Kairos Hearing 1994.
Responses by the representatives of the EU Commission and comments and questions on the responses by witnesses/experts:
I would now like to welcome representatives of the European Commission, Mr. Defraigne and Mr. Pooley. I may introduce to you Mr. Defraigne. He is Director of Directorate General I, in charge of North-South-Relation, sitting at my right hand side, and he will try to react on the previous statements, but especially on the questions that have been prepared and sent to him before. And then we will also listen to Mr. Pooley later on. Mr. Defraigne, I am glad and honoured to give you the floor.
Mr. Chairman, I'm using French, since we have to make Europe more linguistically diverse, but I can continue using English later on. Maybe, before coming to this topic, I ought to remind you what does and does not constitute the responsibilities of the European Union. The European Union, as you know, with its member states, is the biggest aid donor to the developing countries. Together we are bigger than the United States and Japan combined. My second observation: we are the primary trading partner with developing countries, which is to be expected as we are the greatest commercial power in the world and for 30 years we have been one of the principal players in the liberalisation of trade mechanisms, the latest development of which was the conclusion of the Uruguay Round. The developing countries see this as a very important step forward since, as you are aware, they have participated on a grand scale in these negotiations and the majority of them are preparing to become members of the World Trade Organisation. And in all of these negotiations the European Union has made sure to facilitate, stabilise and make our markets more accessible to the exports of developing countries. I believe that on the whole some significant progress has been made. That is what the European Union has achieved. Externally, we give aid and we have opened up our markets.
Until now, we have not been a player in the international monetary system. Despite the progress made internally, through the complete unification of our markets, and through the creation of a European monetary system, Europe today is a player neither in the IMF nor in the World Bank. It is the Member States of the European Union which take part in these two institutions. Not only do we not exist as a group, but we are also separated by the game of constituencies; each of our countries is linked with others which do not form part of the European Union. If the European Union were to vote en masse in the International Monetary Fund or in the World Bank, we would have a larger vote than that of the United States, which at the moment, as you know, is the decision-maker regarding the functioning of these institutions. But one of the predictable consequences of monetary integration from now until the end of the decade will be that the European Union will have to participate as a homogenous entity in the decisions of the IMF and the World Bank. So it is a good idea to start discussing now what our position will be as we begin to play a more and more important role in these institutions.
Then today I have heard a lot of negative things about the IMF and the World Bank, and I suppose that if I had taken part in some of the demonstrations that took place yesterday, I would have heard a great deal more. And of course, I can fully recognise the legitimacy of many of the problems and frustrations expressed. But nevertheless, as a representative of the European Commission, I cannot fully take on board all of the proposals that you have made because I do not fundamentally agree with them.
I would like to say what I agree and disagree with, and in this way we will be able to have a genuine dialogue. I think that when we look at the last two decades, we can see that the world has changed, that the developing world has changed; that certain countries, an important group of countries, are making real efforts to rejoin the developed world. You find these countries essentially in East Asia. There is another group which is in a state of stagnation in its Gross National Product per capita. We could give as examples Latin America and the Arab world, with some shining exceptions. And then there is the problem of those developing countries which are sinking further into under-development — here, again, with some exceptions, basically Sub-Saharan Africa. So the outlook is neither all bleak or all bright, there have been some successes, some partial successes and some failures. This we have to understand.
There are two factors which seem evident and it is the combination of these two factors which explain the success of those which are making progress. One is the quality of the development policies followed by these countries. These policies are not all the same. There is no miracle recipe for development. The policy of continental China hasn't got much in common with the method used in Singapore or in South Korea. But there is a political will and an interest in development, and then there is also the application of a series of basic principles which make countries develop. That is the first factor.
The second factor, I regret to say, is the international economic environment with all its imperfections, with all its faults and weaknesses, but the fact remains: the opening-up of the market has allowed the development of an important manufacturing industry in part of the Third World. Twenty years ago, the developing countries made up seven per cent of exports of manufactured goods; today that figure is twenty per cent. That means that there is a group of developing countries which is changing course. Before, they provided primary materials; now they are becoming our partners and our competitors. And these countries have found a way, not only of developing, but also of reducing inequalities at home. Because one of the most striking things, when you look at the development of manufacturing industry, is that it permits, better than the production of primary materials, the sharing of wealth created in a more egalitarian way, because people are the protagonists, people can improve their situation as manufactured goods become more and more sophisticated. It is a fact which is undeniable. Therefore, there is this group which is succeeding because it has access to, in international markets and can benefit from this.
