ECONOMIC AND SOCIAL COUNCIL OPENS 2007 SUBSTANTIVE SESSION

 

Secretary-General Ban Ki-moon Notes

Bold New Initiatives to Re-energize its Functions

(Reissued as received.)

GENEVA, 2 July (UN Information Service) –- The Economic and Social Council this morning opened its 2007 substantive session, beginning its high-level segment by hearing from the President of the Economic and Social Council (ECOSOC), United Nations Secretary-General Ban Ki-moon, and the President of the United Nations General Assembly.

The Secretary-General presented to the Prime Minister of Bahrain the 2006 Special Citation of the Habitat Scroll of Honour.  The President of the Swiss Confederation and the Prime Minister of Lithuania gave keynote addresses on the theme of “the eradication of poverty and hunger”.  Then the Council began its policy dialogue on current developments in the world economy and international economic cooperation. 

Ban Ki-moon, Secretary-General of the United Nations, said the Council had undertaken bold new initiatives to reenergize its functions and to rejuvenate its mission.  As a result, it was well on its way to becoming the global hub for devising and overseeing development policies and practices.  Two of the Council’s most striking innovations were the Annual Ministerial Reviews and the Development Cooperation Forum.  The Ministerial Reviews could help the Council better assess national progress towards the internationally agreed development goals.  At the same time, the new Development Cooperation Forum could help countries to better gear international development cooperation towards achieving these goals.  These two new functions could not have come at a more opportune juncture. The Council stood at the mid-point of the race to achieve the Millennium Development Goals.  A strong and sustained effort now could mean the difference between the success and failure of the grand endeavour of the Council. 

Dalius Čekuolis, President of the Economic and Social Council, opening the session, said at the beginning of the millennium, leaders had adopted a shared agenda for development, based on a range of targets to be achieved by 2015.  Mid-way to this date, there were encouraging signs of reduction of poverty, and yet many countries remained far from achieving these Millennium Development Goals, especially in sub-Saharan Africa.  There was a need for a true global partnership in which all were committed to meeting the Goals. 

Sheikha Haya Rashed Al Khalifa, President of the United Nations General Assembly, said in order to attain the Millennium Development Goals, partnership both within and without the United Nations needed to be forged.  Speeding up the implementation of the International Development Agenda and encouraging the adoption of measures were among the most important priorities of the United Nations.

Anna Tibaijuka, Executive Director of the United Nations Human Settlements Programme (UN-HABITAT), said after a rigorous review, an expert advice panel was unanimous in identifying the people of the Kingdom of Bahrain to have made impressive effort and progress in uplifting the living standards through an active focus on poverty alleviation and modernization of the city with due regard to environmental sustainability, social inclusiveness including gender equality while at the same time preserving the cultural heritage of the country.  This award to the Prime Minister of Bahrain signified international recognition.  

Sheikh Khalifa bin Salman al Khalifa, Prime Minister of Bahrain, said he felt privileged by the award, which constituted an unexpected and welcomed honour reflecting all the efforts made by Habitat to follow up the efforts made by all countries.  The award was addressed to him and also to the people of Bahrain.  Efforts were continuing to improve the living conditions of the people pf Bahrain, especially those who suffered from poverty. 

Micheline Calmy-Rey, President of the Swiss Confederation, in a keynote statement on the theme “the eradication of poverty and hunger”, said development, in its economic, social and ecological dimensions, and based on the respect for human rights, represented the most crucial challenge and foremost common objective in creating a world which was, at one and the same time, more free and more secure. 

Gediminas Kirkilas, Prime Minister of Lithuania, also speaking on the same theme, said across the globe, economic growth over the past years had been quite promising.  Due to strong growth in developing regions over the past few years, an estimated 135 million people had managed to get out of extreme poverty.  But the progress attained so far was not sufficient and one could not be complacent.

The Council then began its high-level policy dialogue on current developments in the world economy and international economic cooperation.  The panellists for this dialogue were Supatchai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development, Pascal Lamy, Director-General of the World Trade Organization, Murilo Portugal, Deputy Managing Director of the International Monetary Fund, and Francois Bourguignon, Senior Vice-President and Chief Economist of the World Bank.  Sha Zukang, Under-Secretary-General for Economic and Social Affairs, moderated the dialogue. 

Sha Zukang, Under-Secretary-General for Economic and Social Affairs, in an introductory statement, said flagship reports made it clear that after solid and broad-based economic growth over the last few years, the pace of this growth was slowing.   This forecast was surrounded by much uncertainty, with risks mainly on the downside.  Addressing these risks required a policy response that was coordinated internationally.

Supatchai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development, said developing countries continued to grow strongly, supported by favourable financial conditions and strong commodity prices.  Rarely had their growth been so marked and broad-based.  These countries were playing a larger global role than ever in today’s world economic expansion.  Globalization had strengthened their trade and financial linkages with the rest of the world. 

Pascal Lamy, Director-General of the World Trade Organization, said today, there was a broad consensus that trade opening played a vital role in growth and development.  Trade opening and rule making were major goals of the World Trade Organization; but today a number of the current substantive rules of the World Trade Organization did perpetuate some bias against developing countries. 

Murilo Portugal, Deputy Managing Director of the International Monetary Fund, said the global outlook remained favourable, but risks remained of unwelcome surprises.  There was no room for policymakers to relay their efforts both to sustain a stable macroeconomic environment and to advance reforms that would underpin continued strong global growth over the medium term.   

Francois Bourguignon, Senior Vice-President and Chief Economist of the World Bank, said strengthening aid flows to help finance essential infrastructure and social services was vital and required new momentum and better coordination.  But, despite pledges from donor countries, the expansion in global aid had stalled.

