Sixty-third General Assembly

Second Committee

2^nd & 3^rd Meetings (AM & PM)

adopt varied responses to avert global recession, advises Deputy Secretary-General

as second committee begins annual general debate

 

With the worldwide financial crisis, as well as rising food and energy prices, threatening global development, there was a need to adopt financial stimulus packages, extensive reform of international financial regulation and steps to stabilize financial and foreign exchange markets, among other measures, in order to avert a global recession, Deputy Secretary-General Asha-Rose Migiro said today as the Second Committee (Economic and Financial) began its annual general debate.

Noting that no economy was spared from hardship, Ms. Migiro said goods from developing countries were suffering from weakening demand in major developed economies, and difficulties were evident in nations with current account deficits and a heavy dependency on external financing.  Moreover, efforts to achieve the Millennium Development Goals were at risk, despite the World Bank’s announcement that considerable progress had been made in reducing poverty and hunger.

She said the upcoming Doha Review Conference on Financing for Development must address the systemic weaknesses exposed by the current financial and economic turbulence, as well as international tax cooperation, innovative sources of financing, debt sustainability, aid effectiveness and other aspects of the Monterrey Consensus.  There was also a need to increase official development assistance, better coordinate that aid, reduce agricultural subsidies in developed countries, invest more in infrastructure and step up efforts to mitigate and adapt to climate change.

While global partners had yet to deliver fully on their internationally agreed commitments, the Millennium Development Goals were still achievable by the 2015 target date, she said.  But to do that, future action must focus on making good on the pledges already made.  The 2010 Millennium Development Goals review conference proposed by the Secretary-General could help advance that objective, particularly in Africa, where attaining the Goals on time would cost an estimated $72 billion annually in external financing.  High-level political engagement was also essential, as was the involvement of all citizens in moving the development process forward.  The Secretary-General and Deputy Secretary-General were committed to that end.

Sha Zukang, Under-Secretary-General for Economic and Social Affairs, reinforced those themes, calling for fair and effective methods to meet the financing challenges of climate change mitigation and adaptation with a stronger focus on countries with special needs, as well as added assistance to help least developed countries, landlocked developing countries and small island developing States reduce their vulnerability to the vicissitudes of markets and nature. 

According to current forecasts by the Department of Economic and Social Affairs, global economic growth could slow to less than 2 per cent for 2008 and could possibly be even worse in 2009, he warned.  At the same time, widening income gaps in developed, as well as developing, countries were raising concerns about the social consensus upon which stable economic and political relationships ultimately depended.  That was due to the rising tide of economic insecurity linked to a growing number of downside income and welfare risks.

Against that backdrop, he continued, the Committee’s various resolutions must address current systemic challenges in order to send a clear message that the creative forces of the market economy must be coupled with a more inclusive social contract.  Already, there were growing calls for fundamental reform of global economic governance and the international financial architecture to ensure that the financial system more effectively supported sustained and equitable economic growth.

He said that would require a new policy approach, including more effective regulations, particularly in financial markets; more effective counter-cyclical institutions and policies; improved risk monitoring and crisis management better suited to the realities of global financial integration; and above all, more universal social policies, including redistribution measures.

The Committee, he stressed, must also coordinate its work closely with the preparatory process for the Doha Review Conference to be held in late November, as well as promote more broad and inclusive national development strategies that could address poverty in all its dimensions, in all countries, in order to make the Second United Nations Decade for the Eradication of Poverty more effective.

In a keynote address, Ricardo Hausmann, Director of Harvard University’s Center for International Development and Professor of the Practice of Economic Development at the Kennedy School of Government, lamented that economic growth was not one of the Millennium Development Goals because it had not been seen as important at the time of the Millennium Declaration’s adoption.  Growth was important because it accumulated over time and affected all countries.

He said the sophistication of a country’s exports -– measured as the income per capita from the comparative advantage of its exports basket -– played a large role in the development process.  Rich countries did not just produce more of the same; they produced different goods.  To grow rich, countries must change what they produced and exported.  A one-size-fits-all approach would not be the right strategy, and some of the goods that developing countries were already exporting were not good enough to produce much growth.  Development strategies must be specific to each country’s situation, its available resources and the level of connectedness between resource-intensive sectors and its evolving capabilities. 

Opening the meeting, Committee Chairperson Uche Joy Ogwu ( Nigeria) said that if Member States had learned anything from the recent financial turmoil, the world food crisis, soaring energy prices and the effects of climate change, it was that the world today was more interconnected than ever.  While tackling those multiple challenges, Member States must not use the financial crisis as an excuse for not living up to past commitments.  They must remain committed to achieving the Millennium Development Goals, while working together to tackle challenges head-on.  The Committee should send a clear message from New York and Doha on how to address weakening demand and financial distress, and also strengthen mechanisms for international financial regulation and supervision in order to reduce the risk of similar crises recurring in the future.

Other speakers today were the representatives of Antigua and Barbuda (on behalf of the “Group of 77” developing countries and China), France (on behalf of the European Union), Bangladesh (on behalf of the least developed countries), Barbados (on behalf of the Caribbean Community), Indonesia (on behalf of the Association of Southeast Asian Nations), Japan, United States, Tunisia, Brazil, Mexico (on behalf of the Rio Group), Kenya (on behalf of the African Group), Lebanon (on behalf of the Arab Group), Russian Federation, China, Jamaica, Uganda, Algeria, India and Colombia.

Also making a statement was the Special Representative to the United Nations of the International Labour Organization (ILO).

Participating in a discussion that followed the keynote address were the representatives of Costa Rica, Malaysia and the Dominican Republic.

The Second Committee will meet again at 10 a.m. Tuesday, 7 October, to continue its general debate.

Background

The Second Committee (Economic and Financial) met this morning to begin its general debate for the sixty-third session of the General Assembly.

Opening Statements

Committee Chairperson UCHE JOY OGWU ( Nigeria) said that if Member States had learned anything from the recent financial turmoil, the world food crisis, soaring energy prices and the effects of climate change, it was that the world today was more interconnected than ever.  They had also learned that, at a time when problems had a global dimension, countries could not solve them on their own, but must address them together.  While tackling those multiple challenges, States must stay the course and remain committed to achieving the Millennium Development Goals.  The financial crisis must not be used as an excuse for not living up to past commitments; responses to all the challenges would determine success in reaching the Goals.

