HEADQUARTERS PRESS CONFERENCE BY UNCTAD

At a Headquarters press conference this morning, Rubens Ricupero, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD) presented the latest UNCTAD report on African economic and development prospects, entitled “From Adjustment to Poverty Reduction:  What is New?”  Also present was Kamran Kousari, the UNCTAD Special Coordinator for Africa and chief author of the report.

That the legitimate concern with security threats should not be allowed to overshadow the plight of African countries was the first of two points stressed by Mr. Ricupero in his presentation.  Even as one chief security concern was the threat of bacteriological warfare, Africa had already been decimated, not by the human usage of bacteriological weapons, but by the tremendous impact of HIV/AIDS.  People were dying by the millions, while national education and health care systems had been destroyed by the pandemic.  So, although a distinction needed to be made between those different threats, both concerns needed to be addressed.  The need to tackle the challenge posed by the problems threatening human security in African countries must remain a priority.

His second point, he said, was that the new report was intended as a contribution to a constructive dialogue with the Bretton Woods institutions -– the International Monetary Fund (IMF) and the World Bank -- in an effort to improve the approach they had developed.  Among the positive developments of this new approach were centring attention on poverty reduction, recognizing the need for economic growth as one of the preconditions for fighting poverty, the need to balance international support with good governance policies, and the need to improve access to primary education and fundamental health care.  However, on close examination, the new poverty reduction strategy did not represent a substantial change from the previous “Washington consensus”.  There was still too much emphasis on conditionalities. 

For instance, he said, some studies had shown that in sub-Saharan African countries there was an average of 114 conditionalities per aid package, two thirds of which were related to governance issues.  And while the Bretton Woods institutions were keenly aware of the problem, there was still a long way to go before a considerable reduction of conditionalities was seen.  The ministers of highly-indebted countries had said that conditionalities should be reduced to four or five each per aid package for the World Bank and the IMF.  There was a large gap between expectation and reality. 

There was no spirit of negative appraisal in the report, he said, only one of constructive dialogue.  It was a well-balanced analysis that gave an honest opinion, showcased the differences between the approaches adopted by UNCTAD and the Bretton Woods institutions and demonstrated UNCTAD’s willingness to engage in a dialogue to address those differences. 

One example of the divergence of approach between UNCTAD and the Bretton Woods institutions concerned access to basic education and health care.  While welcoming the emphasis placed on facilitating access to primary education and fundamental health care, he expressed doubts about the Bretton Woods position on higher education and advanced health care.  They were basically putting their faith on market instruments, on the resource of user fees.  Yet within the countries concerned, there was widespread poverty and it would be unfair to deprive the poor of higher education and health care.  He suggested that instead there should be a differentiation in user fees.  The rich should pay, but the poor should still enjoy access to public education and health care.  That example characterized his reserve towards the new Bretton Woods policies.  There should be a dialogue in order to make the new approach more useful than those applied with poor results in the past.

Reiterating that the motivation for this report was to open a dialogue for examining the ways in which the new Bretton Woods approach to poverty alleviation differed from the structural adjustment policies applied in the past 20 years,

Mr. Kousari welcomed the recognition that growth did not necessarily trickle down to the poor and that certain social safety nets might be needed.  The new policy approaches provided developing countries with some policy autonomy on the design and implementation of those safety nets.  Yet the macroeconomic policies related to trade liberalization, privatization, prices and agriculture had not changed. Hence the problems stressed by Mr. Ricupero. 

Those macroeconomic policies were more or less responsible for creating past conditions in which growth had not occurred and poverty had increased, he said.  If they were to be left in place and mitigated with social safety nets, it would be necessary to have “additionality”.   A mere shifting of resources from fiscal spending to primary health care and education would not be sufficient.  And no matter how good national policies were, they would be insufficient to address the needs of developing countries unless accompanied by international support.

