GA/EF/2912

RISKS OF GLOBALIZATION STRESSED DURING SECOND COMMITTEE DEBATE

Under-Secretary-General for Economic and Social Affairs Participates in Question and Answer Session with Delegations

While globalization had generated tremendous wealth for many, it had also resulted in the marginalization of most developing countries, the representative of Indonesia told the Second Committee (Economic and Financial) this morning, as it continued its general debate.

Such exclusion, he said, could not but breed enormous discontent and instability, thereby risking potential backlash against globalization, some of which had already been seen in the streets of Seattle and Prague. A balance must be struck in which multilateral cooperation would be revitalized to help the developing countries successfully integrate into the global economy and to be provided with the necessary human and institutional capacities to do so effectively and beneficially.

It was sad, noted Malawi�s representative, that developed countries enjoyed all the benefits of globalization while poorer countries, like his own, continued to be marginalized. While the Bretton Woods institutions and other multilateral institutions were set up to regulate world markets and ensure that all countries were treated alike, in some instances they only served the interests of the major developed countries.

An overwhelming majority of the world�s population was living in desperate conditions while the minority lived in luxury, said the representative of Cuba. Neo-liberalization produced injustice and made the developing economies more vulnerable. He hoped that the international community would have the political will to ensure that developing countries had a voice in the decision-making process.

Libya�s representative said that the world was divided into two distinctly different parts, separated by a prominent line that clarified what it meant to be North and what it meant to be South. The North was overflowing with technology, knowledge, and power, while the South was underdeveloped with most of its population living in pitch darkness, total ignorance and extreme poverty.

He added that poverty could only be reduced through real economic development, which was sustainable, just and humane. A new world order that would lead to the just distribution of wealth at both the national and international levels was needed.

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Addressing the Committee at the outset of the meeting, prior to a question and answer session and the resumption of the general debate, Nitin Desai, Under- Secretary-General for Economic and Social Affairs, said that some of the backlash against globalization was due to the perception that its gains were not evenly distributed. Many of the protesters in Seattle and Prague had not been those marginalized by globalization but those who perceived that their gains were significantly less than those of others.

The Under-Secretary-General added that the backlash was also due to the vulnerability of economies arising from growing integration, and to the ecological consequences of globalization.

Statements during the Committee�s general debate were also made by the representatives of Tajikistan, Uruguay, Uganda, Guatemala, Ethiopia, The former Yugoslav Republic of Macedonia and Monaco.

During the question and answer session, the representatives of the United States, France, Saint Lucia, Brazil, Pakistan, Nepal and Mexico spoke.

The Committee will meet again at 10 a.m. on Thursday, 5 October, to continue its general debate.

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Committee Work Programme

The Second Committee (Economic and Financial) met this morning to continue its general debate. It was also expected to hear a statement by the Under- Secretary-General for Economic and Social Affairs, Nitin Desai, followed by a short interactive dialogue with the Committee.

Statement by Under-Secretary-General

NITIN DESAI, Under-Secretary-General for Economic and Social Affairs, said that the General Assembly was meeting in the glow of the Millennium Summit. The convergence of so many leaders, the attention they had given to the Secretary- General�s Millennium Report, the Declaration resulting from it and the contributions made by the parallel events, had all helped to focus the world�s attention on several issues and the role of the United Nations in meeting the challenges associated with them. If one theme had dominated discussions during the Millennium Summit, it was globalization. If there was one goal that had dominated the Summit, it was the eradication of poverty.

The Secretary-General�s Millennium Report had focused on the theme of globalization, recognizing its benefits and drawing attention to the backlash against it, he said. As the Secretary-General said in his report, �globalization must mean more than creating bigger markets.� Perhaps the greatest result of globalization was the growing inter-connectivity of people. That was evident in the growing number of non-governmental organizations around the world. In 1998, the number of non-governmental organizations active in at least three countries was 23,000.

One of the problems of globalization, he said, was that it was incomplete. The rate of opening up markets varied from one area to another. In areas of particular interest to developing countries, the rate of opening up markets had been slow. Some of the backlash was also due to the disparities between nations and the perception that gains from globalization were not evenly distributed. Many of the protesters in Seattle and Prague were not those marginalized by globalization but those who perceived that their gains were significantly less than those of others.

