United Nations

GA/EF/3109
4 October 2005

Global Economy Declined in 2005 Compared to Last Year, Under-Secretary-General Says in Statement to Second Committee as It Begins General Debate

He Blames Global Imbalances, but Notes Positive Signs, Including Continued Robust Growth in International Trade, Calm Financial Markets

NEW YORK, 3 October (UN Headquarters) -- The global economy had declined measurably during 2005 compared to a strong and broad expansion in 2004, and projections of future growth were fraught with uncertainty and risk, José Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs, said today in a statement to the Second Committee (Economic and Financial) as it began its general debate.

He said the decline was due partly to enormous global imbalances, including the rising external deficit of the United States on the one hand, and growing surpluses in the Asian, European and oil-exporting economies on the other.  Taken together with rising oil prices, and exacerbated by natural disasters and geopolitical instability, the global economic environment could threaten immediate and longer-term growth in developing countries.

At the same time, the broad international economic environment showed some auspicious signs, he said, adding that international trade had continued to grow at a robust pace.  Financial markets worldwide had generally remained calm and trade terms for several developing countries had improved considerably.  The present economic strength of many developing countries demonstrated that substantial progress was possible under the right domestic and global economic conditions.

During the ensuing discussion, speakers from several oil-producing countries noted that increasing demand for energy, reduced refinery capacities caused by natural disasters, and a failure by some advanced countries to renew oil-producing technologies, which affected the supply of oil by-products, had all pushed up the price of oil.  The oil-refining sector in the United States had faced significant constraints due to the recent natural disaster, and it was to be hoped that oil-producing and oil-consuming countries would cooperate in resolving the situation.

Questioned by delegates about the prospects for debt relief in middle-income countries, he said the Paris Club was using the so-called Evian Approach to reschedule debt in those nations.  To another query, about developing-country terms of trade, he said they had improved in many developing countries as prices for their raw-material exports recovered in international markets, especially China.

As delegations subsequently delivered their national statements, speakers pointed to the merits and pitfalls of the 2005 World Summit Outcome Document.  Ghana's representative described it as a compromise of differing interests and concerns, which did not fully satisfy the aspirations of any Member State or group of States.  However, it was better to have a watered-down document to guide the way forward than to bemoan the ashes of an ambitious one that had been incinerated in the heat of deadlocked negotiations.

Several delegates pointed to the urgent need for Member States to meet the development-financing commitments laid down at United Nations conferences, and reviewed at the 2005 Summit.  Indonesia's delegate, speaking on behalf of the Association of South-East Asian Nations (ASEAN), said it was vital to fulfil promises of achieving the 0.7 per cent of gross domestic product target figure for official development assistance (ODA) to developing countries, and to improve the quality and effectiveness of aid by aligning assistance with country strategies, untying aid, and enhancing developing-country capacity.

Viet Nam's representative noted that ODA was estimated to amount to only 0.3 per cent of gross domestic product by 2006, and only 0.32 per cent by 2010, which would be lower than it had been in the 1990s.  Moreover, the current trend of increasing foreign direct investment (FDI) flows could not be guaranteed due to instability in the prices of oil, metals and other goods, as well as to complex developments in the financial and monetary markets, and the surge in terrorist activities.

Echoing that concern, Pakistan's delegate observed that the Summit had inadequately addressed measures to promote equitable FDI to developing countries through investment guarantee schemes, transparent risk-rating arrangements and the provision of tax and other incentives.  In boosting development financing, it was important to reverse the current net outflow of resources from developing to developed nations, and to pursue innovative means of financing at the national and international levels.

Other speakers lamented the Summit's lack of commitments on trade and stressed the urgent need to carry forward the Doha Agenda at the upcoming Hong Kong round of World Trade Organization (WTO) negotiations in December.  Country-level policy reforms and increased aid were not sufficient to ensuring sustained development, Ghana's delegate said, noting that commitments made at the Summit to liberalize trade and implement Doha's development dimensions would remain merely a pious declaration if the Doha Round failed to expand market access and eliminate trade-distorting subsidies; to open markets in manufacturing and services; and to address supply-side constraints.

Delegates also emphasized the need to bridge the digital divide, the importance of South-South and regional cooperation in advancing development goals, and the vulnerabilities of small-island and other marginalized economies.  Other representatives underscored the importance of environmental protection in pursuing development, as well as the need for technology transfer and increased participation by developing countries in the Bretton Woods institutions.

Also speaking today were the representatives of the United Kingdom (on behalf of the European Union); Jamaica (on behalf of the "Group of 77" developing countries and China); Russian Federation; Fiji; Egypt; Morocco; Namibia (on behalf of the Southern African Development Community); Japan; Philippines; Bangladesh; Thailand; India; Algeria; Senegal; Cambodia; Cuba; United Republic of Tanzania; Tunisia; and Kenya.

