UNCTAD-VII: HEADS OF FOUR COUNTRIES FOCUS ON CRISIS.

Jul 14, 1987

UNCTAD-VII: HEADS OF FOUR COUNTRIES FOCUS ON CRISIS.

GENEVA, JULY 10 (IFDA/CHAKRAVARTHI RAGHAVAN) – Three Presidents and a Prime Minister, came Friday to the seventh session of the UN Conference on Trade and Development, both in a show of support for UNCTAD, and even more, to plead for actions to put the world back on the path of growth and development.

President Mitterand of France, President Huseni Mubarak of Egypt, Prime Minister Mrs. Gro Harlem Bruntland of Norway, and President Denis Sassou Nguesso of Congo (current chairman of the OAU) – all came to the podium for ceremonial addresses.

Four heads coming to a world economic gathering on the same day to plead for the same cause – rekindling the dying embers of multilateralism and international cooperation for development – was in itself unusual.

But the presence of two European leaders, whose pro-third world credentials were respected in the south, was also clearly intended to distance Europe form the U.S. postures towards UNCTAD.

Coming form Europe and Africa, and speaking from their perspectives, the four underscored the realities or global interdependence, and warned that the north could ignore the crisis, deprivation and poverty in the south only at its own peril – economy, environmental, and peace and security.

MITTERAND CALLS FOR CANCUN TYPE NORTH-SOUTH SUMMITS.

French President, Francois Mitterand, used the occasion to appeal to leaders of the north and south to meet at summit level to tackle the global economic crisis and development.

Speaking from the podium of a Conference that the U.S. was trying to snub and ignore, and after presenting "some ideas" for international and multilateral cooperation to spur growth and development, Mitterand, looked clearly beyond the collapsing Reagan era in the U.S., and made his plea for north-south summit meetings.

"For far too long", he said, "we have not spoken on these subjects".

French officials later said the remarks were intended to suggest meetings of the Cancun type.

Mooted by the Brandt Commission, and initiated by Mexico, the Cancun meeting of 1981 failed in the face of Reagan’s "magic of the market philosophy", and Cancun proved the last.

In a recent interview, Julius Nyerere, one of the Cancun participants noted the hope with which all of them in the third world had gone there, and said:

"There were some 22 of U.S. present. It was after the Brandt Commission’s report ... and we all went there with some hope. But the hopes were dashed because Reagan said ‘no’ and that was it".

"It was all very revealing", the chairman of the independent South Commission said.

"The other members from north, at least some elements of them, agreed with much of what we had been talking about ... we from the south thought that even if we cannot persuade Reagan, the rest of them who agreed with U.S. would go ahead. What was very revealing, and very depressing, has after Reagan said ‘no’, the other leaders from the north’s said that was the end".

Mitterand himself said there was nothing new in his ideas, and some of them even might sound platitudinous, "bur platitudes have to be repeated when they are not listened to or understood", he declared.

He also announced France’s willingness to host in 1990 the UN conference on least developed countries for a global review of the substantial new programme of action (SNPA) for the LDCS, adopted in 1981 at Paris.

The French President, who came to Geneva to address the Conference in a show of support to UNCTAD which is under attack from the U.S., told the delegates that apart from dealing with the problems of trade and development, they must above all give impetus to political will which "for far too long has been lacking in north-south relations, and have caused more disappointment than is reasonable".

Citing a number of social and economic indicators to illustrate the failed promises of the post-war period, Mitterand said it was necessary "to recognise these illusions so as to avoid them in the future".

Some of the indicators he cited, and the broad picture he painted of the global economy in crisis – in commodities, trade, industry, finance, debt, etc. – were in sharp contrast to the collective view that the OECD Group of countries had been taken in the so-called "assessment exercise".

In an indictment of the current international systems, Mitterand said that less and less of wealth was being devoted to industrial development and production, and more and more to finance, and "financial enterprises were becoming more important with investments declining in industry or production, and whit finance itself becoming more and more speculative".

