unctad.org | Handover Ceremony of the Group of 77 and China in Geneva
Statement by Mr. Supachai Panitchpakdi, Secretary-General of UNCTAD
Handover Ceremony of the Group of 77 and China in Geneva

04 Mar 2010

[AS PREPARED FOR DELIVERY]

"Cooperation, solidarity and the search for new development strategies"

Thank Thailand for steering the group through a quite unprecedented year in which the international community in general and the developing countries in particular faced a much more threatening economic environment than had been the case for a considerable period of time.

This is also shaping up to be a very important year for developing countries, and one in which the political solidarity of the G77 and China will be critical in pushing a forward-looking agenda that will not just prevent us slipping back to "business as usual" but also begin to shape a more stable and inclusive pattern of international economic integration.

It is particularly appropriate that Cuba is taking the reins of the G77 at this moment. Last year was the 50th anniversary of the Cuban revolution, and over the past five decades Cuba has been an ardent proponent of solidarity among developing countries, both in theory and in practice.

* * * * *

The major economies have used up an unprecedented amount of financial and political capital to stem the financial collapse, limit the collateral damage to the real economy and stimulate a broader recovery. There are some hopeful signs; financial markets, media pundits and policymakers all appear heartened about future prospects. I nevertheless believe we must continue to be cautious about the pace and scope of recovery, and particularly vigilant about the downside risks for many developing countries.

It is significant that much of the evidence for recovery comes from the financial sector - from banks, whose balance sheets now show a profit, following several high-profile sell-offs and widening interest rate spreads; and from stock market recoveries since March last year. However, along with the return of the bonus culture, there are reasons to worry that the financial sector has failed to learn the right policy lessons from the crisis and that the resistance to putting in place the required reforms and regulations at the national and international levels will mean that even if we successfully exit from the downturn we will continue to face the threat of systemic financial fragility.

A good part of that fragility has to do with the delinking of the financial from the real economy. If the shape of the recovery is any guide, that de-linkage remains a very serious problem. Unemployment is still rising in many developed and developing countries; wages are still falling; poverty numbers are still increasing, as are the number of people going to bed each night hungry. At the international level, trade has begun to pick up, but aid flows have stalled and remittances have fallen sharply. Moreover, and looking a little further ahead, given the size of private-sector imbalances resulting from the debt-driven binges of the past few years, and the rising level of public debt to deal with the crisis itself, there can be little doubt that rich countries are facing a difficult and lengthy period of adjustment. None of this signals a healthy recovery.

Perhaps most significantly - especially for the world´s most vulnerable - the interrelated threats of rising global temperatures, food insecurity and energy poverty are as challenging as ever.

It is not only particularly difficult for policymakers in developing countries to separate these short-, medium- and long-term challenges, but it is also impractical to tackle them by acting alone. Effective international cooperation is an essential part of a stable and healthy environment for establishing new development paths that are more robust, inclusive and sustainable.

In recent years that cooperation has become fragmented between the different constituencies dealing separately with trade, finance, aid, technology and so on. We need to think in a more holistic and integrated fashion about the policy challenges that will be faced if we are to establish new development paths and the role that the international system should play in supporting those paths, including where appropriate the need for radical reforms. While we welcome the broadening of the G8 into the G20, it is only the UN system that provides a truly representative forum for discussing these issues.

The bond between UNCTAD and the G77 is, in this context, critical to advancing a forward-looking and development-oriented agenda at the international level. It is important that together we grasp the opportunities arising from the crisis.

One positive consequence of the crisis is that policy space is no longer a phrase to be whispered, and indeed, the space available to developing countries to help nurture development paths that are robust, inclusive and sustainable has been significantly enlarged. A whole range of measures deemed unacceptable in recent years - from countercyclical policy to industrial policy to capital controls - has become a legitimate part of the policy tool kit as donor countries have themselves turned to them in an effort to deal with their own economic challenges. It is essential that these measures are now employed in fashioning alternative development paths. This is an area where I believe UNCTAD can provide considerable support to the G77.