The representatives of the United States and Cuba spoke in exercise of the right of reply.

A representative of the Food and Agriculture Organization (FAO) also made a statement.

The Second Committee will meet again at 10 a.m. tomorrow, Tuesday, 4 October, to continue its general debate.

Background

The Second Committee (Economic and Financial) met today to begin its general debate for the sixtieth session of the General Assembly.

Chairman's Opening Statement

AMINU BASHIR WALI (Nigeria), Committee Chairman, said that in its session this fall, the Committee had a chance to focus on the debt problems of countries that were not members of the Heavily Indebted Poor Countries (HIPC) Debt Initiative.  Consideration of financing for development would offer an opportunity to push forward the implementation of initiatives on innovative sources.  On international migration, a central dimension of globalization, the Committee may also wish to adopt resolutions to prepare the ground for the High-level Dialogue on Implementation of the Outcome of the International Conference on Financing for Development, and the High-level Dialogue on International Migration and Development.

He said that, on cross-cutting topics in the broader context of economic, social and environmental development, joint informal events would be held with the Third Committee to increase mutual understanding on issues relating to the advancement of women, poverty and the role of the private sector in achieving the Millennium Development Goals, among other things.

Statement by Under-Secretary-General

JOSE ANTONONIO OCAMPO, Under-Secretary-General for Economic and Social Affairs, noted that the 2005 World Summit had reaffirmed the vital role played by conferences and summits in shaping the broad development vision.  Developing countries had agreed to adopt comprehensive national development strategies and had paid increased attention to financial and technical cooperation among themselves.  Moreover, there had been announcements before the Summit to increase aid from $80 billion last year to $130 billion in 2010, with aid to sub-Saharan Africa doubling over that period, from $25 to $50 billion a year.  The increase in aid, however, must be reflected in the support programmes of partner countries through their own budgets.

He said that if aid commitments were met fully, and the principles of ownership, alignment and harmonization agreed earlier this year in the Paris Declaration on Aid Effectiveness applied, the world would achieve a major breakthrough in international cooperation.  Debt relief for nations in the HIPC Debt Initiative was another dimension of that breakthrough.  The Summit had also seen progress on innovative sources of financing, such as the aim by the French and Brazilian Governments to introduce a pilot project for a global solidarity contribution on air tickets.

While reinforcing the political commitment to a rapid conclusion of the Doha Trade Round, the Summit had made clear that there were still significant challenges to realizing the development dimension of the round, he said.  While welcoming the debt relief initiative for HIPCs, it should not be forgotten that the majority of the world's poor resided in other developing countries -- many of them middle-income countries -- that also faced high debt burdens.  Moreover, the conditionality attached to aid often conflicted with commitments to increase the responsibility of developing countries for their own domestic development strategies.  Only when aid was fully aligned with national development strategies could it be nationally owned and fully effective.  That increased responsibility should be matched by adequate developing-country participation in international economic decision-making.

Turning to the world economy, he noted that it had decelerated measurably during 2005, compared to strong and broad expansion in the previous year.  Global economic growth would reach about 3 per cent in 2005 and 2006, although growing uncertainty surrounded those projections, given the mounting downside risks.  The deceleration had resulted partly from increasing constraints -- mainly enormous global imbalances -- on the one side, the rising external deficit of the United States, and on the other, growing surpluses in several economies, mainly in Asia, Europe and the oil-exporting countries.  The responsibility to address global imbalances fell to countries with large currently account surpluses at least as much as to those with deficits, and the international economic cooperation to address that problem had not been forthcoming.

Oil prices was another concern, he said, adding that the tight situation in the global oil market had been exacerbated by natural disasters and geopolitical instability.  Oil-importing countries had shown growing signs of deterioration, including rising inflation.  Oil prices at such high levels would pose challenges for world economic growth, especially in developing countries.  At the same time, the broad international economic environment did show some auspicious signs.  International trade had continued to grow at a robust pace, financial markets worldwide had generally remained calm, and the terms of trade had improved considerably for several developing countries.  The present economic strength of many developing countries demonstrated that substantial progress was possible under the right domestic and global economic conditions.  A deterioration in the external environment stemming from global imbalances would have a negative effect on both the immediate prospects of developing countries and their longer-term development, including efforts to achieve internationally agreed development goals.

Discussion

The representative of the Dominican Republic touched on rising oil prices and their impact on oil-importing countries, a subject taken up in more detail by the delegates of Kuwait and Iran, who said that when discussing that issue, attention must be paid to other dimensions leading to rising prices, such as increasing demand for energy, as well the reduced refinery capacities at the international level due to natural disasters and other elements.  In addition, oil producing technologies had not been renewed in some advanced countries, which affected the supply of oil by-products.  Exporting countries were doing their best to respond to demand and members of the Organization of Oil Exporting Countries (OPEC) had agreed to provide $7.4 billion for its development fund.

