NAM: NORTH-SOUTH GAP "THE CENTRAL THREAT TO INTERNATIONAL SECURITY AND STABILITY"

Jakarta Sep (TWN) -- The widening gap between the North and the South has become "the central threat to international peace and security", the Heads of State/Governments of the Non-Aligned Movement have said, and have called for a reactivated North-South dialogue to forge a "new global consensus and commitment to strengthen international cooperation for development" and for restructuring of prevailing international economic relations through effective partnership and equitable cooperation.

The international economic situation, the Heads of State/Government said in their final document on global issues and on economic and social issues, has not been conducive to development, particularly of the developing countries, as it remains shrouded in uncertainty and is marked by sluggish and uneven growth.

Most of the developing countries, they said, were no better off today than during the 1980s, and they are still saddled with debilitating debt burdens, strapped for development finance, denied fair access to technology and markets of the developed countries and frustrated by a secular decline in commodity prices.

While a significant number of developing countries had carried out structural adjustment processes and opened their economies, with a view to putting them in line with new conditions for investment and world commerce, "a lack of reciprocity is observed in the developed countries". While there was "a widespread movement for trade liberalisation in the developing countries, the commitment of the developed countries to free trade had continued to weaken" and few, if any steps, had been taken by the latter to reduce the range of non-tariff barriers, and relatively high tariffs facing a large proportion of exports of the developing countries.

"The developing countries," the Heads of State/Government maintained, "cannot be coerced into opening up their markets further or adopting changes in their economic policies in a manner which ignored their stage of development...the early and successful outcome of the Uruguay Round of MTNs is a matter of great importance to the developing countries. If the Round fails to achieve a balanced and timely conclusion, the consequent surge in protectionism and the increased resort to unilateralism and so called 'managed' trade will further distort trade flows and prevent the emergence of a truly open and fair multilateral trading system, and this will constitute a severe blow to multilateralism".

The Heads of State/Government urged the developed countries to ensure without further delay a "balanced, equitable, meaningful and satisfactory conclusion" to the Uruguay Round, taking into account the interests of all parties, especially the developed needs and concerns of developing countries, and stressed the importance of the roll back of protectionist measures by developed countries and the incorporation of the development dimension in the rules for the conduct of international trade.

The NAM Heads expressed their grave concern over the failure of the international financial system to furnish adequate development finance over the past decade, the sharp contraction in external commercial flows, the drying up of world savings and virtual stagnation in Official Development Assistance (ODA) at less than half the agreed target levels of 0.7 percent of GNP. The flow of global investment, they noted, had gone to the developed countries and the situation had worsened by emergence of large negative reverse flows from the developing to developed countries, high interest rates and acute erosion in export earnings.

The Heads of State/government called for a wide range of actions on a broad front to revitalize the growth and development of developing counties and, in particular, the stimulation of new and additional financial flows for development through increased commitment on the part of donor countries who had not yet met the internationally agreed commitments to increase their ODA to 0.7 percent of GNP by 2000.

They also called for increase in real terms of resources available under the 10th replenishment of IDA, as well as the importance of achieving the highest possible level for the Fourth Replenishment of the International Fund for Agricultural Development.

The NAM heads also noted that existing restrictions affecting the world market, together with other inequities prevalent in the world economic environment, was resulting in loss of earnings equivalent to one-fifth of the GNP of developing countries and more than six times the budget spending for human development priorities.

"They consequently reiterated their imperative need for a global partnership in the context of an equitable economic system, as the existing restrictions, particularly in trade relations, cause annually losses for the developing world equivalent to ten times the amount of ODA accorded parsimoniously to them."

The NAM Heads also called for increase in financial flows to the developing countries, inter alia through foreign direct investment and strengthening of international financial institutions. They noted the agreement in principle to increase IMF quotas and urged strengthening of the capital base of the World Bank and regional development banks and for the speeding up of the negotiations for the tenth replenishment of IDA, and for new substantial allocation of IMF's Special Drawing Rights and establishing a link between creation of SDRs and development finance needs.

The NAM heads expressed concern that the enormous needs of Central and Easter Europe for external resources and financial flows had affected availability of resources to developing countries, particularly the low income countries. The needs of Central and Eastern Europe should be met from additional resources and not at expense of those earmarked for the developing countries.

The major industrial countries were also urged to make necessary efforts to reduce interest rates substantially and increase concessional flows of resources.

The NAM Heads endorsed the call for an International Conference on development financing and looked forward to a decision on this at the forthcoming 47th session of the UN General Assembly.

On the external debt of the developing world, the Heads of State/Government said that the reversal of the flow of resources from the South to the North, would require a reduction in the debt stock of developing countries. Past attempts at rescheduling debt had not resulted in decline of the debt burden, but rather an increase in total indebtedness - with the debt rising from $700 billion in 1981 to about $1400 in 1992. While welcoming the global initiatives for more effective ways of reducing the stock of debt, the NAM Heads called for broadening the initiatives to include all types of debt and debtor developing countries, with special consideration shown to debt burden of low-income countries and those making great sacrifices to meet their financial obligations. The reiterated the need for a coordinated tripartite approach involving developing debtor-nations, developed creditor countries and financial institutions, with a view to alleviating the debt burden.

Also, any durable solution to the problem of external debt should include "expansion and liberalization of the trading system, which is greatly dependent upon increased financial flows, remunerative commodity prices, a balanced and successful outcome of the Uruguay Round and the sustained growth and development of developing debtor countries."

The current monetary system, the NAM Heads said, had remained "the private preserve of a few developed countries, has been inadequate in meeting the demands of the present world situation and is in need of systemic and institutional reforms." Its failure to stimulate stable world economic growth and create a financial climate conductive to sustained development should be redressed.