She called on the Committee to work towards a strong message so that, even as Member States were impacted differently by the ongoing crises, they would remain determined to work together and tackle the issues head on.  On the global financial crisis, the Committee should send a clear message from New York and Doha on how to address weakening demand and financial distress, and how to strengthen mechanisms of international financial regulation and supervision in order to reduce the risk of similar crises in the future.  As for the world food crisis, the Committee should make a strong call for full implementation of the Rome Agenda to ensure that recent progress on poverty and hunger was not reversed.  Regarding trade, the Committee should make a strong call for the restart and successful completion of the Doha trade round, which could give a much-needed boost to the global economy.  On climate change, States should make an urgent call for action at the climate meeting in Poznań, Poland, for the completion, by 2009, of negotiations on a post-2012 climate regime.

Deputy Secretary-General ASHA-ROSE MIGIRO, noting that the Committee was meeting at a time when the global financial crisis was affecting all economies, said a growing number of developing countries were suffering from weakening demand from the major developed economies.  Some were also experiencing financial distress, particularly those with current account deficits and a heavy dependency on external financing.  That vicious cycle was likely to drag down the world economy.  The financial crisis exacerbated the hardship already caused by higher food and energy prices, particularly in low-income countries.  Efforts to achieve the Millennium Development Goals were at risk despite the World Bank’s announcement that considerable progress had been made in reducing poverty and hunger.

Every effort must be made to avert a recession, including stimulus packages and measures to stabilize financial and foreign exchange markets and extensive reform of international financial regulation, she stressed.  The upcoming Doha Review Conference on Financing for Development must be used to address the systemic weaknesses exposed by the current turbulence, as well as other important issues, such as international tax cooperation, innovative sources of financing, debt sustainability, aid effectiveness and other aspects of the Monterrey Consensus.

She said that, while much progress had been made towards achieving the Millennium Development Goals, it was uneven and global partners had yet to deliver fully on their commitments, as pointed out by the report of the Millennium Development Goals Gap Task Force issued last month.  Still, the Goals were achievable by 2015 and action should now focus on following up the pledges made.  The 2010 Millennium Development Goals review conference proposed by the Secretary-General could help advance that objective.  Africa was the region facing the greatest challenges and, despite some promising results, such as the reduced official debt, commitments remained only partially realized.  The Millennium Development Goals Africa Steering Committee estimated that it would cost about $72 billion annually in external financing to achieve the Millennium targets in Africa by 2015.  It was necessary to increase official development assistance, better coordinate aid, reduce agricultural subsidies in developed countries and invest more in infrastructure.

The international community could not delay investments intended to increase agricultural productivity nor efforts to mitigate and adapt to climate change, she said.  The assessments of the Intergovernmental Panel on Climate Change (IPCC) made that very clear.  High-level political engagement was essential, as was the involvement of all citizens.  The Secretary-General and Deputy Secretary-General pledged their commitment to strengthen the United Nations development pillar.

SHA ZUKANG, Under-Secretary-General for Economic and Social Affairs, said the protracted financial strains in major developed countries had led to a pronounced downturn in world economic growth, while the macroeconomic environment was increasingly unbalanced and vulnerable to shocks and crises.  According to current forecasts by the Department of Economic and Social Affairs, global economic growth could slow to below 2 per cent for 2008, and the prospects for the world economy in 2009 remained worrisome and could possibly be even worse than those for 2008.  Combined with much higher food and fuel prices, the projected global slowdown would threaten gains made towards the Millennium Development Goals and prospects for further progress.  At the same time, widening income gaps in both developed and developing countries had been raising concerns about the social consensus upon which stable economic and political relationships ultimately depended.  Those concerns were wrapped up in a rising tide of economic insecurity, linked to a growing number of downside income and welfare risks.

Against that backdrop, he said the Committee’s various resolutions must address current systemic challenges in order to send a clear message that the creative forces of the market economy needed to be coupled with a more inclusive social contract.  Already, there were growing calls for fundamental reform of global economic governance and the international financial architecture to ensure that the financial system more effectively supported sustained and equitable economic growth.  That would require a new policy approach, including more effective regulations, particularly in financial markets; more effective counter-cyclical institutions and policies; improved risk monitoring and crisis management better suited to the realities of global financial integration; and above all, more universal social policies, including redistribution measures.

The Committee must also coordinate its work closely with the preparatory process for the forthcoming Doha review of implementation of the Monterrey Consensus, which was less than two months away, he said.  It must promote broad and inclusive national development strategies that could address poverty in all its dimensions, in all countries, in order to make the Second United Nations Decade for the Eradication of Poverty more effective.  The Committee could also play a pivotal role in placing public health issues in the larger economic, social and environmental context.

In addition, it was necessary to meet the financing challenges of climate change mitigation and adaptation in a fair and effective way, he said.  A stronger focus must also be given to countries with special needs, and much more must be done to assist least developed countries, landlocked developing countries, and small island developing States in reducing their vulnerability to the vicissitudes of markets and nature.  The Committee’s session should inject new vigour into efforts to address the serious challenges facing those countries.

Keynote Address

RICARDO HAUSMANN, Director of Harvard University’s Center for International Development and Professor of the Practice of Economic Development at the Kennedy School of Government, focused his discussion on the problem he considered central to the work of the United Nations:  global inequality and what could be done to make the world a more equitable place.

He said income per capita in the United States was more than 50 times larger than in Malawi, Burundi, Democratic Republic of the Congo, United Republic of Tanzania, Niger, Sierra Leone and Guinea-Bissau, while life expectancy in Japan, Australia and Norway was about twice that in Angola, Central African Republic, Mozambique and Zambia.  That could be explained by cumulative differences in long-run growth rates.  Growth was back in policy discussion, though it was not one of the targets of the Millennium Development Goals because it had not been seen as important at the time of the Millennium Declaration’s adoption.  Growth was important because it accumulated over time and affected all countries.  For instance, if two countries started at the same level of income and their growth rates diverged by 6 per cent each year, after 50 years one of them would be 18.4 times richer than the other.

