ADDRESS
BY
RT. HON. P. J. PATTERSON, P.C., Q.C., M.P.
PRIME MINISTER OF JAMAICA
AT
THE IX SUMMIT OF THE G-15
MONTEGO BAY, JAMAICA
WEDNESDAY, 1999 FEBRUARY 10
As we gather once again in the Hemisphere of the Americas, it is my distinct
pleasure to welcome Leaders of the G-15 to Jamaica. I extend a most cordial
and sincere welcome on behalf of all Jamaica.
The privilege of hosting this Summit has fallen to Montego Bay, the capital of
Caribbean tourism. I invite you to enjoy the beauty and variety of our
entire island during your sojourn here.
My colleague Heads know how eagerly I have anticipated their attendance and
how warmly I welcome their presence. I am happy that you were able to come.
The accession of Sri Lanka to our membership will add to the strength and
vitality of our Group. The presence of President Chandrika Bandaranaike
Kumaratunga amongst us, provides a fresh and graceful dimension to our
deliberations.
It is a joy for us in the G-15 to have here in Jamaica, the Nigerian Head of State.
Under the guidance of General Abubakar, Nigeria is poised, once again, to play
an influential role and be a credible voice, in espousing the cause of developing
countries.
Permit me to make special mention of President Chavez of Venezuela, who is
making his first visit abroad after taking the oath of office a few days ago.
We are confident that the G-15 will be strengthened by his contribution, devoted
as he is to the quest for social justice.
GLOBALIZATION
We have repeatedly asserted that globalization is no longer a choice but a
reality. But that does not mean we are all powerless to remove its obvious
imperfections.
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The vast opportunities that emerge from the forces of globalization and
liberalization are equally matched by repercussions which threaten the very
economic survival of many countries within the developing world.
The financial crisis now spreading in several regions, jeopardising the prospects
of economic progress, increasing poverty, causing social instability and
alienation, highlight the economic, financial and social difficulties that can result
from an increasingly interdependent global environment.
It is patently clear that there are aspects of globalization, which hold more
hazards for the weak than for the strong. The pace and direction of
globalization, which threaten defenceless nations and endanger millions of
vulnerable people, will have to be curbed.
Ultimately, this is necessary even in the interests of the strong.
As economies have become more interdependent, the opportunity for wealth
creation has multiplied. So too has the opportunity for destabilising shocks,
transmitted from one country to another.
Yet, no satisfactory mechanism exists to anticipate or respond properly to future
shocks.
The imbalance between the high and growing levels of economic integration and
the lack of structures for managing the system, forces us in the G-15 to pool our
experiences and contribute to viable solutions.
GLOBAL INEQUITIES
We tend to associate this Century with the flowering of human genius and the
explosion of human betterment. And in some respects that is true; but it is not
true in all aspects.
One hundred years ago, as our forefathers looked with hope to the new century,
the global poverty gap, measured as the ratio of average income of the richest
country in the world to that of the poorest, was nine to one.
As we enter the 21st, the global poverty gap has widened. That ratio has risen
to sixty to one.
The world is more unequal than it was when this century began; yet as it ends,
the world is much more interlocked and interdependent.
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We must act with greater urgency and not just pay "lip service" through pious
declarations of respect for human rights. As citizens of the world, the poor must
also be accorded their social, economic and cultural rights.
The battle to eliminate poverty from the face of Mother Earth must commence
now.
The economies of developing countries currently face a disturbing position in the
global arena. In the thirty years between 1965 and 1995, average per capita
income in Africa fell from 14% of that of the industrialized countries to only
seven per cent.
In Latin America and the Caribbean, for the corresponding period, per capita
income was reduced from 36 to 25 per cent of that of industrialized countries.
These figures highlight the challenges now faced by developing countries in
advancing the quality of life of their peoples in the light of worsening income
gaps, between the developed and the developing world.
Even within a few industrialised countries, we see a widening gap and increasing
unemployment as market concentrations lead to mergers of huge conglomerates
and consequential lay-off.
FINANCIAL AND ECONOMIC CRISIS
The pace of globalization of the financial and other markets has outstripped the
capacity of governments to provide the necessary framework to ensure stability.
Let me give you an example: Total private net capital flows to 29 emerging
markets, mainly in Asia, Latin America and Eastern Europe, surged from around
$20 billion in 1989 to $310 billion in 1996. This has now collapsed in the wake of
the recent crisis to $150 billion in 1998. This situation is projected to fall even
more sharply.
The story of that rise and fall is at the heart of the current debate on global
systemic financial instability, and how we deal with it.
None of the governments of the Asian countries most affected by the crisis had
perpetrated failures in their macro-economic policies.
Faced with staggering losses, there were only two practical responses available
to the governments, in the absence of external support of a comparable
magnitude to the capital outflow.
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Firstly, a sharp increase in interest rates precipitating company insolvencies and
recession. Secondly, an enforced devaluation, which led to further insolvency
among companies with huge foreign debt exposure.
These conditions, in turn, have led to an appalling downward cycle of
impoverishment.
