ECONOMIC AND SOCIAL COUNCIL OPENS HIGH-LEVEL SEGMENT OF SUBSTANTIVE SESSION AT HEADQUARTERS ON THEME ‘ACHIEVING SUSTAINABLE DEVELOPMENT’
ECONOMIC AND SOCIAL COUNCIL OPENS HIGH-LEVEL SEGMENT OF SUBSTANTIVE SESSION AT HEADQUARTERS ON THEME ‘ACHIEVING SUSTAINABLE DEVELOPMENT’
|Department of Public Information • News and Media Division • New York|
Economic and Social Council
2008 Substantive Session
12th Meeting (AM)
ECONOMIC AND SOCIAL COUNCIL OPENS HIGH-LEVEL SEGMENT OF SUBSTANTIVE SESSION
AT HEADQUARTERS ON THEME ‘ACHIEVING SUSTAINABLE DEVELOPMENT’
President Says Rising Commodity Prices, Deepening Income Disparities,
Climate Change ‘Serious Threats to Our Efforts to Lift People Out of Poverty’
With soaring commodity prices and the onset of global warming threatening to undo hard-won progress made to alleviate poverty in the developing world, the President of the Economic and Social Council today urged national Governments and the United Nations system to collaborate on integrated approaches to development that placed sustainability at the core of coherent economic growth strategies.
Council President Léo Mérorès, of Haiti, said that the 54-member body, which opened the high-level segment of its annual substantive session in New York today, was meeting as recent global prosperity and economic growth was being pressured by rising food and oil prices, deeper income disparities, and increased competition for resources. “We are facing serious threats to our efforts to lift people out of poverty,” he said, adding that those challenges were further compounded by climate change and the more frequent and more intense storms, floods and droughts that came with it.
This year’s Annual Ministerial Review, which traditionally kicks off the Council’s month-long session, would contribute to promoting collective solutions, including strengthening governance and global cooperation, increasing financial assistance and promoting technology transfer, he said. The two-day Review would also bolster current efforts to better integrate the three elements of sustainable development -- economic growth, social development and environmental protection -- because, he said: “It seems that if development is not sustainable, it will not be attainable.”
He also said that with uncertainty growing about the achievement of the Millennium Development Goals, the Council’s Development Cooperation Forum, which held its first biennial meeting today, was envisioned as a United Nations forum for ensuring coherence in cooperation towards attaining globally agreed development targets. The Forum was uniquely placed to bring together a wide range of development actors and, therefore, had the potential to be a leading venue for inclusive global dialogue and policy review on key development issues.
Under-Secretary-General of Economic and Social Affairs Sha Zukang, who delivered a message on behalf of the United Nations Secretary-General, noted that this was “a critical juncture” in the implementation of the United Nations development agenda. The fragile state of the major developed market economies, and broader economic turbulence were slowing global economic growth, while rising food and energy prices were hitting the poor and vulnerable especially hard.
Urgent collective action was needed, particularly to address global economic imbalances and widespread scepticism about globalization, which many felt was leaving behind the most vulnerable and increasing economic insecurity among the middle classes. “No social or economic order is secure if it fails to benefit the majority of those who live under it,” he said, adding that: “This session of ECOSOC should give new impetus to the realization of our long-standing goal of achieving economic growth, social development and environmental protection in an integrated and balanced manner, which is the key to the prosperity of humankind.”
Today’s opening session also featured keynote addresses by Rajendra K. Pachauri, Chairman of the Intergovernmental Panel on Climate Change, the Nobel-prize winning group of scientists tasked with studying human activity’s effects on the environment; and Lord Stern of Brentford, economist and author of the Stern Review on the Economics of Climate Change, the groundbreaking 2006 report that assessed the effect of climate change and global warming on the world economy.
“We’re all in this together,” said Lord Stern, outlining the key elements of a global framework to tackle climate change. The targets of such a framework would include worldwide cuts in emissions by 50 per cent by 2050, with rich countries cutting at least 80 per cent. Developing countries should take on targets by, at latest, 2020, as rich countries demonstrated low-carbon growth, lived up to funding agreements, and shared technologies.