Speaking in the context of the interactive debate on current developments in the world economy and international economic cooperation were the representatives of Pakistan, Portugal on behalf of the European Union, Russian Federation, United States, Kazakhstan, Guinea, and China.

The Council also adopted its provisional agenda, and approved the programme of work for the 2007 substantive session. 

The next meeting of the Council will be at 3 p.m. this afternoon, when it will start its thematic discussion on the theme “strengthening efforts at all levels to promote pro-poor sustained economic growth, including through equitable macro-economic policies”, during which it will hear an introduction of the report of the Secretary-General on the theme of the thematic discussion, followed by two simultaneous round tables on growth, poverty reduction and equity – emerging paradigm; and on coherence and coordination of macroeconomic policies at all levels.

Documents Before Council

The Council has before it the Millennium Development Goals Report 2007, which looks at the collective record towards the achievement of the Millennium Development Goals (MDGs) at the midpoint between the adoption of the MDGs and the 2015 target date.  The collective record is mixed; the results suggest that there have been some gains, and that success is still possible in most parts of the world, but much remains to be done.  Among progress achieved is that reduction of the proportion of people living in extreme poverty from nearly a third to less than one fifth between 1990 and 2004, is a trend which, if sustained, will allow for the MDG poverty reduction target to be met for the world as a whole; women’s political participation has been growing, albeit slowly, and even in countries where previously only men were allowed to stand for political election, women now have a seat in parliament; child mortality has declined globally, and it is becoming clear that the right life-saving interventions are proving effective in reducing the number of deaths due to the main child killers – such as measles; and the tuberculosis epidemic, finally, appears on the verge of decline.  Much, however, remains to be done.  Currently, only one of the eight regional groups cited in the report is on track to achieve all the MDGs.  In contrast, the projected shortfalls are most severe in sub-Saharan Africa.  Even regions that have made substantial progress, including parts of Asia, face challenges in areas such as health and environmental sustainability.

The Council has before it the report of the Secretary-General on strengthening efforts at all levels to promote pro-poor sustained economic growth, including through equitable macroeconomic policies (E/2007/68), which observes that, despite strong historical evidence that sustained economic growth is an important factor in reducing poverty, the linkage between the two is complex.  The report examines different approaches to the concept of “pro-poor growth”.  It proposes that the objective of policy should be to promote broad-based growth that will contribute to the achievement of the internationally agreed development goals, including the Millennium Development Goals. 

The Council has before it the note by the Secretary-General on the thematic discussion of the high-level segment of the substantive session of the Economic and Social Council: selection of a theme (E/2007/51), which contains proposals by organizations of the United Nations system and by intergovernmental bodies to facilitate the selection of a theme for the next thematic discussion of the high-level segment of the substantive session of the Economic and Social Council.  Taking those suggestions and other elements into consideration, the Secretary-General concludes by recommending the following theme: “The impact of conflict on the implementation of the global public health agenda”.

The Council has before it the report of the Secretary-General on strengthening efforts to eradicate poverty and hunger, including through the global partnership for development (E/2007/71), which notes that, globally, absolute poverty continues to decline.  By 2015, all major regions except sub-Saharan Africa are expected to reduce the proportion of people living in extreme poverty to less than half the 1990 rate.  There has also been global progress in other dimensions of poverty, such as access to education and health care.  Nevertheless, the rate of improvement is insufficient to achieve the goals in the areas established in the United Nations Millennium Declaration.  Meanwhile, the global physical environment continues to deteriorate, with increasing evidence that climate change is reaching a “tipping point”, with potentially devastating consequences for the world’s poor.  However, whereas official development assistance and debt relief to developing countries have increased, net financial flows have been negative.  Official development assistance has not risen to the level of the commitments made by the developed countries, and the promise held out by the possibility of a development-oriented set of trade negotiations has so far failed to materialize. 

The Council has before it the World Economic and Social Survey 2007: Development in an Ageing World (E/2007/50/Rev.1), which says increased life expectancy and lower fertility rates are changing the population structure worldwide in a major way: the proportion of older persons is rapidly increasing, a process known as population ageing.  The process is inevitable and is already advanced in developed countries and progressing quite rapidly in developing ones.  The 2007 Survey analyses the implications of population ageing for social and economic development around the world, while recognizing that it offers both challenges and opportunities.  Among the most pressing issues is that arising from the prospect of a smaller labour force having to support an increasingly larger older population. 

The Council has before it the World economic situation and prospects as of mid-2007: Macroeconomic trends in the world economy (E/2007/CRP.2), updating the World Economic Situation and Prospects 2007, released in January 2007.  The report concludes that, after solid and broad-based growth for three consecutive years, world economic growth is moderating in 2007.  The growth of world gross product (WGP) is expected to slow to a pace of 3.4 per cent for 2007 as a whole, down from 4.0 per cent, as recorded in 2006.  The slowdown is expected to stabilize in 2008 with a projected growth of WGP at 3.6 per cent.  The risks, however, are slanted on the downside.  The report goes on to analyse world economic performance by region, with reference also as to whether the countries concerned are developed, developing, or have economies in transition.  It also considers the question of the challenge for policymakers worldwide to sustain robust growth and, more importantly, how to engender higher growth in more developing countries so as to secure the fulfilment of the Millennium Development Goals.

The Council has before it the report of the Committee for Development Policy on its ninth session (E/2007/33).  At its ninth session (19-23 March 2007), the Committee addressed three themes: climate change and sustainable development; strengthening the international partnership for effective poverty reduction; and the procedure for inclusion of countries in and graduation from the list of least developed countries.  