Growth was a very recent phenomenon –- from the last 200 years or so -- but it had not happened simultaneously across every region of the world, he continued.  When Adam Smith had written The Wealth of Nations, Malawi, Burundi, Democratic Republic of the Congo, and the United Republic of Tanzania had been the world’s poorest countries.  Today the Netherlands was 21 times richer than Nepal.  While some might blame imperialism for that, it had been found that Spanish colonialism between 1500 and 1800 had not caused Spain’s per capita income to rise.  It had been found that in the transition to modern growth, there had been huge variations in individual country performance in every region of the world.  None of the 24 developed countries had enjoyed their highest gross domestic product per capita before 2000.  However, 67 out of the 112 developing countries with data since 1980, or 58 per cent, had had maximum growth in per capita gross domestic product before 2000.

The sophistication level of a country’s exports -– measured as the income per capita from the comparative advantage of its export basket -– played a large role in the development process.  Rich countries did not just produce more of the same; they produced different goods.  To grow rich, countries needed to change what they produced and exported.  A one-size-fits-all approach would not be the right strategy, and some of the products that developing countries were already exporting were not good enough to make them grow much.  Products were like trees and firms were like monkeys; in a structural transformation -– the process whereby monkeys moved from the poor to the rich part of the forest -– it was easier for monkeys to jump a short distance; i.e., to change to products that used similar capabilities, while moving to different products was more difficult.

Those facts should lead to development strategies that were very specific to each country, he continued, adding that one implication of his view was that, in asking the question, “Why do poor countries not catch up?”, there was no easy “stairway to heaven”, and no sequences of nearby trees that could get them to the denser parts of the product space.  When that sequence was not there, the challenge became much bigger.  In looking at causes of the “resource curse” -– bad performance by resource-rich countries -– it occurred because of poor connectedness between resource-intensive sectors.  Some countries also fell into protracted growth collapses because their export sectors encountered trouble when they happened to be in sparse parts of the product space.  When thinking of the next product to develop, it had been found that people in the developing world focused on adding value to raw materials -- a very limited and limiting view of the development process.  Finland had started out exporting wood before moving on to machines that cut wood, then machines that cut with numerical controls, and finally to Nokia.

As such, it was necessary to follow a country’s evolving capabilities, the things it could become good at and the activities it could develop, rather than just looking at what happened to the product that the country happened to have nearby.  That could not happen unless the Government supported economic activity in its specific needs.  Figuring out how to extend, amend, edit and change the pages of legislation and the functions of hundreds of agencies was a challenge that was limiting the capacity of economies to produce the right business growth.  Governments must have very open ears in order to listen to where the opportunities and obstacles were and to elaborate a collaborative strategy that fit the issues.

Discussion

The representative of Costa Rica, referring to the metaphor of the monkeys in the forest, asked how the keynote speaker proposed to solve the problem of poor countries trying to move from one export product to another.

Mr. HAUSMANN, noting that protectionism in rich countries was the first threat to exports from poor countries, stressed the importance of the Doha trade round working to eliminate that barrier.

The representative of Malaysia asked if a country’s culture affected its ability to progress economically, and whether it was too late for countries that had recently implemented export-oriented policies to compete with those that had adopted such policies some time ago.

Mr. HAUSMANN said culture was dynamic, not static.  Three cultural factors were essential to facilitating economic organization and economic growth:  trust; the concept of personal responsibility in one’s own future; and a good attitude towards innovation.  In the past, the economies of export-oriented countries had grown exponentially.  There was no evidence that countries had been able in the last 20 years to 40 years to post economic expansion without growing their exports.  Export-oriented growth was fundamental, and successful exporting countries usually became successful importing countries, as in the case of China.  As the world grew, there were more opportunities for newcomers to enjoy export growth.

The representative of the Dominican Republic said speculation in oil, its impact on the current financial crisis, and on efforts to achieve the Millennium Development Goals, should be on the Committee’s operative agenda.  How could growth and competitiveness be balanced during the current oil crisis?

Mr. HAUSMANN said excessive spending in the United States had led to the bursting of that country’s real estate bubble and its current account deficit.  The United States financial crisis would resolve itself through decreased spending.  Countries such as China, where consumption was on the rise, could also help by buying more goods from abroad and thus run smaller surpluses than they did currently.

The representative of Antigua and Barbuda asked him to elaborate on the role of rules governing the metaphor of the movement of monkeys in the forest or the diversification and movement of goods for export.

Mr. HAUSMANN said many things, particularly marginalized approaches to industrial policy, had limited the capacity of countries to move product space, or for monkeys to jump between trees.  However, industrial policy was no longer viewed negatively, and it focused on competitiveness and productivity.  Broad-based economic policies were laudable, but sector-specific needs must be addressed and Governments must have broad channels for communication and discussion of those needs.  Many countries had development targets for achieving the Millennium Goals, but not for growth and exports.  Nor were funds being used to eliminate obstacles to sustainable livelihoods.  Africa needed non-farm export jobs, particularly as the per capita amount of land for farming was declining, but very little was being done to facilitate that.

Mr. HAUSMANN said in response to the representative of Bangladesh, who had asked him to elaborate on the lack of Millennium targets for growth and exports, that it affected the way in which aid agencies worked.  Progress was measured in terms of how close a nation was to achieving targets on poverty reduction, education, water and health.  But nobody was paying attention to the fact that roads leading to areas where people lived were factored into the Millennium Goals equation.  A cost was being paid for the failure to focus on things that were triggering growth.

General Debate

JOHN ASHE (Antigua and Barbuda), speaking on behalf of the “Group of 77” developing countries and China, said the Committee’s core role and function was the promotion of economic and social development and better standards of living for all peoples.  That was effected primarily through policy formulation, the establishment and promotion of international norms, and the fostering of international agreements on development goals, targets and benchmarks for their achievement; development cooperation to facilitate the realization of policy goals through the implementation of commitments; and monitoring the implementation of those goals and commitments.  Given the dynamics of globalization and the current global political economy, the United Nations had a vital responsibility to respond to the challenges and opportunities for development, in fulfilment of its Charter mandate.

