UNCTAD-VII: "FACES POLITICAL CHALLENGE AND NEEDS POLITICAL WISDOM".

Jul 11, 1987

UNCTAD-VII: "FACES POLITICAL CHALLENGE AND NEEDS POLITICAL WISDOM".

GENEVA, JULY 9 (IFDA/CHAKRAVARTHI RAGHAVAN) – "The major challenge confronting this conference is above all a political one and countries need to address it with all the political wisdom together with the economic expertise at their disposal", Kenneth Dadzie, Secretary-General of UNCTAD told UNCTAD-VII Thursday evening.

The quadrennial sessions of the conference, he said, marked the "broadest high-level assemblies of economic policy-makers", and the specific objective of national leaders and Ministers at UNCTAD-VII was to agree on effective policies to revitalise, through multilateral cooperation, the processes of development, growth and international trade.

The conference was opening amidst "fresh and disturbing evidence of the mounting threat to the health of the world economy arising from deflationary forces".

There were no doubt a number of bright spots in the global economic picture, but "they are hedged with questions marks concerning their sustainability and replicability", he added.

The deflationary currents in the world economy had not come out of the blue, but were the results of policies of major market economy countries deliberately geared to deflation since the beginning of the 80’s, Dadzie reminded the conference.

These policies had been framed without paying full attention to the high degree of interdependence among countries and the monetary, financial and trading systems, including the world commodity economy.

Noting recent trends among major market economy countries to strengthen their mutual cooperation towards stable and sustainable growth, Dadzie said: "their perception of interdependence has yet to extend in an operational manner to the functioning of the international trade and payments systems and to multilateral cooperation to foster growth and development of developing countries – both no less important as potential areas of closer policy coordination".

The logic of interdependence pointed to the need for coordination of national policies to avoid mutual contradictions and ensure convergence in support of global objectives.

It called for multilateral cooperation "as an umbrella for national actions", and UNCTAD-VII offered an opportunity to agree on a framework for reviving multilateral cooperation for development".

Outlining some of the elements of a possible outcome, Dadzie said an important focus of attention at UNCTAD-VII should be "the awesome accumulation of debt by developing countries and the need to improve the international strategy for dealing with the debt problem".

"The readiness of all parties to engage in a substantive discussion of the international debt strategy in its entirety is, I believe, one of the keys to a constructive outcome of UNCTAD-VII".

The discussions must not only recognise the specificities in different debtors’ situations, but also their commonalties and susceptibility to external environment, the need for equitable burden sharing among debtors and creditors, and for new money to response to the needs of debtors.

"There is scope for consensus here on elements of improvement in the current debt strategy, which would of course be elaborated, implemented and monitored in the competent forums, including UNCTAD as appropriate".

And depending on the type and category of debtor/creditor relationships, the consensus could encompass differing degrees of concreteness, for instance as regards the applicability of different types of debt relief within an overall approach to the debt problem.

Dadzie’s remarks appeared to be aimed specifically at the OECD countries, who seem determined to avoid "any decision-oriented discussion" of debt at UNCTAD-VII, or to agree on any overall guidelines.

UNCTAD-VII, he said, should also focus on the world commodity economy, which needed now a two-pronged thrust towards achieving the objectives of the integrated programme for commodities.

It required strengthening of commodity markets for individual commodities through "consultations" among producers and consumers, and mobilises finances for accelerating the diversification of commodity-dependent economies.

The conference, he hoped, would be decisive for the activation of the common fund, which would complement both lines of action.

In addition resources should also be augmented for compensatory financing.

Another area deserving special attention was promotion of new flows of public and private credits and development finance, including by augmenting resources available for the World Bank, IMF and Regional Development Banks; by enhancing the liquidity of the third world through an issue of special dragging rights; and measure to recycle accumulated payments surpluses of major market-economy countries, "following the commendable first steps announced by the government of Japan".

In the light of improving prospects for a measure of nuclear arms reduction, it was not too early to start preparing for possible release of resources from military budgets which could become an immensely valuable source of finance for development and socially productive uses.

UNCTAD could begin an examination of the economic consequences and opportunities implicit in the current nuclear missile disarmament options.

In the area of trade as an instrument of development, the raison d’être of UNCTAD, Dadzie said there was "a risk that pursuit of our work in this area may be hindered by tactical manoeuvring with an eye on the Uruguay round negotiations".

Governments, he said, should use the conference and UNCTAD machinery to build consensus to facilitate a successful outcome of the Uruguay round negotiations, and particularly in areas of special interest to the third world – agricultural trade, textiles, tropical and resource-based products and safeguards, as well as trade in services.

The conference, he said, should take two types of actions: actions in pursuit of UNCTAD’s own mandate, and actions in support of the Uruguay round.

The secretariat’s analytical report and his own report to the conference, Dadzie hoped, would facilitate "significant results" being achieved.

"Such results however will depend upon political perceptions, evaluations and constructive participation of all member-states".

It was for the Ministers and delegates to seize decisively the opportunity at the conference "to move ahead decisively in dealing with the burning issues facing your national constituencies and the entire international community".

"This challenge must not be allowed to go waste. If you do rise to the challenge before you, the entire international community wills tend to reap the benefits of the successful management of interdependence in the global interest".