The representative of the Dominican Republic, raised the additional issue of the vulnerability of Caribbean island States to natural disasters, and the necessity for a rapid response system to be instituted by the United Nations.

On the subject of oil prices, the Under-Secretary-General expressed the hope that through cooperation, oil-producing and oil-consuming countries would be able to manage the situation.  Due to significant constraints faced by the oil-refining sector, due to the recent natural disasters in the United States, discussing that issue would be beneficial to both parties.  Regarding vulnerability to natural disasters, the United Nations had a Central Emergency Revolving Fund.  Furthermore, the issue of making insurance rates more reasonable for countries with location problems should be subject to broader discussion.

The representative of Paraguay said that not enough attention was being devoted to the question of employment creation, which was of the utmost importance in alleviating poverty in developing countries.  Special significance should be assigned to increasing trade relations around the world in such a manner as to generate employment.

Speakers also asked the Under-Secretary-General about his views on the increasing debt burdens of middle-income countries and terms of trade for developing countries in general.

Responding, Mr. OCAMPO stressed the need to make productive employment, which had not been emphasized in the Millennium Declaration, a central element of macroeconomic strategies for development.  With respect to oil-producing nations, they had made several positive contributions to achieving stronger South-South cooperation.

Regarding debt in middle-income nations, he said the Paris Club was using the so-called Evian Approach to deal with the rescheduling of their debts.  The current approach to debt rescheduling benefited larger countries more than small ones and a better institutional mechanism was needed.

On official development assistance (ODA), he said it should be channelled in some way through the budgets of partner countries.  With respect to trade, many developing countries had experienced improvements in their terms of trade, as prices for their raw-material exports recovered in international markets.  Rising Chinese demand had been particularly beneficial to developing countries.

Statements

EMYR JONES PARRY (United Kingdom), speaking on behalf of the European Union, stressed that the time had come for nations to implement the commitments made at major United Nations conferences.  Developing and transition countries should adopt comprehensive national development strategies and strengthen domestic policies to create conditions for poverty eradication, sustainable development, growth and attainment of the Millennium Goals.  Donors must support them by fulfilling their commitments to provide more and better aid, debt relief and trade reform.

Noting that significant new commitments had been made this year on financing for development, he said the European Union had set a timetable to reach 0.7 per cent of gross national income (GNI) in ODA by 2015, and had committed to doubling its aid by 2010 to over $800 billion a year.  Important agreements had also been reached on sustainable development and environmental issues.

He said that in reaffirming their overall commitment to the Millennium Goals, nations had also made specific commitments in key areas at the 2005 Summit.  On health, they had agreed to strengthen health systems, achieve the Cairo goal of universal access to reproductive health by 2015 and integrate reproductive health in Millennium Goal strategies.  They had also reaffirmed the urgent need to address food security, as well as rural and agricultural development.

STAFFORD O. NEIL (Jamaica), speaking on behalf of "the Group of 77" developing countries and China, said it was regrettable that the "July Package" -- which identified many areas of interest to developing countries, and which had been accepted by Trade Ministers in Geneva, had not progressed further.  It was equally disappointing that the 2005 World Summit had not agreed on a message to the ministerial meeting in Hong Kong on the need to fulfil the development dimension of the Doha Work Programme.  The Group of 77 reiterated the call for the elimination of export subsidies by developed countries, enhanced market access for goods and services from developing countries to the markets of developed countries, and the need to facilitate the transfer of technology and knowledge to developing countries through a clear intellectual property regime.

He said the continued use of unilateral coercive measures against developing countries undermined United Nations principles and international law, threatened the freedom of trade and disturbed the flow of international economic activity.  In that regard, Jamaica called for the elimination of such policies.  To advance the welfare of all peoples, the international community should also take measures for the termination of foreign occupation.

Greater attention must be paid to migration, he said.  An area of particular concern was that of reducing the cost of transferring remittances.  Also, the increased incidence of natural disasters and their impact on small and vulnerable economies called for the creation of mechanisms for the prevention, preparedness and mitigation of natural disasters and their effects.

MUNIR AKRAM (Pakistan) stressed the importance of clarity, specificity and political commitment in realizing internationally agreed development goals.  The Millennium Goals urgently needed adequate financing.  The net outflow of resources from the developing to the developed world must be reversed, and innovative means of financing pursued at national and international levels.  Also, the 2005 World Summit had inadequately addressed measures to promote foreign direct investment (FDI) more equitably to all developing countries through investment guarantee schemes, transparent risk rating arrangements and the provision of tax and other incentives. Political propulsion was also needed to create a breakthrough in the Doha Round and conclude it by 2006.