He noted that the Group of 77 and China had been warning for years that the global community had embarked on an unsustainable development path, and calling, also for many years, for systemic imbalances to be addressed.  Yet, Member States had chosen to ignore those warnings and proceeded in annual debates and resolutions to frame the issues as a superficial matter between developed and developing countries that was amenable to solutions through pressure.  There was an economic and financial crisis originating in the most developed, most sophisticated and largest economy; a food and energy crisis arising from the demand side, rather than the product side; an environment and climate change crisis; as well as global governance and institutional crises.  All those crises were urgent and required fundamental, broad-based and simultaneous solutions, but there was currently no framework for devising such solutions.

The United Nations, through the General Assembly, had the task of pointing the way ahead, he continued.  The statements of almost every leader who had addressed the sixty-third session of the General Assembly and the discussions in the High-Level Events on Africa and on the Millennium Development Goals had made clear that different behaviour than that of the past was expected, as were actions and decisions to implement long-standing commitments.  There were several opportunities in the coming year to begin making that difference.  The Committee’s agenda covered a range of issues that were critical to the economic future.  The current multiple crises demanded a difference this year in terms of action-oriented decisions and resolutions which would be swiftly and fully implemented.

PHILIPPE DELACROIX (France), speaking on behalf of the European Union, said the fact that the Millennium Development Goals were in jeopardy due to the impact of climate change, rising food and energy prices and the crisis in financial markets gave the Committee’s work special importance.  The European Union was working on overhauling the international financial system.  The Committee’s work should take into account the positive outcomes from the first meeting of the Development Cooperation Forum, United Nations Conference on Trade and Development (UNCTAD) XII, the Third High-Level Forum on Aid Effectiveness, the high-level meeting on Africa’s Development Needs and the high-level meeting on the Millennium Development Goals, all of which had taken place this year.  The upcoming Doha Review Conference should draw upon the momentum gained from those meetings.

The European Union would participate actively in diverse general debates during the next two months, he said, adding that the bloc was determined to do its part to achieve the Millennium targets.  Last June European Union Heads of State and Government had adopted an Agenda for Action on the Millennium Development Goals, which set examples of priority action and concrete terms on how increased European aid could result in measurable progress on the ground.  The bloc planned to hold negotiations on the draft outcome document for the Doha Review Conference. 

Having been placed at the top of its political agenda, adopting climate change and energy packages was a key priority of the French Presidency of the European Union, he said, underscoring the importance of maintaining the level of ambition and commitment shown last year when all parties at the Bali climate conference had agreed to launch an inclusive negotiating process on a comprehensive post-2012 agreement in Copenhagen by December 2009.  The Poznań Conference in December should rally the same level of political mobilization and set the international community on the right track.  France hoped the Committee’s debates on the comprehensive triennial review of operational activities for development would help consolidate lessons already learned and fall within the framework set by the General Assembly in resolution 62/277 on system-wide coherence.

ISMAT JAHAN ( Bangladesh), speaking on behalf of the least developed countries, said uncertainty and instability in the international financial, currency and commodity markets were contributing to a gloomy outlook for the world economy.  The current financial meltdown ranked as one of the most intense and widest, and the extensive cross-border linkage of the crisis posed high risks to virtually all countries.  The situation could no longer be justified merely as a bursting of the housing bubble; the crisis was a result of regulatory failure to guard against excessive risk-taking in the financial systems of industrialized countries.  Only a systemic solution could restore normality, and interventions should be comprehensive, both in tackling the immediate fallout and in addressing its root causes.

Now more than ever before, a strengthened global partnership was needed to avoid any reversal of progress made thus far towards achieving the Millennium Development Goals, she said.  However, the situation on the ground was becoming increasingly bleak as developing countries continued to suffer from the outward transfer of their financial resources to developed economies.  The collapse of the Doha Round was no doubt also a major setback for the multilateral trading system.  Member States must marshal the political will to achieve a successful completion of the negotiations and the full realization of its development agenda.  The key development deliverables, particularly duty-free, quota-free market access, and support for productive capacity-building for least developed countries, should be pursued expeditiously and comprehensively.  Developed countries and those developing ones in a position to do so must provide duty- and quota-free market access to all products from all least developed countries, even before the conclusion of the Doha Round.

External debt was also a big challenge for many least developed countries, she said.  While the Multilateral Debt Relief Initiative was welcome, piecemeal approaches could not yield effective results.  If a country fulfilled the criteria for the least-developed category, it should be eligible for a debt write-off.  It was, therefore, important that all outstanding multilateral and bilateral debt owed by all least developed countries be written off immediately.  Future development assistance should be grant-based to avert the recurrence of debt unsustainability.  Access to energy, including renewable sources of energy and modern, eco-friendly and affordable technologies, was essential to enabling least developed countries to achieve the Millennium targets and other internationally agreed development goals.  Member States should not sit idle because political will and a sense of genuine partnership could make a change.

CHRISTOPHER HACKETT (Barbados), speaking on behalf of the Caribbean Community (CARICOM), said developing countries, particularly the smallest and most vulnerable, would bear the brunt of the costs associated with the global financial crisis and economic downturn.  The crisis, coupled with rising food and energy prices, threatened to reverse their development gains and widen existing growth disparities between countries.  The resulting significant increase in the cost of borrowing and debt servicing would negatively impact key economic sectors in the CARICOM countries, such as tourism.

Underlining the need for an urgent, comprehensive and lasting solution to the current crisis that would account for the developing world’s concerns and interests, he said the current governance structure of the international financial system was too exclusive, limited and insufficient to meet the requirements of a complex and interdependent global economy.  The United Nations, particularly the Economic and Social Council, should take a lead role in promoting improved global economic governance, in line with the United Nations Charter.  The Council should make greater use of its Charter powers and use its convening powers to increase its participation in global economic management and decision-making.  The Doha Review Conference must offer practical and action-oriented means to address the deficiencies in global economic and financial governance.