The backlash was also due to the vulnerability of economies arising from growing integration, as well as to the ecological consequences of globalization, he continued. What was to be done to meet those concerns? First, it must be recognized that those concerns required growth �- the greatest benefit of globalization. It must also be recognized that there was a governance deficit in the management of globalization mainly due to the shift in influence from governments to the private sector.

Coherence between the various areas of globalization was also a problem, he said. A mechanism was necessary to ensure greater coherence among economic and financial policies. A system was also needed, which reflected and gave greater voice to those that did not have a voice in the institutions that shaped the parameters in which globalization took place. The answer lay in understanding how the benefits of globalization could be used in addressing those concerns.

Question and Answer Session

The representative of the United States said that Mr. Desai�s comments had joined the debate that had been going on for some time. The debate was skewed in terms of its advice to the developing world. Could Mr. Desai discuss some of the responsibility of the developing world in order to enhance its ability to be more competitive in this globalizing world? he asked.

The representative of France said that the goals set for the work of the Committee were ambitious. Mr. Desai had spoken about the quantity and quality of growth. Some studies stated that quality was more important, but perhaps it was more important to ensure the highest growth possible and then it would spread.

The representative of Saint Lucia said that it was amazing that decades ago the international community had condemned imperialism and yet today it was the same thing but packaged differently. It was interesting that Mr. Desai had spoken about persistent poverty, yet it was said that the greatest benefit of globalization was growth. There needed to be a new theory on the economic system. Had the international community run out of theories? Poverty persisted yet the United Nations Development Programme (UNDP) had been weakened. Was this being realistic?

The representative of Brazil asked what Mr. Desai�s views were on the new theory which seemed to focus on more aid and faster and deeper debt relief, as well as more trade. How did he think that the international community could reconcile the strong needs of the poorest countries while addressing other important challenges?

The representative of Pakistan said that there was no empirical evidence that globalization could benefit developing countries. Such a study was lacking. There were inherent difficulties faced by developing countries that needed to be addressed.

The representative of Nepal said he had two comments. First, he felt that there were many sectors in which the developing world was very competitive. Second, the road to development and the right to development needed to be linked. The right to development had to be clarified.

The representative of Mexico said that globalization could be a positive force, but everyone had to be included in the process. He was aware that the international community needed the United Nations cooperation. All countries had to share the responsibility of globalization.

Mr. Desai thanked all the representatives for their questions and comments. He said that when he spoke of growth, he had been referring to many areas. Many of the areas needed to be addressed in terms of national intervention. Many countries had been doing exercises in policy reform, but the response had not been forthcoming. In many countries, the question raised was what was the payoff? National actions and global support had to go together.

The Second Committee could take a lot of credit for decision-making and keeping issues such as low-income debt on the agenda, he said. The debates of the Second Committee had played a major role in the work of the United Nations. The power of ideas should not be underestimated. He believed that higher growth would help to address the poverty problem. Higher growth might result in higher inequalities. That area required more systematic work. This was also a problem of the developed world.

He hoped that he had been clear that growing disparity was the major backlash of globalization. He believed that the Second Committee could make a significant contribution. It could not change the distribution of power. That took time and could not happen as the result of the work of a Committee. The challenge was to make the work of the Committee relevant to all countries.

Trade liberalization had been beneficial to growth, he said. All the evidence suggested that this was the case. This was not the case necessarily with financial liberalization. What were the options for countries? he asked. Developing countries were, on the whole, smaller countries. They did not have the option to put up barriers. The problem was for the barriers of the developed countries to come down.

RASHID ALIMOV (Tajikistan) said that the current General Assembly session had a number of distinctive features. Taking place at the threshold of a new millennium, the decisions taken during the session would determine the course of future international cooperation. The primary task was to implement the provisions of the Millennium Declaration, for which a strategy to achieve sustainable development was needed.

While globalization provided great potential for economic growth, it also contributed to increasing inequities, he said. The primary task of the United Nations was to ensure that its benefits were accessible to all. The rapid spread of information and communication technologies was another feature of the era of globalization. At the same time, the fact that the digital divide was widening between developed and developing countries had to be kept in mind by the United Nations and the entire international community.

The specific needs of countries in transition, such as his own, required a special approach, he said. Those countries were facing the need to meet the challenges of globalization and form new knowledge-based economies. Several of their economies frequently lacked their own resources, especially those that had suffered natural disasters, or, like Tajikistan, were undertaking post-conflict peace-building.