The Council has before it the report of the Secretary-General on regional cooperation in the economic, social and related fields (E/2007/15 and Add.1 and 2), which provides an update to the Council on the perspectives and developments in regional cooperation and the work of the regional commissions in relevant areas since its substantive session of 2006.  Taking the 2005 World Summit Outcome as a main reference point, and in view of 2007 being the midpoint between the adoption of the Millennium Declaration and 2015, the target date for the achievement of the Millennium Development Goals, the report focuses particular attention to an analytical presentation of the status of implementation of the Goals and the lessons that can be drawn from a regional perspective for intensifying the efforts during the coming years.  Addendum one to the report contains the resolutions and decisions adopted by the regional commissions during the period under review that require action by the Council or are brought to its attention.  A second addendum contains a resolution adopted by the Economic Commission for Latin America and the Caribbean at the twenty-fourth session of its Committee of the Whole, held in New York on 5 June 2007.

Opening Statements

DALIUS ČEKUOLIS ( Lithuania), President of the Economic and Social Council, said at the beginning of the millennium, leaders had adopted a shared agenda for development, based on a range of targets to be achieved by 2015.  Mid-way to this date, there were encouraging signs of reduction of poverty, and yet many countries remained far from achieving the Millennium Development Goals, especially in sub-Saharan Africa.  There was a need for a true global partnership in which all were committed to meeting the Goals.  While there was no single blueprint to be adopted by all countries, success stories indicated the existence of certain key factors for success, which should give renewed hope that if these lessons were applied, attaining the Goals would be in the reach of the international community.  In the run-up to 2015, the international community should work on identifying the common factors of success and adopting them to be applied locally.

The primary responsibility for applying the Millennium Development Goals lay with the Member States, Mr. Čekuolis said.  The Council, however, played a role in supporting these and in speeding up the implementation of national development strategies.   A unique platform for sharing national implementation efforts existed in the Council, and those who had volunteered this year to make their presentations were welcomed.  Importantly, the individual conference follow-up processes were brought together in a meaningful way, ensuring coherence between policy and action.  The Annual Ministerial Review would help with taking an extra step towards humanising poverty and deprivation.  The Fair should also evolve into an important catalyst for progress.  With regards to the engagement of all actors engaged in Development Cooperation, the Forum would play an important role in this regard from its launch later this week.

As a further sign of the renewal of the Council as a catalyst for action, all should make the most of the high-level segment to implement the international development goals, including the Millennium Development Goals.  All Member States should send a clear message to the world that in the spirit of true global partnership, all would work to improve the lives of those suffering.    Development for all was essential to the work of the United Nations, and represented its core.  In line with its charter mandate, the Council was ideally placed to help with this, and it fell on the Council to set the tone and shape of its results, for the sake of those whose lives hinged on progress in attaining the Millennium Development Goals. 

BAN KI-MOON, Secretary-General of the United Nations, said the Council had undertaken bold new initiatives to reenergize its functions and to rejuvenate its mission.  As a result, it was well on its way to becoming the global hub for devising and overseeing development policies and practices.  Two of the Council’s most striking innovations were the Annual Ministerial Reviews and the Development Cooperation Forum.  The Ministerial Reviews could help the Council better assess national progress towards the internationally agreed development goals.  At the same time, the new Development Cooperation Forum could help countries to better gear international development cooperation towards achieving these goals.  These two new functions could not have come at a more opportune juncture. The Council stood at the mid-point of the race to achieve the Millennium Development Goals.  A strong and sustained effort now could mean the difference between the success and failure of the grand endeavour of the Council.  Millions of lives quite literally hung in the balance.  The focus of the Annual Ministerial Review, which would concentrate on the first and last Millennium Development Goals – cutting extreme poverty and hunger in half, and building the global partnership for development, was extremely welcomed.

Advancing on these two items was essential for human uplift, and it underpinned the entire United Nations development agenda, the Secretary-General said.  All had the analytical report for the Ministerial Review, as well as The Millennium Development Goals (MDGs) Report 2007, which was being launched right here, right now. This report was the result of a broad interagency effort spearheaded by the Department of Economic and Social Affairs.  It showed that progress towards the Development Goals had been slow in some of the world’s poorest countries, particularly in sub-Saharan Africa. However, its main message remained encouraging: the Millennium Development Goals remained achievable in most countries, but only if political leaders took urgent and concerted action.  Countries in Africa and elsewhere were demonstrating that rapid and large-scale progress on the MDGs was possible.  As this week’s national presentations on implementation experiences would show, it flowed from strong government leadership and sound governance good policies. It required practical strategies for scaling up investments in key areas.  And it needed adequate financial and technical support from the international community.

Experience had also shown that successful national development strategies must be aligned with the MDGs through internal effort – not imposed from outside, Mr. Ban said.  Such strategies should be coupled with a broad-based and balanced macroeconomic policy that fostered growth and employment creation.  Decent jobs, especially for women and youth, provided the strongest link between economic growth and poverty reduction.  All of this would simply not occur without adequate financing, much of which had to flow from a strengthened global partnership for development.  The need for developed nations to keep their promises was particularly stressed.  Today, donors were urged to issue timelines for scaling up aid to reach their target commitments by 2010 and 2015.  They must also address the disparities in the global trade regime, which handcuffed so many developing nations.  The world desperately needed a successful conclusion to the Doha trade negotiations.  Existing trade barriers, agricultural subsidies, and restrictive rules on intellectual property rights reinforced global inequities – and they made a mockery of the tall claims to eliminate hunger and poverty from our world.  The time to convert existing promises into actual progress was now.  The “global partnership for development” must be converted into more than a catchy slogan, and turned into fact so as to address the most pressing development issues of our day, from climate change to trade and aid.  By acting now, the 2015 deadline could still be delivered.

