Group of 77: Financial stability needs multilateral cooperation

The Group of 77 chapters has called for strengthened South- South cooperation, supported by the international community, to bring about an enabling global environment that not only facilitates growth but is also conducive to the equitable distribution of resources. This call emerged from a communique adopted at their recent meeting in Geneva on 24-26 March.

by Chakravarthi Raghavan

GENEVA: Strengthened regional and multilateral cooperation has a central role to play in maintaining financial stability and preventing a negative impact on growth and development, the Group of 77 chapters declared here in a reference to the so- called Asian crisis.

A communique adopted at the 24th meeting of the Chairmen/Coordinators of the G77 chapters held here on 24-26 March, and issued on 27 March, expressed the Group's deep concern over the crisis and its effects, alluding to it as "the recent crises in the currencies of some members of the Group, and the adverse impacts on their economic stability, growth, trade and development prospects."

In the communique, the G77 chapters expressed strong support for the final declaration issued by the Special Ministerial Meeting of the Group of 24, held in Caracas, 7-9 February. That communique called for, among others, a wide-ranging review by a task force of industrial and developing countries of a range of issues relating to international monetary and financial institutions and systems, and greater developing country involvement in decision-making.

The chapters also stressed that in the context of rapid globalization, it was essential to ensure coherence of global macro-economic policies, and formulate international trade, financial and development policies in such a way as to complement and reinforce each other.

"Contradictory trends, such as lowering of existing market access barriers on the one hand and erection by developed countries of new barriers in the guise of environmental and social standards on the other, must be resolved", the communique said. "Any linkage between trade and such standards is inacceptable. The issue of environmental and labour standards should be dealt with only by the competent bodies and should not be raised in international trade fora."

Conducive international environment

Earlier, the communique underlined that developing countries, confronted with enormous challenges as a result of the new trade and financial regimes and the compulsion to restructure their economies, need to strive together to achieve common goals of equitable development.

A strong commitment to the objectives and principles of the Group of is especially relevant in the context of the profound changes unleashed by the globalization process, the G77 said, adding:

"We are of the view that increased global competition does not automatically bring about faster growth and development, nor does growth automatically reduce inequality. The liberalization of an economy is in itself not sufficient assurance that growth and development will follow. Such growth and development requires an enabling international environment which can promote growth with equity to the benefit of all..."

The G77 chapters expressed grave concern that the commitments of developed countries at various UN conferences and summits were not being fully honoured, and cautioned against approaches seeking to implement the outcomes of summits "selectively".

"The focus cannot be only on governance aspects and social issues, thereby excluding the international community's obligations in areas such as providing greater market access, easing debt burdens, and promoting financial flows and technology transfers."

The communique reiterated the need for strong commitment by the international community to provide adequate and additional resources to accelerate sustained economic growth in developing countries, including a substantial increase in official development assistance (ODA) and the Group's concern over the lack of political will in some developed countries to reverse the declining trends of such assistance.

Expressing concern over the chronic financial crisis confronting the UN due to the failure of Members, particularly major contributors, to comply with their financial obligations in full, on time and without conditions, the chapters fully supported the efforts of the Secretary-General of the UN to solve the financial situation.

While also supporting the ongoing reform process of the UN, the G77 chapters insisted that the reform of the secretariat should be in accordance with the UN resolutions which:

  • stress that the restructuring should be with the objective of enhancing the effective implementation of the Charter,

  • emphasize the prerogative of the General Assembly in the creation, transfer and abolition of posts, and

  • assert the principle of equitable geographical representation in the staffing of the secretariat and preclude the monopoly on senior posts of any State or group of States.

Intensifying South-South cooperation

Calling for strengthened South-South cooperation, the G77 chapters said while efforts to promote this are increasing, there is a need to consolidate the on-going efforts, further increase the resources and identify priorities for such cooperation.

In this regard, the chapters' meeting welcomed the initiative of holding on 1-3 June in Jakarta a high-level advisory meeting to prepare for the South Summit. Such a summit was called for by the G77 Ministerial meeting in New York in September 1997.

The chapters also supported the high-level conference on sub-regional and regional economic integration (to be held in Bali, Indonesia on 10-14 August), the 10th session of the Intergovernmental Follow-up and Coordination Committee on ECDC (to be held in Africa in September), and the efforts of the G77 Chambers of Commerce and Industry of developing countries to promote South-South cooperation. Also endorsed were the Agreement for a Global System of Trade Preferences (GSTP) among developing countries and the ongoing Second Round of these negotiations.

The communique welcomed the results achieved so far by the Perez-Guerrero Trust Fund (PGTF) for Economic and Technical Cooperation Among Developing Countries (ECDC/TCDC), and supported efforts to expand the PGTF core resources, including by eliciting contributions from potential donors.

The G77 chapters also expressed concern over the weakening of the UN Environment Programme (UNEP) and the UN Conference on Human Settlements (HABITAT) and the increasing dispersal of secretariats dealing with multilateral environmental agreements.

In other pronouncements, the chapters:

  • recognized the role of UNCTAD as the principal forum of the UN for the integrated treatment of development and related issues in the areas of trade, finance, technology, investment and sustainable development,

  • supported the efforts of the G77 Geneva chapter to develop a positive agenda for future trade negotiations and the central role of UNCTAD in continuing to provide support to developing countries for ongoing and future trade negotiations, and

  • reiterated support for the activities of, among others, of the UN Educational, Scientific, and Cultural Organization (UNESCO), the UN Industrial Development Organization (UNIDO), the Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP).

(Third World Economics No. 182, 1-15 April 1998)

Chakravarthi Raghavan is the Chief Editor of the South-North Development Monitor (SUNS)from which the above article first appeared.