Stressing the important nexus between international migration and development, he said that an agreement on international migration should be a central element of any fair trading system.  There was also a need to consider national and international actions to generate opportunities for job creation and decent work.  Efforts should also be made to enhance the voice and participation of developing countries in international trade, development and financial institutions, as well as to promote and facilitate their access to technology.

He suggested that the Department of Economic and Social Affairs and the United Nations Development Programme (UNDP) should develop a comprehensive matrix involving development goals, targets, indicators, national Governments and development partners.  Inputs for such a matrix would be collected from United Nations agencies, the Bretton Woods Institutions and other bodies.  In addition to identifying and tracking development goals, implementation must be vigorously pursued at the intergovernmental level through national review, sectoral reviews, and reviews by the Economic and Social Council (ECOSOC), to which the 2005 Summit had assigned new responsibilities in the areas of policy dialogue, development cooperation, post-conflict development and coordination within the United Nations system.

ANDREY I. DENISOV (Russian Federation) said that negotiations on development issues that had taken place in the run-up to the 2005 World Summit highlighted areas of shared concern while identifying potential problem areas.  The political impetus for dealing with those issues had been reinforced and any attempts at implementing the decisions arising from the Summit must be done on the basis of consensus. 

He said that a mechanical increase in ODA should not be seen as a panacea for development challenges.  The improvement of aid quality, and the effectiveness of its use, was also of considerable importance.  The Russian Federation supported the call for a more long-term perspective on financing, including that of voluntary mechanisms.  There was a need to set realistic objectives and to resist the temptation to impose solutions that lacked universal support.  Russia understood the importance of improving global environmental governance and supported the Secretary-General's idea of creating a global early warning system, in the context of a revamped International Strategy for Disaster Reduction.

REZLAN ISHAR JENIE (Indonesia), speaking on behalf of the Association of South-East Asian Nations (ASEAN), said development could only result from a genuine and balanced global partnership.  Developed-country commitments contained in the Monterrey Consensus were the hallmark of that partnership, but developing countries must continue with their own efforts to mobilize domestic resources and create conditions for development in line with national priorities and capacities.  A follow-up meeting to the International Conference on Financing for Development would be useful in assessing the progress between Monterrey and the 2005 World Summit.

In moving forward with international commitments on development, he said it was vital to fulfil the promises regarding 0.7 per cent of gross domestic product (GDP) for ODA to developing countries, and to improve aid quality and effectiveness, especially in aligning assistance with country strategies, untying aid, and enhancing developing-country capacity.  It was also essential to support the initiative to eliminate the unsustainable debt of several HIPCs, through either multilateral or bilateral channels.  Similarly, the debt problem of middle-income developing countries must be addressed.

Noting that the international community should also support the World Trade Organization (WTO) meeting in Hong Kong in December 2005, he stressed the importance of making progress in agriculture, services, trade facilitation and trade rules.  Continuing efforts were also needed to reform the international financial architecture, which included enhancing developing-country participation in the Bretton Woods institutions.  ASEAN also urged the international community to continue its support in reconstruction and rehabilitation in the tsunami-affected countries, and to develop alternative energy and renewable energy sources.

NANA EFFAH-APENTENG (Ghana) said the outcome of the 2005 World Summit was a compromise of differing interests and concerns, which did not fully satisfy the aspirations of any Member State, or group of States.  Some saw the results as modest, while others described the document as a watered-down version of the initial drafts tabled originally.  It was better, however, to have a watered-down document to guide the way forward than to bemoan the ashes of the ambitious one incinerated in the heat of deadlocked negotiations.

He stressed that country-level policy reforms, as well as increased and more effective aid, were insufficient in ensuring sustained development in developing countries.  Trade was vital as an engine of growth and developing countries would not achieve economic growth to meet the Millennium Goals without a timely and satisfactory outcome to the Doha Agenda.  If the commitment made at the 2005 World Summit to liberalize trade and implement the development dimensions of Doha was not to remain merely a pious declaration, a satisfactory outcome should include major reform of agricultural trade policies to expand market access and eliminate trade-distorting subsidies; action to open markets in manufacturing and services; and increased aid to address supply-side constraints, as well as enhance developing-country capacity for expanded trade opportunities.

NGUYEN TAT THANH (Viet Nam), associating himself with the Group of 77 and ASEAN, said that while FDI flows kept increasing, that trend could not be guaranteed due to instability in the prices of oil, metals and other goods, complex developments in the financial and monetary markets, and the surge in terrorist activities.  By 2006, it was estimated that ODA would amount to only 0.3 per cent of gross domestic product (GDP), and by 2010 it would only be 0.32 per cent, lower than in the 1990s.  Developed countries should adopt policies to encourage investment in developing countries in a more even and diversified manner, and honour their commitment to the 0.7 per cent target.

