[stop-imf] Camdessus, with pie on his face, bemoans world poverty

[Robert Weissman]

This is an UNCTAD release:

IMF MANAGING DIRECTOR SAYS EXTREME POVERY COULD NO LONGER

BE TOLERATED AS MEANS TO AMELIORATE IT ALREADY EXISTS


UNCTAD X Meeting in Bangkok Also Hears Statements
By President of Cambodia, President of Conference, UNCTAD
Secretary-General


Poverty is the greatest threat to stability in a global world, the
Managing Director of the International Monetary Fund (IMF), Michel
Camdessus, told the United Nations Conference on Trade and Development
(UNCTAD) this morning in Bangkok.  In a keynote address to the Conference,
he declared that extreme poverty in the poorest countries could no longer
be tolerated since the means to ameliorate it existed.  Poverty was no
longer inevitable -- if it had ever been.

The world had unprecedented prospects, he explained, but it also faced
financial instability and exclusion.  Although the most severe economic
crisis of the last 50 years had been overcome with unprecedented speed,
peoples anxiety was not unreasonable.  However, if the dynamics of recent
history could be identified, a new chance to improve human well-being
would be created. 

Among those dynamics, he said, was a recognition that major economic
crisis could be overcome.  Another was the new development paradigm that
was emerging.  A third dynamic was the knowledge that globalization could
lead to world progress, if properly handled -- "and that is a big if", he
cautioned.  

Rubens Ricupero, the Secretary-General of UNCTAD, said the present
gathering was a good place to conduct a thorough in-depth reflection of
the development process -- what went right, what went wrong and why?  He
called on the Conference to avoid old conceptualizations like "the State
versus the market" and face the real challenges of the present, by
analysing facts, not ideologies.  There was an "arrogant" strain of
globalization that endorsed unfettered power of footloose capital, and was
only concerned with profit.  For UNCTAD, globalization meant
interdependence, the mutuality of interest and "win-win" situations. 

Also addressing the Conference this morning were the President of
Cambodia, Samdech Hun Sen, and the President of UNCTAD X, Supachai
Panitchpakdi, of Thailand. 

Finally, the Conference decided to recommend the establishment of a
Committee of the Whole, electing Philippe Petit (France) as its Chairman.
It elected Mohammad Nahavandian (Iran) as Rapporteur and appointed the
following States as Vice-Presidents of the Conference:  Bolivia, Burundi,
Canada, China, Colombia, Czech Republic, Dominican Republic, Egypt,
Ethiopia, the former Yugoslav Republic of Macedonia, Gabon, Guatemala,
Japan, India, Lebanon, Lesotho, Mexico, Netherlands, Nigeria, Norway,
Pakistan, Peru, Philippines, Russian Federation, 


(more)
 Singapore, Slovenia, South Africa, Spain, Sweden, Switzerland, United
Kingdom, United States and Uruguay.

The Conference will meet again at 3 p.m. today to hear an address by the
Prime Minister of Viet Nam, Phan Van Khai, and a statement by former
UNCTAD Secretary-General Gamani Corea.  It will then begin its general
debate. 

Address by IMF Managing Director

Managing Director of the International Monetary Fund (IMF), MICHEL
CAMDESSUS:  The world faced a situation at present where there is a
promise of unprecedented prospects but also financial instability and
exclusion.  There are serious reasons for the anxiety felt by some about
globalization, even though the world has reasonably overcome, with
unprecedented speed, the most severe economic crisis of the last 50 years
and even though it enjoys better prospects for sustainable growth.  There
is a unique opportunity at present -- too good to be missed -- to try to
identify the dynamics in recent history, and thereby offer a new chance to
improve the well-being of humankind. 

There is also a unique opportunity to recognize that poverty is the threat
to stability in a global world, and that an all out effort is needed to
overcome world poverty.

Three of the positive dynamics in recent history are that major economic
crisis can be overcome and that a stable world can be built on its
lessons; that a new development paradigm is emerging; and that we now
recognize that globalization, if properly handled -- and that is a big
"if" -- can be an opportunity for progress for the world. 

The resilience of Asian economies to such a severe crisis, the courage of
authorities and the capacity of the international community to respond
promptly with technical and financial assistance must be noted.  While the
human cost of the recent financial crisis is to be deplored, by 1999 all
economies were recovering and the gross domestic product (GDP) of the
Republic of Korea and the Philippines already exceeded pre-crisis levels.
Thailand, too, would soon be "graduated maxima cum laude" from the IMF
programme.  Its economy is on the path of recovery and industrial output
is now at pre-crisis level. 

