IN ADDRESS TO WORLD ECONOMIC FORUM, SECRETARY-GENERAL

SAYS GLOBALIZATION MUST WORK FOR ALL

Following is the text of an address by Secretary-General Kofi Annan in Davos, Switzerland, on 28 January to the World Economic Forum:

Let me begin by thanking our friend Klaus Schwab for his very kind introduction, and for inviting me to Davos again.

Two years ago I spoke here about the fragility of globalization. Some of you probably thought I was being too alarmist. Yet I believe events since then have shown that my concerns were justified.

Our challenge is not the protests we have witnessed, but the public mood they reflect and help to spread. For far too many people in the world today, greater openness looms as a threat -- a threat to their livelihoods, to their ways of life, and to the ability of their governments to serve and protect them. Even when it may be exaggerated or misplaced, “fear has big eyes,” in the words of the Russian proverb. And, we might add, it has the ear of governments, who feel compelled to respond.

But it is not the case that most people would wish to reverse globalization. It is that they aspire to a different and better kind than we have today.

That was the overriding message to come out of the United Nations Millennium Summit last September -- the largest gathering ever of Heads of State and Government. Its purpose was to take a fresh look at the core priorities for the United Nations in the new century. None was ranked higher than the need to make globalization work for all the world’s people.

You in this hall may take for granted that it can and will. But it is a much tougher sell out there, in a world where half of our fellow human beings struggle to survive on less than $2 a day; where less than 10 per cent of the global health research budget is aimed at the health problems afflicting

90 per cent of the world’s population.

Try to imagine what globalization can possibly mean to the half of humanity that has never made or received a telephone call; to the people of sub-Saharan Africa, who have less Internet access than the inhabitants of the borough of Manhattan.

And how do you explain, especially to our young people, why the global system of rules, at the dawn of the twenty-first century, is tougher in protecting intellectual property rights than in protecting fundamental human rights?

My friends, the simple fact of the matter is this: if we cannot make globalization work for all, in the end it will work for none. The unequal distribution of benefits, and the imbalances in global rule-making, which characterize globalization today, inevitably will produce backlash and protectionism. And that, in turn, threatens to undermine and ultimately to unravel the open world economy that has been so painstakingly constructed over the course of the past half-century.

At the Millennium Summit, our Heads of State and Government resolved to close these gaps -- in the case of income inequalities, to halve world poverty by 2015.

But the Summit also acknowledged that governments alone cannot achieve these aims. Accordingly, in their Millennium Declaration, the leaders endorsed the idea of strong partnerships with the private sector and with civil society organizations, working towards the shared goals of all humanity.

Indeed, we have been making good progress in promoting such partnerships. You may recall that two years ago, here at the World Economic Forum, I proposed a Global Compact, inviting business leaders to play their part in building the missing social infrastructure of the new global economy. Today I want to return to that theme, and take it further.

I asked business leaders not to wait for governments to impose new laws, but to take the initiative in improving their own corporate practices. Specifically, I asked you to embrace and enact, within your own firms, nine core principles derived from universally accepted agreements on human rights, labour standards and the environment. And I offered you the help of the appropriate United Nations agencies.

I am glad to say that many business leaders have responded positively. Equally important, they have recognized the value of working with civil society to achieve these goals.

So the Global Compact now includes not only leading companies from around the world, but also the International Confederation of Free Trade Unions, and a dozen or so leading voluntary agencies which are active in upholding human rights, protecting the environment and promoting development. They are working together to identify and promote good practices, and helping, thereby, to drive out bad ones. The Compact is not a regulatory regime or a code of conduct, but a platform for learning and sharing lessons about what works and what doesn’t.

Last July, representatives from all three sectors came to United Nations Headquarters. We agreed how to take the Compact forward and set a target of 1,000 major companies by 2002.

I am very pleased to announce today that Göran Lindahl, who recently stepped down as the chief executive of ABB, has agreed to lead this corporate recruitment effort and to provide strategic guidance as my special adviser on the Global Compact. He brings to this challenge not only a very successful business career, but also a strong commitment to corporate social responsibility and citizenship.