"If anyone things that this type of development is only against the south and is favouring the north, we will be mistaken. It will not be of lasting benefit to the north ... the whole world is in a crisis, and changes anywhere in the world have repercussions elsewhere".

Warning that the current deterioration could easily lead to conflicts, Mitterand said: "are we simply to be witnesses ... we must take counter-measures. Much time has been lost already ... concerted efforts must be exerted in the west and in the east, in the north where we think we are safe from the worst damages, and in the south as well".

Presenting what he called "some ideas", Mitterand said the rich countries, particularly those with margin of room for manoeuvre because of their trade surpluses, should act and stimulate world growth. In Japan, and in Europe, they should spend money to improve the infrastructures and other new programmes, and all this would stimulate world growth.

Secondly, the international monetary and financial system should be reformed, particularly to secure more stable exchange rates and lower interest rates.

Thirdly, there was need to fight protectionism – not merely in regard to one’s exports but also to one’s imports.

In this regard everyone must put all their cards on the table, whether in agriculture, industry or elsewhere.

The Uruguay round of negotiations, he noted, was addressing these issues, but all the issues should be dealt with, and not merely those that gave some advantage to one or a few countries.

In the area of commodities, actions must be initiated to implement the integrated programme for commodities (IPC), and to stabilise prices of raw materials and commodity markets. A number of commodity agreements were already in place, and "let us try to encourage them, and reach new ones".

Also, there was need to promote diversification of commodity economies in commodity-dependent third world countries, and the second account of the common fund could play a useful role.

The French President also called for solutions to the third world debt crisis, and recalled the proposals made on this at the Venice summit by France, particularly in respect of the Sub-Saharan African countries within the framework of the Paris Club, and for providing funds to the IMF for its special structural adjustment facility for Africa.

There should also be an allocation of nine billion SDRS, and the capital base of the World Bank should be increased, he said.

Mitterand also noted that at France’s insistence, there had been a commitment at Venice summit, which had been avoided previously, bout ODA and reaching the UN target of 9.7 percent of GNP.

France, he said, had reached the target (if aid to its overseas territories are also counted), and countries like Japan and U.S.A. which were much below could not longer remain silent but must implement their commitments.

"BUSINESS AS USUAL WILL NOT DO", SAYS MRS. BRUNTLAND.

Bringing her campaign for "our common future" to the UNCTAD forum, Mrs. Gro Harlem Bruntland called for "a new partnership" between north and south "in the fight against poverty and for sustainable development".

Presenting the report of the World Environment and Development Commission (WECD) she had chaired to UNCTAD-VII, Mrs. Bruntland said many of the crucial issues taken up by her Commission were before the Conference.

While the Commission was ending its work, UNCTAD should continue to serve "as a constant reminder of the weaknesses, the deficiencies and the injustices inherent in the world economic system", and remain "a centre for global understanding and solidarity", Mrs. Bruntland declared.

"The setting is urgent and the development crisis is real", she said.

"UNCTAD and the international community are at a cross-roads. Business as usual will not do ... UNCTAD-VII could make a fresh start for invigorated multilateral cooperation. Following a decade and half of standstill and even decline in our ability to jointly address the real and crucial issues of our time – the time has come to act together".

Outlining the philosophy behind the Commission’s report, Mrs. Bruntland said in the WECD view environmental degradation and unequal distribution of wealth and power in the world were in reality "different aspects of the same set of problems".

Changes were not only necessary but also possible.

For this a new vision and "a new global ethic" was needed.

Poverty was a mayor cause and effect of environmental degradation, but the main threat to global environment came from excesses of affluence in many countries of the north.

International economic inequalities were the "root cause of environment-development stalemate", and the third world would have little opportunity to follow sustainable paths of progress unless external conditions enabled them to develop their human and economic potential, she said.

Environment and natural resources of the third world had become "the ultimate victim in a world economy troubled by serious imbalances", and the victim must now become in ally.