The achievement of sustainable development on a global level was one of the most serious tasks in the new millennium, he said. Natural drinking water was a necessary condition for development. Despite the large number of documents adopted by the international community on water, the issue continued to give rise to serious alarm. Today�s problem relating to water deserved greater political will and action. Tajikistan would therefore like to have 2003 proclaimed the International Year of Freshwater. Its intention to introduce a draft resolution on that subject was supported by over 50 delegations.

FELIPE PAOLILLO (Uruguay) said it was important to lay the foundation for a new economic system that was more just and equitable. The process of globalization had been hailed as bringing opportunity, but it also brought extreme poverty. The Millennium Summit had proposed that the quantity of poor people be halved by 2015. The current situation would not change unless the international community did more. The process of globalization made more urgent the demand for a genuinely open and free trading system. His delegation welcomed a new round of trade talks.

Uruguay had followed a policy of openness with its economy, he said. It had liberalized different aspects of its trade policy. The negotiations that were being carried out to open a free trade area in South America constituted a mechanism to facilitate a North-South dialogue. During the fifty-third session of the General Assembly, the work of the open-ended group had achieved important results. The internal realities of the developing countries had to be taken into account by the developed countries. The decisions of the major conferences of the United Nations had to be implemented.

It was indispensable that Member States comply with the Rio Summit of 1992, he said. �Rio+10� must deal with aspects of the Summit which had not yet been addressed, such as the lack of water and energy resources. His delegation hoped that the upcoming conference on least developed countries would achieve important results. The commitments made had to be turned into action. The work of the United Nations must continue in the area of eradication of poverty.

HAROLD ACEMAH, Head of the Multilateral Organizations and Treaties Department, Ministry of Foreign Affairs of Uganda, said that external debt was, without a doubt, the greatest obstacle today to the development of developing countries. It was also one of the major obstacles to rapid economic growth and poverty eradication. Meaningful debt relief, therefore, must be a high priority for the international community. It was only recently, with the inception of the Heavily Indebted Poor Countries (HIPC) Initiative, that the debt problems of the poorest developing countries had begun to be addressed with the necessary commitment and resources from the international community.

Uganda, he said, was in the forefront of pioneering the linkage of debt relief to poverty eradication. It had established a Poverty Action Fund in 1997 to channel its debt relief into poverty eradication programmes and provide a mechanism for enabling civil society to participate in monitoring the programmes in order to increase transparency.

While the HIPC Initiative would provide important benefits for those countries that qualified for debt relief, there were still some issues which must be resolved to maximize those benefits, he said. Funding must be found to enable some of the regional development banks, such as the African Development Bank, to fully participate in the Initiative by offering debt relief to their borrowers without jeopardizing their financial stability. Also, ways and means must be found to bring the non-Paris Club bilateral creditors into the Enhanced HIPC Initiative to ensure that the principle of equal burden-sharing among all creditors was respected.

While the HIPC Initiative was important, it should not be regarded as a panacea for the developmental problems of least developed countries, which transcended the external debt burden, he said. Unless those countries could sustain both rapid economic growth and rapid growth in export earnings, they would not permanently escape the debt trap. While HIPC debt relief provided poor countries with the financial resources to increase spending on poverty eradication programmes, their permanent exit from debt problems would require the developed countries to open up their markets for the exports of poor countries.

RAFAEL DAUSA CESPEDES (Cuba) said that the Millennium Declaration had expressed the need for a more just economic order. The challenge before the Second Committee was formidable. An overwhelming majority of the world�s population was living in desperate conditions while the minority lived in luxury. The link between peace and development had never been so obvious. Neo-liberalization produced injustice and made the developing economies more vulnerable. The debt of poor countries must urgently be addressed. This required a political solution. His delegation hoped that the international community would have the political determination to reach an agreement in which the developing countries had a voice in the decision-making process.

He said Cuba attached great priority to "Rio+10". It was clear that the principled commitments achieved at the first Rio Summit had not yet been complied with. His delegation believed that "Rio+10" had to focus on the problems before the international community. It must not be an exercise in renegotiating what had already been achieved. The problems of Africa must also be addressed. The next conference of least developed countries would be a good opportunity to examine the work of the United Nations in regard to Africa. Cuba would provide all the assistance it could to assist the needy countries of Africa.