He cautioned that any new deal must not “be like a WTO deal where nobody does anything until everybody agreed on everything. We don’t have that kind time.” There was a need to accelerate public policy design, and research and technology development, and to generate the political will to put policies into action, especially towards low carbon growth. The new framework for action required each individual country to start acting now, with the understanding that other countries would come along. The effort depended on global political leadership and would involve the largest collaborative effort the world had ever seen.
Also today, the Council held a high-level policy dialogue with international financial and trade institutions on current developments in the world economy that featured statements from: Supachai Panitchpakdi, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD); Murilo Portugal, Deputy Managing Director of the International Monetary Fund; Justin Lin, Senior Vice-President and Chief Economist of the World Bank; Valentine Rugwabiza, Deputy Director-General of the World Trade Organization; Ricardo French-Davis, Chairman of the Committee for Development Policy; Achim Steiner, Executive Director of the United Nations Environment Programme; and Mr. Sha.
Ms. Rugwabiza said that, while the WTO’s Doha Development round could not provide immediate solutions to many problems, its successful conclusion could form part of the midterm solutions to help put the world back on the path of economic growth. But, differences would have to be bridged, and every attempt be made to push the limits of political will and to strive for the adoption of the modalities in agriculture and non-agricultural goods by the end of next month.
Indeed, Mr. Panitchpakdi cautioned that, although the world was now standing at the threshold of a breakthrough for this round of negotiations, a breakthrough had to be made by July or a crucial window would close.
In other business, the Council approved its working documents, including its provisional agenda (document/E/2008/100), proposed programme of work (document E/2008/L.5) and the status of documentation for the session (document E/2008/L.6 and E/2008/CRP.1). It also decided to keep the provisional agenda open throughout the session so that, should the need arise, modifications could be made. The Council also approved the list of non-governmental organization recommended to participate in its 2008 session (document E/2008/82).
The Economic and Social Council will reconvene at 10 a.m. Tuesday, 1 July, to continue its high-level segment.
The Economic and Social Council (ECOSOC) today opened the four-day high-level segment of its annual substantive session, which will run at Headquarters until 25 July.
LÉO MÉRORÈS (Haiti), President of the Economic and Social Council, said that this year’s session was especially significant because, first, the Council was taking up all the new functions mandated to it by the outcome of the General Assembly’s 2005 World Summit, and, second, the Council was meeting at a time when the world was grappling with emerging threats to the wave of prosperity and economic growth that had been witnessed over the past decade or so. “In the wake of rising prices for food and fuel, the deepening credit crisis, persisting global imbalances, the declining growth of the world economy, we are facing serious threats to our efforts to lift people out of poverty,” he said.
All that was further compounded by the challenges of climate change, he continued, adding that the disruptive effects of global warming were already becoming apparent. None of that augured well for efforts to achieve internationally agreed development goals, especially the Millennium Development Goals. Challenges were even more serious for developing countries, especially the least developed countries and small island developing States. There was a risk that development gains made over the past decade could be reversed, and, in fact, many countries were already falling behind the target dates for meeting many of the agreed development gaols. “Rising food and fuel prices are also leading to social unrest and instability. If we do not take urgent collective action then we may face turmoil in these countries,” he warned.
He went on to focus on the threats posed by climate change, noting among other things that many small islands would simply cease to exist if the world did not grapple with the challenges of global warming, especially as sea levels continued to rise, and natural disasters continued to increase in both number and intensity. Fortunately, there was a growing realization that measures should be adopted both for mitigation and adaptation to ameliorate the suffering of those “poor and vulnerable countries”. At the same time, that realization should be accompanied by concrete, concerted and collective action.
“I believe that negotiation on the post-2012 arrangements provide an opportunity to launch such action and also enhance financing for developing countries’ efforts on adaptation,” he said, adding that it was now more important than ever to put into practice the concept of sustainable development, which integrated economic growth, social development and environmental protection. He also noted that despite increasing awareness on long-term sustainability problems, there had not been any significant movement on issues such as climate change, deforestation, biodiversity and desertification, areas where the “the situation is deteriorating even as we speak”.