In a world ridden by poverty sustainable development could only be pursued under conditions created by a new era of economic growth, and this needed revival of multilateral approach to solution of problems.

"The industrialised world will have to accept an obligation to ensure that the international economy helps rather than hinders the possibilities for sustainable development".

Referring to the debt service draining massive resources from the third world and increasing the pressures on environment, the Norwegian Prime Minister said:

"Let us be frank about this. Much of the debt will not be paid back in any real sense. To maintain such a demand will entail political disturbances in many countries of such magnitude that they would be completely unacceptable.

"What is needed is new lending on concessional terms, new investments and economic and social reforms. Major debtors also need more loans on commercial terms. New policies must comprise debt relief, long-term rescheduling and conversion to softer terms".

But lending along would not do and aid flows must be increased. The 0.7 percent of GNP ODA target reiterated at the western summit "must now be followed by concrete commitments by all major donors", Mrs. Bruntland declared.

And while aid and lending were essential, in the longer term measures to increase third world earnings from commodity earnings and abolition of protectionism were equally important.

Many third world countries were now diversifying, but a basis for this must be provided through fair income from traditional and current exports, and by consolidating and improving existing commodity agreements and establishing new ones.

The Prime Minister also referred to recent controversies about the WECD recommendation to international financial institutions and other aid agencies about the environment dimension in their operations.

At the ECOSOC meeting here, African and Latin American countries came out strongly against what they considered injection of "new conditionally" in multilateral lending, and blocked moves at blanket endorsement of the WECD report.

The commission, Mrs. Bruntland clarified, had been quite emphatic in coupling its demands for a higher quality of more environmentally sensitive aid with increased aid flows and wider economic exchanges.

Third world countries must evaluate their own needs define their own priorities, and external conditions must be designed to allow them to make choices that would keep options open for the future, she added.

BURDEN OF CRISIS CAN’T BE PLACED ON THIRD WORLD ALONE – MUBARAK.

In his address, Mubarak hoped the Conference could contribute towards emergence of a common perception to get the world economy out of the present deadlock, which was inflicting much suffering on the peoples of the third world when they had expected to reap the benefits of decolonisation and eradication of exploitation.

So far international efforts had not yielded any concrete results to redress the structural imbalances in the world economy.

And the crisis facing the third world, and the world economy, could not be solved by placing the entire burden and responsibility on these countries, he declared.

Mubarak focussed his address on two major issues – the problem of third world debt, and the deteriorating terms of trade.

Citing some telling statistics on both, Mubarak complained that despite their serious significance for the world economy "no adequate efforts had been made to change the situation ... on the contrary we observe other facts that aggravate the situation".

No remedy to the deteriorating situation was possible without a recognition of the world community’s objective of facilitating the integrated development of the third world countries, involving interwoven political and economic dimensions.

Development could not be sustained in a particular continent on the basis of its successful mastery of modern technology and science, while development efforts of other continents were being stifled by faulty international economic policies and adverse conditions.

Whatever their good intentions, third world countries could not by themselves reconcile their external obligations resulting from debt and deteriorating terms of trade, and development requirements.

It would be fallacious to view the problem as one concerning only the third world, and thus place the entire responsibility and burden on them.

Theoretically the assumption would be wrong, and "practically it can have negative consequences".

There could be no stable and balanced growth of the world economy, and an equitable development of the third world under such circumstances.

In the absence of a tangible improvement in the world economic environment, countries of the third world could not also break this deadlock through self-reliance.

"Will be serious mistake to ignore plight of third world".

Col Denis Sassou Nguesso of Congo, who is also the current chairman of the organisation of African Unity, underscored the need for a favourable external environment for third world development, and said this could only be brought about through the establishment of the new international economic order.

Focussing on the third world’s debt, collapse of commodity prices, and deteriorating terms of trade, Col Nguesso said that what was at stake was not merely questions of morality but the very future and long-term interests of the third world countries.

Solutions to the debt problems and sustainable development and environmental questions all required the resumption of north-south dialogue and global negotiations.

