“Delivering the Monterrey Consensus”
Date: 24 Sep 2002
Speaker: Secretary-General Don McKinnon
Location: Commonwealth Institute, London, UK
Your Majesty,
Honourable Ministers,
Ladies and Gentlemen,
It gives me great pleasure to join the Chancellor of the Exchequer in
welcoming you to the Finance Ministers Meeting. I would like to thank the
United Kingdom Government for hosting this meeting and for the excellent
arrangements made for it.
It has been a dramatic year. Our outlook on the future has certainly been
transformed. New challenges and new responsibilities have emerged.
One year ago, we were all deeply concerned about the potential impact of the
11 September terrorist attacks and their aftermath on the global economy.
Commonwealth countries have indeed been badly hit, with loss of tourist
earnings, falls in commodity prices, higher insurance costs, disrupted air
transport. And another casualty was, of course, the meeting we should have had
in St Lucia a year ago.
The downturn may have been less severe than predicted but some important
global developments will have a lasting impact. We all realise that we live
in an interdependent world and the increasing gap between the rich and the
poor must be of concern to all.
Meetings and agreements in Monterrey and Johannesburg mark a new recognition
of the mutual dependence of industrial and developing countries, and their
mutual responsibilities to work together towards sustainable development and
the eradication of poverty.
Significant steps were taken in Monterrey and Johannesburg. They must be
implemented and now we must look over the horizon.
There is no point in just saying: "we promise to do this" or "we will look
into that" or "our agenda is very full" or "we'll do it in the long run". As
John Maynard Keynes once said, "In the long run, we are all dead".
There is a time for agreements and there is a time for action. Now is the time
for action.
So I'm delighted as will be many member countries that you will be discussing
a Commonwealth Action Plan to "Deliver Monterrey". May I also say that I am
particularly pleased we were able to work closely with the Commonwealth
Foundation and the UK Treasury to organise a series of regional civil society
consultations. The voice of civil society must be incorporated in the Action
Plan and will be heard in the Plenary.
There must be four essential components in this Action Plan:
First, if we are serious about delivering the Millennium Development Goals, we
need to increase aid and make it more effective. This year has seen several
encouraging announcements of increases in aid volumes. I hope that all
Commonwealth donors will agree to put their aid/GNP ratios on a rising trend,
even if the UN 0.7 percent target will take some time to meet.
We also need to make aid more effective. Untying aid, for example, could have
a considerable impact on recipient countries-an impact equivalent to a US$10
billion a year aid increase. Huge progress could be achieved by aligning donor
flows with recipient country priorities and directing aid to country-managed
programmes rather than simply supporting individual fragmented projects. For
this to happen, of course, donors and recipients must work together to create
standardised auditing and reporting procedures which inspire confidence.
Again, I hope Commonwealth donors can set an example to the rest of the world.
The second important point is that aid alone will not lift developing
countries out of poverty. It will help them evolve better economic policies
and develop their capacity to compete in the global economy, but these efforts
will remain fruitless if wealthy nations continue to impose high tariffs and
non-tariff barriers on competitive products from the developing world.
Providing aid without the freedom to trade is like giving someone a car, but
no license to drive it.
So the message to advanced nations is simple: if you really want to help
developing countries, give them access to your markets.
Creating wealth in the developed world and reducing poverty are often seen as
incompatible goals. This is plainly wrong. In fact, the two go hand in hand:
as poor nations are allowed to export to developed countries, they will grow
wealthier and will themselves become new markets for the developed world's
manufactured products.
Like trade barriers, agricultural subsidies have a distorting effect on the
economy. These amount to US$ 1 bn per day, six times the current level of
global aid. Significant progress could be achieved if OECD countries
substantially reduced subsidies in sectors where developing nations have a
competitive advantage. This would also reduce the real cost of certain
products to consumers in the developed world and release resources for more
productive purposes, thereby increasing the growth potential of developed
economies.
These are difficult decisions for developed nations-decisions which, on the
face of it, may appear to go against their national interests. But this is a
blinkered view-in a world of growing interdependence, the best way for
countries to defend and promote their national interests is to act for the
benefit of the world community as a whole.
Third, private flows have a crucial role to play in promoting enterprises that
are internationally competitive. We must develop innovative ways of broadening
country coverage of private flows to emerging markets.
The Commonwealth Private Investment Initiative seeks to achieve this through
the establishment of regional venture capital funds and North/South
partnerships. For countries with endowed handicaps that find it difficult to
attract investment, our "Lowering the Threshold" report advocates an
innovative way of using official funds to pave the way for increased private
flows. As part of this Initiative, Commonwealth Heads of Government launched a
US$ 150-200 million Africa Investment Fund at their summit in Coolum last
March.
Fourth, reform of the international financial architecture must continue. We
need to strengthen the voice of developing countries and small states in
global financial institutions. Voting power and representation should be made
to reflect more adequately the economic strength of developing countries and
their stake in the global financial system.
I hope Commonwealth ministers can agree to work with international financial
institutions to make progress on these issues.
As we move forward we also need to make sure that the HIPC initiative really
does deliver what it promised - lasting exit from the burden of unsustainable
debt.
As you know, Commonwealth Finance Ministers provided the impetus for this
initiative back in the 1980s. Some progress has been made, but additional
financing is needed. Moreover, extra action is required to ensure that
countries end up with a sustainable level of debt and are insured against
slipping back into unsustainable debt as a result of events outside their
control.
Finally, these initiatives can only work if we reaffirm our collective
commitment to democracy and good governance. The more democracy you have the
more development you get. Good governance should apply equally to all, both in
the public and private sectors. Recent events have shown the damaging impact
that failures in corporate governance can have in developed as well as
developing economies.
I would like to conclude by congratulating the Commonwealth Business Council
and the United Kingdom Government on the success of yesterday's Commonwealth
Business Forum. The theme of this year's Forum, "Managing
Globalisation-Challenges for Business and Governments" is very timely. The
challenge for all of us today is to ensure that the economic growth and
technological progress brought about by globalisation benefit the many, not
the few.
As Amartya Sen, the Nobel laureate, has said "what is needed is a fair
distribution of the fruits of globalisation." In other words, we need to make
sure globalisation is managed in a spirit of generosity and inclusiveness.
Globalisation is a train that can't be stopped. But we can-and must-steer it
in the right direction, so that it benefits everyone on this planet. This
vision is at the centre of our strategy and, as Commonwealth citizens, it is
our joint responsibility to work collectively towards this goal.
24 September 2002
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