DIN BALAKASI (Malawi) said that current global microeconomic imbalances bore some disturbing resemblances to those of the 1970s and 1980s, when the absence of cooperation and coordination among major economic powers led to a systematic breakdown and hard landings. The failure to resolve the current macroeconomic imbalances in an orderly manner would be most damaging to growth in the developing countries.

It was sad that the developed countries enjoyed all the benefits of globalization while poorer countries, like his own, continued to be marginalized, he said. The Bretton Woods institutions and other multilateral institutions were set up to regulate world markets and ensure that all countries were treated alike. He noted that in some instances those institutions only served the interests of the major developed countries. The international community must take urgent action and support its commitment to support the economic reform measures introduced in many countries as a means of promoting development.

As trade accounted for only a small share of the economic activity of the developing countries, particularly the least developed countries, those countries were in a comparatively weak position to benefit from globalization and liberalization, he said. Transfer of financial and technological resources were needed to help such countries build capacity and improve their trade performances. He hoped that all countries and multilateral organizations would work towards the achievement of an equitable and unbiased system of international trade, which in the long run would strengthen global cooperation.

SILVIA CRISTINA CORADO-CUEVAS (Guatemala) said that development was the highest priority on the agenda of the United Nations. The United Nations had to be strengthened in this area. Her delegation felt that the operational activities of the Organization were important because of the impact they had had on the development of struggling countries. In an increasingly interdependent world, environmental policy was important in order to make all countries ecologically sound. Guatemala would be present at the next Commission on Sustainable Development. She reaffirmed her delegation�s support for "Rio+10".

It was clear that peace and development were inter-linked. In that regard, her delegation took note of the Brahimi Report on United Nations peace operations. It contained suggestions that were worth considering. The agenda of the Second Committee was a challenging one. She offered the full support of her delegation.

MAKARIM WIBISONO (Indonesia) said that it was increasingly recognized that market forces and globalization alone had not been able to lift great numbers of people out of poverty. Nor had they been able to narrow the widening gap between the developed and developing countries.

Thus, he said, while globalization had generated tremendous wealth for many, it had also resulted in the greater majority of developing countries missing out on the opportunities offered and being bypassed or marginalized in the process. Such exclusion could not but breed enormous discontent and instability, thereby risking potential backlash against globalization. Indeed, examples of such backlash had already been seen in the streets of Seattle, Prague and elsewhere.

Indonesia fully recognized the double-edged sword nature of globalization, he said. It had both reaped the benefits of globalization and had been wrecked by a financial crisis. The greatest challenge facing the Millennium Assembly was to establish an international economic system that was just and democratic, for transforming globalization into an effective instrument of growth and development.

What was also clear, he said, was that globalization was here to stay, and to ignore that reality would not be in the best interests of the well-being of people. A balance must be struck in which multilateral cooperation would be revitalized to help the developing countries successfully integrate into the global economy and to be provided with the necessary human and institutional capacities so as to do so effectively and beneficially. In meeting that challenge, there could be no alternative to dialogue with development partners and all stakeholders �- one which was anchored in mutual interests and benefits, shared responsibilities and genuine partnership.

BERHANU KEBEDE (Ethiopia) said that one of the central challenges was to ensure that globalization became a positive force for all the peoples of the world. While globalization was inevitable and was becoming a permanent feature of the new international order, it was far from a panacea. There must be in place mechanisms to regulate the conduct of free trade in order to ensure an equitable exchange between unequal partners predicated on a win-win principle. His delegation called on the international community to take a comprehensive action to address the economic and social predicaments facing the least developed countries. The Third United Nations Conference on Least Developed Countries was an opportunity to redress the plight of the world�s most vulnerable people.

One of the most important issues that needed to be addressed by the international community was the challenge of financial development, he said. His delegation welcomed the decision of the General Assembly to convene in 2001 a high level intergovernmental event of financing for development. Development assistance and concessional finance continued to be of critical importance for the development of large areas of the South. Another important area that needed to be addressed by the intergovernmental event was the issue of external debt reduction. It also had to critically analyze and come up with a recommendation with regard to governing capital flows, reducing the risk of crisis and crisis management.