Focussing on the problems of Africa, "the most stricken continent today", the chairman of the OAU said solutions to the problems facing that continent were essential if the continent was to be spared "widespread wretchedness".

Later at a press conference, the OAU head said that one year after the adoption of the special programme for Africa by the UN General Assembly "there has been no political will to move from intentions to actions".

African countries, he noted, had taken serious measures of adjustment, but they needed international support, which so far had not been forthcoming.

African debt was still a major problem, and Africa was waiting to see how the words of the Venice summit of the western nations in this matter would be translated into action.

He agreed with a newsman that so far the promises of aid given in the general assembly remained "paper promises", and Africa would be tremendously disappointed if the promises were not translated into action.

"It will be a serious mistake", he said, for the industrial nations to ignore the plight of the third world.

The countries of the third world constituted the overwhelming majority of the world population, and failure to act would create a political, economic and social crisis that would impact on the "small islands of property in the industrial countries".

VENEZUELA DEPLORES UNILATERALISM IN INTERNATIONAL RELATIONS.

Venezuela’s Minister of Development, Hector Meneses said the world was at a transitional stage because of technological innovations, expansion of services sector, a new international division of labour, and shift to bilateralism among major economic powers.

There were attempts to force unilateral change on international relations, distort multilateral standards, and impose selective points of view, even as the relevant international forums were being bypassed.

The structural, ideological and institutional crisis in the international economic environment had affected third world countries grievously.

International trade as vehicle of development had been affected, and foreign debt threatened to paralyse development, jeopardise social peace, and destabilise states.

The resolution of the debt problem was a responsibility of the entire international community, and not just a few.

Global solutions, through multilateral cooperation, should be found for resolving problems of commodity price instability and ensure equitable trade flows.

EUROPEAN COMMUNITY STRESSES UNCTAD’s "IMPORTANT ROLE".

Danish Foreign Minister, Ellemann-Jensen, speaking for the community and member-states, underscored the important role of UNCTAD, "as a universal forum in a world of growing interdependence", to promote international cooperation to reactivating growth and development.

The acute difficulties in the world economy, which were particularly affecting the third world, rendered international cooperation essential. The alternative was fragmentation of the world economy, to the detriment of growth and development, and to the wellbeing of all countries.

But transforming this general commitment into concrete and realistic action was however "a demanding task", which required "political courage to put aside ideological and extreme positions and concentrate on promoting constructive cooperation".

"In this context", he said, "a common assessment of the new realities in the world economy is important", the Danish Foreign Minister declared.

The issue of agreed assessment as a prelude to concrete decisions and measures has become controversial, and has deadlocked the Conference so far, preventing it from constituting separate commissions to deal with the four sectoral issues.

The G77, backed by the socialist group and China, have been demanding that discussions and negotiations on proposals should not be held hostage to prior agreed assessment. The OECD groups have been resisting it, with some among them trying to use this to prevent any "negotiations" in UNCTAD.

The Danish Minister also said that the opportunity to reach consensus on "the necessary domestic policies and international cooperation to revitalise growth and development" should not be lost, and such a consensus would be "a positive outcome" for the Conference and a new beginning for international cooperation.

It would also, he said, increase confidence in UNCTAD and set a new path for the organisation by reactivating its role.

In the area of domestic policy, he spoke about there being no realistic alternative to adjustment, about increased efficiency of public sector and greater role for private sector as "a major contribution to adjustment".

He spoke of need for adequate external financial resources for poorer and least developed, the need for EEC member-countries to meet as rapidly as possible to ODA targets, and for other industrialised countries to emulate the EEC example in setting up stabex-like schemes for compensating commodity export earnings shortfalls.

On debt, he sang the familiar refrain of "enhanced cooperative action on a case-by-case basis" by the parties involved – whether debtor and creditor governments, the international financial institutions or private Banks – to reduce the strains in a growth promoting environment.