In order to give impetus to its international integration policy, Viet Nam would be hosting the Asia Pacific Economic Conference Summit in 2006, he said.  His country was also in the final stages of completing negotiations for its accession to the World Trade Organization and was continuing its cooperation with six African countries.

FILIMONE KAU (Fiji), noting that the World Summit outcome document was not solely about development, said it also touched on issues of peace and collective security; human rights and the rule of law; and the strengthening of the United Nations, a reflection of the fact that modern challenges were comprehensive and interrelated.  Towards that end, developed-country trade partners should recognize the difficulties faced by developing economies during trade reforms by assuring commodity prices during the cessation of preferential treatment.  There was also a need to pay attention to the pace of change and to adjust it so that developing nations could keep abreast.

He noted the disparity between rich and poor countries in information and communications technology, adding that such technology was universally acknowledged as a development tool that was essential to social development, economic growth and good governance.  For Fiji and other countries of the Pacific region, information and communication technology was the key to ending the "tyranny of distance", and the deficiencies in that region must be addressed urgently.  Migration, too, was a critical issue for Fiji, which looked forward to the report of the Global Commission on Migration as a basis for preparing next year's conference on the subject.  In the interest of furthering the role of the United Nations in those and related matters, Fiji called for the strengthening of the Economic and Social Council and greater empowerment of the Secretary-General in directing the Organization's structure.

MAGED ABDELFATTAH ABDELAZIZ (Egypt) said that he looked forward to reaching an agreement on how to address the debt problems of all countries, particularly middle-income countries, where about 75 per cent of the world's poor reside.  In that regard, Egypt proposed the further examination and implementation of debt swaps for development.  He expressed his country's interest in examining innovative and additional sources of financing for development, provided that they did not pose any burdens on developing countries and were consistent with their development priorities.

He also said that his country saw the necessity of addressing Africa's development needs and proposed that an item relating to the topic be introduced to the Committee's agenda, in addition to the item on the New Partnership for Africa's Development (NEPAD) discussed in the plenary of the General Assembly.  Regarding the increase in oil prices, he remarked on the necessity of working towards the diversification of energy sources and called upon financial institutions to provide finance to energy projects in middle-income countries, including for renewable energy.

ABDELLAH BENMELLOUK (Morocco) noted that developing countries had made commitments to implement national development strategies, while developed countries had agreed to establish a timetable to raise their contributions to ODA.  Adding that developed nations had also recently decided to relieve foreign debt in the poorest countries, he encouraged donor countries to find solutions to the debt burdens of other developing countries.

Continuing, he said that new approaches to financing for development could supplement international efforts to achieve the Millennium Goals, but should not substitute for traditional forms of assistance.  Regarding trade, he regretted that the Summit document did not meet the interests of developing countries.  It was vital to complete the Doha Round of trade talks, ensuring that specific interests of developing countries were considered.

Turning to international migration, he said it would be the focus of a high-level dialogue next year, which would be an opportunity to strengthen cooperation in all areas of that field.  Any debate on migration should seek to pinpoint positive aspects and reduce effects to a minimum, including ways of reducing the costs of transferring migrant remittances to countries of origin.

MARTIN ANDJABA (Namibia), speaking on behalf of the Southern African Development Community (SADC) and aligning himself with the statement delivered by Jamaica, said that 38 per cent of the SADC population lived below the poverty threshold of $1 a day.  In addition, the region had to contend with one of the highest infant and maternal mortalities in the world and a falling life expectancy rate, due to HIV/AIDS.  The disease threatened to decimate the foundation of development -- human resources. 

He noted that some sub-Saharan countries spent more on debt servicing than on key social sectors necessary for development, lamenting the fact that the Heavily Indebted Poor Countries (HIPC) Initiative had failed to position most of the countries in the region to service their debt without experiencing any shocks.  He reiterated SADC's position on debt cancellation, saying that it was the only lasting solution to the problem faced by highly-indebted poor countries, and low and middle-income countries that could not sustain their debt.

Speaking on SADC's efforts to address the region's challenges, he discussed the SADC Regional Indicative Strategic Development Plan and the Strategic Indicative Plan for the Organ on Politics, Defence and Security as a set of strategic frameworks within which the region pursued its development agenda.  In 2004, the region experienced a gross domestic product (GDP) growth rate of 4.1 per cent, compared to 3.2 per cent in 2003.  He expressed his organization's conviction that development should remain at the centre of the United Nations agenda and he would like to see the Second Committee revitalized, and the Economic and Social Council strengthened, to support SADC's development efforts.

