As this is the first session of the General Assembly since the tenth quadrennial session of UNCTAD, which took place in Bangkok last February, I would like to begin by sharing with you my views on the implications of UNCTAD X for the future international agenda on development.
It would not be an exaggeration to assert that Bangkok marked a turning point in international discussions on development. We should not overlook the fact that the agreement reached there, which gives a meaningful orientation to future action on trade and development issues, took place just a couple of months after Seattle. And as I have already mentioned, Bangkok provided a welcome opportunity for the international community to initiate a healing process and begin to rebuild confidence in the multilateral trading system.
As a matter of fact, Bangkok saw the beginning of a new convergence of views which stresses the importance of the social dimension in the process of globalization as well as the need to ensure that this process is an inclusive phenomenon that can benefit the developing countries, particularly the poorest ones.
The process initiated at UNCTAD X also enabled us to see more clearly the importance of other critical issues. Key among them are poverty eradication, the qualitative aspects of growth and development policies, environmental sustainability, and income distribution. All these issues are assuming greater significance in the international agenda. The Conference was also instrumental in creating greater understanding of the complexities of the globalization process. As I said in my closing remarks in Bangkok, much remains to be done in order to translate that understanding into practical moves for institutional change at the international level. In this regard, the Programme of Action reaffirmed UNCTAD´s role in international development policy-making, and we have been cooperating with all relevant organizations accordingly.
As regards global trends, the world economy made last year a welcome turnaround. Robust growth was accompanied by an improvement in world trade. Some degree of normalcy returned to the currency and financial markets following the chaotic conditions of the previous two years. We hope that this year will continue or even surpass that performance, with overall growth expected to be the highest in more than a decade.
We would be well advised, however, not to make hasty extrapolations for the future on the basis of the recent impressive performance of the world economy. That economy is indeed evolving, and not necessarily in a reassuring manner. The very same Friday that the joint annual meeting of the IMF/World Bank was opening in Prague, three events that took place within hours of one another confronted us with the increasing unpredictability of the new world economy. First, there was the concerted intervention by European monetary authorities in the value of the Euro -- a reflection of the macroeconomic imbalances among the three major economies. Second was the sharp drop in technology stocks following the announcement of Intel´s falling profits -- a vivid expression of lingering doubts over stock market fluctuations and of fears about what sort of landing the United States economy would make. The third event was the release of part of the strategic oil reserves of the United States, prompted by developments in the oil markets.
These three apparently coincidental phenomena all point in the same direction. They tell us that neither stability nor sustainability can be taken for granted. Above all, they tell us that international policy action to attain these objectives has not lived up to expectations and that relevant policies will need to be formulated and better coordinated at the international level.
Allow me to turn now to the recent rise in oil prices, which has reminded us of the high level of uncertainty still surrounding world economic performance. This development has proven that we continue to be as dependent on oil as ever for both individual and collective transportation. The excessive claims of the "new economy" have not yet altered this phenomenon.
The era of cheap oil may or may not be behind us. But there is little doubt that a decade of depressed prices helped stoke demand in the industrial countries and everywhere else. It discouraged new investment in production and refining and delayed moves to alternative sources of energy and more environment-friendly technologies. All this appears to be fuelling a much more volatile market than before. As British Chancellor Gordon Brown remarked in Prague, the terms of the debate on oil have shifted to the need for stability, in the interest of producers and consumers alike.
The immediate responsibility rests with policy makers in the stronger economies, who must avoid either an inflationary or a deflationary spiral. Appropriate policy responses should include fiscal measures, when necessary, as we have recently seen in France.
For oil-importing developing countries which face the burden of a rising import bill, compensatory financing from multilateral institutions on soft terms should be considered. The World Bank´s recent announcement that it would make structural loans and other forms of emergency funding available to oil-importing countries is a step in the right direction. Such funding should in fact be offered to all developing countries in accordance with their payments position.
Nor should we overlook the special situation and problems of oil-producing countries. Oil is a non-renewable resource and, for oil-producing countries, it constitutes a source of revenue -- in some instances, the only source of revenue. It is also counted on to underpin future economic development and diversification, so it is only to be expected that these countries would seek remunerative and stable prices for their main exported commodity.
All of these considerations lead me to conclude that we need policies and measures which will ensure both remunerative prices for producers and fair prices for consumers. I agree that this will not be easy, and that is precisely why this issue must feature prominently on the future international agenda.
In that agenda, special attention should also be given to energy conservation. Over the longer term, the challenge is to create a truly global and participatory approach to managing the world´s non-renewable resources.
The recent call by industrial countries for coordinated policy action in the face of rising oil prices is undoubtedly to be welcomed. However, it contrasts sharply with the indifference shown by those countries to similar calls from the developing world when faced with the devastating consequences of falling commodity prices. And indeed, for most commodities exported by developing countries, the depressed prices of 1998 are still with us; the recovery is partial at best. Oil-importing developing countries have thus the worst of both worlds: they pay more for imported oil, but are still getting low prices for their exports. Worst of all, this is taking place against a background of diminishing ODA flows towards the weaker partners in the world economy. Today, ODA disbursements in real terms are at their lowest levels in 20 years. World commodity markets must receive continuous attention, and not only when sharp rises in oil prices threaten to disrupt the leading economies.
Asymmetries and, may I venture to say, double standards prejudicial to developing countries, also exist in the multilateral trading system, notably as regards the balance of mutual rights and obligations, including market access. Redressing such imbalances ought to be seen as a priority before we engage in a new round of trade negotiations.