GLOBAL FINANCIAL ARCHITECTURE
What has been exposed by the recent crisis is the worst of all possible worlds -financiers
who acted as if there was a global lender of last resort to bail them
out, combined with the lack of a lender of last resort, when crisis actually struck.
As a lender of last resort, the IMF remains unsuited to that role. It simply has
not been given adequate financial resources. Yet with its limited resources, it did
"bail out" creditors, while leaving debtors in the lurch.
It is clear that the world needs a properly constructed arrangement for a lender
of last resort.
This is currently on the Reform Agenda, but first, we must ensure that the
developing countries have a genuine part in final decision-making.
Prevention, of course, is invariably better, and cheaper, than cure. If imprudent
lending behaviour is prevented, then risks of contagion are reduced.
All major financial markets are subject to prudential regulation: sufficiently light
to encourage financial innovation and competition but sufficiently tough to
prevent reckless behaviour which threatens the stability of the system.
There is no comparable system of prudential regulation at a global level.
Emerging markets have been pressed to liberalise their financial markets,
without adequate controls. This has contributed to growing tremors in the
international economic system.
Even if the emerging market crisis spreads no further, fundamental questions
have already been raised about the structure of global governance.
There must be a multilateral approach to monitoring and managing global crises.
We need to take a bold new look at the architecture of international economic
institutions, and Developing Countries have to insist on being a part of the
design team.
We must demand a rapid and more effective response to the negative social
effects of the existing global economic structure.
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To prevent the further stagnation and marginalisation of our economies and to
relieve severe social pressures on our peoples, we first raised our voices in
Malaysia for a holistic international financial system. Such a system must reduce
the risk of sudden market crises, which destabilise the world economy.
Clearly, there is an urgent need for strong and enforceable international
arrangements for effective regulation.
DEBT
Short-term private capital flows now dominate total net financial flows to the
developing world. With most of these resources gravitating to a few developing
countries, increasing inequalities will emerge, since the poorest countries are not
benefiting from this aspect of globalisation.
Against the background of this unequal access to private capital, official
development flows have continued to stagnate, except those from a few Nordic
donors. This situation represents a serious development crisis for Heavily
Indebted Poor Countries, which are highly dependent on external financing.
The international community must therefore continue to pursue the reforms
energetically. There must be institutional reform, more democratic, transparent
and accountable to its members, and a redesign of the policy frameworks, more
appropriate to national circumstances.
Private capital flows are to be encouraged but they should never at any time be
regarded as a substitute for development assistance.
The severe strains resulting from international financial exposure of developing
countries must prompt our call for ensuring increased concessional funding.
The need for effective responses to the inequities of low-income debt is
imperative.
While the mechanisms for alleviating problems of debt by middle-income
countries to commercial creditors were being improved, there had been virtually
no progress in relation to the debt of low-income developing countries.
Over the last decade there has been a stream of initiatives "Toronto"; enlarged
Toronto"; Trinidad", now the HIPC Initiative announced amid considerable
fanfare, but producing little in aggregate terms.
Africa - potentially the main beneficiary - can expect no advance by the new
Millennium on per capita incomes enjoyed in 1980. It now faces the additional
handicap of increasingly depressed commodity prices.
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INTERNATIONAL TRADE
The resurgence of protectionist measures by developed countries, especially
those emerging in the disguise of technical standards, environmental, social and
humanitarian concerns and anti-dumping measures, highlights the obstacles
which we face.
The problem presented for the world economy by weak commodity prices is
largely unrecognised in current ad hoc responses to the present crisis.
Commodity futures are at a 20-year low.
Oil prices are lower in real terms, than at any time since the 1973 "oil shock".
Non-oil commodity prices are now a remarkable 70% lower in real terms than
when the Club of Rome warned of growing shortages and soaring prices. All
this has been a calamity for commodity producers.
Until very recently, this slump in commodity prices, has actually been seen by
commodity importers as a gain in the terms of trade.
It represents an involuntary transfer of income to resource rich countries from
the resource poor and is both a real and a structural problem.
The deep slump in commodity prices is not an unalloyed blessing to importers.
It is increasing the risk of economic collapse, debt default and political turmoil in
major developing economies.
The international community needs to resume its work on commodity price and
earnings stabilisation, abandoned over two decades ago on the mistaken notion
that unbridled market forces would take care of it all.
There has been a failure to faithfully implement certain provisions of the Uruguay
Round Agreements, which are of particular, concern to the export interests of
developing countries.
This points to the urgency of securing a more equitable, predictable and nondiscriminatory
institutional mechanism for international trade, which takes special
account of the constraints and interests of developing countries.
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THE WTO: A RE-VISIT
As we did in Harare, the G-15 has to devote special attention to shaping the
agenda of the WTO in an effort to ensure the preservation of the interests of the
developing world.
Reciprocity is reasonable, only when we are all at the same starting point.
We should not hesitate to support the maintenance of special and differential
treatment, especially within the context of growing regionalism among the
developed markets.