KAZUO SUNAGA (Japan) said that foremost among global economic issues was the rising cost of oil and its potential for undermining financial resource mobilization efforts, such as ODA and the expansion of debt relief measures.  His country believed that in-depth consultations should be used to discuss the subject, focusing on its impact on development.  Other priority areas that his country deemed important were the threat posed by infectious diseases, such as Avian influenza and SARS; peacebuilding; and the responses to natural disasters.

He reiterated the importance of "two approaches" for tackling such issues:  first, by identifying them as issues of human security, and second, as issues of South-South cooperation.  He noted that human security would be discussed in the General Assembly in accordance with the outcome document, which contained the first reference to that concept in an official Assembly document.  South-South cooperation, based on the New Asian-African Strategic Partnership, was likewise recognized by the document as having great potential for helping to advance internationally agreed development goals.

LAURO L. BAJA (Philippines) highlighted three areas that he expressed as having an enormous impact on the achievement of the development agenda:  the debt problem of many middle-income developing countries; the looming energy crisis; and international migration and development.  Because of high oil prices and limited financing resources, assistance from donor countries and international financial institutions would be needed to give reprieve to middle-income countries in servicing their debt.  In view of this, the Philippines proposed the adoption of debt-for-equity development projects, on a voluntary basis, as a complement to the agreement by the Group of Eight countries to write off debt owed by highly indebted poor countries.  As part of that scheme, multilateral institutions and large commercial banks would plough back into the economies of debtor countries 50 per cent of an agreed-on portion of the debt-service payments due them, in the form of equities or other kinds of financial assets.

On the rising cost of energy, he said the possibility of an oil summit should be discussed, as an arena for discussing strategies for addressing the problem.  With regard to migration, he said there was a need to look at remittances as an economic resource that could bring about economic growth in countries of origin.  Efforts should be undertaken to help reduce the transaction cost of transferring remittances to developing countries.

IFTEKHAR AHMED CHOWDHURY (Bangladesh) noted that the gap between rich and poor was widening, the reverse transfer of resources was continuing, interest rates and inflation were increasing, oil prices were soaring, and incidences of tariff barriers and non-trade measures had remained high.  In achieving development goals, the international community must democratize the decision-making process of the international financial institutions, allowing for greater policy space for developing countries in formulating their own development strategies.  It must also establish an open, rule-based, equitable international trade regime, with greater market access for developing country products, and delivery of ODA commitments.

Moreover, he added, FDI must be channelled to non-recipient developing countries by providing incentives for such investments; urgent steps must be taken to address the worsening debt burden of developing countries; and labour mobility from developing countries to developed countries must be enhanced.  Developed countries must make available knowledge, information and technologies to developing countries, including formulas for producing life-saving pharmaceutical products.  Increased international assistance must also be provided in creating and strengthening national, sub-regional, regional and international mechanisms to prevent, prepare and mitigate natural disasters and their effects, and financial and technical support must be extended for relief, rehabilitation and reconstruction.

KHUNYING LAXANACHANTORN LAOHAPHAN (Thailand), associating herself with ASEAN and the Group of 77, said that the world's experience with development aid had shown that, for the development agenda to succeed, it must be fully crafted, led and owned by recipient countries.  Meanwhile, developing countries receiving aid should adopt and implement policies that were conducive for the achievement of pro-poor economic growth, private sector investment, and empowerment of the poor.  Towards that end, sub-regional and regional cooperation should be used by developing countries in order to utilize their diverse strengths.

She also said that it was necessary for the United Nations, through the Second Committee, to inject a new momentum by sending strong political messages to the upcoming World Trade Organization ministerial conference in Hong Kong, with an emphasis on issues of international trade, the international financial system and development.  Developed and developing countries had common goals but differentiated responsibilities, she said, and the Committee should recognize that as it conducted its work.  She expressed her country's belief that the Committee's scope of work did not need expansion, but that it needed to put into practice its existing agenda and to conduct itself in a more action-oriented manner.

NIRUPAM SEN (India) said that many nations had expected more from the 2005 Summit in the fields of finance, trade, technology and debt relief. It was heartening that the Development Committee communiqué of the International Monetary Fund (IMF) and World Bank had urged developed countries to make concrete efforts in achieving the target of 0.7 per cent of GDP for ODA, and to continue building the needed political consensus to enhance the voice and participation of developing and transition countries in their decision-making.  The United Nations should keep a vigilant eye on reform in the Bretton Woods institutions, and also give political direction to the World Trade Organization meeting in Hong Kong later this year.

Continuing, he said that environmental protection had remained a major challenge for developing countries.  The Johannesburg Plan of Implementation, adopted by the World Summit on Sustainable Development, recognized the need to assist developing countries in achieving sustainable development.  Noting that one of their major constraints was implementation of sound technologies, he said the global regime in place served to inhibit the use of technology for development by impeding the rights of all to share the benefits of technological advancement, rather than facilitate their transfer to developing countries, including in the area of public health.