This year’s Annual Ministerial Review should contribute to the latest efforts for promoting collective solutions, including strengthening governance, creating markets for sustainable development, strengthening global cooperation, increasing financial assistance and promoting technology transfer. He strongly believed that the Ministerial Review could contribute to global efforts to generate a coherent response to the challenge of integrating the three elements of sustainable development. “The current approach of pursuing development goals through sectoral approaches will never be enough to meet the threats posed by climate change,” he said, stressing that national Governments and the United Nations needed to develop coherent and integrated approaches to development, which placed the issue of sustainability at the core of relevant strategies.
Continuing, he said that, given the growing constraints posed by shrinking natural resource bases, it seemed that if development was not sustainable, it would not be attainable, and he urged the Ministerial Review to send that strong message and to call for determined action. The Ministerial Review also provided a central forum for all stakeholders to assess progress in overall implementation of the internationally agreed development goals.
The National Voluntary Presentations during the Review would provide an opportunity to share an assessment of those countries’ progress towards that end and was also a manifestation of the growing partnership between developed and developing countries, especially in pursuit of the Millennium Goals, he said. That partnership was key to overall success, and both developed and developing countries needed to assume their obligations for the prosperity of all. He thanked Belgium, Chile, United Kingdom, United Republic of Tanzania, Lao People’s Democratic Republic, Luxembourg, Kazakhstan and Finland for volunteering this year.
Turning to the Development Cooperation Forum, he said the new panel was envisioned as an inclusive United Nations forum for ensuring coherence in development cooperation to achieve the internationally agreed development goals. Indeed, at a time of growing uncertainty regarding the broad achievement of the Millennium Development Goals, the Forum was uniquely placed to facilitate policy dialogue among a wide range of development actors. Therein lay the Forum’s potential to be a leading venue for inclusive global dialogue and policy review on key development cooperation issues.
He stressed that the innovative modalities of cooperation established for the Ministerial Review and the Development Cooperation Forum had brought renewed dynamism to the implementation of development goals, by promoting greater interaction among different constituencies. The inclusion of civil society organizations, parliamentarians, as well as local governments and private sector actors, was essential in sustaining the engagement and commitment of all stakeholders in bridging the implementation gap.
Summing up, he said that ECOSOC had become much more than a “month-long meeting in New York”, and now the substantive session was a culmination of various activities which had taken place throughout the year. Through its meeting on the food crisis, the Council had shown that it could play an important role in highlighting the immediate humanitarian needs, while emphasizing the need for long-term sustainable solutions. The special climate change event in May had brought together leading environment and development experts and had explored the nexus between climate change and development.
As for upcoming meetings, he believed the Ministerial Review and the Forum would have a lot to contribute to the Accra, Ghana, meeting on aid effectiveness and the Doha, Qatar, meeting on development financing. The Council had shown that it was increasingly becoming better equipped to assess progress on the ground and galvanize action at national, regional and international levels. “Let us build on our work during the past months and continue to help countries in achieving their goals,” he said.
United Nations Secretary-General Ban Ki-moon, in a statement delivered by Under-Secretary General for Economic and Social Affairs, SHA ZUKANG, said the international community was at a critical juncture in the implementation of the United Nations development goals. Today was an occasion to focus on four of the most pressing challenges.
First, he said the fragile state of the major developed market economies, persistent global imbalances and soaring oil and non-oil commodity prices were slowing global economic growth. The financial turmoil of the past year reflected systemic weakness in global financial markets. Second, rising food and energy prices were hitting hard on the livelihoods of the poor, and progress towards development goals could be reversed if workable solutions to those twin crises were not found. Third, the profound threat of climate change, if not addressed timely and adequately, could bring all development efforts to naught.
Finally, he added, scepticism about globalization continued. “No social or economic order is secure if it fails to benefit the majority of those who live under it,” he said. From that perspective, all States should have serious concerns about a system whose wealthiest 400 citizens commanded, as a group, more resources than its bottom billion. At the same time, leaders, economists and bankers were deliberating long-term solutions to address systemic inadequacies, and he encouraged all to pursue concerted action to redress the woes of the global economy.
