Rich can’t forever “fence out” the poor, says Ricupero

Geneva, 2 July (Chakravarthi Raghavan) - The rich countries can fence themselves in by erecting trade barriers, immigration and other walls around themselves, but they cannot forever fence out the poor, and need to show decisive and responsible leadership to deal with the problems of the Third World countries - be it the financial crises or development-friendly trading system or slashing extreme poverty, UNCTAD Secretary-General Rubens Ricupero, told the ECOSOC high-level segment Monday.

Ricupero was speaking at the policy dialogue session at the High-Level segment of the United Nations Economic and Social Council (ECOSOC).

Earlier, the meeting heard the US Treasury Secretary, Paul H. O’Neill, speaking of his recent trip to Africa and on the need to increase aid to meet achievable objectives there - clean water, primary education and attacking AIDS - and the US intended programs for this.

Also, speaking at the meeting earlier were the IMF Managing Director Horst Kohler and the World Bank’s Managing Director, Dr. Mamphela Ramphele. Kohler spoke about transforming the Monterrey consensus (at the UN Summit on Financing for Development) into concrete actions and measurable results to achieve the UN Millennium Development goals, mixing it for good measure with homilies on good governance and sound economic policies, and the World Bank-IMF Poverty Reduction Strategy Programmes. He also adverted to the “Enron collapse and the WorldCom scandal” to speak about the need to address “risks and vulnerabilities” in the advanced countries. Ramphele for his part spoke of the three building blocks of the Millennium Development Goals, the ‘emerging global development compact,’ and implementation as the path to development effectiveness.

None of the three (at least from their prepared remarks) demonstrated an awareness of the world outside, where the very fundamentals of transnational corporate global capitalism and the misgovernance of corporations helped by their friends in governments, were being challenged.

Ricupero in his speech shattered the ‘reassuring view’ presented by earlier speakers, and contrasted the state of the world now with that of the 1990s, when the Berlin Wall was demolished by people with their bare hands and makeshift tools, creating a visual symbol of the exhilarating promises of the 1990s. “It was an era to abolish all barriers—barriers dividing people, by ending apartheid and the ideological confrontation of the Cold War, and barriers dividing economies, through globalization and liberalization.”

But 12 years later, said Ricupero, “the barriers are returning, with statesmen discussing how to erect legal and political walls against economic refugees and poor immigrants, Governments planning fences against suicide terrorists and rich countries raising new barriers to steel, agricultural and other sensitive imports.”

Not all walls are alike, and they can form a prison or a cage, as in Berlin, or they can provide necessary defense or protection; but whether justified or not, “they are almost always an admission of failure to find lasting solutions to the problems at hand,” he said.

But, “one of the “most insidious types of walls is the barriers we build inside our minds against unpleasant realities and immovable problems,” Ricupero said, and referred to the unsuccessful efforts that he and others made at Monterrey (FfD meet) “to draw the world’s attention to the despair and suffering of the millions of innocent Argentineans” who were being punished by the misdeeds of’ their Governments. “Many of us urged prompt action to avoid the contagion,” he said, but now, more than three months later, the disease has spread, to Uruguay, Paraguay, Brazil, and other Latin American countries.

In Argentina, “the sense of hopelessness and abandon is fast evolving into dark and chaotic agony.” He was aware that there were “no simplistic, miraculous cures,” nor was he playing the blame game.

“But in the face of such manmade catastrophes, our first and most urgent action should be to relieve the suffering and contain the damage. Even after several episodes of painful crises in emerging markets, the international community still lacks a realistic strategy for dealing with financial instability and the debt problem.

“Just ‘muddling through’ cost Latin America a lost decade in the 1980s; and a similar lack of orderly procedures for handling international debt has now been exposed in Argentina. Uncertainty continues to surround the modalities of official intervention in the financial crises, adding to volatility in market sentiment. Current arrangements appear to encourage pro-cyclical policy responses, which risks only deepening the crises. It is time to end such ad hoc approaches and to get on with a genuine reform of the international financial architecture. Only multilateral action can effectively deal with the debt problem, only cooperation among the major economic powers can deliver the degree of currency stability needed by developing countries to ensure that trade and financial flows complement their domestic efforts.”

Referring to trade issues, Ricupero said that trade had always been one of the channels for transmitting recessions in the industrial countries to the developing countries. A recurrence of this phenomenon was seen just last year, when the US economic slowdown was the central reason for the sharpest contraction in trade performance worldwide since 1982, “with the loss in value three times higher than the reduction in volume, hitting the commodity-exporting developing countries particularly hard.”

“More than ever, the international community as a whole, and not least the developing countries,” said Ricupero, “needs a strong multilateral trading system and the successful delivery of the Doha promises to inject as much growth and development potential as possible into the negotiations. This is why we were dismayed by recent threats to those promises arising from a disturbing sequence of protectionist measures.”

Referring to his views, in a contribution to a book, about the paradoxical situation after the Uruguay Round, of developing countries having finally persuaded themselves that they should be among the staunchest defenders of’ multilateralism, since they needed it, if not more than the others, because of “their vulnerability and lack of power”, but that they could do little to save it on their own, the UNCTAD head added: “this is as true today as it was then.”

“We must all resist protectionism everywhere, but it is only the major trading powers, which account for the largest share of world trade, that can really make a difference, by exercising responsible leadership,” Ricupero said. Among the main victims of the shortcomings of the trading system are the commodity-dependent Least Developed Countries, “caught in a poverty trap in which, like the snake devouring its own tail, pervasive poverty ends up perpetuating itself.”

The recent UNCTAD’s LDC Report 2002, had shown that the proportion of the population living on less than a dollar a day had been underestimated in the poorest countries, particularly in Africa, and the number of people living in extreme poverty in those nations had actually doubled in the past 30 years. But the Report also demonstrated that “there is a golden opportunity to radically change the situation because at very low levels of income per capita, a doubling of average household incomes can rapidly slash $1-a-day poverty rates.”

The report had also argued that the way forward was “with national policies that are development-oriented and outward-looking,” with the LDCs seeking “to manage integration with the world economy through trade and investment.”

But to be successful, “these policies need to be complemented by increased debt relief; more, and more effective, aid; a renewal and recasting of international commodity policy; and greater South-South cooperation.”

In each of these three challenges - financial crises in Argentina and Latin America, the negotiation of a more development- friendly trading system, and achieving the Millennium Development Goal of slashing extreme poverty in the poorest countries—“we need the decisive and responsible leadership of those who have the power to create a tolerant, pluralistic and generous multilateral agenda.”

“It is much better to take this road than to put up more trade walls and financial fences, however strong and invulnerable they may look,” he said,  adding the warning in the words of Gildor, the elf, in the novel The Lord of the Rings, “The wide world is all about you: You can fence yourselves in, but you cannot forever fence it out”. – SUNS5153

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