10:46 PM Apr 30, 1996

NEW AND IRREVERSIBLE REALITY, BUT THE PROCESS BY ITSELF CAN CREATE GREATER DISEQUILIBRIUM WITHIN AND BETWEEN COUNTRIES.

Steps should therefore be taken at the international level to guide the globalisation process to take account of social and political dimensions, UN Secretary-General Boutros Boutros-Ghali declared Saturday in summarizing and drawing some conclusions from two round-table discussions involving heads of states and heads of international agencies that followed the formal inaugural ceremonies.

Dr Boutros Ghali, who chaired the second panel of heads of agencies, presented the following points as the conclusions of both the roundtables.

Firstly, globalisation and the unification of markets worldwide is a new phenomenon and an irreversible one.

Secondly, there is a real apprehension that globalisation without international control can create more disequilibrium within and among states. It can also create frustration and insecurity among the poor in societies as well as in poor countries.

Thirdly, said the Secretary-General, certain rules and guidelines should be adopted by the multilateral system and coordinated by international organisations. These should include the following five measures:

* To pay attention to the social and political dimensions of globalisation;

* To obtain the participation of grass roots movements, non-governmental organisations, trade unions and the business sector;

* Regionalism should be encouraged among developing countries as a transition to multilateralism;

* We need strong international organisations, a strong multilateral system, and this will depend on the political will of member states;

* Underlying these, the importance of moral values have to be stressed. The logic of competition has to be replaced by the logic of solidarity, in which there is a balance between equity and efficiency.

Earlier, in the roundtable of heads of agencies, Ministers from Costa Rica, Ghana, Jordan, Morocco and Norway posed questions to IMF Managing Director Michel Camdessus, UNCTAD Secretary General Rubens Ricupero, WTO Director General Renato Ruggiero, World Bank Managing Director Sven Sandstrom and UNDP Administrator James Speth. Each minister was asked to pose a question to one of the agency heads, and comment on the answers.

In their questions and comments, most of the Ministers raised issues regarding the costs of adjustment, liberalisation and globalisation and the need to address poverty and inequities.

Whilst the IMF and WTO heads insisted on the need to adhere strictly to the dictates of market forces, the chiefs of UNCTAD, UNDP and the World Bank put stress on the need for "solidarity" with the poor to bolster their capacities and interests in the face of globalisation.

The Foreign Minister of Costa Rica asked Camdessus what steps the IMF is taking to ensure that structural adjustment programmes would indeed benefit all the people.

The Minister was apparently referring to the need to address the social costs which accompanied IMF-sponsored structural adjustment policies, a point that had been strongly made in the previous roundtable of heads of state, and the fact that rich-poor gap within countries were increasing and the benefits of 'reforms' were going to some while the majority faced hardships.

Mr Camdessus, however, did not answer the question.

Instead, he made a reference to the criticisms against economic orthodoxy that came out in the previous roundtable of heads of States. The IMF head launched into a defence of orthodoxy by giving a lengthy presentation on the factors that led to the successful growth of some developing countries.

This included by now repetitive IMF formula advice to all developing countries: the need to get economic fundamentals rights, such as fiscal discipline, financial stability with stable prices, appropriate safety nets during adjustment, key structural reform, discarding of protectionism, and the need for a medium-term policy.

In response, the Costa Rica Minister said it was not that developing countries lacked the will to undergo structural adjustment. Rather, there was political anxiety because although strenuous efforts were made to comply with structural adjustment, there were "meagre results."

He added: "I agree more efforts are needed but we also need a longer period of international solidarity."

In his question to Ricupero, the Jordanian Minister of Trade said that a greater reliance on the market had increased growth. "But equity has not improved to the same degree, so how can the situation be improved?"

Ricupero said that efficiency and markets are indispensable but not enough. "We are witnessing integration on a planetary basis, with a move towards a single world market. Yet there is so much insecurity, with people becoming so afraid of globalisation." He mentioned the recent French strikes as an example.

The UNCTAD Secretary-General said there were two reasons for public disenchantment over globalisation.

"Firstly, people feel uncertain over the future, with the fear of losing their jobs. Marginalised countries feel they can become more marginalised.

"Secondly, there is not only fear but the feeling of injustice, that the price paid for globalisation is not evenly distributed and the weakest and poorest have to pay the highest price.

"We must therefore show not only the promises of globalisation but also provide answers to the feelings of fear and injustice over globalisation."

Ricupero added that globalisation is characterised by greater competition. The elimination of trade barriers and protection makes competition more intense, he said, but countries are not on an equal footing.

Therefore, with this kind of competition, said Ricupero, there is need for fair rules and for arbiters, which are the governments (to regulate national rules) and the international organisations like the IMF and WTO (for international rules).

"We need rules that make people able to compete and create incentives for people to compete, such as opportunities for market access, training, education, aid to countries at the initial stage."

Ricupero quoted a statement by Camdessus (made in Rome in November 1995) that the logic of competition has to be balanced by the logic of solidarity.

"What the world needs is not to be afraid of the future or competition. But to have faith in the future, the leaders have to provide hope."

In response, the Jordanian Minister said that "when we try to promote efficiency, we failed to provide equity. Efficiency has improved at the expense of equity.

"Efficiency (through privatisation etc) was promoted by international organisations through structural adjustment programmes. In the face of globalisation, we need cooperation, we want the strong to help the weak, the rich to help the poor.