ABDALLAH BAALI (Algeria) said that a significant gap still existed between the statements made by leaders at the recent World Summit and the actual realities faced by the world's poor.  Discussions on institutional reform and human rights had sidelined questions of development, he said.  Development should remain at the heart of the international community's discussions, because there could be no peace or security without development.

He said his country viewed the quality of international cooperation in its present form as insufficient, not from a lack of technical or human means but from a lack of political will to translate ideas into concrete objectives.  He acknowledged the efforts made so far in financing for development, combating pandemics and addressing the debt crisis.  However, much remained to be done on the subject of trade, for instance, as well as on the opening of markets and on the issue of technology transfer.

Regarding the environment, he said climactic events such as tsunamis, floods, hurricanes and earthquakes were reminders of the need for urgent collective action in that area, for instance through the establishment of early warning systems.  He praised the decision to make 2006 the International Year of Deserts and Desertification, because it increased the world's knowledge about the problems of soil degradation, deforestation, drought and water scarcity encountered by African countries in particular.

PAUL BADJI (Senegal) noted that development faced many obstacles, and that determined steps must be taken to foster growth in all nations.  The international community must explore ways of accelerating progress to end famine, malnutrition and food insecurity in Africa, where millions of people were deprived of the vital minimum they required to cover their basic needs.  Efforts must be made to further integrate the continent into world trade through greater liberalization of international exchanges and eliminating quotas for developing country products. Achievement of the Doha Round of trade talks could not occur unless a multilateral, free and fair trading system was built.

Stressing that Africa must also take part in the digital revolution, he said the international community must close the double gap of infrastructure and human capital that separated developed from developing countries.  It was urgent to realize the 2005 Summit commitments, recognizing that considerable effort was necessary before 2015 to reach the Millennium Goals.  Real political determination was needed to correct the world's severe imbalances.

CHEM WIDHYA (Cambodia), aligning himself with the Group of 77, said that without increased development assistance, many States, particularly least developed countries, would fail to achieve the Millennium Development Goals.  With that in mind, Cambodia called on developed countries to remain firm in their commitment to increase the flow of ODA to the least developed countries to the level of 0.15 per cent to 0.2 per cent of their gross national product in 2006, and to take the necessary steps to reverse the decline in ODA.

His country also believed in the importance of strengthening the United Nations Conference on Trade and Development (UNCTAD), so that that body could better help developing nations and countries in transition to integrate themselves into the multilateral trading system.  He said that a non-discriminatory trading system was needed to create enhanced and predictable market access for the few exportable products that least developed countries had.  In that connection, he expressed full support for the Doha Plan of Action, in particular its efforts to further strengthen areas such as education and information and communication technology.

ILEANA NUNEZ MORDOCHE (Cuba) said the outcome of the 2005 World Summit had been discouraging, thwarting the hopes and efforts of most nations in the developing world.  It had become a forum for United Nations reform, leaving development issues behind, and making ambitious proposals to create new bodies and allocate exorbitant resources to other fields of work.  Previously agreed language addressing important goals and commitments had been questioned, and new formulations in treating such issues as HIV/AIDS and gender equality suffered a real setback.  Some of the new ideas proposed, such as innovative sources of financing for development had not received the desired global support, and even the humble, quick-win initiatives of Jeffrey Sachs faced extinction.

The Second Committee should return development to its place on the United Nations agenda, she said, and its agreements should constitute the basis for practical steps to improve the quality of life of people in all sectors.  The Committee should build on international agreements to achieve what the Summit had failed to do -- identify ways to move forward towards genuine development cooperation.  That cooperation must be unselfish, based on the utmost respect for the sovereignty of nations, as well as the right to choose freely their own development model.  There could be no real progress in economic and social development if cooperation disregarded the interests, priorities and needs of poorer nations.

TUVAKO MANONGI (United Republic of Tanzania) said the 2005 World Summit outcome document was the result of a give-and-take bargaining process, reflecting the minimum that developing countries had been able to secure in the negotiation process.  The development cluster referred to commitments made elsewhere, which must be implemented immediately if developing countries were to achieve the Millennium Goals by 2015.  The primary responsibility for achieving the Goals lay with each country, but an enabling international environment, providing a fair, inclusive, transparent and non-discriminatory international economic system and multilateral institutions, was also important.

In the current global trading system, it was mainly rich countries that benefited disproportionately, while small and poor countries remained marginalized, he said.  Developed countries continued to impose trade-distorting mechanisms, including subsidies to their farmers, high tariff peaks and tariff escalations, as well as high environmental, health and labour standards that rendered products from developing countries uncompetitive.