The Doha Review Conference must also address issues of concern to middle-income developing countries, including debt sustainability, trade and development cooperation, he said, noting that, due to the inappropriate application of criteria such as per capita income, many CARICOM Member States were no longer eligible for concessionary financing.  Faced with rising interest rates and volatile commodity prices, their debt burdens would increase dramatically, thwarting economic growth prospects, as well as the region’s ability to achieve the Millennium targets.  The international community must give greater weight to the lingering debt problems of small, vulnerable States and middle-income developing countries.  CARICOM should be internationally recognized as a special category of small, vulnerable, highly indebted middle-income countries deserving of special measures to relieve their debt burdens.

MARTY M. NATALEGAWA (Indonesia), speaking on behalf of the Association of Southeast Asian Nations (ASEAN), noted that, just as the phenomenon of record energy and food prices was beginning to subside and stabilize, the global economy was now being shaken by a financial crisis that some had referred to as a “tsunami” in the financial sector.  Unlike the financial crises that the majority of ASEAN countries had experienced in 1997-1998, the present crisis had not originated from the periphery, but from the centre of the system.  Its effects were, therefore, being felt globally, and there was potential for a sharp slowdown in economic activity and even a global recession.

Together with climate change, the global economic crisis was exerting tremendous pressure on the international community and must be addressed urgently, he stressed.  As a result of the crisis, the efforts of developing countries to attain internationally agreed development targets, including the Millennium Development Goals, were being hampered.  It was, therefore, a challenge for the Committee to address issues relating to economic growth and development at a time of crisis and economic uncertainty.  Over the next couple of months, Committee members would be dealing with issues such as financing for development, sustainable development, poverty eradication, globalization and interdependence, and information and communications technology for development.  It must ensure that they were addressed in such a way as to help fashion meaningful solutions to the current crises and the overall global economic situation.

In particular, the Committee must make use of the forthcoming Doha Review Conference to re-energize the spirit of partnership and solidarity to provide the financing for internationally agreed development goals.  That must include the implementation of long-standing international development commitments on official development assistance (ODA) and development assistance to least developed countries.  As for the Doha trade negotiations, the United Nations must provide a clear political consensus to encourage World Trade Organization members to return to the negotiating table and focus on development issues.  It was also important that the Committee’s work on sustainable development maintain the momentum to address climate change.  Success in addressing today’s crises must be measured by how the international community rose to the occasion and realized its global commitments by ensuring sustained global partnership and solidarity for development even beyond 2015.

SHIGEKI SUMI (Japan) recalled that at the Fourth Tokyo International Conference on African Development (TICAD IV) and the Group of Eight (G-8) Summit, both hosted by his country earlier this year, the Government of Japan had responded to rising food prices through policy formulation and aid implementation.  In January, Japan had announced that it would provide $1.1 billion in food aid to boost agricultural production in developing countries.  At the G-8 Summit, leaders had expressed their strong commitment to resolve the food crisis.  Japan would work with other development partners to double rice production in Africa in the next decade.

He said his country was eager to contribute its experience and knowledge to help solve the current world financial crisis.  In a bid to ensure human security through protection and empowerment of individuals, the G-8 focused on improvements in health, water, sanitation and education.  Japan had pledged an additional $560 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria in the coming years.  The G-8 Summit had also emphasized the importance of good water cycle management.  Japan, the largest donor of development assistance in that field, was determined to step up its efforts further.

Emphasizing the importance of developing countries having ownership of their development agendas, and of partnerships with the international community advancing those agendas, he said the TICAD follow-up mechanism had been set up to produce periodic reports on progress in implementing goals to accelerate broad-based growth in developing countries, in addition to ensuring human security through peace, good governance and measures to combat climate change.  The development agenda must also address the needs of groups of countries in special situations.  Committed to exercising strong leadership on climate change, Japan had invested $10 billion to set up the Cool Earth Partnership to help developing countries reduce emissions and pursue sustainable development.

T. VANCE McMAHAN ( United States) said the world faced higher fuel and food prices, the shock of which had led to a rise in food insecurity in a number of countries.  Despite significant global progress, efforts by a number of developing countries to achieve development goals needed reinforcement.  There were also serious challenges in the multilateral agenda.  Despite ongoing attempts to advance the Doha trade round, progress had stalled short of an agreement.  The upcoming Financing for Development Review Conference would require intensive negotiations and constructive dialogue to bring the very divergent sides together in consensus.

Global problems often demanded global solutions and, in today’s interdependent economic environment, any effective solution required actors at all levels to do their part, he continued.  In the multilateral system, it was necessary to redouble efforts to reach an ambitious Doha trade agreement.  United States President George W. Bush was committed to trying to reach a deal before he left office in January.  At the national level, countries must work even harder than before to create an enabling environment for sustained economic growth.  The United States Government had taken unprecedented steps in recent weeks to stabilize its financial sector.  It was now debating the issue of appropriate regulatory reform to assure long-term stability.  For many developing countries, the key challenge would be building on reforms that had already taken place to improve their business climates, reduce macroeconomic distortions, and increase investment spending.

Both developed and developing countries must act to advance development, he continued.  Improving aid effectiveness, which was crucial to development success, was an area in which greater cooperation remained necessary.  Non-State actors also had a role to play; foundations were now major foreign-assistance partners and they should be better integrated into the global system.  Civil society must also play an important part, ensuring that dissenting and underrepresented voices were heard.  The multilateral system could succeed if all countries worked together in a spirit of compromise.

HABIB MANSOUR ( Tunisia) said the food, energy and financial crises, coupled with the threat of climate change, had weakened gains and prospects for development.  Despite progress made in achieving the international development agenda and numerous references made to it in various documents, the Millennium Goals were not being implemented adequately.  Humanity continued to face unprecedented challenges that compromised development and exacerbated poverty.  That required comprehensive action to tackle the root causes.  Efforts to achieve the Millennium targets had been diverted to address the current global financial crisis and other concerns.  The recent high-level meetings on Africa’s development and the Millennium Development Goals addressed those concerns, and Tunisia supported the proposal to hold a Millennium Development Goals review summit at the end of 2010, and to create a follow-up mechanism to measure Africa’s fulfilment of the Millennium targets.