SHEIKHA HAYA RASHED AL KHALIFA (Bahrain), President of the General Assembly, said today was the inauguration of a new age which would witness the strengthening of the Economic and Social Council according to United Nations General Assembly resolution 61/16, which was negotiated for over a year, and was one of the most important achievements of the sixty-first session of the General Assembly, and reflected the vision of Governments and Heads of State.  The new responsibilities of the Council could play a vital role as part of the collective efforts made by the international community in order to combat poverty and strengthen human development in the interests of all.  There were great challenges that awaited all, particularly with regards to the fulfilment of the hopes of millions who were suffering from poverty and epidemics in many parts of the world.  The world was confronted by a moral and ethical duty to respond to these needs, in particular in the Least-Developed Countries.  The challenge today was to meet responsibilities and to work together to form strong partnerships.  Every member of the human family could be saved from poverty, backwardness and disease. 

Constructing a more pluralistic system that would be more capable of facing the challenges of the twenty-first century was vital, and cooperation and progress needed to be implemented among the Member States in order to lead to a better future in which there was no place for hunger and poverty.  In order to attain the Millennium Development Goals, partnership both within and without the United Nations needed to be forged.  Speeding up the implementation of the International Development Agenda and encouraging the adoption of measures were among the most important priorities of the United Nations.  Progress had been evaluated in the implementation of the Millennium Development Goals and establishment of partnerships in this respect, including the declaration of new resources to support the implementation of the Goals. 

The Annual Ministerial Reviews could participate in the formulation of strategic policies related to development cooperation, the President of the General Assembly said.  The Monterrey Consensus required follow-up, and cooperation and complementarity between legal, legislative and executive work of the United Nations could increase its effectiveness, allowing it to improve its efforts for the attainment of the Millennium Development Goals, which would result in better lives throughout the world.  Women were the key to development, and yet were still discriminated against and marginalized.  There was a long road ahead to create equality, and to enable women politically and economically, raising their living standards.  It was not possible to attain the Millennium Development Goals without enhancing and respecting the rights of women.  Climate change was one of the most serious challenges that mankind was confronted by, and it required international efforts, which could not be delayed.  Combating the spread of HIV/AIDS was also important.  This was the beginning of a new era in the Economic and Social Council, and its prestige was rising.  The Council would have to address a wide range of issues, and it was wished all success. 

Presentation of 2006 Special Citation of the Habitat Scroll of Honour to the Prime Minister of Bahrain

ANNA KAJUMULO TIBAIJUKA, Executive Director of the United Nations Human Settlements Programme (UN-HABITAT), said that, since 1989, United Nations Habitat had run a Habitat Scroll of Honor annual award system to recognize consistent efforts or innovative approaches in the implementation of the Habitat Agenda which sought to promote adequate shelter for all and sustainable human settlements development in an urbanizing world.  After a rigorous review, an expert advice panel was unanimous in identifying the people of the Kingdom of Bahrain to have made impressive effort and progress in uplifting the living standards through an active focus on poverty alleviation and modernization of the city with due regard to environmental sustainability, social inclusiveness including gender equality, while at the same time preserving the cultural heritage of the country.  The Government of the Kingdom of Bahrain had devised forward-looking plans in housing policies since the Isa Town cornerstone had been laid in the late 1960s, with His Highness working hand in hand with the people.  This was a qualitative step, marking the first time Bahrain had built a modern, fully serviced city. 

Nearly 20 years later, Hamad Town had been built in response to the increasing number of housing applications, she said.  In between those land mark pro-poor programmes the Government implemented different housing projects at various scales and in several areas for different income groups.  The overall outcome was a thriving beautiful City of Manama which stood out as a best practice in recent urban development and modernization.  These achievements were important in this rapidly urbanising world.  The time when homo sapiens had become home urbanus.  These were daunting challenges complicated by increasing slum dwellers now over 1 billion people as well as the spectre of climate change which was threatening coastal settlements in particular small island states including Bahrain.  This award to His Highness Sheikh Khalifa signified international recognition.     

BAN KI-MOON, Secretary-General of the United Nations, said he was honoured to give this citation to the Prime Minister of Bahrain, under whose leadership the country had made remarkable strides in ridding itself of poverty, moving to a thriving, diversified economy, whilst preserving the cultural diversity of the Kingdom.  Bahrain had made effective progress towards achieving the Millennium Development Goals.  Eradicating poverty was one of the greatest challenges of our time, and all Governments were urged to redouble their efforts in this regard. 

The Secretary-General then presented the Special Citation of the Habitat Scroll of Honour to the Prime Minister of Bahrain.

SHEIKH KHALIFA BIN SALMAN AL KHALIFA, Prime Minister of Bahrain, said that he wanted to extend his deep gratitude to Secretary-General Ban Ki-moon for the Special Citation of the Habitat Scroll of Honour.  He felt privileged by the award, which constituted an unexpected and welcomed honour reflecting all the efforts made by Habitat to follow up the efforts made by all countries.  The award was addressed to him personally and also to the people of Bahrain.  Efforts were continuing to improve the living conditions of the people pf Bahrain, especially those who suffered from poverty. 

This award made all the citizens of Bahrain feel proud because it represented the international recognition to implement the Millennium Development Goals and an encouragement to attain these objectives, the Prime Minister said.  The right to decent shelter was one of the inalienable human rights.  Bahrain had reaffirmed this right for the inhabitants of the Kingdom.  The programme also focused on modernization and preserving cultural heritage.  An annual award had been announced.  He was looking forward to future cooperation. 