Pressuring developing countries to further open markets without giving them possibilities to export and find their way out of poverty and underdevelopment is a rather short-sighted approach. The risk is that many developing countries´ markets will cease to exist, as those nations will be unable to obtain the resources needed to pay for their imports of capital goods and technology from industrial countries without increasing their debt. Incurring debt that cannot be repaid from their own resources earned through exports is, as we all know, not an ideal solution either.
The current "post-Seattle stage" is dominated by one main concern: the need to re-establish confidence in the WTO decision-making process. In the next few months, how fast and how effective this confidence-building process proves to be will certainly determine whether the normal dialogue and rule-making work at the WTO can be resumed. But confidence, Mr. Chairman, cannot be restored durably without clear acknowledgment by all trading partners of the need to overcome the imbalances to which I have just referred. To this end, it is essential that any future round of trade negotiations incorporates fully the development concerns in its agenda and priorities.
We must also take a more coordinated approach, one that links trade negotiations with action aimed at strengthening the supply capacity of developing countries, including multilateral financial support. In a recent article in The Economist, Jeffrey Schott of the Institute of International Economics stressed that: "international financial institutions should be directed to coordinate their efforts more closely with the WTO to enable developing countries to take better advantage of the opportunities created by trade pacts; there have been many hortatory declarations in support of such policy coherence, but so far little action".
For developing countries, particularly the least developed ones, enhancing productive capacity remains a major challenge. In meeting this challenge, technology will play a critical role. And I am happy to say that the resurgence of interest in science and technology, especially information and communication technologies, is fully evident in the work of UNCTAD at both the intergovernmental and secretariat levels.
UNCTAD is striving to bring science and technology issues to the forefront of the development dialogue and policy formulation. Through our ground-breaking analytical work, our support to intergovernmental and expert forums including the Trade and Development Board, ECOSOC and the Commission on Science and Technology for Development, as well as our assistance to developing countries in building science and technology capacities, we will continue to play the focal role you have assigned to us.
Let me now turn to the least developed countries, which are facing the greatest challenge of our times: eradicating poverty through sustained development. This challenge, by its very nature, must also be addressed by the international community. As you are well aware, it will be the subject of the forthcoming Third United Nations Conference on the LDCs, to be held in Brussels in May 2001.
Progress made in the last two decades unfortunately does not inspire optimism. While investment flows have attained unprecedented levels, long-term capital flows to LDCs declined in the last decade by about 40 per cent in real per capita terms. This was the result of shrinking ODA, coupled with the failure of most LDCs to attract sufficient private capital inflows to offset the decline.
Compounding this problem is the fact that the majority of LDCs -- which import oil and export primary commodities -- are currently caught in a double bind of high oil prices on the one hand and low and volatile primary commodity prices on the other. The deterioration of the terms of trade has further exacerbated the liquidity shortage, which in turn discourages much-needed investments in the economic and social infrastructure. All of this will have particularly serious implications for a significant number of LDCs that are beset with problems of domestic peace and security.
Moreover, almost two thirds of the LDCs have an unsustainable external debt burden. That burden is undermining aid effectiveness and creating a kind of "aid-and-debt trap" in which the lack of aid effectiveness in turn prevents a durable exit from the debt problem. The HIPC Initiative is important, as it widens the coverage of the types of official debt eligible for relief to include multilateral debt. But current expectations regarding the benefits of the Initiative, even in its enhanced form, are unrealistic. The relief being provided is not just coming too late and too slowly -- a criticism that is already being actively addressed - but rather, the magnitude of assistance is quite simply too little. If the enhanced HIPC Initiative is to retain its credibility and succeed in removing the debt overhang of the world´s poorest countries, a bolder approach is required.
The conclusion I draw from this pessimistic scenario is that, in drafting the new Programme of Action for the LDCs to be adopted next year in Brussels, now more than ever we need concrete and action-oriented solutions. UNCTAD´s Least Developed Countries 2000 Report addresses that concern. It examines the radical rethinking now under way on international development cooperation, a rethinking based on a diagnosis of past policies. But, as the report asks, is that diagnosis correct, or are we making mistakes? In choosing the right policy options for the LDCs, much will depend on this diagnosis. And as the report suggests, a courageous and innovative approach will thus be required at the Third United Nations Conference on the LDCs.
As regards the preparations for the Conference, a four-track preparatory process has been put in place, in line with the relevant provisions of the General Assembly. The process comprises the preparation of national action programmes and of a new Programme of Action for the coming decade; the identification of concrete measures and initiatives in the areas of trade, investment, ODA and the improvement of transportation infrastructure; and the involvement of civil society. The relevant organizations within the UN system have also been fully involved in the process from the outset. In light of the review by the Trade and Development Board last week of a draft outline of the new Programme of Action document TD/B/47/CRP.2, PDF, 5 pp. 19KB], the work of drafting the document has already commenced.
In conclusion, allow me to share with you some views on our work. Following UNCTAD X and in preparing for LDC III, our workload has increased substantially. Our substantive and management capacity are both overstretched. We are doing all we possibly can to meet the increasing demands placed on us, but I am afraid we are reaching a point where we will be unable to meet your expectations unless you act to enhance our ability to fully implement the work programme. I ask Member States to help us meet this challenge. In particular, we need to restore some of the management structures and capacities which have been eroded through successive streamlinings. We must also ensure that the effective implementation of the Bangkok Plan of Action document TD/386, PDF, 52 pp., 175KB] gives our excellent staff a fair chance to pursue their legitimate career aspirations within the United Nations.