The Doha Review Conference in December would provide an opportunity to take stock of the situation and explore possible courses of action, he said.  The Monterrey Conference had been an important step forward and the Doha Review should be a genuine turning point to consolidate gains already made in that regard, in addition to addressing the specific needs of Africa.  Official development assistance was the engine for resource mobilization.  Although many developed countries had committed to allocate 0.7 per cent of gross domestic product for assistance, the volume of aid had declined.  Individual financing had complemented the assistance, but it should not be a substitute for it.  Mechanisms like the Global Solidarity Fund were good funding sources.  Efforts to fight the effects of climate change should be integrated into international development strategies.  The results of the Bali Conference should enable the international community to move ahead in that regard.

PIRAGIBE DOS SANTOS TARRAGÔ ( Brazil) noted that prospects for the world economy had deteriorated significantly since the Committee’s last meeting.  An unprecedented rise in world food and energy prices had been followed by the worst financial crisis since the 1930s.  As a consequence, the global expansion initiated in 2001 might not be capable of withstanding the test of time, and ran the risk of turning itself into a worldwide economic recession.  It was necessary to go back to the drawing board and retrace the origins of the problem in order to gauge its economic impact.

He said developed and developing countries alike should devote themselves to drawing up policies and measures to mitigate the most harmful effects of the crisis, in particular those affecting the less fortunate and more vulnerable populations of the developing world.  In helping the General Assembly tackle development cooperation, the Committee should address the possible consequences of the financial crisis for development assistance flows and world economic growth.

Noting that it was difficult to see how the United Nations and Member States could avoid dealing with the issue head-on, he said one possibility would be to hold a high-level dialogue to review the international financial and monetary architecture and re-examine global economic governance structures.  The upcoming meetings of the International Monetary Fund and the World Bank provided an immediate venue for collective action.  The mandated role of the Economic and Social Council should also fully come into play in such a forum.

Turning to the food crisis, he said it had been argued that biofuels may have aggravated the present crisis by diverting key crops.  However, Brazil had proved that biofuel production from highly energy-efficient tropical plants, such as sugar cane, had been environmentally sustainable, had not contributed to the surge in international food prices, and might be expanded without affecting food production.  Sugar cane in Brazil was grown on less than 1 per cent of the available arable land, and growth in biofuel production had not occurred at the expense of non-fuel grain harvests.  Brazil had also not remained idle in addressing climate change, and was striving to reduce deforestation in the Amazon tropical forest.

JANE STEWART, Special Representative to the United Nations and Director of the International Labour Organization (ILO), said that, while the serious challenges looming in the economic and financial system, compounded by threats relating to climate change and food security, were multidimensional, the ILO had been warning about a persistent, global jobs crisis facing some 2 billion people, which continued to impede development efforts.  The ILO’s Global Employment Trends, 2008, had found that economic turbulence could increase global unemployment by an estimated 5 million persons this year.  The resounding claim was that sustainable development could not be achieved without employment creation and decent work at the centre of development policies.  That was a crucial understanding that Member States must continue to bear in mind as they embarked on the new policy session.

She said that in June 2008, the tripartite partners of the ILO, representing 82 Member States, as well as workers’ and employers’ organizations, had adopted by acclamation a new “ILO Declaration on Social Justice for Fair Globalization”, which stressed the need for policy coherence and leadership from social partners, businesses and Governments in order to achieve social justice for a fair globalization.  The ILO aimed to utilize that new policy tool during the sixty-third session.  However, good intentions were not enough.  There was a need for partnerships at all levels, as well as coherent action among the organizations of the multilateral system, to achieve the various internationally agreed development goals.

CLAUDE HELLER ( Mexico), speaking on behalf of the Rio Group, said international migration was undoubtedly one of the phenomena most relevant to globalization.  Its relationship to the economic growth, development, and societal well-being of the emitting, hosting, and transit countries was undeniable.  There was a clear need to discuss the topic within the United Nations, specifically in the framework of the Committee.

Another area of special interest for the Rio Group was that of middle-income countries, he said.  It had become clear in the last few years that they had specific needs and that the continuous support of the international community could be decisive in the consolidation of advances in development and in avoiding backtracking.  Another central issue was the negotiation of a resolution calling for participation in the International Conference for South-South Cooperation.  Its format should be determined, and the conference should take place during the first semester of 2009 at the latest.

He said the Rio Group intended to contribute actively to developing the capabilities of insertion into the international networks of technological innovation.  In that area, the Group was interested in making a positive contribution to increasing and strengthening regional and international cooperation in two areas that the Group considered required decisive attention:  the promotion of regional scientific development and the stimulation of technology-transfer processes oriented to the production sector.  Joint action towards the sustainable development of societies was especially relevant in the context of economic uncertainty, within a financial system in crisis, and with multiple challenges.

ZACHARY MUBURI-MUITA (Kenya), speaking on behalf of the African Group, said that, while trillions of dollars had been spent on financial bailout packages across the developed world in the past few weeks, the target of doubling aid to Africa by 2010 had not been met.  On the contrary, current statistics of the Organisation for Economic Co-operation and Development (OECD) indicated a decrease in official development assistance.  As stressed in the Political Declaration on Africa’s Development Needs, poverty and social deprivation remained the greatest challenge facing the world today, and there was a dire need for sustainable growth and development to overcome it.  Some progress had been made in terms of democratic governance, the rule of law, human rights and resolving long-standing conflicts so as to create an environment conducive to achieving sustainable development.

However, Africa remained off-track to achieve the Millennium Development Goals, he said.  Sufficient commitments to Africa were already in place to address debt, shortfalls in aid, HIV/AIDS, malaria and other infectious diseases.  But the political will to implement them was lacking.  It was to be hoped that the United Nations would set up a mechanism to follow up and monitor implementation of commitments made on Africa and clearly set forth in the Political Declaration.

Pointing out that climate change was exacerbating ecological threats and threatening livelihoods in many African countries, he said the continent had contributed least to global greenhouse gas emissions, but it was most affected by climate change.  Still, there was an unwillingness to provide unconditionally the resources needed for adaptation measures.  The Committee should view the current food and energy crises, as well as the evolving financial crisis in perspective.  Most African countries had been hit by the food crisis and needed international assistance, and they would undoubtedly need help if the current financial crisis was not addressed urgently and comprehensively.