ALI HACHANI (Tunisia), associating himself with the Group of 77, said peace and security had their roots in poverty and without well-coordinated international partnerships to deal with poverty, instability would continue to weigh on the world.  For that reason, it was crucial to bring the human dimension of development front and centre in the efforts of the United Nations.

Innovative financing, as a supplement to ODA would be a necessary component to achieving that end, as would a balanced, non-discriminatory multilateral system of trade, he said.  But prospects for growth and human development continued to depend on manageable debt, not only for the poorest countries but also for middle-income countries.  The recycling of debt by converting its use to social and environmental purposes could stimulate development and help eradicate poverty.  Tunisia was pleased that a debate on migration would be held in 2006.  It would present an opportunity to discuss the rising costs of processing remittances.

He said his country's hosting of next month's World Summit on the Information Society would mark its contribution to a balanced society, which, up to now, was marked by a wide digital divide.

JUDITH MBULA BAHEMUKA (Kenya), noting that trade could lead to greater human development and contribute to poverty eradication, called for reduced tariff escalations for products of interest to developing countries, and for the elimination of domestic support measures in developed countries.  There was a need to address supply constraints in developing countries, and the successful completion of the Doha Round of trade talks would mean little unless supply capacity and competitiveness issues were addressed.  The international community should put the necessary measures in place to ease those constraints.

South-South cooperation was an important tool in achieving development and strengthening the economic links among developing countries, she said, adding that its potential had remained untapped due to a lack of effective implementation and follow-up mechanisms.  However, profound technological, economic and political changes in the South had provided greater opportunities for increasing cooperation, and trends in capital and trade flow among countries of the South had shown a remarkable increase.  South-South cooperation was gradually moving from bilateral exchanges to regional integration and intraregional exchanges.

FLORENCE CHENOWETH, Director of the Food and Agriculture Organization (FAO), said that in order to achieve a lasting impact on poverty, the interaction of income, hunger reduction, education, health, gender and environment must be understood.  It was also necessary to fund actions and initiatives that reduced hunger through rural development and the reduction of rural poverty, while at the same time strengthening direct access to food by the most vulnerable.

For its part, she said, FAO would continue to bring to the early attention of the international community issues and situations that may have an adverse impact on development, such as the avian flu.  Through the "Education for Rural People" programme, an initiative being carried out in conjunction with United Nations Educational, Scientific and Cultural Organization (UNESCO), FAO would build awareness about the importance of rural education and gender equality.  FAO had sent Member States information about a special conference of Agriculture Ministers from small island developing States to examine issues affecting food security and sustainable development in their respective countries.  In observance of the International Year of Microcredit, the organization would carry out activities in rural finance.

Critical to FAO's work would be the building of partnerships with institutions that shared the same goals, she said.  Those included the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP).  In continued support of the New Partnership for Africa's Development (NEPAD), FAO would work on a document on forestry, fisheries and livestock.

Right of Reply

The representative of the United States, speaking in exercise of the right of reply, said that her country's embargo against Cuba should not be addressed in the General Assembly and by bringing up the topic, Cuba was diverting attention from the failed economic policies of its communist Government and its poor human rights record.  The United States was the largest source of humanitarian assistance to Cuba, and if its population suffered from hunger, that was due to the failings of its own Government.

In the view of the United States, she said, Cuba seemed to have no interest whatsoever in reforming its economy to that of a free market economy, which had led to its mismanagement.  Forty-five years ago, Cuba's per capita income was equal to that of Spain, but now the country had one of Latin America's most desperate economies.  Cuba was not a victim as it sought to present itself, but the seat of a tyrannical Government that punished any who dared to have a differing opinion.  The United States would not support an opening with Cuba as long as it was being led by Fidel Castro, who denied Cubans their basic human rights.  Neither could the United States support an economic opening with a country with such an abysmal record on political and economic issues.

The representative of Cuba replied that for 13 years, the General Assembly had adopted the resolution entitled "To put an end to the economic and financial blockade against Cuba", which rallied the support of 179 Member States and provided the most obvious proof of the vigorous rejection by the international community of the obsessive, criminal policy of the United States Government against Cuba.  Cuba knew full well that the pretext employed by the United States Government in adopting that stance was in open rejection of international law and had grave extraterritorial implications.  To say the embargo was simply a bilateral issue was a lie; it was not a simple embargo but an economic war against Cuba of colossal dimensions.

She said it was not necessary to enumerate the innumerable achievements of Cuba on human rights.  The country did not believe the Committee to be the appropriate forum for a debate on that matter, though it was ready to hold a debate on the issue in any forum.  It was surprising to hear such accusations from a Government that in recent days had ignored the rights of its own population that had been affected by Hurricane Katrina, to give one example.  The United States delegation ignored the achievements of Cuba in the social and economic development areas.

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