Another encouraging development is the emergence of new growth poles in the South, which have moreover also proved resilient in the face of the crisis. These are now translating into new forms of development solidarity and new opportunities for South-South cooperation.

In recent years, many developing countries have been pursuing more outwardly oriented growth strategies and have suffered during the crisis from their dependence on external demand, particularly from the US, Japan and Europe. This dependence could potentially be reduced by greater regional cooperation. The promotion of domestic and regional demand - coupled with moves to enhance social protection - could unlock savings and increase demand for imports from one another.

One particularly encouraging development in this regard is the sharing of experiences among developing countries about policy successes and failures. I very much hope that UNCTAD can help promote this kind of cooperation. The South Summit that is expected to be hosted in Africa will be a very important venue for advancing this agenda and reshaping the international architecture in a more democratic and development-friendly direction. Two further events on the UN calendar later this year will also provide opportunities for UNCTAD and the G77 to move ahead with this agenda.

The first is the MDG event at the start of the GA in September. In this regard, we will have a special session of the TDB in June, at which we hope the G77 will make forceful presentations on how they want the agenda around international development goals to advance. Our Public Symposium in May will also address this, among other issues, with the wider development community and civil society in particular. The second event is the follow-up to the UN conference on the financial crisis. This process is beginning to pick up pace with the renewed efforts of the co-facilitators. UNCTAD has been identified as a key agency, and again our collaboration with the G77 will be important in pushing for required reforms.

* * * * *

The new threats I mentioned earlier also require a new approach to development cooperation. The tragedy of Haiti, which brings together old development challenges and new issues, will be a testing ground in this respect. Developing countries, including Brazil, Venezuela and of course Cuba, have been quick to respond. The need to get away from the aid model that has driven cooperation for much of the past half-century, and to promote a more integrated approach, will be key here as well.

One area where we all have an interest in finding new approaches to international cooperation is climate change. We are all still digesting the events in Copenhagen at the end of last year. But one thing I think is surely true is that climate change can no longer be seen as just an environmental challenge but a development challenge as well.

The impact of rising global temperatures is already, and will long continue to be, the most damaging in developing countries, and particularly those that have added least to the problem. Past and present greenhouse gas emissions, the bulk of which have been produced by developed countries, are commonly considered to be the main cause of global warming. Developed countries need to lead global action to mitigate climate change by adopting strong policy measures - not just in their own interest, but also for ethical and economic considerations. They need to assume responsibility for the accumulation of emissions affecting the global climate that have resulted from their past actions, particularly as they have greater economic, technological and administrative capacity to shift rapidly to a low-carbon economy.

UNCTAD believes that mitigation and adaptation measures need not compromise economic growth. In the same way that countries may look to the long-term benefits of infrastructure spending in their response to the short-term consequences of the crisis, so they could also incorporate climate change mitigation policies into their recovery plans.

The energy sector is pivotal in this regard. However, very large adjustments will be needed to shift from carbon-based to renewable energy sources, and developing countries cannot be expected to assume the burden of those adjustments. At the same, it is imperative that developing countries become much more precise about the financial, technological and trade aspects of those adjustments; the costs involved in shifting to low-emission, high-growth paths must be more carefully spelt out and possible multilateral solutions designed. UNCTAD is ready to become more active in this discussion if member states so wish.

* * * * *

In the 45 years since the birth of UNCTAD and the Group of 77, the world has changed beyond recognition. Still, however, we are searching for the same things that galvanized our predecessors to look for more representative and collective solutions to global challenges; peace, security and prosperity remain distant goals for too many of our fellow citizens.

The financial crisis has reminded us just how fragile our lives can be on a day-to-day basis, and the climate crisis reminds us that unless we make changes today, the lives of our children and grandchildren will be even more fragile. They also remind us that cooperation has to be the basis for a more prosperous and healthy planet. The G77 and China have much to do in helping to realize that future, and UNCTAD stands ready to support its efforts in whatever ways we can.



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