NAWAF SALAM ( Lebanon), speaking on behalf of the Arab Group, said the world economy had come into uncertainty, allowing the shadow of recession to loom on the horizon.  The international food, energy, financial and credit crises, as well as climate change, were so large in magnitude that they required concerted and cooperative efforts by all Member States in order to address their adverse impact.  The challenges also required a global response through action-oriented policies, and policymakers in developed and developing countries alike should work together to avoid a global recession.

The Arab Group was concerned about the decline in ODA during 2007 for the second consecutive year, he said, calling upon developed countries to fulfil their commitments to devote 0.7 per cent of their gross national income to aid, and to implement the commitments made in the outcomes of the major United Nations conferences and summits in the economic, social and related fields.  The Arab Group was also quite concerned that some developing countries, especially Arab ones, would be unable to achieve the Millennium Development Goals in 2015.

Turning to climate change, he said that challenge should be addressed within the context of sustainable development.  Equal weight should be given to the three pillars of sustainable development:  economic development; social development; and environmental protection; and all three should be addressed in an integrated, coordinated and balanced manner.  Developed countries should focus on providing the financial resources that developing countries needed to address the negative impacts of climate change, whether through mitigation, adaptation, transfer of technology or capacity-building.  The Arab Group called for concerted efforts among the Member States to address desertification and drought, especially because most of the Arab countries suffered from their adverse impacts.  In addition, the Arab Group was deeply concerned about the failure of the Doha multilateral trading negotiations, and called upon developed countries to demonstrate the political will necessary to overcome the current impasse in the talks.

VITALY I. CHURKIN ( Russian Federation) said that emerging crises clearly indicated that the global governance system did not match the challenges facing it.  It was evident that attempts to regulate the global economy by unilateral and simply outdated methods were futile.  The ability of one side to dictate the rules of the game and super-regulation did not work.  Member States must look together for ways to create a new and more just international financial system with the participation of major world economies.  It was time to think of the collective elaboration of common rules of economic interaction, which would allow a balance in the world’s economic potential.  To restore the ability to manage world development, new and flexible forms of collective leadership were needed, based on the reconciliation of mutual interests and awareness of responsibility for the future of the world.

There was no reasonable alternative -– neither today nor in the foreseeable future –- to the present global architecture based on the United Nations and the rule of international law, he said.  The Organization remained a universal forum endowed with a unique legitimacy, and a major platform for discussion and decision-making on a broad range of socio-economic, humanitarian and environmental issues.  It was obvious that the Organization could not stand aloof from addressing the global financial, energy and food crises that jeopardized progress towards the Millennium Goals.  The crises marked a special imprint on the Committee’s work, and the Russian Federation was ready to take part in constructive discussions during the course of the forthcoming session on the priority issues of food and energy security.

He said his Government also regarded the problems of rapidly soaring agricultural prices and climate change as global challenges.  Another priority was the preparation for the Doha Review Conference on Financing for Development, which must not be duplicated by discussions within the Committee.  Rather, those discussions should supplement and enrich the negotiations on the draft outcome document of the Conference.  The Committee’s agenda and programme of work provided a good opportunity to discuss and adopt by consensus substantive decisions on important macroeconomic policy issues that, for different reasons, might not be considered in Doha by Heads of State and Government.  The Government of the Russian Federation favoured the adoption of a succinct and focused political declaration as an outcome of the Review Conference.

LIU ZHENMIN ( China) said the world was confronted with a “development crisis” whereby the traditional world economic engine had fallen into its own trap.  Soaring energy prices and a deteriorating external economic environment threatened the growth of newly emerging economies.  The vast majority of developing countries had not fundamentally gained the chance for development that they deserved, and the gap between rich and poor countries was widening.  Member States must cooperate and work concertedly to reverse that trend.  The global partnership for development must be further strengthened.  Governments should make good use of the political consensus formed at the recent high-level meeting on the Millennium Development Goals and redouble their efforts to translate consensus and commitments into measurable progress.  Developing countries needed real assistance, technology transfer and investment, in addition to help to improve their capacity for sustainable development.

 Reform of the international financial architecture was also needed, as were steps to ensure financial security, he said.  While the IMF had made some progress in increasing the say and representation of developing countries, it should focus in the future on improving the regulation of international financial markets, with particular respect to the economic vulnerability and policies of reserve-currency- issuing countries that could affect the whole system.   China also called for the creation and improvement of a fair, equitable, open and non-discriminatory multilateral trade regime.  All members should work to push for a comprehensive, balanced outcome of the Doha Round.  To ensure agricultural development and food security, a long-term international food cooperation strategy was needed.  In terms of energy security, Member States must foster a new energy security concept featuring mutually beneficial cooperation, diversified forms of development and common energy security through coordination and enhanced dialogue.

RAYMOND O. WOLFE ( Jamaica) said developing countries were individually and collectively confronting complex and daunting challenges that threatened to derail development efforts and gains.  Half the world owned a miniscule portion of global wealth.  Despite significant gains in eradicating extreme poverty, it remained alarmingly high in the developing world and although myriad commitments had been made, the developing countries had never been more marginalized from the mainstream of the global economy.  The gap between the developed and developing countries had widened and prospects for substantial social and economic growth in the latter had deteriorated.  That gloomy state of affairs was a clear indication of the sense of urgency that ought to be applied in tackling global challenges in a prompt and decisive manner.

Development was a right for all and not the privilege of a select few, he emphasized.  The United Nations, therefore, had a critical role to play in advancing the development agenda through more effective and efficient delivery of its mandates.  There was an undeniable nexus between financing for development and the fulfilment of internationally agreed development goals.  The full support of the international community was pivotal to collective success.  While developing countries had largely implemented various development strategies, developed partners should be held accountable for their indispensable role and responsibility in the overall implementation of development goals.  Full and effective implementation of commitments remained a moral and political imperative.

