In special address to UNCTAD member States and observers, he also urges"unified and clear policies" to help world recover from financial crisis
Geneva, 27 January 2011 - Financial speculators seeking profits from fluctuations in commodity prices "24/7, with no authority around the world able to intervene and supervise" have led in recent years "to price behaviour patterns that are incomprehensible for many and certainly a big bother for all of us," President Leonel Fernández of the Dominican Republic said Wednesday in a special address to UNCTAD member States.
President Fernández said a United States law soon to take effect that is intended to limit such speculation, and indications that the G-20 group of nations will discuss the issue, are hopeful signs. He added, however, that the topic also should be addressed by the United Nations. "Let´s not forget that true global governance is the General Assembly, which is the G-192," he said. He noted that UNCTAD will stage its second Global Commodities Forum next week, from 31 January to 1 February, with a focus on just such volatility in commodity prices.
Mr. Fernandez spoke during a special address to UNCTAD member States and observers.
The President said speculation appears to be playing a role in distorting prices for oil and various staple foods in recent years. Terming the matter extremely important for developing countries, he said that stable and reasonable food and energy prices - and progress in poverty reduction - are vital for social stability and democratic governance. "We all know that when commodity prices rise in developing countries, social disturbance is the result."
Focus on the global financial crisis has dominated the international community for the past two years, Mr. Fernández said. "All the debate has led us to forget that this financial crisis was preceded by another crisis - the crisis of rising prices in basic commodities and foodstuffs." Almost as bad was the unpredictability of prices, he said, since that makes it hard for governments in poorer nations to plan effectively to protect their populations.
In June 2008, the price of oil rose to $147 per barrel, only to fall a few months later to $40, Mr. Fernández said. Now prices are climbing again - for oil and for such foods as wheat and maize. Reasons include rising demand from the world´s growing middle class and various restrictions in supply caused by such events as droughts, cyclones and the effects of global warming, he noted. But he added that commodities speculation is a major factor that has not received enough attention. Commodities futures trading in the past was a way of smoothing out fluctuations to help producers and consumers, but "recently, this pattern no longer involves physical producers and consumers of commodities but other investors who have nothing to do with such goods" and are only interested in profits, he said.
On the subject of international responses to the financial crisis, the Dominican President said that "in Europe, the priority has been given to reducing debt," while in the United States, there has been "increased spending to generate economic growth and initiate a recovery."
"When we have opposite poles like this within the G-20… obviously what we need are unified and clear policies to get the world out of the crisis situation," he said.
Mr. Fernández concluded by calling for UNCTAD and other international institutions to "play a key positive role in putting the globe on the path to prosperity and well-being."
Introducing the Dominican President, UNCTAD Secretary-General Supachai Panitchpakdi noted that Mr. Fernández, now serving his third term in office, has "helped enhance Dominican participation in hemispheric forums such as the Organization of American States and the Summit of the Americas." Mr. Supachai went on to say that Mr. Fernández presided over economic reforms during his first term in office (1996-2000) that enabled the Dominican economy to enjoy an average growth rate of 7 per cent, the highest in Latin America.
