Mr. Arun Shourie
Minister for Privatisation

International Conference on Financing for Development 

Monterrey, Mexico
22 March 2002

Mr. President,
First of all, please accept our deep appreciation for the warm hospitality of the Government and people of Mexico, and for all the work they have put in to make this Conference such a success.

Mr. President,
We have had an extensive, open and rewarding encounter over the week about the ways we wish to shape our collective future. Recent events have reminded us, the Conference has underscored, that our future is indivisible. When we hear of a catastrophic train wreck, Mr. President, we do not ask how many people were traveling first class. It is no different for human society on planet earth. Today this realization unites us, and with this Conference we have taken a big stride in delineating what steps should be taken to safeguard, and fashion that future.

We believe that following are among the contours of the "new partnership" that is envisaged in the Monterrey consensus document.

First and foremost, the primary responsibility for improving the state of our affairs lies with our own societies. We have to mobilize our own resources in greater measure. We have to ensure that those resources, as well as what is received by way of aid, is used better.

Nor do I detect, Sir, the moral hazard that some others do in linking aid - like devolutions within our own governmental structures -- to performance. The argument seems to be that the enforcement of performance criteria will inflict hardship on ordinary people, specially the poor - who are in no way responsible for malfeasance or inefficiency. The recipient country should be the most concerned, as it is the most affected, by the conduct that leads to those resources being wasted or siphoned off. Given the vast pool of talent and experience that is available in the development community and in our countries, I am sure it is possible to devise criteria that achieve both objectives simultaneously: they help improve conduct, and at the same time insulate the people at large. Such criteria will ensure that resources are better used, and therefore the resistance to raising resources for aid will be softened; and the people in our societies - the poorest most of all - will reap greater benefits from those resources.

We must own up to and scrutinize our own working: it is entirely right, of course, to remind others of what they are doing, of what more they should be and are not doing, but we too must own up to what we inflict on our own people.

True, many things remind everyone today of how intertwined their fate is with that of others. The consequences of a territory and of resources becoming available to terrorists, of a breakdown of public health systems in one region, of a polluting industry, affect people far and wide. This has quickened compassion and concern. But we cannot bank on this as a solution. Each society has enough problems of its own to contend with and to meet them. And no one owes us a living.

That is what I would want people from countries like mine to be mindful of, with whom I am one.

My counsel to friends from the developed world is naturally the converse! That today there is a net transfer of resources from many poorer countries to the North is a grave reproach. A house with such vast chasms between rooms cannot stand, any more than one divided against itself - indeed, such a house is bound to be not a dwelling at all.

But those chasms cannot be bridged, the campaign against the impoverishment and indignity that afflict vast sections of humanity cannot be won, without resources. It was well said at the time the size of the Marshall Plan was being debated that it is no use extending a ten feet rope to a person drowning in twenty feet of water. The target of assistance established three decades ago is not an excessive call on the means of rich countries.

The announcements that have been made by the United States and by the EU are most welcome. They are the "headline news" of this Conference. But we must also remember that they are but a fourth or fifth of what panel after panel has estimated is required for meeting just the Millennium Goals: Goals to which the Heads of State and Government of the world committed themselves in the General Assembly, Goals which themselves are modest as can be.

We must proceed on the assessment of the leaders of the US and EU that this is the most that the peoples in those countries can be persuaded to part with in the coming years by way of aid. That assessment redoubles the argument for innovative methods of raising resources. A variety of them have been broached and others can be devised. Many involve small levies but generate enormous amounts through the volume of transactions they catch. We should not long postpone seriously evaluating these proposals: adopting them will raise resources, of course; it will also help change the content and direction of "growth".

We do hope that a substantial part of these enhanced flows will be channeled through multilateral development agencies, including the regional banks. These agencies have done exemplary work. They have pervasive acquaintance with countries and societies that need to be helped. Every dollar that they get, they can leverage to mobilize three dollars from private funds. And they manifestly do not have the resources that the tasks that have been assigned to them require. Can the current funds at the disposal of the IMF meet the typhoons that sweep financial markets these days? Are the funds and programmes of the United Nations not struggling for more resources? Surely the World Bank can expand its operations.

In their turn, the multilateral agencies should deepen the introspection they have commenced about the policies and conditions they have been prescribing. Were the conditions appropriate? Were they too onerous or too numerous? What was the assessment of these agencies of countries in South East Asia, what had they concluded about Argentina -- just before these countries went into a tailspin? Surely, each of twelve revival packages to a country must have been justified on the ground that it would lead to a string of improvements. What happened in fact? This introspection should probe deeper, as I said. And the results should be made public as well. Few measures will build confidence in the expertise of these vital institutions as doing so will.