Noting that middle-income countries comprised roughly half the United Nations membership, he said they were slowly being relegated to mere “orphans” in the international system, particularly in terms of aid financing and debt alleviation.  Middle-income countries like Jamaica were grappling with economic and financial vulnerability, a heavy debt burden, inequality, large pockets of poverty, and several other critical challenges.  The international system should re-examine its stance vis-à-vis middle-income countries and seek to establish a more systematic approach in order to support efforts to eradicate global poverty, given that approximately 40 per cent of the world’s poor lived in middle-income countries; offset the vulnerabilities experienced by many middle-income countries that adversely impacted efforts for sustained economic growth; and avoid losing the social and economic progress already achieved.

FRANCIS BUTAGIRA ( Uganda) noted that, in the publication World Economic Situation and Prospects 2007, the United Nations warned of a possible global economic downturn, with significant risks attached.  That was quickly becoming a reality, with all the world’s developed regions experiencing a recession of some kind triggered by persistent global macroeconomic imbalances.  Growth in developing countries would be strongly affected as a result.  The economic slowdown had come at a time when the steadily strengthening average growth in least developed countries, many of them in Africa, had been approaching 7 per cent last year.  At present, developing countries that were net importers of energy and food commodities were suffering adverse terms-of-trade effects.  The downturn was expected to weaken demand for African exports considerably, and growth could drop to 2.2 per cent in 2008 and 1.1 per cent in 2009.

The unfolding global food crisis was a grave humanitarian concern and a serious threat to social and political stability, he said.  That was particularly bad for sub-Saharan Africa, where it was likely to wipe out all progress made thus far towards achieving the Millennium Development Goals.  Additional food and monetary aid must be mobilized quickly to meet humanitarian and food emergency needs in developing countries.  In the longer term, increasing investments, as well as research and development in the agricultural sector, were essential in dealing with the present crisis and addressing persistent, widespread rural poverty in developing countries.  Contract farming was no response to the food crisis in Africa, and it could turn the continent into a supplier of raw materials as it had been in colonial days.  What was needed was the addition of value leading to the export of manufactured foods while at the same time meeting domestic food needs.

MOURAD BENMEHIDI ( Algeria) said that, in light of the current crisis in food and energy prices, it was necessary to overhaul the international financial regulations in order to combat the kind of speculation that had caused disturbances in most financial markets.  Despite efforts by developing countries to achieve the Millennium Development Goals, the results were still mixed, particularly in Africa, due to the energy and food crises and the effects of climate change -- all of which threatened to undermine development.

Expressing his country’s support for the creation of a world partnership for development, he said developing countries needed fair representation and decision-making powers in international financial institutions, including the Bretton Woods institutions.  While the positive contribution of globalization to international markets and world growth was undeniable, it was also a factor in the marginalization of many countries owing to the obstacles it created.  All developing countries should play a role in global economic policies.  The IMF and the World Trade Organization could not be universal if they remained under the management of the same mechanisms that gave such a small scope to developing countries.

The Doha Review Conference in late November would be a great opportunity to evaluate further the progress achieved in implementing the Monterrey Consensus, he said.  Regarding climate change, Algeria supported fully the principles underlying the international campaign to safeguard the planet.  African countries had the particular characteristic of being the most threatened and the most vulnerable in the area of climate change, and that was why it was important to help them.  Algeria also favoured constructive negotiations to arrive at a consensus concerning the reduction of greenhouse gas emissions.  Algeria also supported the international campaign to safeguard the planet against desertification.  The solutions and strategies to be considered at the Poznań Conference in December should look to a post-Kyoto period based on common but differentiated responsibilities.

SUSHILKUMAR SHINDE (India) called for urgent action to address falling aid flows, net outflows of funds to developed countries, volatile capital flows, debt, the payment of trade-distorting agricultural subsidies by developed countries, non-tariff barriers, trade talks that threatened the livelihood of millions of poor farmers and non-inclusive international norm-setting frameworks, among other factors exacerbating the challenges facing developing countries.  The current financial crisis had compounded those problems, making financial regulatory change necessary.  New regulatory regimes should encourage the highest standards of business conduct and compliance, which should go hand in hand with closer official scrutiny.

Higher and more volatile prices of food, energy and other commodities had compounded the problem, he said.  Against that backdrop, growth must be encouraged, particularly in highly populated countries with the potential to drive much-needed global economic growth.  The financial crisis had also demonstrated clearly the importance of policy space to address financial problems, which should be equally available in developed, as well as developing, countries.  A change in the international financial architecture should ensure a greater voice for, as well as more participation by, developing countries, and the United Nations must regain its traditional role in guiding international economic policy.

Efforts to review the intellectual property rights regime so that critical climate technologies could benefit humankind rather than a few innovators had been blocked, he noted, emphasizing the need to change such approaches.  In addition, the United Nations Framework Convention on Climate Change must be guided by the principle of common but differentiated responsibilities and the historical responsibility of developed countries.  The energy challenges facing India and other developing countries were large, urgent and immediate.  Every household must have access to affordable electricity, as well as clean cooking and transport fuels.  India called for energy efficient-strategies.

CLAUDIA BLUM ( Colombia) said that, in the face of the existing crises, the General Assembly must examine their repercussions on different areas of development.  The food problem demanded special attention, and Member States should build on the outcomes of the Rome Conference.  Likewise, it was necessary to encourage an analysis of the energy-related aspects of the food problem, particularly the impact of the increase in oil prices on the cost of transportation and basic inputs for food production.  Despite the recent slowing of the rise in fuel prices, it was convenient to address the issue from a structural and long-term international perspective.

She said there was also a need for a more ambitious and broader outcome with respect to the Monterrey Consensus that went beyond reaffirming the commitments made in 2002, and to respond to the challenges posed by the global economic panorama.  That included regulation of the financial and capital markets of all countries; adequate mechanisms to offer emergency liquidity during crisis, and avoid excessive accumulation of risks; and the development of an effective follow-up mechanism.  The implementation of additional measures to confront illicit capital flows, including the financing of terrorism, was also necessary.

The Committee’s recent decisions on operational activities for development meant great advances in the quest for the enhanced effectiveness and capacity of the United Nations to respond to the priorities of recipient countries, she said.  There was a need for a system focused on national capacity-building that served as a catalyst for more predictable, transparent and result-oriented international cooperation.  Colombia was concerned about the possible impacts of the international economic environment, and the General Assembly should thus promote an open dialogue on the multiple causes of the situation.

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