Fifty-seventh General Assembly

Second Committee

13^th Meeting (AM)

SECOND COMMITTEE HEARS PLEA FOR INTERNATIONAL AID TO INTEGRATE

LANDLOCKED, CONFLICT-HIT TRANSITION STATES INTO WORLD ECONOMY

Landlocked and conflict-ridden countries in transition were among the nations most affected by the global economic decline since 2000, Azerbaijan’s representative told the Second Committee (Economic and Financial) this morning as it concluded its consideration of sustainable development and international economic cooperation.

Stressing that transition countries needed improved market access and special development assistance from donor countries and international financial institutions, he said they particularly needed policy advice and technical assistance to create attractive foreign investment climates, which would allow them to obtain vital new technologies, know-how and modern management.

Echoing those sentiments, the representative of the Federal Republic of Yugoslavia noted that the impact of the global economic slowdown had been marked by a sharp drop in growth rates.  Quoting the Economic Survey for Europe issued by the Economic Commission for Europe (ECE), he added that transition economies as a whole had remained highly susceptible to external disturbances.  Whether that weakening was only temporary would depend largely on the strength of any global economic recovery, he said, cautioning that if the international economic environment deteriorated further, several transition economies could face difficulties in meeting growth targets.

Noting that the past few years had marked a turning point for transition economies, in their conversion from planned to market economies, Ukraine’s representative said that some had been slow to recover from transformation-related recession.  Calling for clear international commitments to ease the completion of market-oriented reforms and set economic growth on a sustained path, he said international assistance must focus on such areas as macroeconomic stabilization, private sector development, sustainable production patterns, reforming the intellectual property system, boosting foreign direct investment (FDI), trade liberalization, expanding market access and technology transfer.

Armenia’s representative noted that transition economies had been active in entering an increasingly integrated world over the past decade, which should fuel faster growth in productivity, trade volumes and national incomes.  While they would face steep adjustment costs, those should be outweighed by the benefits of a larger and more competitive global market.

At the outset of this morning’s meeting, Venezuela’s representative, on behalf of the “Group of 77” developing countries and China, introduced a draft resolution on industrial development cooperation.  He also introduced a resolution on cooperation in preventing and combating corrupt practices and transfer of funds of illicit origin and returning such funds to the countries of origin.

In other business this morning, speakers welcomed Kyrgyzstan’s sponsorship of a draft resolution proposing 2003 as the official year celebrating Kyrgyz statehood.

Other speakers this morning included the representatives of the United States, Kyrgyzstan, The former Yugoslav Republic of Macedonia, Poland, Zambia, Viet Nam, and the Republic of Korea.

The Committee will meet again at 10 a.m. on Monday, 21 October, to begin considering the environment and sustainable development.

Background

The Second Committee (Economic and Financial) met this morning to conclude its consideration of sustainable development and international economic cooperation.  It was also expected to take up two draft resolutions, respectively dealing with industrial development cooperation, and preventing and combating corrupt practices and transfer of funds of illicit origin and returning such funds to the countries of origin.

Introduction of Resolutions

LUIS JOSÉ CARPIO GOVEA (Venezuela), on behalf of the “Group of

77” developing countries and China, introduced the two drafts.  By the terms of the first, on industrial development cooperation, the General Assembly would reaffirm commitments made by the international community at recent conferences in Monterrey and Johannesburg, and stress the importance of cooperation for development.  The Assembly would emphasize that transfer of technology to developing countries should occur, and that the international community should give greater assistance to initiatives supporting microenterprises in those countries.

Regarding the second text, on corrupt practices and transfer of illicit funds, he stressed that preventing corruption and the transfer of illicit funds was essential in mobilizing resources for development in developing countries, and recommended the strengthening of international cooperation to that end.  The item should remain on the agenda for the fifty-eighth session of the General Assembly, he added.

Response to Introduction of Draft Resolution

HERBERT TRAUB (United States), responding to the introduction of draft resolution (A/C.2/57/L.9), said experts from more than 100 countries were seriously considering asset recovery issues as a topic for ongoing negotiations in Vienna.  The United States hoped the issue would remain de-politicized.  Moreover, the United States would be very interested in eliminating the need to spend more money, particularly since the Second Committee was already taking up the issue. 

He said the text should call for:  an essential role for the private sector in national economic development; a stable and transparent environment for commercial transactions to foster private sector growth and development; creation by governments of an environment conducive to commercial expansion, including property rights to encourage business growth; and the elimination of corrupt business practices.