The Asian nations and emerging markets elsewhere which have confronted the
crisis with such fortitude are to be saluted.  It is a tribute not only to
their governments and institutions but also to their people.  We must not
pretend the reform process is over, but it is important that economies
have stabilized and fundamental changes in finance and corporate sectors
have been made.  These States have now gained a better chance now of
achieving high quality growth.  Beyond the recovery, there is another
golden opportunity to press for a world less vulnerable to upheaval. 

There are three basic lessons to be learned from these countries.  First,
that it is of essential importance to strengthen all available means of
prevention, and that institutions must be given these means to prevent
crisis.  Second, that the strength and determination of governments is of
decisive importance in avoiding crisis.  Third, that the international
community has the ability to respond and thus reduce the length of the
crisis.  These lesson are an important avenue for stability in the future,
and underline the extensive reform agenda for international monetary and
financial system which is being implemented. 

The recoveries rest on, or have developed in parallel with, positive
developments in the way the international community approaches its
economic challenges.  A new paradigm of development is progressively
emerging here.  A key feature of this is the progressive humanization of
basic economic concepts.  It is now recognized that markets can have major
failures, and that growth alone is not enough and can even be destructive
of the natural environment and of social and cultural goods.  Only the
pursuit of high-quality growth is worth the effort.

High-quality growth is growth sustained over time without domestic and
external imbalances, but it is also growth that has the human person at
its centre.  It is accompanied by high levels of investment in education.
It is growth that is sustainable, based on continuous efforts for equity,
poverty alleviation and for empowerment of poor people, and that promotes
the protection of the environment.

A second key feature is the convergence between respect for ethical values
and the search for economic efficiency and market competition.  This
augurs well for the highest quality growth.  There is now a far wider
recognition that participatory democracy can maximize the effectiveness of
sound economics, that transparency, openness and accountability are basic
requirements of economic success, and that combating collusion, corruption
and nepotism is a legitimate concern of the international community.
Stability and strong institutions are clearly essential for growth and
hence poverty alleviation, but popular support for stabilization and
reform cannot be counted on unless the whole population, including the
poorest, are able to contribute. 

In short, a new economic paradigm is emerging.  New opportunities arising
from information technology, compounded with more reasonable efforts to
share the benefits of growth, will amplify economic and monetary
stability.  The new paradigm is rooted in fundamental human values, and
together with a better ability to prevent and manage crisis, it is a
distinct and positive chance of our times. 

A vigorous call to turn globalization into an effective instrument for
development can be detected.  Globalization can be seen in a positive
light -- not as a bland malevolent force.  Globalization should be seen as
a logical extension of human and economic relations that have already
brought prosperity to many countries and people, and as the best means of
improving the human condition throughout the world. 

If such powerful positive dynamics are at play, one must ask why there is
such anxiety and rejection of globalization.  There is anxiety because
globalization has not yet demonstrated that it is concerned enough, or
capable of, overcoming the greatest concern of our times -- poverty. 

Poverty is the ultimate systemic threat facing humanity.  Consideration of
the positive dynamics makes the lack of pace in reducing poverty all the
more unacceptable.  The widening gaps between rich and poor within nations
and the gulf between affluent and impoverished nations, are morally
outrageous, economically wasteful and potentially socially explosive.  It
is not enough to increase the size of the cake.  The way it is shared is
deeply relevant.  If the poor are left hopeless, poverty will undermine
societies through confrontation, violence and civil disorder.  We cannot
afford to ignore poverty anywhere. 

The extreme poverty in the poorest countries can no longer be tolerated.
We must work together to ameliorate it.  The means exist to do this.  The
information  technology revolution reveals its potential daily and could
eliminate forever the knowledge gap between rich and poor countries.
Global markets can easily allocate resources to poor countries, provided
the environment is right, and the poorest countries are more determined
than ever to centre their policies on human development. 

Poverty is no longer inevitable -- if it has ever been.  It can be
addressed, provided new opportunities are mobilized for the poorest.  This
can be done by being respectful of priorities of those countries
themselves.  The best way to respond now -- North and South together -- is
to mobilize all our resources at least to implement the
not-overly-ambitious pledges already made by States at the United Nations
conferences of the 1990s. 