But there is another factor which plays a part and which is also very positive, and that is the development of international capital markets. Now I know someone is going to tell me, and so I will preempt them, last week in Le Monde it was reported that George Soros had made more than a billion dollars speculating with his own personal funds on international currencies on Wall Street. This is shocking, and certainly something which cries out for our attention and demands to be put right, however we must not allow the Soros case to obscure the big fish who are appropriating the international capital which is needed by the Third World. We will come back to the issue of debt, as it is of extremely pressing concern to this meeting, and rightly so, but there are assets invested by business, there is direct international investment which is proving itself to be an agent of Third World industrialisation, and which has some positive aspects and does not automatically mean, necessarily, that international capital totally controls the purse strings of the unfortunate developing countries. It is a lot more complicated than that. It is clear that direct international investment from business has the effect of creating wealth, of generating foreign currency, creating jobs, and improving access to international markets, which is extremely valuable.
Now I will be told, I've already been told just now, that it is the problem of big business, and that the most important trade is conducted by big business. This is no longer true. It is true that there are big companies and that they are continuing to grow, but alongside there is something new, the fact that tens of thousands of medium-sized businesses are becoming international businesses, and will invest in the Third World in the form of partnerships, and will become sources of economic and industrial diversification.
So, may I summarise, there have been some successes. These successes are due firstly to good internal policies, which have been helped to fruition by access to international markets and by the provision of capital from the market, much more than from aid. Aid, it has to be said, and we feel all the more at ease discussing aid because we contribute a great deal of it, is limited, will remain limited and causes a lot of undesirable consequences, one of which was pointed out by Mr. Martin just now.
I'll come now to those countries which have not experienced success, notably that group of countries with average revenues which are caught in the debt trap. We are told that this debt is the joint responsibility of the North and the South, that we must resolve it together, and it is true. And we are told, "In every case, we must do away with it, we must get rid of this debt." I personally would like to look a bit further into this. Towards two aspects of this debt. I see it as being two debts. Firstly the debt of those countries which owe to the commercial banks, and then the debt of those countries essentially indebted to governments or to international organisations. When we are talking about countries indebted to commercial banks, it is obvious that if the debt is canceled, and if we want to avoid the collapse of our own banking system — which would cause enormous economic and social problems for the European countries which have invested in this system — it would mean that the member states would have to shoulder the burden with taxpayers' funds. And whether they would do it directly or via the IMF or the World Bank, poses a very grave problem: to suggest to taxpayers, who are usually average people with average incomes, that they should finance a debt which has been accumulated in the Third World, and by whom? Because that is what is so interesting.
I will give you a figure from the World Bank. Today, we can say that Sub-Saharan Africa and the Arab States have the highest proportion of foreign debt as a percentage of their GDP, and at the same time, the highest level of private assets held abroad as a percentage of their GDP. To put it another way, these are the countries where, by all sorts of internal mechanisms in which corruption clearly plays a central role, private owners have become wealthier, have taken their money abroad and left their nations in debt. And so we are being asked to foot the bill. So this is one of the problems I would like to address when I talk about solutions, because in some of the suggestions made there is something which greatly interests me. But I would like to say this: for the North to help the South out of its debt problem, the North has the right to ask for certain changes in the South. I will admit maybe it is a paradox, and I am not afraid of being a little provocative here, I'll even go a bit further — I think that the debt strategy is an opportunity for useful, interesting and positive change in a whole string of developing countries.
I am now referring particularly to countries with average incomes, notably Latin America. Contrary to much received wisdom, the IMF and the World Bank are busy conducting a silent revolution in these countries, which in the end should change their political and social balance. These countries have always had a very unequal distribution of wealth. Those who own the land and natural resources and who therefore control the production of primary materials, have a very high standard of living, and find the status quo suits them perfectly well. They have developed a small local industry under enormous protectionism, and by producing in their factories poor quality goods at utterly excessive prices to the consumer they have made themselves rich. How can a debt strategy address this problem? In two ways: the first is that the debt strategy envisaged by the IMF and the World Bank seeks to eliminate inflation which is, as you realise, a tax on the poor. The rich can easily protect their assets against inflation, but the poor cannot. So, every policy of stabilisation, as it is called, is a policy which strives for greater social justice. The question is knowing how to achieve stabilisation. To achieve stabilisation, we must stop printing money, indiscriminately call a halt to budget deficits. Then, the choice will be: either increase taxes or reduce expenditure.
