SECRETARY-GENERAL URGES BUSINESS LEADERS, AT ‘TURNING-POINT IN HISTORY’ TO BE ‘PART OF THE SOLUTION’ IN WAR AGAINST WORLD POVERTY

SECRETARY-GENERAL URGES BUSINESS LEADERS, AT ‘TURNING-POINT IN HISTORY’

TO BE ‘PART OF THE SOLUTION’ IN WAR AGAINST WORLD POVERTY

Following is the text of today’s address by Secretary-General Kofi Annan to the closing session of the World Economic Forum in New York City:

It’s good to be back in New York, and to find all of you here.

Even in the dark days of last September, I was confident that this great city would soon recover its traditional verve and vibrancy.  I am so glad that Klaus Schwab shared my confidence –- and your presence here this weekend shows that we were both right.

My message to you is still the same as it was in Davos last year, and even three years ago.  But I believe it has gained greater urgency.

Two months ago, I had the honour to deliver the Nobel Lecture in Oslo.  I began by asking my audience to imagine what life is like, and what it holds in store, for a girl born in today’s Afghanistan -– though I might equally well have mentioned a baby boy or girl in Sierra Leone, or in the poorest parts of almost any developing country.

I reminded them that the life of that girl, and of hundreds of millions of her contemporaries, would be living under conditions that many of them in that audience would consider inhuman. 

If that was true for that audience, it is surely even more so for you here today.

Perhaps no one in this hall feels as rich, or as powerful and influential, as he or she is perceived to be by others.  And yet I believe all of you –- whether you are business leaders, political leaders or opinion leaders –- know well that you are enormously privileged, compared to the great majority of your fellow human beings, both in your standard of living and in the power and influence that you wield.

You all know that you are sharing this small planet with well over a billion people who are denied the very minimum requirements of human dignity, and with    4 or 5 billion whose choices in life are narrow indeed compared to yours.  In fact the planet seems to many of us more and more like a small boat driven by a fierce gale through dark and uncharted waters, with more and more people crowded on board, hoping desperately to survive.

None of us, I suggest, can afford to ignore the condition of our fellow passengers on this little boat.  If they are sick, all of us risk infection.  And if they are angry, all of us can easily get hurt.

Our problem is one of reality multiplied by perception.

The reality is that power and wealth in this world are very, very unequally shared, and that far too many people are condemned to lives of extreme poverty and degradation.

The perception, among many, is that this is the fault of globalization, and that globalization is driven by a global elite, composed of -- or at least, represented by -– the people who attend this gathering.

That perception is not universal, but it is widely shared –- especially in places like Argentina and East Asia, which have recent experience of severe financial crises, but also by an increasingly vocal section of public opinion in the developed world. 

Do not underestimate the attraction of the rival gathering, timed to coincide with yours, that has just finished in Porto Alegre, Brazil.  Its title, “World Social Forum”, is intended as a criticism of yours, implying that you are interested “only” in economics, or in profit, and that you do not care about the social effects of your economic activities.  And that criticism resonates around the world.

I believe that perception is wrong -- and that globalization, so far from being the cause of poverty and other social ills, offers the best hope of overcoming them.  But it is up to you to prove it wrong, with actions that translate into concrete results for the downtrodden, exploited and excluded.

It is not enough to say -- though it is true -- that without business the poor would have no hope of escaping their poverty.  Too many of them have no hope as it is. 

You must show that economics, properly applied, and profits, wisely invested, can bring social benefits within reach not only for the few but for the many, and eventually for all.

Some of the business leaders among you may respond that that is not the business of business -- that your job is only to look after the bottom line, and the interests of shareholders.  They would argue that social policy is a matter for governments, and also that it is up to governments to ensure that more people enjoy the benefits of capitalism, by creating a business-friendly climate in each country.

Certainly there is much that governments can and must do.  I will come to that in a moment.  But more and more business leaders are realizing that they do not have to wait for governments to do the right thing, and indeed they cannot afford to.  In many cases, governments only find the courage and resources to do the right thing when business takes the lead.

I am glad to say that many business leaders have responded to the call I first made in Davos three years ago, when I proposed the Global Compact.  They have publicly espoused the nine principles that I set out then –- principles drawn from international agreements on human rights, labour standards and the environment.  And we are working, together with the International Confederation of Free Trade Unions, and leading non-profit groups that have relevant expertise, to help those business leaders ensure that the nine principles are really applied in their day-to-day corporate practice.

That is good, but the Global Compact asks for more. 

There are many positive ways for business to make a difference in the lives of the poor -- not through philanthropy, though that is also very important, but through initiatives that, over time, will help to build new markets, as well as improving the self-respect of the corporations concerned and the respect they enjoy in the wider community.

Increasingly, business leaders are recognizing that there are many small and poor countries in which they do not invest enough -- not because these countries are badly governed or have unfriendly policies, but simply because they are too small and poor to be interesting markets or to become major producers, and because they lack the skills, infrastructure and institutions that a successful market economy needs.  The unpleasant truth is that markets put a premium on success, and tend to punish the poor for the very fact that they are poor.

Left alone in their poverty, these countries are all too likely to collapse, or relapse, into conflict and anarchy, a menace to their neighbours and potentially -– as the events of 11 September so brutally reminded us -– a threat to global security.  Yet, taken together, their peoples represent a very large potential market -– and many of their disadvantages could be offset if international business and donor governments adopted a common strategy aimed at making them more attractive to investment and ensuring that it reaches them.

Sometimes companies can make a massive difference with really small investments.  Take the case of the world's salt manufacturers.  Working with the United Nations, they have made sure that all salt manufactured for human consumption contains iodine.