Expressing the hope that the resolution would be very clearly drafted to avoid the misuse of legal terms, he said that was very important because all countries had legal experts working hard in Vienna and failure to avoid such mistakes could create formidable problems.

OMAR SULTANOV (KYRGYZSTAN) said that as a co-sponsor of General Assembly resolution 53/22, on the United Nations Year of Dialogue among Civilizations, his country believed that the protection of cultural diversity was closely linked to dialogue among civilizations, cultures and religions, as well as to increased mutual understanding, solidarity and cooperation.  Dialogue was designed to give contemporary meaning to the notion of cultural heritage, statehood and education.

He said the quest for historic and ethnic roots had become vital to the Newly Independent States (NIS) following the Soviet Union’s collapse.  President A. Akaev of Kyrgyzstan had proclaimed 2003 the “Year of Kyrgyz Statehood” and Kyrgyzstan, with 37 other Member States, had sponsored a draft resolution entitled “Celebration of the Year of Kyrgyz Statehood”, submitted to the Committee under agenda item 86 (c).

NIKOLAY SAHAKOV (Armenia) said that economies in transition had been more actively entering an increasingly integrated and institutionally harmonized world over the past decade, and that greater openness would fuel faster growth in productivity, trade volumes and national income.  The successful integration of those transition countries into the world economy would benefit all, and while they would face steep adjustment costs, those should be outweighed by the benefits of being part of a larger and more competitive global market.

Since independence, Armenia had been trying to adjust to the multiple stresses of the post-Soviet economic, cultural and political transformations, he said.  Transition from a centrally planned to a free market economy called for strong support from the international community, which had largely determined progress in implementing economic reforms in Armenia.

DIMCE NIKOLOV (former Yugoslav Republic of Macedonia) said the Secretary-General’s report provided comprehensive analysis of the most relevant aspects of transition economies and their integration into the world economy.  It also demonstrated the diversity and complexity of their development.

He said that his country’s crisis last year had caused grave economic and social consequences.  Despite the provision of donor aid, the country still needed additional funds to recover from the damage.  It continued to cooperate with the World Bank and the International Monetary Fund (IMF), in order to secure financial arrangements.

The former Yugoslav Republic of Macedonia, intent on full integration into the European Union, had adopted high-level trade liberalization policies, particularly for European Union products, and was working to ensure its economy and institutions met European Union standards, he said.  The country had signed free-trade agreements with almost all South-eastern European countries, and had also joined the World Trade Organization (WTO).

VLADISLAV MLADENOVIĆ (Federal Republic of Yugoslavia) said the impact of the global economic slowdown had become evident in a sharp deceleration in growth rate.  Quoting the Economic Survey for Europe of the Economic Commission for Europe (ECE), he said economies in transition as a whole had remained highly susceptible to external disturbances.  Against that background, determining whether the weakening was just temporary would depend to a large extent on the strength of a global economic recovery.  If the global economic environment deteriorated further, several transition economies could face difficulties in meeting their growth targets.

Stabilization and consolidation of the economy remained one of the major preoccupations of the Yugoslav Government, he said.  The cost of transition was high, but the price would be higher if transition was delayed.  The Government was implementing a programme of economic reforms, which aimed to achieve macroeconomic stability and the structural reforms needed for a stable market economy.  In the transitional phase, when many problems inherited from the past required resolution, Yugoslavia also needed the assistance of the international community.

EWA ANZORGE (Poland) said the initial years of the new millennium were crucial for global development cooperation and for the credibility of the international community.  Poland, formerly a centrally planned economy, understood the often difficult and painful transition from central to market economies and welcomed the tangible efforts by developing countries to implement principles of democracy, human rights and good governance.  Poland would promote all initiatives aimed at including all stakeholders in development cooperation.

She said it was hard to overestimate the role of international organizations and multilateral institutions in stepping up support for developing countries seeking good governance, particularly technical assistance for improving legal frameworks and institutions.  Stressing the need for programme monitoring and assessment, she said the United Nations could benefit from the experiences of the peer review mechanism of the Organization for Economic Cooperation and Development (OECD).

MWELWA MUSAMBACHIME (Zambia) said the solution to Africa’s intricate development problems could best be found in unwavering international commitment.  Zambia was happy with the creation of a development prism in the name of the New Economic Plan for Africa’s Development (NEPAD) to help the continent to focus on achieving sustainable human development.  With NEPAD, Africa had a chance to redeem itself and recover lost ground.

