GENUINE EXPORT GROWTH ONLY WAY OUT OF FOREIGN DEBT, ARGENTINA’S DELEGATE SAYS

Fifty-seventh General Assembly

Second Committee

7^th Meeting (PM)

GENUINE EXPORT GROWTH ONLY WAY OUT OF FOREIGN DEBT,

ARGENTINA’S DELEGATE SAYS

Only through genuine export growth and international trade could Argentina begin meeting its foreign debt obligations and achieve sustainable development, the representative of Argentina said this afternoon as the Second Committee (Economic and Financial) concluded its general debate.

As several speakers addressed the issue of crippling external debt, he said that Argentina had paid a net $3.5 billion to international lending institutions so far this year at a great social cost, while the remainder of the country's foreign debt had gone unpaid for nine months.  Quoting a recent report of the Secretary-General, he warned that the lack of a coherent, international debt sustainability strategy left developing countries at risk of returning to the lost decade of the 1980s.

Underscoring the crucial need for debt cancellation and debt restructuring if an unsustainable future crisis was to be avoided, he noted that the elimination of agricultural subsidies in the developed world would lead a 1 per cent increase in Argentina's gross domestic product (GDP) and create badly needed employment.

Myanmar's representative said that one of the great obstacles to a liberalized trade system that would benefit developing countries was the heavily regulated world market for agricultural goods.  Because of agricultural subsidies, the exports of developing world not only could not enter markets in the developed countries, but their consumers were forced to pay higher prices for agricultural goods.

The representative of the United Republic of Tanzania welcomed the enhanced Highly Indebted Poor Countries (HIPC) initiative, but stressed that additional measures were still required to reduce the debt borne by developing countries.  Through that initiative, her country had improved social services, thus reducing poverty to a certain extent, but servicing the remaining debt continued to be a burden.

Echoing the debt theme, Uganda's representative said that, while the implementation of debt relief to the highly indebted poor countries was of particular concern to his country, that should be followed up with market liberalization, as increased access to developed-world markets for the exports of developing countries was important for poverty eradication and development.

Yemen's representative stressed the importance of eliminating trade policies that inhibited development, noting that agricultural subsidies were not in the best interests of international trade.  They severely hindered the efforts of developing countries to compete with more technologically advanced and deep-pocketed countries.

Several speakers also addressed the question of foreign direct investment (FDI), which had declined sharply in 2001, after a record high level in 2000.  One such speaker pointed out that FDI, one of the main sources of capital inflows to developing countries, had shrunk by 14 per cent in 2001, and the share of FDI to the 49 least developed countries had dropped to a mere 0.5 per cent of the global total.

The representatives of the United Arab Emirates, Honduras, Syria, Iraq, Tunisia, Ukraine, Bhutan, Sudan and Malawi also spoke this afternoon.

Others making statements were representatives of the Organization of the Islamic Conference, the International Union for the Conservation of Nature (IUCN), and the Food and Agriculture Organization (FAO).

When the Second Committee meets again, at 10 a.m. tomorrow, it will being its consideration of an agenda item on trade and development.

Background

The Second Committee (Economic and Financial) met this afternoon to conclude its general debate.

Statements

AHMAD ALKHAJA (United Arab Emirates) said the international community should develop and promote an economic strategy that would take into account the concerns and problems of both developed and developing countries.  In that respect, developed countries should honour commitments made at the World Trade Organization (WTO) meeting at Doha, as well as those made at the World Summit in Johannesburg.

He noted that the percentage of those living in extreme poverty had not decreased over the past year, and those people were still suffering from a lack of nutrition, medicine, fresh water and education.  Efforts should also be made to protect present and future generation from the terrors of armed conflicts and to help poorer countries eradicate poverty through economic development programmes.  Calling on the international community to develop new policies on foreign debt, he said that writing off the debts would help developing countries to more efficiently implement economic development programme.

The United Arab Emirates had offered assistance to many developing countries, particularly least developed countries in Asia and Africa, he said.  It had contributed $27 million to rebuild the Jenin refugee camp destroyed by Israel in the occupied Palestinian territories.  The country was greatly concerned about the economies of those territories, where Israel had occupied agricultural areas.  The international community should force Israel to abide by United Nations resolutions and depart from the occupied territories.

MANUEL ACOSTA BONILLA (Honduras) said the Second Committee should focus on implementing the development financing goals of the latest meetings of the Development Committees of the World Bank and the International Monetary Fund (IMF).  It must keep those issues at the forefront during the high-level meeting in April of the Economic and Social Council, the Bretton Woods institutions and the WTO.