The NAM Heads noted that commodities represented the economic lifeblood of most if not all developing countries, many of whom remained dependent on one or two commodities for generating foreign exchange earnings. Commodity prices in real terms had now fallen to their lowest levels in the last hundred years and there had been "retrogression in cooperation between producers and consumers" in the area of commodities.

They strongly urged producer and consumer countries "to make every effort to reactivate commodity agreements with economic clauses. They urged all signatories to the Common Fund within the framework of the Integrated Programme for Commodities to revive the schemes and make them fully operational.

The Heads of State/Government underlined the need to forge "a new global consensus and commitment" to strengthen international economic cooperation for development. The accelerated development of developing countries now assumed "added urgency" and the goal of settling problems emanating from growing interdependence among nations and interlinkages of issues could only be pursued through consultation and negotiations.

"The reactivation of a constructive dialogue between the North and the South, therefore, has now become more pressing than ever. Such a reactivated dialogue should not be cast any more in terms of 'demands' on the part of developing countries or misperceived as 'charity' on the part of developed countries. Rather it should be conducted on the basis of genuine interdependence, mutuality of interest, shared responsibility and mutual benefit, clearly and coherently presented and rationally discussed and negotiated.

"..the fate and fortunes of the North and the South are now inextricably intertwined, and sustained economic prosperity in the North is now possible in the absence of stability and sustained development in the South...the developing countries too cannot achieve their development goals without the conducive global environment that the policies of the North can and should provide."

As an "indispensable corollary" to efforts in the North-South context, the NAM Heads called for intensification of efforts of Non-Aligned and other developing countries to attain collective self-reliance, not only to enhance their negotiating strength but also increase their opportunities for development.

Recognizing the various obstacles and difficulties in promoting South-South cooperation, the Heads of State/government reaffirmed the urgent need for a "pragmatic and action-oriented Plan of Action" and welcomed in this regard the report of the South Commission and its specific recommendations. They called upon the NAM's Standing Ministerial Committee for Economic Cooperation to study possibilities of implementing the relevant recommendations in the report.

Calling for an "evolutionary and flexible approach" whereby groups of interested countries, as core groups, initiate cooperation through viable projects open to all developing countries, the NAM Heads said, "if these groups of core countries are ready to implement projects of mutual benefit, such initiatives should be encouraged, particularly where they contribute to strengthening the collective self-sufficiency of the developing world."

In this context, they took note of the efforts of some developing countries to conclude bilateral payments arrangements, as well as establishment of a data exchange centre, as specific initiatives to strengthen South-South trade and economic and technological cooperation.

(With Morocco, Pakistan and a few others opposed to any reference to the Group of 15 and their efforts and projects to promote South-South cooperation, the NAM document had to content itself with making an oblique reference to 'core countries', as well as to the payments arrangements and data exchange centres which are part of the G15 ECDC programmes, which are open to all members of the G77).

The NAM Heads also underscored the importance of assured financial under-pinning of various South-South projects and towards this end asked its Standing Ministerial Committee to study new and innovative ways of financing the projects.

The NAM heads, in this regard, stressed the need to facilitate active involvement of the business community and also recommended the possibility of convening the Ministerial Meeting of Non- Aligned Countries on South-South Cooperation when it deems necessary.

The Global System of Trade Preferences (GSTP), the NAM Heads said, constituted a primary vehicle for promoting trade expansion among developing countries and was "an essential mechanism" for strengthening collective self-reliance. However, the membership of GSTP was limited and the scope of liberalization already effected remained narrow. The GSTP, they said, should be strengthened through definitive ratifications of the agreement by signatory countries that had not yet done so, through accession of other members of the G77 and through adoption of modalities and approaches envisaged during the second round of negotiations.

The NAM Heads welcomed in this regard the offer of Cuba to host the Ministerial meeting of the GSTP negotiating committee after the second round of negotiations, set to be concluded in principle in July 1994.

The NAM Heads noted with concern that the activities of NAM's Action Programme for Economic Cooperation among Developing Countries had declined considerably in recent years, due mainly to scarcity of financial resources available to NAM countries for furthering such activities. They also pointed to the imperative need to revitalize APEC activities through concrete measures to promote cooperation. To update the list of spheres of cooperation, the Heads of State/Government agreed to "reactivate and review the Action Programme for Economic Cooperation among Non-Aligned Countries". They also endorsed the establishment of a joint coordinating committee of the NAM and the Group of 77 to enhance collaboration, avoid duplication of efforts and provide greater efficiency in attainment of common goals.

Among other things, the NAM Heads called for a review of the activities and programmes of the functional bodies, expert groups and specialized centres of the NAM, and for appropriate measures to guarantee the successful convening of the 7th meeting of the APEC Coordinating Committee and the Second Substantive Meeting of the Standing Ministerial Committee for Economic Cooperation as soon as possible.

"Success in South-South cooperation," the NAM Heads said, "will lend greater credibility and added strength to efforts in attaining a just and equitable international economic order based on mutual trust.

"...the emergence of a new world order that brings peace, stability and development to all humanity will depend to a large extent on whether steps are taken to bridge the widening North- South economic inequities, and to translate the concept of world partnership into meaningful and genuine action.

"The South needs the resources, markets and technology of the North to realize its development aspirations, in particular for eradication of poverty. The developed countries cannot be sole engine of growth for the world economy, particularly in the context of the persistence of recessionary conditions. The South's development, in turn, is in the interest not only of the peoples of the South, but of the North as well."