Asked why countries that had put their houses in order still experienced lower foreign investment levels than other countries, which had only recently emerged from conflict, Mr. Ricupero said it was a well-known fact that private investment generally followed economic growth, not preceded it, except in certain countries richly endowed with natural resources.  For example, even during the worst periods of its civil war, Angola was always one of the African countries attracting the most investment -- not because of stability or good governance, but because of its natural endowment.  In most cases, however, foreign direct investment followed economic growth. 

Yet UNCTAD had tried to change that situation by sponsoring the publication of investment guides for least developed, he said.  The private sector, which normally published such guides, was not interested in the least developed countries, so only a public international institution could do it.  Another tactic had been to establish investment councils that brought together African governments and private international companies interested in investing in Africa.  That tactic had served as an inspiration to the IMF, which had established some similar councils.

On the lack of export/import financial institutions in Africa, Mr. Ricupero acknowledged that there was a shortfall in trade-specific areas.  African countries had suffered such a decline in their terms of trade due to the collapse of commodity prices that even increases in official development assistance (ODA) were more than offset by the loss of profits on the export of commodities.  There needed to be better compensatory facilities to make up for the suffering caused by the collapse, as the previously existing compensatory facilities were almost impossible to use because of the punishing level of interest rates.  There was also a need for credit for exports in general. 

A correspondent asked about the seeming contradiction between Mr. Ricupero’s position –- as a representative of the United Nations -– on conditionalities and the position of the New Partnership for Africa’s Development (NEPAD) -– endorsed by the United Nations -- which stressed the link between good governance, human rights and fiscal housekeeping.  Mr. Ricupero said he did not see any contradiction at all.  The strength of NEPAD was that the commitment to better governance came directly from African leaders; it had not been imposed externally.  That African commitment to good governance made external conditionalities less necessary than ever.  The members of NEPAD should have the opportunity to live up to the commitments they had made, and the international community supported their sincere ownership of the pledge to improve governance.

Furthermore, he had not said that there should be no conditionalities at all.  The report made clear that there were four to five necessary conditionalities -– those that guaranteed sound macroeconomic policies.

Twenty-five years ago, he said, UNCTAD was alone in maintaining that the world trading system contained many imbalances against developing countries.  Now many countries and institutions, including some developed countries and the World Trade Organization, acknowledged that fact.  Furthermore, the generalized system of preferences -- an idea born in UNCTAD years ago -- and initiatives such as the European Union’s “everything but arms” initiative on trade with Africa would not have been possible without the efforts UNCTAD had put into disseminating such ideas. 

The UNCTAD was a poor man’s organization without the resources of the World Bank or IMF, he said.  Its strength lay in the discussion of sound, well-argued ideas, which might find a receptive ear among those with the power to change the rules governing the current financial system. 

Furthermore, UNCTAD’s message had incorporated new elements over the years.  For instance, after the fall of the Berlin Wall, while most economic institutions had predicted a decade of enormous development and financial liquidity for all countries, UNCTAD had been the only institution to predict that the 1990s would be characterized by the frequency, intensity and destructive power of a monetary and financial crisis.

Questioned about his statement that “UNCTAD is a poor man’s organization”, Mr. Ricupero said that UNCTAD tried to articulate the perspective of developing countries.  The UNCTAD’s membership included all countries in the world, because its basic belief was in interdependence.  The problem with contemporary

globalization was that countries had lost sight of the fact that the world should be truly interdependent.  The UNCTAD tried to balance mainstream views.  For example, the new report’s emphasis on building sound institutions was accompanied by a warning that good institutions would only be created gradually.  The developed world had had centuries to do what the developing world was being asked to do in mere years.  One simplistic recipe for development could not be applied to all countries:  the international community needed to be supportive without being indulgent.

He added that UNCTAD also believed in the need to further South-South cooperation -- not to the detriment of North-South relations, but in complementarity with them.  An enormous increase in trade among developing countries had been witnessed.  There had been very impressive growth in trade in manufactured goods and technologically advanced goods among developing nations.  Yet countries further along the path to development, like China and India, needed to do more to advance cooperation with other developing States.

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