He also spoke in this connection about the role of direct investment, and of debt renegotiations and restructuring in Paris Club as proof of acceptance of need for exceptional measures for most heavily indebted among the poorest countries.

The community spokesman also spoke of UNCTAD’s leading role in the area of commodities, and while recognising the "continued validity" of a number of elements of the integrated programme for commodities, also called for future action to be based on experience of the past.

The structural adjustment efforts at diversification, he said, should also be supported, and in this connection spoke of EEC willingness to support through voluntary contributions such efforts through the second window of the common fund.

The second window could hope to get at best 200 to 300 million dollars of capital, and it was not clear how this small sum could finance the billions of dollars needed for diversification of commodity economy, apart from the problems of technology transfer and other matters, including industrialisation.

PAKISTAN’S MAHBUB UL HAQ SHOWS HE IS DIFFERENT.

Pakistan’s Commerce and Planning Minister, Mahbub Ul Haq, struck a different note, not only from other third world speakers but also the three west European leaders who spoke today, and took some pot shots at UNCTAD, its secretariat and the Group of 77.

He lived up to his reputation (acquired over the years as an economist, World Bank official and Minister) among the G77, as a figure who always tries to show he is different from others.

Some who were present in the hall said that U.S. delegate, Denis Goodman, who "demonstrates" his contempt and indifference to UNCTAD by ostensibly reading newspapers at meetings, was all attention when Mahbub Ul Haq spoke.

The substance of Haq’s remarks did not come as a surprise to third world delegates, some of whom had got a preview of it at a diplomatic luncheon hosted by a western Minister the previous day.

Third world delegates would not comment for the record, many of them noting that if he had spoken anywhere else – within the group or even open meetings of UNCTAD board – they would easily have replied to him, but he had chosen to speak from one place where it was not customary to respond on such matters.

Several of them noted that Pakistan had never raised any of the points within the Group of 77 – either at the time when the policies he was faulting were being framed and pushed, or even in the preparations for UNCTAD-VII, either at the Dacca Asian regional meeting or at the Havana Ministerial meeting of the G77 as a whole.

Pakistan had fully participated in the Asian regional ministerial meeting in March, and the earlier and subsequent G77 preparatory work in Geneva, including on the negotiations over an UNCTAD-VII agenda, which Haq faulted.

No Pakistan delegate participated in the Havana deliberations of the group, though the Pakistani Ambassador to Mexico turned up at Havana on the fourth day of the general debate in the plenary, spoke for a brief three or four minutes, to make a few points in telegraphic language (reading out from a telex he had probably received) which in no way differed from the G77 positions, and departed Havana immediately without even registering himself as a participant and delegate. Even this brief appearance was unknown to most of those present at Havana.

Haq said in his speech that UNCTAD-VII could either discuss the "non-specific and non-actionable agenda" presented or discuss the very survival of UNCTAD as a viable forum.

Preferring to do the latter, he charged UNCTAD with fatal errors: becoming a partisan secretariat for the third world, being "preoccupied with wrong issues" – devoting the 70’s and 80’s to "non-issues" – and north and south content to makings UNCTAD a debating society.

Haq praised UNCTAD’s performance in the initial phase – ODA target, GSP and framework of multilateral commodity agreements – and among the "non-issues" listed the efforts to set up "mutilated common fund" and efforts at "stabilisation of commodity prices".

The third fatal error, he claimed, was that both the industrialised and third world nations had been content to use UNCTAD as "a debating society" rather than as serious negotiating forum.

To remedy these fatal flaws and revive UNCTAD as a viable forum he wanted "a Ministerial level task force", and meanwhile pursue a positive agenda for change and build a consensus through constructive dialogue for an agenda of change.

Among these he mentioned creating a debt refinancing facility under auspices of World Bank/IMF, and the American idea of an "early harvest" in the Uruguay round – suggesting package dealing with agriculture, "reciprocity" (which he did not spell out), dispute settlement, safeguards and services, and enlargement of the compensatory finance facility for commodities.