Turning to the food crisis, he noted ECOSOC had provided a swift response by convening a special meeting, which had identified key messages and actions to be taken by the international community. He also had established the United Nations Task Force on the Global Food Crisis. Indeed, the food crisis had laid bare the need for longer-term planning to improve world food security. States had a historic opportunity to revitalize agriculture, especially in developing countries. Using small farm holders as a vehicle to achieve global food security presented an occasion to make “marked progress” towards eliminating rural poverty.
He said efforts were under way to bring together producers and consumers to find a solution to rising fuel prices. However, there was a need to focus on long-term solutions. Further, unprecedented awareness of the scale and scope of the challenges of climate change had put the need for urgent collective action in sharp relief. The current ECOSOC session should give new impetus to realizing the long-standing goal of achieving economic growth, social development and environmental protection in an integrated manner.
While globalization may be a fact of life, all countries needed policies and institutions that were tailored to changing domestic and external circumstances, he said. Greater coherence also was needed in global finance, trade, aid and investment policies. Noting that critical opportunities existed this year to strengthen global partnerships for development, he said the Development Cooperation Forum should become the principal venue for global dialogue and policy review on the coherence of international development cooperation. In his report on “Trends and progress in international development cooperation”, he had echoed the concern that the current aid effectiveness framework was not sufficiently responsive to development issues that cut across multiple sectors, such as human rights, gender equality and environmental sustainability. The Forum should give due attention to such cross-cutting imperatives.
In closing, he said he had witnessed ECOSOC’s transformation into an interactive forum, and he welcomed the broad participation of parliamentarians, local governments and civil society. He was sure that the high-level segment would make significant contributions to the Accra High-Level Forum on Aid Effectiveness, the Millennium Development Goals High-Level Event to be held in September and the Doha Review Conference on Financing for Development.
Chairman of the Intergovernmental Panel on Climate Change (IPCC), R.K. PACHAURI, said it was becoming increasingly apparent that the global community had pursued a development path that was not sustainable. The IPCC functioned under the directives of the United Nations Environment Programme (UNEP) and the World Meteorological Organization, and had released its Fourth Assessment Report last year.
The Panel’s role was to comprehensively assess the scientific, technical and socio-economic information relevant to understanding the scientific basis of climate change, its potential impacts and options for adaptation and mitigation, he said. The review and writing process of IPCC assessment reports was extensive, and every draft was carefully reviewed. Indeed, the Fourth Assessment Report had involved 450 lead authors and more than 130 countries.
Turning to the economic and social aspects of climate change, he said that a doubling of CO2 concentration could create a loss of 1.5 to 20 per cent of global gross domestic product (GDP) and real social cost of carbon would rise by 2 to 4 per cent per year.
Regarding the impacts of climate change, he said that 1.1 to 3.2 billion people would experience increased water scarcity by 2080, and that crop revenues could fall by 90 per cent in Africa by 2100. Some 20 to 30 per cent of species would be at risk of extinction if increases in warming exceeded 1.5 to 2.5 degrees Celsius.
On regional vulnerability, he said projections for 2100 had shown that a very large area of the globe would suffer from extreme vulnerability, and he urged action to avoid that type of outcome. The Panel had examined stabilization scenarios for greenhouse gas emissions. The costs of mitigation were not high: global average costs for stringent mitigation would induce a slowing of global gross domestic product growth of less than 0.12 points.
Continuing, he said mitigation actions must start in the short term to achieve medium- and longer-term benefits. Some 60 to 80 per cent of greenhouse gas reductions would come from energy supply and use, and industrial processes. Significantly de-carbonizing power production would require incremental global investments of up to $40 billion per year; $30 billion per year in non-OECD (Organisation for Economic Cooperation and Development) countries. That would be offset by reduced investment requirements resulting from improved end-use energy efficiency.