The issue of democratizing the governance of the international finance system had to figure on the debate of financing development, he said. There was a need to end the marginalization of developing countries from the decision making process in multilateral institutions. His delegation expressed serious concern regarding the decline of resources allocated to the development activities of the United Nations. The UNDP was one of the most important development organs of the United Nations system. It was imperative that the international community gave the necessary support, so that the UNDP could carry out its development mission with greater vigour.

ABDUSSALAM O. IBRAHIM (Libya) said that the world was divided into two distinctly different parts, separated by a prominent line that clarified what it meant to be North and what it meant to be South. The North was overflowing with technology, knowledge and power, while the South was under-developed and most of its population lived in pitch darkness, total ignorance and extreme poverty. Poverty could only be reduced through real economic development. Development must be sustainable, just and humane. That required restructuring of the institutions of both State and society in the developing countries. Thus, the international community was called upon, at the dawn of the new millennium, to give priority to the development programmes of the developing countries. A new world order was needed, he said. That could lead to the just distribution of wealth at both the national and international levels. The sharing of the North and South of the fruits of globalization to narrow the gap between them, reduce their disparities and avoid the marginalization of developing countries. There also needed to be the establishment of a stable and strong international financial system. His delegation urged dialogue to determine a balanced view of development. He appealed to developed countries to implement their commitments to provide developing countries with the required resources and environmentally sound technologies.

Recent years had witnessed a strengthening of the phenomenon of imposing sanctions, he said. His country was a victim of the imposition of such sanctions. He called on the international community to put an end to those measures and oppose them, since they constituted a misdirection of the proper conduct of international relations. The Declaration adopted by the South Summit Heads of States and Government had expressed its deep concern over the imposition of economic sanctions. The Declaration also called on the international community to provide assistance in the clearance of landmines and the rehabilitation of the victims of these mines.

NASTE CALOVSKI (The former Yugoslav Republic of Macedonia) said that it was clear who was benefiting from globalization and who was not. The most negative effect of globalization was the marginalization of small and vulnerable economies. Also, it did not really contribute to the elimination of poverty and underdevelopment, in spite of the assumption that, if managed properly, it could be a major force for development and poverty eradication. The task ahead was to work out a programme of policies and measures to manage globalization and to agree on a mechanism that would realize those goals.

There was a strong dissatisfaction with the present multilateral trading and finance system in the developing countries and in the countries with economies in transition, he said. The number of barriers, both qualitative and quantitative, was increasing rather than decreasing. Access to markets was becoming more difficult due to the continuous efforts to preserve competitive advantage through protective measures, such as customs and quotas. It was unacceptable that many economies remained outside the WTO and were not helped to become members. The United Nations, particularly UNCTAD, should continue to insist on the liberalization of the international trading system, which was essential for the development of many countries.

Turning to the debt problem, he said that writing off the debt of countries which could not repay was a must. Why should present and future generations pay the debt of former generations, who had invested in uneconomical projects or spent funds on dubious undertakings? Also, there were countries, such as his, which found themselves in difficult situations due to reasons or undertakings not of their own. Why should his country�s economy suffer because of the wars in parts of the former Yugoslavia or due to the decisions of the Security Council? It was imperative that the heavily indebted poor countries be freed from the debt burden.

JACQUES L. BOISSON (Monaco) said the phenomenon of globalization had contributed to many changes between and among countries. Many had not benefited from this. The fruits of globalization must be shared in a more equitable manner. The international community had to be more aware of the violation of human rights that persisted around the globe as a result of globalization. States were frequently left helpless in the face of these new financial situations.

The objective, also linked to globalization, to reduce by half the number of people living in poverty, should guide the work of this Committee, he said. Monaco fully reaffirmed its support of the United Nations Decade against

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Poverty. The exchange of experiences in urban planning could only contribute to the improvement of the living conditions of urban populations. Monaco was resolved to increase its international cooperation with regard to the environment and sustainable development. Practical measures needed to be adopted by multilateral corporations in this regard. The commitments of Monaco towards using clean energy sources with relation to electricity remained active. It was important to develop alternative energy resources and to implement anti-pollution measures.

Monaco was faced with the challenges of the new global economic order. His delegation felt it was vital to strengthen public aid for development and was actively preparing for the Rio+10 Summit. Legislation to fight against money laundering was very similar in Monaco, as in other European States. It was important to battle the laundering of money of dubious origin. Multilateral and effective cooperation was necessary if progress was to be made in that area.

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