Meaningful sustainable development could only be achieved when Africa’s international debt regime was manageable and sustainable, he stressed.  Given the historically debilitating debt situation, Zambia called for more efforts by the international community towards debt cancellation, so that sustainable development programmes could be launched.  With the current high levels of debt, even funded development programmes under the Highly Indebted Poor Countries (HIPC) initiative, were not fully synergising with non-HIPC funded programmes and thus had no chance to complement one another.

YASHAR ALIYEV (Azerbaijan) noted that landlocked and conflict-ridden transition countries were among the most affected by the global economic decline since 2000 and needed improved market access as well as special development assistance from donor countries and international financial institutions, including the Bretton Woods institutions and the WTO.  They particularly needed policy advice and technical assistance to help them create an attractive foreign investment climate.  Outside investment would enable transition economies to obtain vital new technologies, know-how and modern management.  Coherent and country-specific responses to the needs of developing countries would ensure efficacy and ultimately contribute to poverty reduction. 

He said his country had consistently pursued policies aimed at integrating it into the market economy.  Azerbaijan had signed more than 300 bilateral trade agreements with over 30 countries, established trade relations with 123 countries, and applied for WTO membership.  Moreover, it had broadened cooperation with the Europeon Union, through the European Union-Azerbaijan Partnership and Cooperation Agreement.  In addition, a sound economic policy had bolstered foreign investment to $6.8 billion during 1995 to 2001, with another $10 billion expected in the next three years.  Azerbaijan’s ratio of foreign direct investment (FDI) to gross domestic product (GDP), as well as FDI per capita, were among the highest for transition economies, he noted.

SERHII SAVCHUK (Ukraine) said the past few years had marked a clear turning point for transition economies in converting to a real market economy and accelerated their active involvement in the global economic and political environment.  Many had performed remarkably, while others had been slow in recovering from the transformational recession.  That uneven progress still required clear commitments from the international community to facilitate the completion of market-oriented reforms and to set economic growth on a sustained path.

He said it was essential to channel international assistance to specific issues of immediate relevance for transition economies.  Those included macroeconomic stabilization, economic restructuring for private sector development, promoting sustainable patterns of production, reforming the intellectual property system, boosting FDI, trade liberalization, expanding market access and technology transfer.  He recalled that the Monterrey Consensus and the Johannesburg outcome documents had defined ways to foster international economic cooperation in support of sustainable development worldwide, including in transition economies.

NINH THI BINH (Viet Nam) said that the integration of developing economies into the world economy was particularly difficult for economies in transition.  Since 1986, Viet Nam had instituted economic reform policies that had resulted in annual economic growth of 5 per cent to 9 per cent, a jump in real income per capita, declining inflation and diversified and expanded agricultural production.  The country, once a rice importer, was becoming a leading rice exporter.  It had worked to create a friendly investment environment, reorganize public administration, strengthen legal framework, expand production and create jobs.

However, huge challenges remained in integrating Viet Nam fully into the world economy and making its products competitive in world markets, he cautioned.  The country’s infrastructure, financial system, service and legal systems needed upgrading, he said, calling on the international community, particularly developed countries, the Bretton Woods institutions and United Nations agencies to further assist Viet Nam and other transition countries to meet their development goals.

Ms. SELJUKI (Afghanistan) said that her country had joined as a co-sponsor of a draft resolution to be introduced by the representative of Kyrgyzstan declaring 2003 the year of Kyrgyz statehood.  In view of the importance of cultural and identity questions in promoting development, the Afghan delegation hoped that the text would be approved by consensus.

SHIN BOO-NAM (Republic of Korea) applauded the recent progress of transitional economies in implementing privatization programmes, noting that the private sector’s contribution to the GDP in 21 of the 27 countries of Central and Eastern Europe and the Commonwealth of Independent States (CIS) now exceeded     50 per cent.  The continuation of those policies would promote FDI and facilitate trade in the future.

Pointing out that knowledge and expertise accompanied the capital inflows resulting from FDI, he strongly encouraged economies in transition to adopt tax incentives, non-tax incentives and special economic zones, which had proved effective in attracting FDI in his country.  The Republic of Korea fully supported

regional and multilateral trade liberalization, he said, underscoring the importance of transition economies in forging strong trade relations with the European Union.

Citing Columbia University Professor Joseph Stiglitz, who addressed the Committee earlier this month, he said that with greater integration into the world economy, economies in transition would be more exposed to market economic fluctuations and volatility.  They should remain firmly committed to market reform and the international community should make every effort to help them develop the necessary infrastructure

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