Adaptation to climate change and the promotion of sustainable development shared common goals and determinants, including access to resources and equity, he said. Appropriate policies were essential for improved sustainability and adaptive capacity. Committing to alternative development paths required major changes in several areas, including economic structure and consumption patterns. There was increasing recognition of the need for a more inclusive concept of governance, including through cooperation among various levels of Government, the private sector and civil society.
Highlighting the Panel’s Lighting a Billion Lives Campaign, he said 1.6 billion people lacked access to electricity, 33 per cent of whom lived in India. Under the campaign, a commitment had been made to enable a billion lives to have access to light from solar technologies. Solar lanterns had been developed, which mitigated 145 kilograms of CO2 emissions per year and saved 40-60 litres of kerosene per year.
Lord STERN of Brentford, economist and author of the 2006 Stern Review on the Economics of Climate Change, written for the British Government, said that climate change and development were the two greatest challenges of the twenty-first century. “If we fail on one, we will fail on both,” he added, stressing the inextricable links between the two. It was becoming increasingly evident that global warming threatened to undermine development and poverty eradication gains on all fronts. The links were vital and the two issues must not be separated.
The international community should not look at development and climate change targets as “merely inspirational”. They were much more serious than that, since the dire cost of missing them could not be shrugged off. In the case of global warming, which stood to arrest social and economic development on a scale never imagined, target dates could not be reset and forecasts could not be re-adjusted. Action was required now to at least set up an agreed global framework for action by all countries.
Climate change threatened to bring about the greatest and widest-ranging market failure ever seen, and urgent policy prescriptions were needed to address the economic and social disruptions. He had initially that countries needed to spend 1 per cent of their gross domestic product to stop greenhouse gases rising to dangerous levels. Failure to do that would lead to damage costing much more -- at least 5 per cent and perhaps more than 20 per cent of global gross domestic product.
But, with evidence that the planet was getting hotter faster than had been previously thought, emissions needed to be reduced even more sharply, he said. The concentration of greenhouse gases in the atmosphere would have to be kept below 500 parts per million, costing around 2 per cent of gross domestic product.
“This is all about the management of risks,” he said, urging Council delegations to pay close attention to the estimates about temperature increases, sea-level rise, deforestation, and icecap melt. The five degree increase in temperature that scientists had forecast through 2050 was “not the difference between Edinburgh and Madrid”.
Indeed, as interconnected as the world was today -- socially and economically -- such an increase would be “Earth transforming”, forcing changes on a scale that would involve massive population migration and alterations in behaviour and consumption. Those changes would have to take place over 100 to 150 years, not the millions of years of global transformation that had been sparked by the first Ice Age. “And from what we know about massive movements was that they resulted in conflicts and world war,” he said.
So, delays would be catastrophic, he said, stressing that addressing the issue now was the best economic choice. Delays actually increased the cost of taking any effective action, because as greenhouse gases increased, the cost of putting in place technologies to tackle C02 also rose. Starting planning now, with clear targets and good policies allowed measured action and kept costs down. Delayed action or decisions, lack of clarity and bad policy would increase costs. He stressed that, while markets played a key role, they were not enough.
There was a need to accelerate public policy design, and research and technology development, and to generate the political will to put policies into action, especially towards low carbon growth. It was important to ensure good policy -- in all countries -- and put in place extensive carbon pricing mechanisms, and provide support for technological development and sharing, he said, calling on all nations to work together on an agreed framework.
“We’re all in this together,” he said, outlining the key elements of a global framework. The targets of such a framework would include worldwide cuts in emissions by 50 per cent by 2050, with rich countries cutting at least 80 per cent. Developing countries should take on targets by at latest 2020, as rich countries demonstrated low-carbon growth, lived up to funding agreements, and shared technologies. He cautioned that any new deal must not “be like a WTO deal where nobody did anything until everybody agreed on everything. We don’t have that kind time.” The new framework for action required each individual country to start acting now, with the understanding that other countries would come along. The effort depended on leadership and involved the largest collaborative effort the world had ever seen.