"Some countries achieve efficiency and equity at the same time but others not. Multilateral institutions must help countries to get both efficiency and equity together."

The Minister of Trade for Ghana asked Ruggiero what were the main consequences of liberalised trade for employment worldwide and especially LDCs.

Ruggiero replied that there were two opposing views, both of which had to be countered: that industrialised countries (ICs) are losing jobs due to growth in developing countries (DCs), and the view of LDCs that globalisation favours marginalisation.

He said it was not true that there was a threat to ICs from DCs. The ICs have not suffered from globalisation and liberalisation, and in fact they improved their chances of getting out of recession due to growth in East Asia. OECD imports from DCs are only 1.5% of their GNP and does not constitute a threat.

Ruggiero claimed that in developing countries, marginalisation has been reduced by trade liberalisation. However many developing countries, particularly the less developed among them, were now marginalised.

On the equity issue, Ruggiero said there were two separate issues: what was the most efficient way of raising resources, and the problem of distribution. These two problems could not be integrated through a single solution.

He added that the responsibility of the trading system was to favour the most competitive producer and through this to raise resources in the most efficient way.

"How these resources will be used is not our responsibility. It is that of the international institutions and national governments."

In relation to market access for LDCs, Ruggiero proposed a move towards zero tariffs for LDC goods. These would pose no danger to importing countries. "If we grant zero duty for the LDCs, we also enhance the possibility of foreign investment moving in."

He added that regionalism, especially for DCs and LDCs, was an essential instrument in the initial phase in trade. But regionalism everywhere must be seen as a transition to multilateralism and not an alternative.

"We have global problems which can be solved only if we create a market that is global and free. If we have three or four blocs, Africa will be left out.

"All the preferential areas must move to global free trade so that in the end we will have one global free trade area."

The Ghana Minister said although Ruggiero's response was frank, it was the management of the pace of transition that was the key issue. Getting fundamentals right was not enough.

"You can have structural adjustment, but globalisation and liberalisation have made investments mobile and competitive and job creation becomes very difficult."

He added that African Ministers have asked for a fund to address the problem of stable markets and trade diversification. Without a solution, "LDCs may be driven to the margins of despair. Africa expresses concerns on restrictive trade practices even when there is liberalisation.

"Measures must be taken to enable us to be committed to the Uruguay Round, otherwise we will`push these countries to the margin because there are no even fields for even play."

The Minister of Trade for Morocco asked Sandstrom whether the World Bank could take into account political necessities in the formulation of policies.

Sandstrom replied that good economics was also good politics. There was a need to strengthen the voice of the poor and the public so that resources are allocated to policies that support the poor. There was need to build a civil society and for the poor to influence public policy.

He added that a single policy paradigm does not fit every country, but there are some fundamental lessons commonly applicable, such as investment in human resources.

The Minister for Development in Norway asked Speth about the lessons learnt by the UN from its poverty initiative.

Speth said despite all the efforts, world poverty was growing faster than population, with 1.5 billion living in poverty. Between 1960 and 1990, the gap between the richest and poorest 20% of world population increased from 30-fold to 60-fold.

"Growing poverty and environmental decay will breed despair and from this cauldron of anger and profound injustice will breed conflict and violence."

It was a myth that growth is being achieved, as a World Bank report shows that half the countries where the UN provides aid are experiencing negative growth, and the LDCs with 10% of world population have only 0.1% of world income.

"It's a myth that the market in a globalised economy is enough to replace aid, that the developing countries can hitch their wagon to globalisation and be on a ride to prosperity."

Speth said that even where the right macroeconomic policies were in place, globalisation and liberalisation could result in growth but also to increasing poverty, inequality and unemployment.

An attack on world poverty must include an increase in development assistance, Speth stressed. It was not enough to get policies right and rely on market forces. "We need a reformed development assistance that recognises that economies exist for people (and not people for economies), that benefit the poor (not the rich) and that the polity is as important as the economy, and growth with employment and environment."

Speth said that the UN's attack on poverty should have five thrusts (which emerged from the UN Conferences of recent years).

For the first time, the UN system as a whole (including the World Bank and IMF) had been brought together to implement these thrusts:

* Basic social services for all (UNFPA taking the lead, with UNICEF, WHO, etc);

* Jobs for all (ILO as lead agency, with UNIDO, UNDP);

* Sustaining the natural resource base (led by the post-UNCED machinery);

* Empowerment of women;

* Creating an enabling environment (led by World Bank with UNCTAD participation).

Speth said UNCTAD had an important role in the enabling environment cluster, to facilitate how trade can work for the poor, how the burden of structural adjustment can fall more on the rich and not the poor.

However, none of the plans would be possible without reformed development assistance. "Just when the Cold War is over, when we have learnt how to do development better, support for aid is declining," Speth said.

"It is ironic that just when we have understood the links between peace and development, when the UN has assumed greater responsibilities and undertaking far-reaching reforms, the financial means to support the UN are drying up.

"They are not only ironies but tragedies. We need a cohesive not a fractured globalisation, a worldwide web of opportunity, equity and justice."

In response, the Norwegian Minister said Norway appreciated the UN and UNDP initiatives to reach the poorest countries and the growing willingness to reform.

She added there should be more focus on the social sector such as health and education. Although this had been concluded by the Social Summit, so far very few donor countries and DCs had allocated more money to this.

Regarding the UN's financial situation, there was a need for the UN in peacekeeping and development and there must be a willingness to pay for it. The money required to tackle poverty was only 4% of all military spending.