The result is that every year, more than 90 million newborn children are protected against iodine deficiency, and thus against a major cause of mental retardation. 

Let me challenge all of you to follow this example, and think of ways that your company can help mobilize global science and technology to tackle the interlocking crises of hunger, disease, environmental degradation and conflict that are holding back the developing world.

Please join in the Global Health Initiative, which this Forum has been discussing over the last few days.

Please work with the new Global Fund to fight AIDS, TB and malaria, to provide at low cost the products developing countries need for disease control. 

It is a shocking fact that, out of the 1,233 drugs licensed in the world between 1975 and 1997, only 13 were for tropical diseases, and only four were commercially developed specifically for tropical diseases suffered by human beings.  We can surely improve on this, now that governments –- working with foundations and international organizations –- are starting to offer venture capital for the private sector to develop medicines and vaccines for these neglected diseases, on condition that the new compounds are marketed to poor countries as close to cost price as possible. 

Over the last two years I have seen this differential pricing applied to medicines for treating malaria, HIV, TB and sleeping sickness.  Now, the new Fund should enable many more countries to take advantage of it.

Working together for health is not just a matter of charity.  It also makes economic sense.  A scientific study, led by Jeffrey Sachs of Harvard, has now proved what many of us from Africa already knew.  Investments in the health of poor people are a springboard for economic growth, with as much as a sixfold return on investment.

And much the same applies to education.  In the developed world, companies give large amounts of money to universities, not out of charity, but to maintain the flow of skilled engineers and scientists that the economy needs.  Why not do the same in developing countries, where it would make an even greater difference?

Once you start thinking creatively along these lines, you will come up with ideas much faster than I can.  Please bring them to the United Nations Development Programme -– or to whichever of the various UN funds, programmes and agencies is directly involved in your sector.  We will be more than happy to help you find partners in the developing world.

Initiative and partnership are the two key ingredients of success.

Business needs enlightened partners in government, but it need not wait passively for them to appear.  In many countries, the voice of business leaders plays a very important role in moulding the climate of opinion in which governments take their decisions.

And governments do indeed have a decisive role to play, in the months and years ahead, in determining whether globalization really is made to work for the poor, or whether, even as it bridges geographical distance, it widens the material and psychological distance between the privileged and the powerless.

A first, vital test will come as early as next month, with the International Conference on Financing for Development, in Monterrey, Mexico.

I believe this Conference offers us the best chance we have had, in many years, to unlock the financial resources that are so desperately needed for development.  I believe tangible results are possible.

It is essentially up to the governments of the world to prove me right, and the sceptics wrong.

On the one hand, the Conference must strengthen and sharpen the consensus that now exists on the policies, mechanisms and institutional frameworks required, in developing countries, to mobilize domestic resources, and to attract and benefit from international private investment.  In particular, there should be agreement to conclude a comprehensive international convention against corruption, providing, for example, for the repatriation of illicitly transferred funds.

But at the same time there must be real movement forward on four key issues that are of vital importance to all developing countries:  trade, aid, debt, and the management of the global economy.

On trade, an event of great promise occurred in Doha last November, with the agreement to open a new round of negotiations that will address the concerns of developing countries.  But so far, it is only a promise.  We need results.  The developed countries must negotiate in good faith, to stop flooding the world market with subsidized farm exports, to the detriment of developing countries, and to open their own markets to labour-intensive products from those countries.

But even when a door is opened, you cannot walk through it without leg muscles.  So, as trade barriers are removed, we must make sure that developing countries receive the assistance they need to develop their infrastructure and capacities.

We need at least an extra $50 billion of official development assistance (ODA) each year if we are to reach the Millennium development goals, including the halving of extreme poverty in the world by 2015, to which all the world’s governments have committed themselves.  That means doubling the present figure for ODA –- which may sound ambitious, but would still leave us well short of the recognized goal of 0.7 per cent of gross national product for all donor countries.  I still see no good reason why the Monterrey Conference should not adopt that extra $50 billion as an immediate, short-term target, to be achieved within two or three years.

It should also be the occasion for creditor countries to give a clear commitment to implement the Heavily Indebted Poor Countries initiative fully and promptly, and indeed to go beyond it so that from now on the debts of those countries become truly sustainable.  And something also needs to be done to ensure more equitable burden-sharing in financial crises involving middle-income countries, as in the recent tragic case of Argentina. 

Finally, all these issues can no longer be settled in private conclave among the rich and powerful.  The developing countries have as a big a stake as anyone in the future of the world economy.  Their views should count for something when decisions affecting it are taken.  The Monterrey Conference should be the occasion for those who currently wield the greatest influence to show that they are taking this subject seriously.

I am glad to say that many business leaders are showing a great interest in this Conference, and playing an active part in the preparations for it.  I hope they will make a big effort between now and then to ensure that their governments take it equally seriously.  No one is better placed than they are to refute the arguments of protectionists and penny-pinchers, making a persuasive case for genuinely open markets and more generous official assistance.

I think we all have a sense today of having come to a turning-point in history.  We felt that already with the end of the cold war and the beginning of a new millennium -– and then, last September, we found ourselves entering that new millennium through a gate of fire, such as none of us ever wished to see.

The forces of envy, despair and terror in today’s world are stronger than many of us realized.  But they are not invincible.  Against them, we must bring a message of solidarity, of mutual respect and, above all, of hope. 

Business cannot afford to be seen as the problem.  It must, working with government, and with all the other actors in society, be part of the solution.

Let that message go out today, from this stricken but indomitable city, and let us make it heard throughout the whole world.

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