In the brief open exchange that followed, Pakistan’s representative was among those who agreed that cooperation and collaboration were the keys to success against climate change. He said that it was crucial to acknowledge that thus far, no model of successful carbon-free development had been successfully shown to developing countries. Those countries had only one model to follow and had been offered no other solutions. Moreover, rich countries must acknowledge that the deal on development had already been agreed -- not just the Millennium Development Goals, but on financing for development, sustainable development and technology, but they were being implemented too slowly or simply languishing. The development agreements should not be put on hold while the exercise to craft a new deal on climate change got under way.
So, while developed country partners continued to talk about the “shared vision for development”, that vision was not being implemented. Overall, much more thought and political commitment was needed to come up with an integrated development model that served both objectives for development and climate change mitigation and adaptation, especially since the cost of technology was bound to get more and more expensive. Further, a much greater demonstration of commitment was needed from the richer countries, which bore the greatest responsibility for where we were today.
High-Level Policy Dialogue with International Financial and
Trade Institutions on Current Developments in World Economy
Opening the discussion, dialogue moderator SHA ZUKANG, Under-Secretary-General for Economic and Social Affairs, emphasized the current difficult global financial situation and said a collective response had to be articulated in light of the growing economic anxiety. While far-reaching deregulation of trade and financial markets had unleashed new economic activity, it had also extended risks to wider populations, particularly at the household level in developing countries. Adding to those worries were other threats, such as climate change and food insecurity.
A greater policy response was needed to manage that menu of insecurity and prevent those threats from becoming catastrophes, he said. Multilateral solutions and collective action was necessary to provide a secure and prosperous future for all. Developing economies and economies in transition faced distress, as the financial outlook dimmed and oil and food prices rose. Meanwhile, progress in meeting the Millennium Development Goals was being threatened. Thus, the Economic and Social Council had to foster consensus-building to address these challenges. As in the food crisis, where steps to meet emergency food were accompanied by a long-term plan to raise agricultural productivity, a range of policy responses had to be considered.
The commitments made by developed countries to provide the world’s poorest countries with sufficient and effective development assistance also had to be kept, he continued. Progress in international development coordination since 2002 had not been broad enough. Conditionality attached to aid flows had to be limited. Concerted solutions should be sought. While a framework for a concerted response to the global food crisis had recently been made, its implementation remained to be seen. In that vein, the global response to the current economic situation should first be defined and acted on.
Panellist SUPACHAI PANITCHPAKDI, Secretary-General of the United Nations Conference on Trade and Development (UNCTAD), said that, after the last 5 consecutive years of highly robust growth, including in the developing world, the world economy faced a vastly different picture. Never before had such a confluence of crises been seen, even during the oil crisis in the 1970s and the financial crisis in the 1990s. A new toolkit to meet these crises might, therefore, be necessary and global action was required even while regional coordination was undertaken, particularly since efforts to mitigate the crises in the food, energy and financial markets were often conflicting.
A clear vision of what needed to be done at the global, regional and local levels should be developed, he said. To that end, a number of complicating factors and situations had to be taken into account. Although the world was now standing at the threshold of a breakthrough for the Doha round of negotiations, that breakthrough had to be made by July or a crucial window would close. In addition, the spin-off effect of the sub-prime mortgage crisis had to be factored in. It was not yet known if the bottom of the crisis had been reached, or if, as was hoped, some economies would be sheltered. Reverse fund flows and the role of sovereign wealth funds should be studied, while efforts to tackle inflation should be coordinated through a global approach.
Given the complex situation, various policy options had to be considered, including how to strengthen market mechanisms to ensure they worked at the optimum level, he said. Those market mechanisms should also be supplemented by Government action whenever the market was unable to fully meet the challenges, such as in the area of climate change. In that context, market speculation and the role played by speculators had to be better understood, so that they were not solely and erroneously blamed for all market ills. Furthermore, agricultural policies had to be bolstered by the educational, research and training programmes that were widespread in the 1970s. A global oil strategy should also be elaborated that targeted alternative sources, transportation infrastructure and conservation practices.
