal was to convene a globalization summit, which would discuss whether it was time to move into global taxation.  The Panel was not expressing that as a final recommendation but as a suggestion that it be discussed frankly and openly in a summit format.  The question of tax reform required a country-by-country analysis.  Some countries, even some developing ones, had done a good job in raising revenues, while many others, including his own, had not done good work in raising sufficient revenue.  As a whole, developing countries had a huge shortfall of resources to promote and implement social policies. Indeed, there was room for tax reforms that could give governments more muscle with which to implement their social policies.

How confident was he that he would convince the public and the politicians that the Panel's proposals were the way forward? another correspondent asked.

Mr. Zedillo said he expected some altruistic organizations of global reach to take the Panel's ideas and promote and finance them.  That was vital.  Many politicians in rich countries did not report foreign aid, not because they did not believe it was good, but because their constituencies did not like it.  If someone, such as civil society groups, undertook to make the public aware of how little their countries contributed in foreign aid and of the value to themselves of doing so, public opinion would shift and so would that of the politicians. 

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