Key Note Addresses on “Eradication of Poverty and Hunger”

MICHELINE CALMY-REY, President of the Swiss Confederation, delivering a key-note statement on the theme “the eradication of poverty and hunger”, said development, in its economic, social and ecological dimensions, and based on the respect for human rights, represented the most crucial challenge and foremost common objective in creating a world which was, at one and the same time, more free and more secure.  The large number of development goals approved by the international community over the last decades, given their close interrelation, called for exceptional efforts with respect to policy coherence, be they national development policies or cooperation policies conducted by donor countries and multilateral development agencies.  Against this backdrop, the Millennium Development Goals were to be understood as the locomotive driving the global development agenda forward. 

Economic growth that benefited the poor was not the result of getting the right economic formula down on paper.  Instead, it was the fruit of a subtle mixture of factors, including prudent macroeconomic policies, effective social protection that compensated for harmful economic inequalities, and a combination of investments in the infrastructure, professional training and basic public services such as security and health.  There was already the knowledge and the experience necessary to enable the international community to vanquish extreme poverty and hunger.  And there was also the issue of resources, providing they were ready to be mobilised.  All of the stakeholders, Governments, multilateral institutions, non-governmental organizations and the private sector should join forces on a broad front, on the national, regional and global levels. 

It was important that the developing countries, for it was they who bore the ultimate responsibility for their own development, formulated and implemented efficient and effective strategies to combat poverty, steered by the Millennium Development Goals, Ms. Calmy-Rey said.  Good governance at the national level was indispensable for sustainable development.  If headway was to be made, there was a need for a universal organization, vested with legitimacy in the eyes of all and capable of dealing with the various facets of the development challenge in an integrated manner: there was a need for the United Nations.  The inclusion of all partners, together with representatives from civil society, the private sector, and academia, injected momentum into the inter-Governmental processes, and played a key role in the implementation of the development agenda. 

GEDIMINAS KIRKILAS, Prime Minister of Lithuania, said that it was a great honour to speak at this year’s high-level segment of the Economic and Social Council, which was the first high-level segment of a renewed ECOSOC that was truly well placed to act as a central coordinating body responsible for reviewing the United Nations system’s contribution to achieving the internationally agreed development goals, including the Millennium Development Goals.  Across the globe, economic growth over the past years had been quite promising.  Due to strong growth in developing regions over the past few years, an estimated 135 million people managed to get out of extreme poverty.  Central and Eastern Europe had also achieved progress in poverty reduction.  But the progress attained so far was not sufficient and one could not be complacent.  Overall progress in achieving the Millennium Development Goals, including poverty reduction, remained uneven.  The importance of national poverty reduction strategies with a strong sense of ownership could not be stressed enough.  At the same time, in order to see real progress in fighting poverty and hunger, local efforts needed the sustained and coordinated support at regional and global levels. 

Sustained economic growth was a major factor in reducing poverty, Mr. Kirkilas said.  But growth alone was not sufficient.  In order to translate economic growth into pro-poor gains on the domestic level, growth must be accompanied by strengthening institutional capacity, equitable delivery of public services, active social inclusion, bridging the gap between the urban and rural development, as well as investment in human capital.  Empowerment of the poor, of the vulnerable - empowerment in the broadest sense of the word – was extremely important in bringing about a change for the better.  Education and skill acquisition was an equally powerful tool in poverty eradication.  To deliver on the commitments to reduce poverty and hunger, the dialectical link between poverty and conflict must also be tackled.  It was the fragile States that posed the greatest difficulty in fighting poverty.  ECOSOC could contribute significantly to the work of respective institutions dealing with fragile and post-conflict States.  The Peacebuilding Commission could benefit from ECOSOC’s own experience.

To add to the list of problems that made fighting poverty a daunting challenge, climate change was increasingly a factor to be reckoned with, the Prime Minister of Lithuania said.  Equally, there were the serious concerns regarding the effects of climate change vis-à-vis agriculture and food security, water resources, energy, human health, and human habitat.  The eradication of extreme poverty demanded a constructive and truly global partnership of developed and developing countries.  However, with multiple challenges in various parts of the world, the need for urgent assistance and resources for sustained aid was ever increasing.  It was urgent to agree on measures that would strengthen the United Nations capacity to deliver as one in the areas of development, humanitarian assistance and the environment, while taking into account the cross cutting issues, such as gender equality, sustainable development, and human rights.

Statements in High-Level Policy Dialogue

SHA ZUKANG, Under-Secretary-General for Economic and Social Affairs, moderator of the dialogue, said this was his first official statement in his role as Under-Secretary-General for Economic and Social Affairs.  In a week of day-to-day events, this policy dialogue brought forward a rare opportunity for the heads of economic institutions to give the Council their perspectives on the situation of the world economy.  Flagship reports made it clear that after solid and broad-based economic growth over the last few years, the pace of this growth was slowing.   This forecast was surrounded by much uncertainty, with risks mainly on the downside.  Addressing these risks required a policy response that was coordinated internationally.  The major drag on the world economy was a slow-down in the United States - growth in the rest of the world remained robust, but potential growth was not enough to act as an impetus on the United States. 

Mr. SHA said the strength of economic growth in economies in transition and in poorer countries was still highly dependent on the international economic environment, which was largely determined by the economic programmes and policies of the major developed countries.  Economic growth for poorer countries had continued to be strong, with an increase in the prospects in many least developed countries for achieving the Millennium Development Goals.  However, economic progress was far from homogenous.  In recent years, the international economic environment had been favourable for most developing countries, which had seen certain advantages.  Their vulnerability showed, however, in increased volatility in the prices of commodities, as well as other factors. 