Haq also blamed the third world group as having indulged in "merciless bashing of the north" in UNCTAD, and advised them to seek sensible solutions for their genuine problems of trade and development, and thus give a signal to the industrialised nations that the G77 wanted to seriously use UNCTAD as a negotiating forum.

CRUCIAL JUNCTURE FOR WORLD ECONOMY, SAYS WORLD BANK CHIEF.

The World Bank President, Barber Conable said the global economy was a crucial juncture, where wrong moves or inaction by rich and poor countries would set the stage for stagnation and recession into the next decade.

Only coordinated international reform of fiscal, monetary, credit and commercial policies can prevent a disastrous setback to development in the third world.

Industrialised countries too were threatened by recent world economic trends, Conable warned.

"By decision or default, the nations represented here will set a course either towards renewed global growth or towards stagnation and eventual recession".

Lambasting the "self-defeating forces of protectionism" which was gaining ground in the industrial world, he said: "while third world nations invested in becoming processors of their raw materials for export, their wealthy trade partners penalised those efforts by keeping duties on semi-manufacture imports higher than on primary commodities.

"The developed world cannot expect success in preaching free trade as long as it practices such obvious protectionism".

Conable praised the "boldness" of third world leaders and the "patience of their afflicted peoples", who, he said, had begun to take painful steps towards economic adjustment.

"But there is a serious risk that increased protection by the industrial nations will set back economic development for many years and inflict unnecessary suffering on some of the poorest people in the world".

Conable urged countries to use the negotiations in the Uruguay round to provide the vital impetus for actions for liberalisation of trade.

He also urged the U.S. to reduce its 170-billion dollar budget deficit, and on leading industrial nations to stabilise world currencies. He also urged them to find "innovative debt relief" for the poorest nations, and "substantial new capital flows from public and private sources" to support continuing fiscal adjustment in the third world.

UNDP’s DRAPER RENEWS CALL FOR MARSHAL PLAN SOUTH.

The chief administrator of the UN Development Programme, William Draper said the delegates were meeting at a time of "widespread pessimism", with economic indicator providing a bleak message.

Recession was looming over north and south, and debt was weighing down the most vulnerable countries to the breaking point.

Times of crisis were also times of opportunity, and the world economic crisis, and in particular the plight of the third world countries, "compels us to seize the opportunity to resolve developmental problems by a means and manner not envisaged before".

He renewed in this connection his recent proposal for increasing official development aid by 50 percent to an annual 50 billion dollars, to go mostly to the least developed countries.

Raising ODA to this level would still only amount to 0.5 percent of the GNP of the industrial world, Draper noted, and compared it to the 1.3 percent of GNP given by the U.S. by way of the Marshal plan for rebuilding Europe.

But unlike the marshal plan aid, Draper said, "it would not be enough to provide the third world with money alone. It must also be provided support in policy-making and management to ensure a proper environment for the kind of massive aid input ... demanded".

DEBT SOLUTIONS VIA GLOBAL COOPERATION SANS FRONTIERS – NICARAGUA.

The Nicaraguan Foreign Minister, Alejandro E. Martinez Cuenca, said the problem of debt must be faced within the framework of global cooperation without frontiers.

Any other way, he said, would increase poverty, injustice, political and social instability, and polarise the confrontations between the north and the south.

Earlier, he said, the debt problem was no longer that of the third world alone.

Like Latin America, Asia and Africa, the U.S. too was confronted with the problem, and the 500 billion dollar debt now accumulated under the Reagan administration exceeded the 382 billion dollar debt of Latin America.

The 125 billion dollars that the U.S. must pay out annually to service its debt to commercial partners, especially Japan, within the framework of its trade and budget deficits, presented "a discouraging panorama for the stability of the dollar, interest rates and protectionism".

The phenomenon did not only affect the economies of the industrialised nations, but also the prospects for development of the third world.

Debt was a political problem, and the opening of détente between the two super-powers and the reductions in arms spending, would give "space to direct resources, permitting global solutions to problems confronting debtor nations.