He stressed the need to close the large gap between countries that had benefited financially from globalization and those that had not.  In profiting from economic globalization, international community must not neglect developing nations.

SYED SHAHID HUSAIN, Organization of the Islamic Conference, said that issues of concern to members of the organization included macroeconomic policy questions, commodities, external debt and the international financial system.  They were also concerned about sustainable development and international economic cooperation, the environment, migration, operational activities for development, South-South cooperation, and the permanent sovereignty of the Palestinian people and that of the Arab population in the occupied Syrian Golan over their natural resources.

He said there was immense interest in seeking speedy solutions to the global economy’s worse-than-expected performance in the last year and to the current unfavourable economic situation.  The World Bank's emphasis on centralized and comprehensive poverty reduction strategies were shared by the Conference, which also hoped that the need to boost technological and higher education, infrastructure, as well as the tourism, transportation and communication sectors, would not be ignored.

One year after the tragic events of 11 September 2001, it was important to address the root causes of the world's social and economic ills, he added.  They included underdevelopment, treacherous foreign occupations, debilitating conditionalities, inequitable trading patterns and other harmful practices.

BAGWAT SINGH, International Union for the Conservation of Nature and Natural Resources (IUCN), said his organization had spent 12 months preparing for the Johannesburg Summit, where it had been represented at the highest level.  At the Summit, the IUCN had sponsored or participated in numerous side events intended to contribute to the debate on sustainable development.  It had supported such United Nations processes as the Global Ministerial Environmental Forum of the United Nations Environment Programme (UNEP).

In the field, his organization had continued to develop its programme of capacity-building for environmentally sustainable development, focusing on water resources, forests, biodiversity and its sustainable use, he said.  The IUCN would introduce a full report on its activities supporting the United Nations when the Committee met to deal with the agenda item on environment and sustainable development.

FLORENCE A. CHENOWETH, Director of the Food and Agriculture Organization (FAO) Liaison Office with the United Nations, said that despite universal recognition of the right to food, hunger continued to cause suffering, whether caused by war, drought, natural disaster or poverty.  In societies where hunger was widespread, overall growth was also compromised, with a yearly decline of nearly 1 per cent in the rate of economic growth.  The alleviation of hunger was a precondition for sustainable poverty reduction, she added. 

The FAO also perceived HIV/AIDS as a problem of critical importance for development in general, rather than simply a health issue, she went on.  FAO activities were motivated by increasing evidence that HIV/AIDS intensified existing labour bottlenecks in agriculture, increased widespread malnutrition and added to the problems of rural women, especially female heads of households, and especially in Africa.

Concerning the implementation of the Third United Nations Conference on the Least Developed Countries, she said that a concrete element of the deliverables that FAO had proposed at Johannesburg was a food safety facility for those countries to help them build their capacity to improve food safety.

ABDULLAH ALSAIDI (Yemen), noting that the year had witnessed important international events aimed at promoting multilateral cooperation in international trade and sustainable development, said it was incumbent upon the international community to implement those objectives, including confronting the challenges of financing development and halving the number of malnourished people worldwide by 2015.

He said his country had devised a poverty-reduction strategy for 2003-2005. It included the participation of women’s groups, labour unions, trade associations, as well as United Nations Offices and Funds.  That kind of broad participation in the decision-making process was a strong base for making sustainable development successful.  It must be applied at the regional level, as well, he added. 

Stressing the importance of eliminating trade policies that inhibited development, he said that agricultural subsidies, in particular, were not in the best interests of international trade.  They were detrimental to developing countries attempting to compete with more technologically advanced and deep-pocketed countries.

HANADI KABOUR (Syria) said the Second Committee was meeting at a time when the economies of some countries were slowing down and others were facing crises.  The international conferences at Monterrey and Johannesburg had established some hope for the international economy, and the Committee must build on that.  She stressed the need to work on what had been achieved so far, saying it was time to move from words to deeds.  A follow-up mechanism was needed to check progress on all the declarations and commitments made.

She called for collective action to meet the challenges of disease, poverty, water shortage, desertification, the world economy, declining assistance, protectionism, debt, the growing gap in information technology and other issues.  Opportunities offered by globalization had gone hand in hand with economic difficulties for developing countries.  The international community must establish a system to spread globalization’s benefits to all.

Economic growth and poverty eradication were the most important priorities for developing countries, she said.  They would benefit greatly from an increase in development assistance and modern technologies.  At the same time, developed countries must end their protectionist trade policies as trade was one of the most essential sources in promoting development.  According to the World Bank, trade obstacles had caused developing countries a loss of $650 billion per year.