Panellist MURILO PORTUGAL, Deputy Managing Director of the International Monetary Fund (IMF), said the global economy was slowing in the wake of financial dislocations and the effects of soaring commodity prices. While global activity appeared to be more resilient than originally thought, the Fund still anticipated a protracted slowdown. He discussed growth patterns in various regions, including the United States, where growth fell below 1 per cent in the last two quarters, and in the euro area, where growth would likely slow. In emerging and developing economies, growth was projected to moderate on modestly in 2008-2009, reflecting robust domestic demand.
He went on to highlight various risks, noting that the risks of inflation had accelerated, which limited central banks’ ability to support growth. While financial sector markets had begun to stabilize, overall confidence remained fragile, and bank balance sheets were still under strain from accumulated losses. Further, the shifting pattern of global imbalances was raising new concerns. The United States dollar had declined significantly in real effective terms and the adjustment had fallen disproportionately on the currencies of economies with flexible exchange rate regimes.
Responding to a cyclical slowdown had been complicated by the “volatile” behaviour of oil and other commodity prices, he said. The world was facing a confluence of challenges, which, combined, carried implications for managing inflation. Serious questions confronted many developing countries: how were price increases affecting prospects for achieving the Millennium Development Goals? What was the right balance between short-term financing and adjustment in response to increased prices? No country would be immune to the impact of higher prices on global growth, and international institutions needed to find solutions. Joint work, notably through the High-Level Task Force on the Global Food Price Crisis and the Millennium Development Goals Africa Steering Group, was more important than ever. The Fund remained committed to finding solutions.
Panellist JUSTIN LIN, Senior Vice-President and Chief Economist of the World Bank, said turmoil in financial markets, slowdowns in high-income countries and the rise of oil and food prices had all adversely affected near-term growth prospects for developing countries. Most developing countries had so far shown impressive resilience largely due to lower external imbalances and short-term debts. They also had large reserves and healthy current account surpluses. Nevertheless, the Bank estimated that developing countries’ growth rates would fall from 7.8 per cent in 2007 to 6.5 per cent in 2008. In addition, inflation was rising in a number of countries and up to 105 million people could become poor due to higher food prices. The rise in oil and energy prices would also decrease gross domestic product and lower real income in poorer, oil-importing countries.
In that context, Governments faced daunting challenges in protecting their most vulnerable citizens, he said. Social safety nets should be expanded, while Governments should avoid export bans and price controls. Agricultural development should be part of longer-term economic strategies, particularly in Africa where staging a green revolution should be priority. While progress at their midpoint had been mixed, the Millennium Development Goals were still achievable, and strong and inclusive economic growth must be at the centre of strategies to meet them. Higher quality and more equitable resources should be committed to key programmes in education and health. Environmental sustainability should be integrated into core development work. New financing, rather than a reallocation of development assistance, was needed to assist developing countries in their transition to low-carbon and climate-resilient growth strategies. Successfully concluding the Doha round of trade negotiations was also one of the most important steps towards inclusive and sustainable growth the world community could take.
Donors had to do their part by scaling up aid in line with their commitments, he continued. So far, aid flows had increased much less than had been expected, or promised. While new sources and modalities of aid promised more resources and innovation, they posed new challenges to effectiveness and coherence. More private capital in support of development had to be leveraged. The mutual accountability framework should also be re-energized at the financing for development conference. The Bank was ready to collaborate closely with its partners in ensuring the success of the important development discussions scheduled for later this year and looked forward to making the alliance between the Council’s political message and the Bank’s comprehensive development focus even more fruitful.
VALENTINE RUGWABIZA, Deputy Director-General of the World Trade Organization, said the Doha round could not provide immediate solutions to many problems. However, its successful conclusion could, along with other measures, form part of the midterm solutions to help put the world back on the path of economic growth. This year, much progress had been made, which was captured in the two revisions of the draft modalities in agriculture and non-agricultural market access.
A great deal was already on the table, she explained, noting that the agreement to eliminate all forms of export subsidies by 2013 would enhance the ability of developing and least-developed countries to compete in a fairer trading system. In non-agricultural goods, members were working towards cutting tariffs according to a formula whereby developed countries would apply tariff cuts on a line-by-line basis, while flexibilities would be available for developing nations. That would generate new business opportunities in developed and developing countries, providing huge potential for more diverse South-South trade.