To sustain a salutary international economic environment, more efforts were needed to move forwards on the trade negotiations in the Doha Round which were suspended last July.  A substantial share of employment in developing economies was in sectors of low productivity.  One of the dark clouds on the horizon was an unsustainable pattern of global imbalances.  A more severe loss in confidence in the dollar could destabilise the international financial system, derail global economic growth, and put in jeopardy the achievement of the Millennium Development Goals.   The IMF needed to serve as an impartial mediator in this regard, and should make changes in order to fulfil this role, as more comprehensive governance changes were required.  The aging of the world’s population brought other challenges to the prosperity of the world economy.  The contours of a workable mechanism for effective international policy coordination should be debated. 

SUPACHAI PANITCHPAKDI, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said that the good news was that developing countries continued to grow strongly, supported by favourable financial conditions and strong commodity prices.  Rarely had their growth been so marked and broad-based.  These countries were playing a larger global role than ever in today’s world economic expansion.  Globalization had strengthened their trade and financial linkages with the rest of the world.  There had been remarkable gains for both developed and developing countries, although management and balancing was needed to ensure sustainability.  The global trading system had become more inclusive, fuelling economic growth and recovery.  Overall, the share of developing countries in global trade had increased.  Their impressive expansion of exports, imports and consumption meant that they were now major contributors to both global supply and global demand, which was beneficial to the world economy as a whole. 

A new landscape for development finance was emerging, Mr. Panitchpakdi said.  For a number of years, global capital flows had been reversed; developing countries had become net exporters of capital, and developed countries, net importers.  The resource transfer from the poor to the rich was the exact opposite of what happened in the first era of globalization in the early 20th century.  Tackling the goal imbalances, and dealing especially with exchange rates and financial speculation, must remain a priority for the international community.  There could be little doubt that these current account imbalances could not be corrected without adjustments in the global pattern of demand and exchange rates.  Most of the financial crises in the post-Bretton Woods era of floating had been preceded by a build-up in nominal interest rates differentials, which was not covered by depreciation in the exchange rate of the country with the higher nominal interest rate. 

This led to shifts in the currency composition with the higher nominal interest rate and implied a further rise in the return on such investments, the Secretary-General of UNCTAD said.  Shifts in short-term asset holdings from currencies with very low inflation and very low nominal interest rates to those with higher inflation and higher interest rates broke the vital link between interest rate differentials and the risk of currency depreciation.  The recent wave of globalization had increased competitive pressure in world markets, with distributional consequences both among and within countries.  Failure to address them effectively could trigger renewed protectionism internationally and social instability domestically, jeopardizing many of the gains brought about by economic expansion.  From a development perspective, it was a moral imperative for the world to remember poor countries, especially at a time of robust global economic growth.   

PASCAL LAMY, Director-General of the World Trade Organization, said he was glad that cooperation was the central theme of this panel.  International cooperation was the only recipe for sustainable development and growth of all countries.  This was especially true in the area of the environment, with cooperation needed to tackle climate change; it was also valid in the area of health, where there was need for global cooperation to fight pandemics such as HIV/AIDS or malaria, to name just two; and it was also the case of trade, and in particular the on-going trade negotiations under the Doha Development Agenda.  Today, there was a broad consensus that trade opening played a vital role in growth and development.  Trade opening and rule making were major goals of the World Trade Organization; but today a number of the current substantive rules of the World Trade Organization did perpetuate some bias against developing countries.  This was true with rules on subsidies in agriculture that allowed for trade-distorting subsidies which tended to favour developed countries. 

While political decolonisation had taken place more than 50 years ago, economic decolonisation had not yet been completed.  A fundamental aspect of the Doha Development Agenda was therefore to redress the remaining imbalances in the multilateral trading system, and to provide developing countries with improved market opportunities.  But while trade was an essential ingredient, trade opening was not a panacea for all the challenges of development.  Nor was it necessarily easy to accomplish, or effective unless it was embedded in a supportive economic, social and political context.  It was necessary, but not sufficient in itself to ensure that the benefits of the negotiations bring positive results for the people in developing countries.  Trade opening could only be politically and economically sustainable if it was complemented by flanking policies which addressed at the same time capacity problems and the challenges of distribution of the benefits created by more open trade.  

Increasing trade opportunities for developing countries and in particular the least developed countries remained far and away the most important contribution that the World Trade Organization could make to development.   What remained to be done was small compared to all the proposals already on the table, which represented two to three times what was achieved in the last round of negotiations.  But it was also small compared to the potential benefits of rebalancing the multilateral trading system in favour of developing countries, or the weakening of this insurance policy against protectionism if there was failure.  Today, reaching agreement on subsidies depended on a number of things which remained to be done over a transition period of several years to leave space for a smooth adjustment.  Today the challenge was less economic than political - it was about making the multilateral trading system deliver; about making international trade cooperation deliver. 

MURILO PORTUGAL, Deputy Managing Director of the International Monetary Fund, said that the assessment and the baseline scenario were that times continued to be good for the global economy.  There continued to be solid growth in the Euro area and Japan, a vigorous pace of expansion in emerging market countries, particularly in China and India, and a strengthening of growth in the United States was expected in the second half of the year.  After a year-long slowdown in growth, the United States economy was expected to regain momentum gradually as the drag from the housing correction and the softness in the business sector dissipated.  In the Euro area, growth had been stronger than expected.  The Euro area’s economy forward momentum looked solid and growth was expected to remain above potential through 2008.  Growth in Japan continued at a healthy pace.  Solid confidence amidst strong profits in the business sector and continued employment growth should underpin a further expansion of the economy. 

