The Honourable Timothy Harris
Minister of Foreign Affairs

at the
International Conference on Financing for Development

Monterrey, Mexico
March 21-22, 2002

Mr. Chairman; His Excellency Mr. Kofi Annan - Secretary General of the United Nations; His Excellency Mr. Vincent Fox - President of Mexico, my fellow Heads of Delegations; Distinguished Guests; ladies and gentlemen.

St. Kitts and Nevis looks to the outcome of this Conference with great hope and anticipation. It is our desire that this Conference brings before the international community, the whole range of issues related to globalization and trade liberalization that threaten the very survival of small island states such as the member countries of the Organization of Eastern Caribbean States (OECS). We hope that the ventilation of these issues will spur international decision-makers to action, and will result in the transfer of resources between nations in a manner that would ensure that the fruits of globalization are equitably shared.

Of course, we are committed to the view that each country must play the lead role in mobilizing the resources necessary for its own development. Hence, the members of the OECS, including St. Kitts and Nevis, have been busy integrating and developing their capital markets as a means of enhancing domestic resource mobilization and attracting foreign capital. Indeed, over the years, we built a solid platform from which to launch our capital market development initiative. In particular, our economic performance was characterized by impressive real economic growth rates, fiscal surpluses, low levels of inflation, a stable currency and the accumulation of healthy levels of external reserves.

However, in recent times, it has become increasingly evident that, in the global village that is emerging, external developments and actions assume even greater importance than domestic policies and decisions, in determining the economic performance of small island states. Specifically, the watering down of the preferences that our goods enjoy in international markets has devastated banana farmers and has brought our sugar industry to the brink of economic collapse.

We ventured into international financial services as a means of diversifying our economy and supplementing our income but the unilateral action of the OECD, through its harmful tax competition initiative, has stifled the growth of this sector, notwithstanding our recent removal from the OECD list of uncooperative nations. We have held dearly to the tourism sector that has delivered substantial foreign exchange earnings and numerous job opportunities, but within a month of the senseless and gruesome terrorist act on September 11, tourism earnings had declined by as much as 40% and we are still struggling to accelerate the recovery process. These problems have combined with a spate of natural disasters and a volcanic eruption in one our member territories, to generate large fiscal deficits and push debt levels well beyond the targets that we had set ourselves.

There are many lessons that may be learnt from the experience of the Eastern Caribbean States. In the first place, globalization dramatically increases the risk to which the already vulnerable small island states are exposed. Indeed we are like small crafts in a vast and turbulent ocean. Unfortunately though, in the sea of globalization there are no small craft advisories. Moreover, the resources required to bolster our economies and mitigate the risk associated with globalization are well beyond the capability of our tiny fragile economies, especially during this period when we must restructure our economies and embark on a path of transition and reform. Our experience suggests that there is a strong case for the enhancement of the levels of development assistance to developing countries. We do not view development assistance as a "hand out" but we view it as part of the cost of securing a peaceful, harmonious and stable world community to the benefit of citizens of rich and poor countries alike. We therefore lend our fullest support to the call for a doubling of development assistance in a three-year period.

Secondly, the devices employed to assist small island states traverse the stormy waters of globalization must be preemptive rather than reactive. In particular, the member countries of the OECS need help now. We simply cannot afford to wait for an economic crisis or disaster before concerted action is taken. The rate at which we have been forced to accumulate debt suggests that the distinction between middle income and low income countries is artificial in the context of a fast paced global economy, and that even middle income countries may be in need of substantial resource transfers to avert crises and economic malady.

We feel strongly that the international community must not only devote resources to the alleviation of the problems of HIPIC countries, but must also do everything in its power to ensure that the list of HIPIC countries is not expanded through the addition of other developing countries, including a number of countries that are now labeled as middle income countries. In fact, in view of the high cost of crises and the risk of contamination in a global economy, we are convinced that multilateral financial institutions must reorient their operations to focus more on crisis prevention and less on crisis management.

Finally, Mr. Chairman, we believe that this Conference must initiate the process of putting in place mechanisms for equitably sharing the spoils of globalization. There is no doubt the globalization, by promoting the more efficient allocation and utilization of resources, will yield great benefits. However, what is at issue, and what is generating much fear among people all over the world is the question of "who wins and who loses". Unless we can construct devices that facilitate the transfer of resources, through Official Development Assistance and other means, and assure our people that we will all be winners, the wheels of globalization may grind to a halt because of the fears and uncertainties of the people to whom we are ultimately responsible.

Mr. Chairman, I thank you.

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