Differences would have to be bridged, she said. The Director-General intended to call a ministerial-level meeting the week of 21 July, and every attempt must be made to push the limits of political will, and to strive for the adoption of the modalities in agriculture and non-agricultural goods by the end of next month. To do that, gaps must be closed in the identified “hotspots” in the next three weeks. In industrial goods, difficult issues must be addressed, including the levels of tariff cuts to be implemented by developed and developing countries. In the current period of increased financial uncertainty, the rules-based trading system of the WTO provided a highly important source of economic stability. Counting on the WTO and conclusion of the Doha Round was the nearest available message of confidence that could be sent. She urged all countries to resist domestic protectionist pressures. Only then could the global community do what it set out to do several years ago rebalance the multilateral trading system in favour of development and poverty reduction.
RICARDO FRENCH-DAVIS, Chairman of the Committee for Development Policy, said external shocks usually created large, negative effects on developing economies. The initial effects on key macroeconomic and social variables rippled across the entire economy, through reduced government spending, lower wages and higher unemployment, thus impacting countries’ development potential. Given that, a “development-friendly international financial architecture” was needed to provide adequate “counter-cyclical official liquidity” to low- and middle-income economies, particularly in the face of natural disasters resulting from climate change.
It was urgent to improve compensatory financing mechanisms or design new ones where gaps existed, he continued. The need for action had become more pressing with increases in oil and foodstuff prices, which had affected net importers of those commodities and provoked social discontent. While some countries had built cushions of reserves as a buffer against external shocks, high reserve levels carried large burdens in terms of the opportunity costs of productive investment foregone, and direct financial loss stemming from low-interest earnings on reserve assets.
He said official compensatory flows could play a crucial role in avoiding unnecessary costs to developing countries by reducing the need to hold such high levels of reserves, and avoid excessive adjustments. Several major compensatory financing mechanisms existed, but were limited in coverage or too narrowly defined. He stressed the need for a reformed compensatory financing architecture to provide official liquidity and aid to developing countries suffering the negative impact of external shocks. Reinitiating issues of special drawing rights could be directed to finance an increase in the availability of compensatory financing.
ACHIM STEINER, Executive Director of the United Nations Environment Programme (UNEP), said much of UNEP’s work was an integral part of addressing both the sustainable development agenda and the world economic outlook. Much of the morning’s discussion had touched on how to use natural resources, and as transformations took place across national economies, it was essential to consider how they were investing -- or not -- in certain pathways. Looking at energy, for example, the linkages between sustainable development and economic growth were clearly visible. 2007 had been another record-breaking year for renewable energy, with nearly $150 billion having been spent on renewable energy, an increase from $33 billion in 2005. In fact, over one fifth of new power generation came from renewable energy last year.
This trend was relevant to all economies, particularly developing ones where growth rates were even higher than in developed ones, he said. In looking forward and in responding to crises, vulnerabilities and risks, economic transformation should be considered through the sustainability lens. That would mean, among other things, more efficient and intelligent use of energy resources. While the international policy community might be at a loss for credible answers in the adaptation arena, solutions in the mitigation realm could be areas for innovation and growth. That was seen even in the small example of using solar power in villages where harnessing renewable energy sources was not a luxury, but a pre-condition for economic development. Not only could the use of renewable resources diversify a country’s energy mix, but it could reduce the carbon footprint and the demand for oil.
Today, there was a unique opportunity to look at the sustainable development agenda, economic policy and the global response to climate change as an integral package, he continued. That was one way in which UNEP -- along with the United Nations Industrial Development Organization (UNIDO), the United Nations Development Programme (UNDP) and the international financial institutions -- could deliver a climate package at the climate change conference in Copenhagen that was not only credible for the developing countries, but could truly contribute to achieving the Millennium Development Goals.
The representative of Barbados expressed the hope that the country delegations would have the opportunity for a dialogue, which had been cut short due to time constraints, about the host of relevant issues raised in the morning’s presentations.
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