Jul 17, 1987


GENEVA, JULY 15 (IFDA/CHAKRAVARTHI RAGHAVAN) – The crisis in the world economy needs actions "directly aimed at reviving the tempo of development in development countries", former secretary-general Gamani Corea told the Seventh Session of the conference Wednesday.

Corea was the last speaker in the plenary, which adjourned to resume the general debate on July 24.

Addressing the Conference by special invitation, Corea said that while macro-economic policies of industrial countries, with accent on growth, was an "essential requisite", it was not enough to give the necessary momentum to development in the third world countries, and actions directly aimed at reviving development should be taken.

"The case by case response to crisis situations needs to be replaces by more comprehensive actions which would vastly augment flow of financial resources to the developing countries, eliminate the barriers to their exports, and strengthen their earnings from commodity trade", he said.

"Such actions will not benefit just one group of countries. They would impart strength and dynamism to the global economy as a whole".

The Conference was meeting in a setting of virtual halt to development process and uncertainties and imbalances clouding the overall global environment.

"Only the insensitive can fail to see the dangers inherent in this situation. The ‘lost’ decade is affecting the global economic, political and social fabric of countries of the third world, and will eventually flow over national boundaries to attain global dimensions".

There were "some unhappy parallels" now with UNCTAD-VI in that the situation at that time "has remained with us to this day".

The UNCTAD secretariat had then pleaded for timely actions to reverse the state of affairs, for bolder and more positive macro—economic policies to reinforce recovery and put sharper accent on growth, and for further actions at getting development process going again in the third world.

But at Belgrade they did not get "the hoped for responses".

Much faith was then put by the industrialised countries in the locomotive power of their recovery process for global economy, and there was "a good deal of misplaced confidence" that most things were "manageable" – the debt crisis and the payments crisis of third world as "manageable".

Third world countries were told that adjustment, rather than action to improve the global environment, was the need of the hour, and that if they tightened their belts, cut down budgets, and stopped interfering with market forces all would be well.

But time had "tragically proved the inadequacy of this reasoning", and four years later industrial countries were still showing a halting, faltering, stop-go kind of recovery, with each

year growth forecasts of the previous being revised down".

Third world countries might have no option but to adjust to harsh circumstances, "but on a broader front the need is to get out of a global recession, not to adjust to it ... no amount of ‘adjustment’ will ensure return to rapid growth if global environment remains hostile".

Corea noted the greater awareness now that responses of the past had proved inadequate, though there were still "no lack of signs of malaise in multilateral negotiations and stalemate in dialogue".

Focussing on the commodity issue, Corea noted that the difficulties in negotiating and renegotiating commodity agreements, and the delay in the entry into force of the common fund, had "encouraged some negative attitudes".

Rejecting the view that difficulties in negotiations was proof of "futility of commodity agreements" he said this attitudes, or market forces vs. Intervention, or changing political attitudes influencing diplomacy of commodity negotiations, "did not negate the essential logic of the IPC or commodity agreements".

The IPC till now had not enjoyed the benefit of the common fund, which was intended to be its center-piece or catalyst. Individual commodity agreements were never intended to deal with "synchronised global recession" but rather with problems of commodity specific cycles, and "have not proved a failure so far on that test".

"I do not consider the alternative to commodity agreements based on consumer-producer cooperation is a retreat to completely unregulated markets", Corea declared.

"The inescapable need would be for the producers themselves to improve their own cooperation and coordination in the management of supplies".

Welcoming the Soviet decision to join the common fund, and the good prospect of the fund coming into being, Corea said this would be "the high water mark of years of efforts to implement the IPC".

Praising efforts of industrial and third world countries and the UNCTAD secretariat for continuing to press for establishment of the common fund, and urging remaining governments who had not so far done so to ratify the agreement quickly, Corea said: "the changed prospect for the establishment of the fund has altered the prospects for the implementation of the IPC itself and has strengthened the credibility of multilateral negotiating processes".

Developments concerning the fund was "a good omen for the conference", and while no one could expect complete solutions to all the critical problems, it was vitally necessary that a significant beginning be made".

If the decisions of the conference led to decisive steps in crucial areas and to creation of a new and more favourable climate for dialogue and for negotiations, the conference could mark the beginning of a new and constructive phase.

There were now many sings that the time had come to build a fresh on the basis of new perceptions, Corea said, and referred to the recognition of the need for disarmament and end to the debilitating arms race, as well as Bruntland report highlighting the compelling terms of relationship between development and environment.

A recognition of its point on the need for "sustainable development", where there would be both growth and protection of resource base, "must surely point, not only to national actions, but also to the creation of an international framework that make such developments possible".

Pleading for a new global development consensus, similar to the post-war one based on full employment, Corea said such a consensus would recognise that dynamic growth was of crucial importance to the world economy and conditions for stability, and that rapid growth of the third world countries was crucial for the strength and stability of the world economy.

"A developmental consensus would take us beyond short-term and incremental responses, and lead inevitably through change, adaptation and reform, to a better international monetary and systems, a better regime for international trade, and to a sounder system for world commodity trade".

All countries, he said, must participate in moulding this consensus, which must take account of differing needs but also reflect the common interests for a new and better world.

Third world countries must be active in the negotiating processes that lay ahead, and "enhance their unity and their capacity to cooperate with each other".

"I do not believe that there can be sound negotiating results if the developing countries are weak and divided", Corea added.

"UNCTAD", Corea said, "could play a crucial role in the shaping of a better world".

"The interdependence of issues and importance of the development dimension in the world economy would gain increasing significance in the period ahead. UNCTAD, both by its mandate and tradition, had always viewed issues in terms of their inter-relationships and in a development perspective, and had not hesitated to highlight major issues simply because negotiations might prove difficult".

"All this had made UNCTAD unique about the international agencies, and its future relevance lay in retaining this unique character".

"And as events unfold on the world economic scene all member-states will come increasingly to appreciate the value of UNCTAD, and its strength and statue will grow", Corea added.