By taking the necessary steps to this effect immediately -- tomorrow will
be too late -- we can significantly increase the chances of a diverse
synergy between social spending and growth.  We can thereby achieve the
higher level of national growth necessary to reduce poverty by half by
2015.  And the acceleration of growth in developing countries can
stimulate growth everywhere. 

The principles States committed themselves to in the 1990s must become
operational.  The challenge is to work together to build developing
country capacities to fight poverty and to mobilize resources to support
their efforts.  Poverty is a challenge that the poor countries must
confront themselves.  They are on the front line.  Many have shown what
can be done when the ultimate objective is human development. 

The content of programmes is important, but so is the degree of national
support for them.  A programme will only work if people and society
support it.  Success lies in national ownership through a participatory
approach that engages civil society.  It is essential to ensure that poor
countries are in the drivers seat of the process, and the rest of world
should be ready to provide support when a country indicates it needs it.  

Development partners can assist by assigning the highest priority to
providing unrestricted market access for all exports from poorest
countries.  They can also work to encourage private flows of investment to
lower-income developing counties.  And they can back up their pledges to
reduce poverty, in the North and in the South.  Official bilateral
creditors and donors should be ready to step up the level of assistance.
Aid fatigue is not a credible excuse, but is almost cynicism when, for the
past decade, advanced countries have enjoyed the peace dividend.  It is no
longer fashionable to mention the commitment to provide 0.7 per cent of
GDP as overseas development assistance, but that objective is still
relevant.  Debt relief is a most welcome contribution, but must not be
seen as a substitute for new financial flows. 

Multinational institutions are ready to play their part.  It is imperative
that a new higher level of cooperation exists between the United Nations
system and the Bretton Woods agencies, as together they try to support the
work of countries to alleviate poverty.  The task is just monumental.  All
out effort is needed to alleviate poverty.  A higher level of cooperation
is needed.  A reinvigorated  multilateralism must be the response. 

The international community is giving with one hand but taking away with
the other.  Governments have made a far-reaching decision in the Bretton
Woods institutions to reduce by half the debt of 35 to 40 of the poorest
countries.  However those same governments have failed, in the World Trade
Organization (WTO), to launch a trade round or to take steps to eliminate
trade barriers to exports from poorest countries.  The latter initiative
has the greater long-term potential for export-led growth and for income
generation and lifting the poor out of poverty.  Unless reversed, these
failures by governments will make a mockery of their debt-relief
initiatives.

There is a similar incoherence in government activities for peace and
development in Africa.  Just as development is the other name of peace, so
peace is the other name of development.  The arms trade and military
expenditures must be restrained.  Perhaps United Nations Secretary-General
Kofi Annans suggestion that military expenditures be set at no more than
1.5 per cent of GDP in Africa could be followed.  States could also
cooperate in the interdiction of the smuggling of raw materials and
natural resources to finance armed conflicts, and they could broaden the
United Nations arms register to involve more countries and to include
small arms.  How many ploughshares could be forged with such an oversupply
of swords? 

In the past two years, a great deal has been done to identify the
architecture needed to reform the international monetary and financial
system and a start has been made on that reform.  All countries have a
responsibility to make sure they are doing everything to make their
institutions and economies measure up. 

However, there must also be more coherence in the attitude of governments
to political support for multilateral institutions.  Governments sometimes
find it convenient to fail to support measures in public that they
wholeheartedly support in the executive bodies of international
institutions.  In a world where demagogic campaigns can develop in a
flash, no multilateral body can fulfil its responsibilities unless it is
perceived for what it is -- a faithful instrument of its member states.
The IMF and others must be seen to have the legitimate political support
of their shareholders. 

Multilateralism is the best way of enhancing the coherence of actions and
initiative for all humanity, but multilateral institutions are also the
only avenues to properly address the broad issue of world economic
governance.  This is not a utopian vision of world government but an
effort to find global responses to inescapable global problems. 

Globalization has until now operated at the whim of financial and
technological forces, but it is high time that responsibility for it is
taken.  The world needs to be imaginative enough to conceive of
institutions that will best serve this purpose, or at least make necessary
changes to the Bretton Woods or United Nations institutions to allow them
to do so. 