The Compact has also inspired many tangible projects, ranging from investment promotion in the least developed countries to human rights promotion in and around the workplace. But there is much more that we can do to ensure that the opportunities of globalization are more widely enjoyed and appreciated.

In many parts of the world the biggest obstacle to social and economic progress is violent, disruptive conflict.

This, of course, is primarily the responsibility of governments. But private companies operating in these unhappy regions should be very careful to act responsibly, in ways that improve the chances of peace, or at least do not fuel the continuation of conflict. De Beers has set an example, with its response to criticism of the diamond trade in Africa and its efforts to ensure that traders and consumers of diamonds will no longer unwittingly help to finance warlords. Within the Global Compact, we are about to launch our first thematic dialogue, seeking to establish a common understanding among the various stakeholders as to the appropriate roles companies can and should play in zones of conflict.

I believe that the Global Compact is an exciting venture that can help change the world, even if only in small steps. So I hope all of you business leaders here today, if you are not already involved in it, will soon join us.

And I hope equally that those of you from civil society organizations who have criticized the Compact will come to understand that for us at the United Nations, engaging with the private sector is not an option. It is an imperative

-- in this and other endeavours. We must engage all relevant social actors who can make a difference.

Only through effective partnerships can we beat back endemic or epidemic disease, which is such an unmerciful enemy of normal life in developing countries. I am not sure that any of us has yet grasped the full horror of the HIV/AIDS pandemic in Africa, either in its human or its economic dimensions. In some countries it has devastated entire generations. That puts an overwhelming obligation on all of us to do whatever we can to help those already infected, and above all to halt the spread of the virus.

Similarly, investment, not just in medicine but also across the board, is of decisive importance for the developing world. The only developing countries that really are developing are those that have succeeded in attracting significant amounts of direct foreign investment, as well as mobilizing the savings and resources of their own citizens.

Unfortunately, that is only a relative handful of countries. The rest of the developing world, and especially the least developed countries, is almost entirely missing out -- in spite of the fact that many of them have put in place highly welcoming regulatory frameworks for foreign investment, and are making extra efforts to attract it.

If they have not succeeded, it is often because they lack the necessary infrastructure, or because their market is too small and too isolated to be of interest. Local markets have to compete in the global market, and it is unforgiving.

Here, too, international companies could help change this, by working together, and working with governments, to reduce the risks and costs of doing business in the least developed countries, and to disseminate information about the investment opportunities there.

Another critical area where partnerships could make an enormous difference to developing countries is information technology. I have set up a small group of advisers to help find ways of bridging the "digital divide" -- many of whom are present here today. My special thanks to them, and to all the others who have agreed to work with me on this issue, which I believe is crucial for the future of many poor countries.

The advocacy role of business leaders is equally important. To participate more effectively in the global economy, developing countries need, above all:

-- faster and more generous debt relief;

-- increased official development assistance, carefully targeted to make poor countries more attractive as investment destinations;

-- and the full opening of rich countries’ markets to poor countries’ products.

These broader social roles, of partner and advocate, may be relatively novel for the corporate world, but they can no longer be separated cleanly from the standard business model, nor can they be reduced to a question of philanthropy. Companies are learning that, as markets have gone global, so, too, must the concept and practice of corporate social responsibility. And they are discovering that doing the right thing, at the end of the day, is actually good for business.

In other words, the fragility of globalization that I have spoken about poses a direct challenge to the self-interest of the corporate sector, and a central part of the solution is the need for you to accept the obligations -- not merely the opportunities -- of global citizenship.

Indeed, all of you here -- leaders from business and civil society organizations alike -- must come to realize that you represent the vanguard of tomorrow’s global society, in which markets must be open, but open markets must be fully underpinned by shared values and global solidarity. You are the first truly global citizens, and only you can give meaning to that term through your actions and advocacy to ensure everyone, rich and poor alike, has the chance to benefit from globalization.

In doing so, my friends, you have my full support, and that of the United Nations.

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