Among the recommendations of the IMF and the World Bank, when you look much closer, the stress is on the implementation of taxes which will be simultaneously more effective and fairer. I will give as an example Argentina: 30 million inhabitants and 30,000 inhabitants who payed income tax. Now you have a taxation reform in Argentina which is leading towards a genuine income tax, a tax with a progressive character. It must be recognised that this is a revolution which the Argentinians might never have achieved through social struggle.
The other aspect is expenditure. Many countries at first opted to make reductions in those areas of expenditure which help people, spending on social programmes, and it is true that in the beginning the IMF and the World Bank failed to pay enough attention to these aspects. But today, because we are having this dialogue, this debate, things have begun to change on this level too.
But above all, the IMF and the World Bank, under terms imposed by us, the countries of the North, it is true, are managing to open up the market, to get rid of all these oligopolies and monopolies which form the oligarchical power base of these countries. These oligarchies which ensure the control of political power, including the distribution of public wealth, which prevent new businesses from appearing, monopolise credit, prevent the emergence of potential entrepreneurs, who do exist in these countries, from entering the formal economy instead of remaining confined in the black economy.
Now I don't want to go on for too long, but I would like to make it clear, I would like to go back to my argument — and I will leave aside the problem of Africa which is much more complicated and which Director General Pooley is much more qualified to speak on than I am — by saying: let's not be too pessimistic about the evolution of the world. Some of the developing countries are developing, really developing. There are others which, through the debt strategy, are dedicated to implementing a series of internal balances which are bringing in tow greater efficiency and justice.
And now, under three separate points, I would like to offer you my conclusions on the improvements we should introduce at the level of the international economic system.
The first point: we are in favour of an economic Security Council which would be representative of all the continents of the world and which would ensure a coherent collaboration between the different pillars of the international economy: the World Trade Organisation, the International Monetary Fund and the Development Bank. We want the world to see these global development strategies, with their integrated "environmental" dimension, defined by a political body, which is no longer the G7 and which should not become the G3. That is clear. As for the IMF, there too we must realise that we, Europe, should play a more active role proportional to our importance and our degree of integration. But the IMF must become more universal, without going towards "one nation, one vote", that is a dream. It is a dream in the IMF, but great progress can be made by making representation more equitable for the developing countries. But the real change for the IMF, is that it must ensure genuine supervision of the macro-economic policies of each country. Not only of the developing countries, but also the countries in the G7, and especially those countries which accumulate trade deficits, and have built up an external debt which now exceeds the debt of the Third World, and which in their dedication to reabsorb that debt are causing the dollar to fall and destroying any growth possibilities for their trade partners. The IMF must have the means to intervene in the affairs of the bigger countries. The IMF must improve its competitiveness in providing liquid assets for the developing countries. It must definitely reinforce structural adjustment facilities, and SDRs must be created for those countries which have not yet been recipients of a share.
I would like — I'll leave to one side the World Bank, because there you could say almost the same thing — I would like to say a word about an institution which we haven't discussed yet and which, in my opinion, ought to play an increasingly important role: the International Bank for Settlements and Clearing, which is responsible for improving the careful supervision of capital markets in order to avoid this internationalisation process from turning into a systematic crisis. This institution is in my opinion the best placed to address a question which has been asked here and which is basically a just one: to establish a clarification of capital exports which are bound up with corruption, obviously with drugs, with all sorts of system dysfunction, and which are an obstacle, notably in the resolution of the debt problem. Because it will be impossible to resolve the debt problem of Africa and the Arab world if we do not restore to these countries their illegally exported private capital. We must create and put into force mechanisms which will enable the recovery of these assets, because it is a question of justice, a question of efficiency and it is one of those improvements which would be possible and useful today, even if it does not necessarily lead to the ideal world which you rightly continue to promote.
Thank you for listening.
I will now ask Mr. Peter Pooley, Acting General Director of Directorate General VIII to take the floor.