Strong dynamics are at play in our history, carrying the promises of more
financial stability, of a new paradigm of development and of a better
chance of humanizing globalization.  They could make it possible to fulfil
the universal pledge to reduce poverty.  Through reinvigorated
multilateralism, we can better address the global dimension of problems. 

The bell that UNCTAD has chosen as a logo for this Conference is
reminiscent of the bells of villages -- calling old people to wake up and
reminding them that an angel has visited the earth.  It can serve as a
reminder that, provided humanity cooperates, the world can be saved.
Positive dynamics for high quality equity development have been given to
the world today.  It is up to us to cooperate, in a spirit of
responsibility and solidarity, as good citizens of one global village.

	Replies to Questions

	Asked what kind of IMF was needed, Mr. CAMDESSUS said that first,
the IMF must remain as it was.  Its purposes were as valid today as they
were 50 years ago.  The growth of balanced international trade must be
promoted, while developing the public resources of all members. The Fund
must also continue to assist in the establishment of a multilateral system
of payments and give confidence to all its members. 

The IMF continued, he said, to be a self-reforming institution and it
accomplished this according to the needs of the time.  Its central task,
however, was not financing but surveillance.  Its goal was to help all
countries perform with excellence, optimize their economic policies,
improve the plight of their people and assist them in their contributions
to the world.

Surveillance must now be broadened to incorporate the establishment of
stability, strengthening banking and financial systems and improving the
quality of governments, he declared.  The new world financial architecture
must also have the full participation of the financial and private
sectors. 

Poverty reduction must be at heart of programmes, because experience has
taught that there is a kind a positive equation taking place:  sound
macro-economic and monetary policies led to growth, as well as poverty and
inequity reduction. 

He said the Funds focus on surveillance and crisis prevention should not
be carried by abandoning members.  The IMF was committed to its 180-plus
members.  Systematic crises could occur, as it did in Thailand, but the
IMF must be constant in its support. 

The private sector must also be involved in market-based solutions, he
said.  The emphasis made earlier that debt relief and market access must
go hand-in-hand was an issue he favoured.  Debt relief was only a
temporary means.  The relief provided by the World Bank had to be balanced
by the provision of market access by the WTO.

On a question raised about crises and poverty reduction, he said action
must be taken now and solidarity must be demonstrated.  It will be
necessary to spend more for social purposes.  But resources must be
generated through a more flexible economy.  Flexibility must be stressed
so that country economies could grow.  South Africa, for example, did not
grow enough and there was a need for structural changes to fuel such
growth.

The IMF was seen unjustly as an instrument that created marginalization,
he said.  "Let me, however, refer you to 80 countries that currently have
IMF programmes", he added.  Would they want such programmes if the Fund
did encourage marginalization?  The IMF tried to work hand-in-hand with
governments, and it did everything it could to help the poorest, with help
of the World Bank, the United Nations and other institutions. 

The IMF, he said, also wanted to be attentive to the problem of the
smallest and weakest countries.  It was trying to bring their problems to
the attention of the international community.  It was  currently doing
this and had not closed its agenda to such countries.

On the question of the yardstick used to define poverty situations, he
said the IMF was open to any serious discussion on this issue.  "But you
must help us to convince the world that this kind of measurement must be
reviewed", he added.

He said he was also aware that it was not one-country, one-vote which
prevailed in the current system.  Although this was the desired system, it
was not in his hands to change the status quo.  However, all of the
important decisions taken by the Funds board were taken by unanimity and
not by a majority imposing its views on the world

There also seemed to more interest in dwelling on the mistakes of the past
than in discovering avenues for the future.  The IMF, as part of a larger
system, shared the mistakes of the system and had made mistakes.  However,
the IMF was more interested in learning the lessons from these mistakes.
It had been accused of being erroneous in its handling of the Asian
crisis.  "How then are we witnessing such a quick recovery?"

Another criticism is that interest rates were very high.  But did
countries have the courage to take the necessary action to reduce them?  A
number of Asian countries, however, were reducing inflation because such
policies were working. 

There was also no "cronyism" between the IMF and Wall Street, as had been
inferred.  Read the Wall Street Journal to see how critical they were of
some of the IMF policies.  

And yes, the IMF did share many of the views of the United States treasury
because it had 18 per cent of its capital.  The United States, however,
was also in the forefront of the fight to establish a global market
economy.