Group of 77: Indonesia takes over Chairmanship

In a speech on 12 January 1998, marking the handover of the Chairmanship of the Group of 77 from Tanzania to Indonesia, Ali Alatas, the Indonesian Foreign Minister, expressed the view that the Group could act as a platform for both South- South cooperation and holding a dialogue with the North to effect a more equitable globalization process. Specific issues which have to be addressed by the Group include UN reform, financial flows for development, debt servicing and the multilateral trading system.

NEW YORK: Globalization has to be given the highest priority on the agenda of the Group of 77 so that it could be managed wisely, with an eye to equitable sharing of responsibilities and benefits, Indonesia's Foreign Minister, Mr Ali Alatas said here on 12 January, at a ceremonial meeting of the Group when Indonesia took over the Chairmanship from Tanzania.

Mr. Alatas suggested that the G77 should convene an experts group meeting to articulate a vision of the South on the future role of the United Nations, and to formulate inputs for a possible South-South Summit, called for in the San Jose Declaration on South-South Cooperation and endorsed by the 21st annual meeting of the G77 last September.

Globalization and the South

The Indonesian Foreign Minister noted that since the demise of the Cold War era and with the fundamental changes that have taken place on the international economic scene, globalization has become so pervasive that no country can escape its impact. And though it has considerably benefited some countries that have managed to avail themselves of its broadened opportunities, many developing countries are facing enormous challenges, risks and uncertainties. Its impact has threatened the weakest and most vulnerable economies with disaster.

Even those developing economies that have managed to integrate with the global economy and thereby achieved a certain level of dynamism, have found themselves susceptible to severe currency fluctuations and to the rigours inflicted by international financial markets moving large amounts of capital in and out of countries, often with staggering speed.

Recent events in East and Southeast Asia have demonstrated that, given such volatility, economic structures painstakingly built over decades through painful adjustments and sound fiscal and monetary policies could crumble in the span of a few weeks. Through its contagion effect, this upheaval in one region could spill over to other parts of the world where even the developed countries are bound to feel its shock. The IMF and the World Bank are heeding the call of the Asian countries to examine closely recent developments in currency markets with a view to their appropriate regulation so that their operations would be rendered more open and transparent.

The profound changes wrought by globalization and economic liberalization make it all the more necessary that the G77 continue working for the achievement of an international climate conducive to development and to a more equitable and effective functioning of the global economy. The Group should define its work, this year and in the years ahead, in such a way as to cover the common interests of all developing countries, whatever be their levels of development, and at the same time contribute to an overall improvement of the global economy. Its advocacy of the developing world should also provide a sound basis for constructive dialogue with our negotiating partners in the developed world.

But such a constructive dialogue would prosper only within the processes of a UN that has been reformed and thus rendered more capable of fulfilling its mandate in the social and economic spheres. The reform package initiated by the UN Secretary-General should lead to the enhancement of the role of the UN in the promotion of international cooperation for development.

For, at the global level, only the UN with its universal mandate and democratic orientation can assume a primary role in the management of globalization and economic liberalization with a view to ensuring justice and equity. At the same time, the issue of international cooperation for development should be returned to centre stage in the reformed organization and, along with an agenda for development and the right of all peoples to development, be accorded the emphasis and attention that it deserves. In this regard, the Regional Commissions play an essential role in articulating the concerns and needs of regions in their striving for sustainable development and should therefore be strengthened in the course of UN reform.

The G77, as one of the main deliberative forums within the UN, should endeavour to adapt to the reforms so that it too could judiciously respond to the challenges of the new millennium and play a constructive role within the framework of the UN. For that purpose, Mr Alatas suggested, the Group should convene an experts group meeting that would contribute to the articulation of the vision of the South on the future role of the UN. Such a meeting could also formulate inputs towards a possible South-South Summit as called for in the San Jose Declaration on South-South Cooperation which was subsequently endorsed by the 21st Annual Ministerial Meeting of the Group last September.

Financial flows for development

The steady decline in financial flows for development is among the most urgent concerns of the Group. Financial flows now are largely in the form of foreign direct investment and large private capital flows to finance international production. The few developing economies with infrastructures and productivity levels adequate enough to attract such flows risk being devastated by a sudden change in the direction of these flows. On the other hand, most developing countries must depend on official development assistance which has been declining. This has led in many cases to economic stagnation.

"We are therefore heartened that the 52nd Session of the General Assembly has adopted a resolution on 'High-level Intergovernmental Consideration of Financing for Development', which is a significant first step in squarely addressing this critical issue. Indeed, it is imperative that this complex, multi-dimensional issue be resolved in a systematic, comprehensive and constructive manner."