Emerging markets and developing countries were expected to continue to grow strongly in 2007, drawing continued support from favourable financial conditions and, in many cases, from strong commodity prices, as well as, strengthened macroeconomic management and continued reform efforts, he said.  In China, GDP growth re-accelerated to an annual pace of more than 11 percent in the first quarter of 2007, was led by buoyant investment and exports.  In India, GDP growth expanded by 9.1 percent in the first quarter of 2007.  It was encouraging that growth prospects also remained strong, broadly across all groups of emerging market and developing countries.  Growth remained strong in most of emerging Asia and emerging Europe, had gained further momentum in Latin America, and continued to be buoyant in Sub-Saharan Africa. 

There were a number of downside risks, Mr. Portugal said.  First, inflation pressures remained a concern, in both advanced and emerging market countries.  Second, the recent noticeable rise in long-term interest rates and spreads and last February turmoil reminded to guard any complacency about global financial sector risks.  Third, continued large global current account imbalances left open risks of a possible disorderly unwinding and of rising protectionist pressures.  The global outlook remained favourable, but risks remained of unwelcome surprises.  There was no room for policymakers to relay their efforts both to sustain a stable macroeconomic environment and to advance reforms that would underpin continued strong global growth over the medium term.   

FRANÇOIS BOURGUIGNON, Senior Vice-President and Chief Economist of the World Bank, said at the global level, economic growth in developing countries during the past decade had been truly transformational, and opened opportunities from which all regions could benefit.  At the regional and sub-regional level, inequality of opportunity and participation in global growth was arguably the greatest threat to future sustainability of growth and to meeting the Millennium Development Goals.  The international community should do a better job of meeting its commitments of better financial support to the poorest countries, while multilateral institutions needed to improve coordination to avoid falling well short of what was needed. 

Today there was a period of exceptionally strong growth for developing countries and for the global economy as a whole.  Developing country growth over the past decade was faster than the preceding two decades, and consistently outpaced growth in rich countries.  This continuing strong growth was driving rapid poverty reduction.  The world as a whole was on track to exceed the Millennium Development Goal target of halving the share of extreme poor by 2015: this was an enormous achievement.  This global picture provided grounds for some optimism, but the story varied substantially at the regional and country levels.  Not only were there huge disparities in income distribution across regions and countries, but the gap was widening.  The challenge of meeting the Millennium Development Goals was increasingly concentrated in the fragile States. 

Strengthening aid flows to help finance essential infrastructure and social services was vital and required new momentum and better coordination.  But, despite pledges from donor countries, the expansion in global aid had stalled, and the mix of aid instruments was cause for concern.  A growing number of important externalities tied countries together: global trade policies, migration, sharing of water, regional infrastructure, and perhaps none were more evident today than greenhouse gases.  Adapting to climate change was already an immense issue, and a challenge in many developing countries.  These issues posed a special challenge to multilateralism, and in particular the capacity and commitment of multilateral institutions, including both the World Bank and the United Nations, to produce durable answers to difficult problems.  Lagging aid flows posed one such challenge.  Likewise, the need to agree on and implement a global response to climate change would require an enormous transformation in the way in which the global community operated.

Interactive Dialogue

MUNIR AKRAM ( Pakistan) asked if the Doha Development Round was concluded around negotiated parameters and if agreement was reached on agricultural subsidies among other topics, whether a deal could be made?  What would the concrete benefits would be for the rest of the developing countries, such as the Group of 90?  If the round was unable to be completed, should there be a second fast track agenda to avoid that the rest of the developing countries remained hostages of that process?    On the global financial imbalances, Pakistan asked whether it would not be better to look at the entire international financial architecture and to try to revive the basic objectives, which were global financial stability and access to short-term financial means. 

PEDRO MARQUES ( Portugal), speaking on behalf of the European Union, said the European Union was very pleased to participate in today’s high-level policy dialogue on current developments in the world economy and international cooperation and looked forward to a dynamic discussion on this theme.  Even continued growth did not guarantee achievement of the Millennium Development Goals by 2015, because 44 individual countries failed to achieve growth of over 3 per cent.  This was a question of inequality, within and among nations, and a deficit in pro-poor, employment-generating growth.  It was through a collaborative approach at the national, regional and international levels that these challenges should be addressed.  Africa and the least developed countries faced particular challenges in today’s globalized economy. 

The foundation for development was peace and security, as well as the respect for the human rights and fundamental freedoms of all.  The European Union reaffirmed its commitment to the Millennium Development Goals, which were the rallying point to ramp up and improve the living conditions of the poor all over the world.  The European Union was committed to improve the quality and effectiveness of aid, and would continue to implement the Paris Declaration.  Trade was an engine for growth.  A successful conclusion of the Doha Round trade negotiations was essential, and depended on developed and developing countries alike. 

ALEXANDER YAKOVENKO ( Russian Federation) said the Russian Federation wanted to ask a question on globalization.  There were many positive aspects to it but there were still millions of people without those benefits.  Countries with weaker economies were particularly vulnerable.  Globalization was seen as a multifaceted phenomenon.  There should be a diversity of models with regard to the specificities of the different countries.  Russia considered the cooperation within the framework of the international organisation of the United Nations as very important.  It was asked what the priorities could be in ensuring the cooperation between the international community and countries? 