SAID SHIHAB AHMAD (Iraq) said it was essential to prevent the increasing marginalization of developing countries caused by globalization, saying it was also important to ensure that their goods and products reached international markets, thus enabling the countries of the South to strengthen regional economic links.

He called for an end to the economic embargo against his country, which ran counter to the principles and goals of the United Nations Charter and was a flagrant violation of human rights.  Besides impeding Iraq’s production capacity and destroying its infrastructure, the embargo had led to increased unemployment, low employee morale, and higher mortality rates for women and children.  In addition, it had caused the country's income to drop two thirds in the 1990s.

FRANCIS MUMBEY-WAFULA (Uganda) said that the Brussels, Millennium, Monterrey and Johannesburg conferences had focused on the central challenges of humankind.  The next task should be to establish and commit adequate resources to an integrated and coordinated follow-up mechanism to review and monitor implementation.

Of particular concern to Uganda was the implementation of debt relief to the highly indebted poor countries.  Debt relief should be followed up with liberalization of developed-country markets, because access for the exports of developing countries was necessary for poverty eradication and development.

Official development assistance (ODA) also remained an important component of development, he said.  Commitments by development partners to provide 0.7 per cent of gross national product (GNP) as ODA should be kept, and that assistance should be targeted at infrastructure and human resources development.  Welcoming the establishment of the Office of the High Representative for Least Developed Countries, he said the United Nations would play a critical role in supporting such programmes as the Plan of Action for Least Developed Countries for the Decade 2001-2010 and the New Partnership for Africa's Development (NEPAD).

NOUREDDINE MEJDOUB (Tunisia) expressed the hope that action programmes adopted at recent important conferences would ensure an equitable sharing of the dividends of globalization and spare the people of the South its negative fallout.  The Monterrey Conference was a historic event, advocating an integrated approach to development programmes that intensified cooperation among various agencies.  Johannesburg reiterated the commitment to eradicate poverty and promote sustainable development with shared but differentiated responsibilities between developing and developed countries.

While the Johannesburg action programme had not satisfied all developing countries, it had been an achievement in its awareness of the unsustainable threats facing the world, he said.  The time had now come for urgent action in combating the numerous dangers taking shape on the horizon.  The two conferences had pleaded for genuine partnership where developed and developing nations each had responsibilities.  Developing countries must endeavour to foster development, and developed nations must provide adequate assistance.  Pledges of support had already been made and, hopefully, would soon become reality.

SERHII SAVCHUK (Ukraine) said his writing supported the development of innovative mechanisms to solve the debt problems of developing nations and countries in transition.  One mechanism, proposed by Ukraine's President at Johannesburg, concerned swapping debt for sustainable development and would fuel both economic growth and ecological development.

He said that, although the global economy remained weak overall, the IMF’s World Economic Outlook had forecast strong performances by economies in transition, with aggregate gross domestic product (GDP) expanding 5 per cent this year.  Ukraine, for example, showed clear signs of microeconomic stability and increased industrial output, and had posted robust economic growth for three consecutive years.

Ukraine’s extensive economic restructuring had bolstered productivity and foreign direct investment (FDI), he said.  Efforts were also under way to improve monetary and financial systems.  Current macroeconomic trends suggested that exports, supported by increased private consumption and domestic investments, had largely fuelled Ukraine’s economic growth.

RADHIA MSUYA (United Republic of Tanzania) said that scientific and technological rapid advances in such areas as microelectronics, biotechnology and information had played a critical role in economic and social development, influencing all areas of human endeavour.  It was hoped that developed countries would enhance their cooperation to enable developing countries to improve their living standards through appropriate technology.

Welcoming the enhanced Highly Indebted Poor Countries (HIPC) initiative, she said there was still need for additional measures to reduce the debt burden. Through the initiative, the United Republic of Tanzania had improved social services to a certain extent, thus contributing to poverty reduction, but servicing the remaining debt continued to be a burden.  Expressing concern about declining ODA, she said that trend was counter-productive, noting that the HIPC initiative and ODA were mutually reinforcing.  Neither could replace the other, he added.

Commending those countries that had reached the ODA target of 0.7 per cent of GNP, she recalled that the Group of Eight Summit at Kananaskis, Canada, and the European Union had promised to significantly increase ODA.  Additional resources pledged should be made available in a timely manner to permit enhanced and predictable funding for sustainable development programmes, she said.