For us in the Caribbean, this is no theoretical exercise. Along with West African
countries, we are living through the terrible nightmare of the threat to our small
societies and fragile economies in respect of banana exports. It is a real threat
to our poorest people, when treaty arrangements designed to redress inequality,
are endangered through the duress of retaliation by the big and powerful.
The WTO itself will have to be re-visited.
It must not be allowed to betray all our expectations. It is time that values like
fairness and equity are restored to their centrality, as these principles were
recognised in the days of the GATT.
In the field of services, developing countries must demand that labour be treated
in the same way as capital, especially in this era of human rights.
We urge a more effective transfer of technology, which benefits producers and
users in order to enhance social and economic welfare.
The WTO must take urgent steps to implement the agreements reached in
Singapore, for a special regime for the least developed countries and those who
share their characteristics of fragility.
NORTH-SOUTH DIALOGUE
In our attempts to pursue efforts at promoting North-South dialogue, the G-15
must constantly resolve to keep the issues of poverty and social distress, high on
its agenda of discussions with the North.
We reiterate our belief that constructive dialogue with the North is essential in
order to build a new global paradigm.
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This dialogue must recognise that only through a "community of interests"
between developed and developing countries can this be achieved and so shape
a just and equitable global economy.
During my tenure as your Chairman, we have sought to advance the process of
constructive dialogue with the leadership of the G-8. The initial contacts
between these groups, as mandated in Cairo, represent a further step in useful
interaction.
I am confident that this process will be pursued with the greatest urgency and
vigour in the future.
We are confident that the agreement on an open agenda for this dialogue, with
emphasis on employment, will yield benefits for all.
SOUTH-SOUTH COOPERATION
The pursuit of South-South cooperation is assuming increased significance in the
developing world's efforts to ensure our economic survival.
The implementation of initiatives in the fields of science and technology among
G-15 Member Countries, will prove essential in accelerating progress in the areas
of communication and information technology.
These have now become more important in improving the quality of human
resources and in tapping the vast developmental potential, to be accrued from
the appropriate application of scientific and technological advances.
The development of the scientific expertise of the peoples of the developing
world and the benefits to be derived from collaborative scientific research by
countries of the South, could yield tremendous returns, given the outstanding
achievements of our peoples in various fields over the years.
Against the background of G-15 efforts to advance science and technology,
Jamaica is encouraged by progress being made between countries at the
bilateral level.
We are proud to site on the Mona Campus of our University of the West Indies,
the International Centre for Environmental and Nuclear Sciences (ICENS).
This initiative epitomises the vast potential for developing countries to cooperate
in the sharing of information, experience and expertise in the areas of science
and technology.
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PRIVATE SECTOR INVOLVEMENT
There is a great need for full private sector involvement in the activities of the G-
15. This is one of the keys to the success or failure of the Group's efforts.
We seek to ensure that dialogue is initiated not only between governments but
also between the governments and private businesses and among private
enterprises themselves across national borders.
This private sector involvement will fuel growth within the economies of the
Group. Through these initiatives, we can take best advantage of the
complementarities of our members and learn useful lessons by exchanging
expertise in areas of similarity.
In this connection, we note with considerable satisfaction that during
January, seven of our countries - Egypt, India, Indonesia, Malaysia, Sri
Lanka and Zimbabwe - negotiated eight bilateral investment treaties,
to make a total of 38 for the BITs which we have concluded among
ourselves.
THE JAMAICA CONSENSUS
We are all familiar with the considerable benefits of economic growth within our
borders and across the globe.
We know only too well that poverty breeds injustice, but wealth will not by itself
bring justice.
That is why we of the developing world will not be apologetic in espousing our
vision of development and international cooperation, based on foundations of
equity and justice.
We dare not shirk our duty to fight against hunger, disease, environmental
degradation, poverty or ignorance, wherever it still exists.
And so-
We meet during this Ninth Summit to reaffirm our Group's commitment to SouthSouth
cooperation and North-South dialogue, in an increasingly complex global
environment.
We meet to advance the dialogue in order to fashion a world order,
characterised by increased equity, transparency and prosperity for all.
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We meet to redefine the future position of the South within the broader
framework of international economic relations.
We meet to fashion a course of constructive action, which seeks, not merely to
reform existing and un-democratic structures, but to shape the new architecture
where we can live and grow in comfort.
This new and dynamic forum offers a timely opportunity to jettison the
constraints occasioned by past realities.
We are challenged to break new and fertile ground.
Let this Summit be remembered by future generations as one of the defining
moments in our continuing struggle to overcome a history of external control and
dependence.
Let there emerge the "Jamaica consensus" which serves as an effective starting
point.
A NEW GLOBAL ORDER
As we approach the Twenty-first Century, let us pledge to keep alive the vision
of a global order of equity and prosperity.
Our task is formidable, but by no means insuperable.
The progress we have already made - serves as a testimony to our capacity - to
fulfil the principles and ideals that define our purpose and to achieve the goals to
which we all collectively aspire.
Let our meeting in the New World proclaim a new global order, which is more
equitable, humane, peaceful and just for all mankind.
It is with inestimable pleasure, that I formally declare open, this Ninth Summit of
the Group of Fifteen.
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