Thank you, Mr. Chairman. Now I am not going to speak about Africa. I think there is one or two prior questions to ask oneself before I talk about anything to do with development, and the main prior question is whether it is worth opening a dialogue at all with this assembly and, indeed, wether that is worth my while being here at all. I note that the representatives of the Council have not arrived. I don't know quite why — they have obviously got something more important to do. When I saw the papers which arrived very late due to action by German unions, and not through any inefficiency of the organisers I might say, I wondered whether it was worth my while coming to open a dialogue with you. What has been said and the reaction to the good sense just spoken by Mr. Defraigne — a combination of silence and mocking laughter — persuades me to the contrary.
There have been said things here which amazed me and astonished me in the case of serious people. Mr. Martin was telling us earlier that the Community must be serious. I must ask: Are you serious? Look at some of the things that are in these documents. Do you really believe them? I look for a reply to some of these questions because then I would decide whether we can have a serious dialogue. Do you believe that there is a real possibility of solving the problems of development to developing countries by instituting a new economic order based on justice — your idea of social justice — and on the basis of sustainable environmental development — your idea of what is environmentally sustainable. Do you believe that there is a real possibility?
Well, I was in Rio and I didn't see any great result there in terms of a new world economic order. Do you believe — just take a small example from Guyana — that the government that over a generation ruined that country was a government imposed as a result of a plot by the donor community? Is that believed here? Because if that — well, it appears to be believed here — if that is your starting point to talk about Guyana then there is no sense in continuing. Because it is totally unrealistic and wrong. Do you believe that it is possible to democratise a bank like the World Bank in the way that you propose? That the European Union should use its weight, as I understand it, which amounts to more than one third of the voting power and perhaps rather more, perhaps 40 per cent with the four new member states, in order to put itself in a position where you have one nation — one vote, and we reduce our power of 16 countries to one tenth instead of 40 per cent? Is that going to happen? Do you really believe that? Do you know any bank or any organisation with economic and commercial ends which gives the same voting power to the person who has one share as to the person who has a million shares? I must have some idea as to whether these things are really believed. If this is your starting point, if it is your starting point that the first thing to do is to raise all commodity prices and then all will be well, if you believe that nations which have incurred debts, as has been said, have the right to announce them if the debts were incurred by their predecessors. If it is that what you believe, then you believe something that will completely jam up and completely freeze the whole financial system. If you are a government you normally need to borrow money. Every government borrows money in the short term and in the long term. And the solutions suggested of annulation of commercial debt, because it was incurred by somebody else on the part of a government, is one way to ensure that that government would never be able to borrow money again. Not from the international institutions, not from its own people. And if you believe that, then there is no point in starting a dialogue on the basis of the reform of the institutions.
We are ready to put forward proposals for the reform of the Bretton Woods institutions. But if your starting point is that the Bretton Woods institutions are a plot, a conspiracy by the donor community in order to exploit further the Third World, if you characterise the World Bank and the IMF and the European Union and Mr. Defraigne and Mr. Pooley as neo-colonialists then there is no point in starting a dialogue at all. So I will stop here. If you do not want to talk to me in terms that make something like sense then there is no point in my talking to you.
May I ask you for some respect for our speaker. Maybe I would ask him personally one additional question: You referred at the end of your contribution to possible reforms of the Bretton Woods institutions which are not under those requisites that you indicated. Have you the willingness to give a small indication of what could be done?
Not to this body, no.
Sorry, I have to ask the audience persistently not to take part in the debate now except for our experts and witnesses who have prepared their contributions. So the floor is now to witnesses and experts who want to speak. Silence, please. Mr. Atherton Martin, please.
Mr. Chairman, I didn't travel to Brussels to be insulted by anybody.
Nor did I come here to be insulted, but I was.
(Mr. Pooley leaves the room.)
I will ask Mr. Martin nevertheless to say what he has to say. And then we will go on in the last part of reflection of this morning which has a little bit a different course than I expected it. So Mr. Atherton Martin, please.
Thank you, Mr. Chairman. This last gentleman who spoke, Mr. Pooley, confirms my worst fears about the extent of resistance to the just and serious demands that are being made by people from the South. In fact, it is in sharp contrast by the presentation of the first gentleman who at least had the decency and the common sense — and I want to personally thank Mr. Defraigne for coming back for the discussion, because you yourself raised some serious and important questions which we need to talk about, not with standing assumptions. And I would like to raise a couple of them with you.