Important measures have been proposed at the Conference. Important proposals have been advanced, important announcements made to enhance the flow of aid. Everyone has also stressed that the important thing now is to implement them. Sir, even as we urge closer monitoring of development programmes, we should set up a mechanism, a device for monitoring the implementation of what is agreed upon at our gatherings. In the last few years we have had the Rio Summit on the environment, and the one in Kyoto. We have had the conference on population and development in Cairo, the one on women in Beijing, on human rights in Vienna, on the social agenda in Copenhagen, on the habitat in Istanbul, there has been the UN meeting on small arms, the General Assembly has met and agreed upon Millennium Development Goals. We will soon be meeting in Johannesburg to consider ways to make development sustainable. We should task a group of experts to prepare an annual "Action Taken Report" - with a chapter per conference - that sets out the decisions that were taken at the conference, and what has been done in regard to each decision and goal.

Another factor affects the quantum of resources that are ultimately available for development: corruption. The donors complain that leaders and civil servants of the poor countries eat away the funds. The latter point out that the firms that bribe are from the rich countries, that the funds soon find their way back to banks and properties in the latter. Either way, concerted, cooperative action is required. After 9/11, information is being exchanged about financial operations of terrorist groups. Exactly the same sort of cooperation should be instituted to exhume moneys spirited away from poor countries. To invoke bank secrecy laws in this regard, and simultaneously to engage in elaborate debates about amounts that can be made available for aid, is to mock the poor who have been robbed - as it is to mock taxpayers in the richer countries from whose contributions aid is being financed.

As important as the quantum of funds is access to markets of the North. Removal of tariff and subsidy protection in even a few sectors will release a vast flood of sustained resources for the South through exports: the subsidies to agriculture alone that are given in the rich countries exceed one billion dollars a day. You will recall that till just a few years ago India was dependent on food imports. Today, government godowns alone have more than sixty million tones of foodgrain stocks. That is far more than we require for food security. But as we cannot export them - because of non-tariff barriers and because of the effects subsidies in the potential markets have on prices there -- the stocks are becoming a heavy burden on governmental finances. We must also bear in mind that acute misgivings have been expressed about many features of and about the impact of globalization. The one way to allay these is to ensure that there is globalization not only of markets in the South and of capital flows, but also globalization of equity and opportunity everywhere.

Mr. President, great emphasis has been placed in our deliberations on creating conditions that would enable and induce private capital to flow to developing countries. That is but right. And the fact is that many a developing country is striving today to become an attractive investment destination. Indeed, there is a competition to outdo each other in this regard. Our countries recognise that it is not enough to lift barriers to foreign direct investment. Today they actively woo it.

Private capital will be effective - and it will be most naturally welcomed -- when it works to produce goods that meet the felt needs of the people in those countries - rather than when it merely replicates goods which have sold well in rich societies, and when it churns them out with technologies devised for the vastly different factor proportions of those latter countries. It will be effective - and it will be most naturally welcomed - when it comes for long-term engagement, rather than when it is merely seeking to profit quickly from differentials in interest rates or exchange rates.
There is also a telling irony. The reason the market is thought of so highly is that it compels all who enter it to be efficient. It exposes them to the peril of failure. Bearing risks is of the very essence of a market economy - and in the rich, developed countries private firms combat risk at every turn. But ever so often when these very firms come to developing countries, they demand -- and are often able to wrest - agreements by which host governments take over the full risks that they may encounter down the road. We have placed great emphasis in our deliberations on good governance, and coherence. Good corporate governance is as important, as is coherence between the goals private capital pursues and the needs of our people.

Sir, we greatly welcome the partnership between governments, global economic institutions, business and civil society which has been one of the hallmarks of this conference - as it was of the process leading up to the meeting. The cooperation must continue along the constructive lines we have seen. Fashioning performance criteria that will nail the conduct that needs to be altered, preparing an annual audit that documents what action has been taken on the results of each of the dozen conferences like this one that have been held during the last decade - there is enough work for all of us, it is work that is best done by our working together.

Mr. President, the United Nations and its allied bodies have a special and central role in this global engagement. We consider the multilateral processes we collectively generate within the United Nations, as in this Conference, as a global public good which we must preserve and advance. We regard the institution of the United Nations itself as the principal global public good in its own right, as both the symbol of universality and the vehicle for the delivery of our aspirations. Let us cherish it and strengthen its democratic working.

In conclusion, Mr. President, the tasks that our deliberations have thrown up brook no delay. We should attend to them -- as the Buddhist savants would say - with the urgency of a person whose hair is on fire.

On behalf of the participants from India, I thank you once again.

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