Compounding the challenge of a dearth of financial flows for development is the burden of external debt servicing that has severely hampered the development efforts of many developing countries. Many initiatives have been launched to resolve the external debt crisis but these have at best resulted in some measure of temporary relief as they addressed the various sources of indebtedness separately instead of comprehensively covering bilateral and multilateral debts as a whole.

The G77 should therefore continue to work for an effective "once-and-for-all" solution to the debt problem that would not only bring lasting relief to debt-burdened developing countries but also bring them back on the road to development.

The growing problem of private sector indebtedness that has wreaked havoc on exchange rates and stock markets in some developing countries must also be addressed decisively.

To many developing countries, economic growth requires expansion of trade - for which there should be enlarged opportunities in this era of globalization.

"Unfortunately, in spite of the establishment of the WTO, some developed countries have found new and insidious ways of undermining the comparative advantage of our exports, such as the introduction of extraneous issues like the environment, labour laws, human rights and other social issues in trade and economic cooperation arrangements. It is indeed ironic that while an agreement on financial services has been reached, the major exports of developing countries, notably agricultural products and textiles, are being subjected to arbitrary protectionist measures."

It is therefore essential that developing countries become full and equal partners in the common endeavour to nurture a free and just multilateral trading system within the framework of the WTO.

In this era of globalization, the issue of the environment and its linkage with development has become increasingly pertinent. These two issues should be dealt with in accordance with the agreements reached at the Earth Summit of 1992. This means a balanced approach in which development should not be sacrificed in the name of environmental protection. Developed countries should therefore be held to their commitment to provide the necessary financial resources and transfer of technology that will enable developing countries to implement sustainable development programmes.

South-South cooperation

"The challenges of this era of globalization and economic liberalization demand from all of them a high degree of competitiveness and a tremendous capacity for self-reliance. This means a commensurate enlargement and strengthening of South-South cooperation as a way of solving many of our problems of national development as well as a strategy for global economic growth. When South-South cooperation takes place between regional economic groupings, it could serve as a way of softening the negative aspects of globalization, including the marginalization of developing countries from international economic decision-making. We should therefore build on the consensus embodied in the resolution on Technical and Economic Cooperation Among Developing Countries (TCDC/ECDC) adopted at the 52nd Session of the General Assembly, on the need for increased dialogue and cooperation among regional economic groupings."

Alatas announced that the Indonesian Government was prepared to convene an experts group meeting on strengthening economic cooperation among the regional economic groupings of developing countries. He also urged the G77 members to participate in the projects and activities of the Centre for South-South Technical Cooperation which will be launched in a few weeks in Jakarta.

"The solution to the fundamental economic issues of our time depends on our capability to form, together with the industrially advanced countries, a global partnership for development. The rigours and vagaries of globalization demand that our Group strive even harder in pursuing that goal. In doing so, we face formidable tasks but we shall not be fazed for we can draw commensurate strength from our sense of solidarity and unity of purpose. Impelled by the aspirations of our people and guided by our shared vision, let us dare to build a new and more equitable and just world."

Earlier, in turning over the Chairmanship to Indonesia, the Tanzanian Foreign Minister, Mr Jakaya M. Kikwete said that fostering an enabling environment conducive to rapid and sustained economic growth and development was indispensable for developing countries, particularly the least developed countries. Poverty, hunger, disease and ignorance cannot be overcome unless the production of goods and services is greatly increased in developing countries.

Developing countries as a whole are still confronted with many shared and common problems and challenges arising from the deepening interaction among nations and the accelerated globalization and liberalization of the world economy.

In this regard, all developing countries are vulnerable to the unfavourable economic environment, which calls for increased international support, including concerted South- South cooperation.

In surveying the various issues that came up before the UN and its system in 1997, and the G77's activities and achievements in this regard, Mr. Kikwete made a special reference to the inputs to the Group's work from the South Centre and the Third World Network. The South Centre, he said, had made major contributions, especially during the UN General Assembly Special Session (UNGASS) and the UN-reforms debate. The G77, he added, should explore ways and means of strengthening its existing cooperation with the Centre.

The Tanzanian Foreign Minister also expressed his sincere appreciation for the positive contribution of the Third World Network to the work of the G77 and China through the various activities of the TWN such as roundtable discussions on issues of importance to developing countries and through articulating South issues through its publication.
(Third World Economics No.178, 1-15 February 1998)

The above article was originally published in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.