TSHERING PENJOR (Bhutan) the international community continued to face formidable challenges in implementing what has been agreed and called on the Second Committee to focus on implementation during the coming session.

He said the Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States, as well as the United Nations Conference on Trade and Development (UNCTAD), had played a significant role in carrying out the mandates of the Millennium Declaration.

U WIN MRA (Myanmar) said there was some hope that the world economy would recover from the slowdown this year, but it was still overcast by clouds of uncertainty.  Slow recovery in the United States and the continued slowdown in Japan had dampened any hope for global trade growth.  The IMF had forecast that trade growth would be 2.2 per cent this year, compared to 12.6 per cent in 2000, which was a setback for global economic integration.  Political instability in the Middle East had put pressure on oil prices, which would reduce global GDP by 1 per cent.  Deficits in the balance of payments in the United States had reached about 4 per cent of GDP this year.  The same level of deficits had triggered financial crisis in the Asian economies five years ago, he added.

Economic slowdown in developed countries had put many developing nations in a highly vulnerable situation, he said.  The global flow of FDI had also declined sharply in 2001, after the record high level of 2000.  Foreign direct investment  -– one of the main sources of capital inflows to developing countries -- had shrunk by 14 per cent in 2001, and the share of FDI to the 49 least developed countries had dropped to a mere 0.5 per cent of the global total.  In the wake of that vulnerability, developing countries should enhance their position by embracing South-South cooperation to reduce the negative effects.

Last year, the WTO had launched a new round of trade negotiations, optimistically referred to as the development round, he continued, stressing that trade must be a source of economic growth and poverty reduction.  The new round must ensure an open, rule-based, transparent non-discriminatory and predictable, multilateral trading system.  One of the great obstacles to such a system was the heavily regulated world market for agricultural goods.  Industrialized countries were spending more than $300 billion per year on agricultural subsidies.  Because of those subsidies, exports from developing countries could not enter markets in developed countries, where consumers, therefore, paid higher prices for agricultural produce.

ALBERTO D’ALOTTO (Argentina) said that protectionist measures, particularly agricultural subsidies, must be eliminated if developing nations were to reap fully the benefits of globalization.  Developed nations spent $350 billion annually on agricultural subsidies, seven times greater than their foreign aid budgets.  The elimination of those agricultural subsidies would lead to a 1 per cent increase in Argentina’s GDP and create necessary jobs.

Argentina was on the verge of emerging from an extreme economic crisis, he said, noting that indicators since May had revealed a reversal of negative flows characterized by relative stability, controlled inflation, improved export performance and an end to the decline in production.  Only through genuine export growth and international trade could Argentina achieve sustainable development and begin meeting its foreign debt obligations, which had gone unpaid for nine months, he stressed.  At a great social cost, Argentina had so far this year paid a net $3.5 billion to international lending institutions, he added.

He warned that the lack of a coherent, international debt sustainability strategy left developing countries at risk of returning to the lost decade of the 1980s.  Debt cancellation and restructuring were imperative if an unsustainable debt crisis was to be avoided in the future, he emphasized, adding that Argentina’s situation should serve as a lesson.

OMER BASHIR MOHAMED MANIS (Sudan) noted that the Monterrey and Johannesburg summits had come two years after the Millennium Summit, where leaders had spoken of the world economy and dangers threatening humanity.  Now was the time for direct action to implement pledges and commitments to follow-up and accurate monitoring mechanism.

Combating poverty would continue to be the greatest challenge facing the world today, he said.  However, indicators had revealed that in contrast to the goals of the Millennium Summit the number of poor people would jump to 410 million by 2015.  Imbalances in the world’s economy and the ever-increasing gap between rich and poor could only be remedied by increasing ODA, relieving debt, opening up markets and building up production capacities, he stressed.  Without full support from the international community, the poor of the world would cease to exist.

ISAAC LAMBA (Malawi) said that his and other sub-Saharan African countries faced crippling debt and the HIPC debt relief initiative was a key to solving that

problem by freeing up resources for poverty eradication and sustainable human development.  He stressed the need for rapid and full implementation of the HIPC initiative and for the full funding of the HIPC Trust Fund.

However, HIPC alone would not solve Africa’s development problems, he pointed out.  The continent must increase its share of international trade, and its exports, particularly agricultural goods, must have greater market access. African governments needed technical and financial assistance for capacity-building and resource management, he said, stressing the importance of developed nations making good on their commitment to earmark 0.7 per cent of GNP for such assistance to the poorest countries.

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