RICHARD T. MILLER (United States) said what was heard from the presentations was rather good news in terms of the growth rates of the world economy, although many of the developing countries did not seem to be able to integrate themselves appropriately in the globalized economy and take advantage of the overall prosperity.  With regards to the latter, it was clear that there was no need for a major overhaul of the international financial institutions.  However, it would be appropriate to focus on some improvements at the margins of the system.  If each of the panellists could, in their field of expertise, do one thing to bring the poorest countries into the system in order to bring them into the overall prosperity, what would they focus on?

YERZHAN KAZYKHANOV ( Kazakhstan) said that transit transport cooperation was one of the key factors of successful economic development.  Fifteen out of thirty-one landlocked countries were least developed countries.  Kazakhstan wanted to take into account the interests of that group in the area of economic development and interregional cooperation and asked about the views of the panel on those topics.   

ALPHA SAW ( Guinea) said Guinea was interested in the impact of emerging emergency markets in India and Brazil for the transformation of development assistance to the developed countries, and whether there was an analysis to provide information on this issue.  Was there information on the impact on the current situation for least developed countries (LDCs), particularly for the tragic situation of cotton producers.  On the integration of LDCs into globalization, what could each stakeholder do for the most vulnerable and poorest countries, as it was clear that there was a need to focus on these latter, and a lot remained to be done in this regard.  Nothing had been provided for in countries in post-conflict situations to consolidate peace. 

LIU HUA ( China) said that this form of dialogue enhanced the coherence and cooperation.  The global economic picture was healthy as a whole but had also some risks such as global imbalances.  That called for a closer cooperation.  The World Bank representative was asked what kind of measures would be taken to reform the World Bank.  On the International Monetary Fund (IMF) presentation, a question was raised about the reform of the IMF, which would now enter a critical stage and what kind of efforts the IMF would undertake to push forward its reform.  

Mr. LAMY, Director-General of the World Trade Organization, responding, said with regards to the question of Pakistan on what were the concrete benefits of the deal for developing countries, this was more market access in agriculture, textile, clothing, and footwear, among others.  A reduction in tariffs and increased market access in many developing countries was also a benefit, as there was a strong South-South dimension.  On subsidies, trade-distorting subsidies were a weapon in international trade which many developing countries could not afford.  These subsidies also impacted production.  If the Round were to fail, and whether there would be room for a moral development package, this was unlikely, as the geo-political consequences would go far beyond trade.  Further, international trade negotiations were not about morals, they were about trade-offs. 

Imbalances stemming from globalization had to be addressed at the national as well as the international level, and had to be focused on countries whose own capacity to address this were the weakest.  As a priority, to move the whole agenda forward, Mr. Lamy said he would focus on making domestically a better case for trade opening and resisting protectionism.  Freedom of transit was absolutely crucial for many land-locked developing countries, and this was a big challenge, and in some aspects, international rules about making sure that transit was free could perhaps not be as clear as they could be, and there was therefore more to be done in this field. 

Mr. PANITCHPAKDI, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said that UNCTAD would continue to debate the dichotomy between highly disciplined trade existence and the lack of discipline within the financial regulations.  During the next meeting in Acra, the challenges would be discussed.  On the issue of the integration of the poorest members of the community into the system, UNCTAD tried to place more emphasis on how to address the issue of the creation of productive capital formation.  On the impact of the emerging countries and the implications for least-developed countries, it was an important ongoing agenda where a better understanding was sought with regard to what was meant by economic assistance.  In UNCTAD’s publications, there was a report dealing with the South-South economic cooperation between Africa and Asia.

Mr. PORTUGAL, Deputy Managing Director of the International Monetary Fund (IMF), said the objective of the IMF, to provide financing for all, should be revitalised.  On the issue of global imbalances, this was an international problem, a multilateral problem which no country could solve in isolation, and any attempt for an individual solution would be sub-optimal.  This was why there was the new system of multilateral discussions on how to solve the problem whilst maintaining global growth.  There was a need to reform international institutions - in the IMF there was a medium-term strategy which tried to reform a number of strategic areas, including the surveillance function, and also reform of quotas.  On what the IMF could do for low-income countries, it remained an international partner for a comprehensive strategy for low-income countries, and had worked to make these more flexible.  Twenty-five per cent of the budget went to capacity building.  It also worked to increase market access.  There were four important areas to focus on: higher aid - it was important for all countries to live up to their commitments; improved market access for low-income countries; better governance in these countries; and more steady and fast implementation of policy reforms in these countries, which could lead to higher growth.  On the reform of quotas, there had been an increase in these for four of the most dynamic members following a meeting in Singapore, and the IMF was now in the process of revising the quota formula to go for a second stage in increase in these.  It was also committed to increasing the number of votes for certain countries to at least 4 per cent so as not to allow the aggregate share of low-income countries to fall. 

Mr. BOURGUIGNON, Senior Vice-President, Chief Economist, World Bank, said that the issue of trade was an important topic.  On the benefits, one advantage was expansion.  Those countries which did not benefit could then integrate themselves more closely to global flows.  If the round was not so successful, the issue of market access remained essential for those countries.  Integration into trade flows required increased volume of trade on the demand side and something on the supply side – the countries should facilitate their integration into the trade flows.  Investing in infrastructure, human capital was particularly important.  The main goal for those countries should be the integration into the trade flows. 

On landlocked countries, the importance of the regional public goods was raised, Mr. Bourguinon said.  With regard to the analogy between poverty and the poorest countries, some countries qualified as emerging countries would have a lot of poverty.  On the issue of the post conflict countries, those were crucial situations.  Countries which came out of conflict came back to conflict a few years later because not enough resources had been made available to them.  Weak institutions and governments in those countries were an additional problem.

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For information media • not an official record