Firstly: You spoke about a number of "success stories" and unsuccessful stories. And you raised the question of the "tigers" of Asia as being examples of success stories. You indicated that it is partly due to the quality of development policies that were followed by these states and you indicated what, you thought, some of those policies might have been. I would like to suggest that there there were also some other circumstances and policies that were followed by these states which, if they were followed today or if they were even possible today, would not be tolerated by the international community. E.g., it is well known that especially in the early stages of their move toward industrialisation, that the NICs, as we know them today, received over long periods of time massive amounts of international aid. We are in a time today when it is precisely the opposite trend that is occurring for most of our countries.
Secondly: It is also true that many of the NICs managed their growth, their startling growth, in the context of severe internal control over the rights of trade unions and other people within those societies, the right of the dissent, the right to strike, the right to even negotiate for conditions that would be suitable to the workers' health and safety and even to talk about the environment was not a right that was possible in those times. And so the real cost of development of those models probably has not yet been taken into account. The knowledge we have today, e.g., of the impact of unmitigated application of agricultural chemicals to farms probably was not available then and is partly the result, today, of the negative impact of these policies of food production and growth that were achieved in these areas. And we, certainly, do not want to undergo that high cost of environmental damage as we seek to address our own growth and development problems. So, the questions of ecology and environment are a factor for us today that probably was not as critical a factor under the circumstances that these countries proceeded. Also, it is quite true that there was, and still are probably today, some extremely high subsidisation of food production in these countries that today is considered an unfair trade in practice, that today is not tolerated on the structural adjustment programmes, that today is not tolerated on the NAFTA, that today is not tolerated under the bilateral agreements in trade that our countries now have to content with.
So, I am suggesting to you that the circumstances under which the growth took place in these countries is remarkably different from the circumstances in which we today have to operate. As a result, the policies and the programmes that have to be put in place have to take into account some of the proposals that my colleagues have been making here this morning which seem to have disturbed your colleague so substantially. I would suggest that these be matters that are taken into account. One other point I'd like to make on another matter you raised...
Can you be brief?
Very short. I am not asking questions. I just want to raise two comments. You spoke about the question of corruption, and it means the North is being asked to pick up the bill, that money was used to create wealth for a few. Well, there is a very easy way to deal with that problem. Most of our dictators, most of our corrupt industrialists, most of the people who have stolen wealth from our people live in the North, have bank accounts in the North, in your countries, and it would be very simple, it seems to us, to find out where they have their bank accounts and to transfer those moneys back into our treasuries. That would save you tax spares. Most of these people have large mansions and holiday resorts in your countries because they don't live in their own countries. So, it seems to me, we can short-circuit what is a very difficult problem for you by working with you and your security people to find out where they are, get the money, sell the mansions, get the money back in our treasuries so that we can at least ask you for less money than we are now having to ask you for.
Thank you. (applause)
Mr. Defraigne, please.
First I would like to tell you that the man who has left us, Director General Pooley, has dedicated his life to the ACP-countries in Africa. He is an activist working towards the solution of this continent's problems, and I think you could hear the depth of emotion, so unusual among the British, which lent a sincerity and indignation to his arguments which spoke to us all. There is a risk in our deadlocked society, where official speeches are so often wooden, where the margins for manoeuvre become terribly narrow, of seeing the creation of assemblies like yours where generally well-informed people, not all, but in every case highly motivated, and often motivated by noble causes rather than personal ambition, end up imagining an alternative world, and because you are all together, you often use the same language, some of you represent important organisations, others just yourselves, but you have a freedom of speech, of imagination without limits. And it is healthy, from time to time, to let your imagination run free, especially when faced by injustice and poverty. But at a given moment, it is dangerous, because we all know that the world is evolving, has to improve, but can only do so through violent ruptures, i.e. revolutions, and why not the Revolution? But it isn't a question of revolution, we have to go step by step. And as conscious as Mr. Pooley is of a series of deficiencies in the system in which we all live, and I think he would have been very pleased to discuss this further with you, it has been intellectually difficult for him to be confronted by a sort of alternative concept which he sees as unrealistic. And because he is really there on the ground where it counts, confronted by all sorts of problems, he doesn't think that your sort of support helps him very much. I had to say that, because it should make you think as well about your approach to dialogue with institutions like ours which do exist and which do share power and responsibility.
Now I would like to come back to the subject of the success stories of Asia. One thing has always struck me about Asia, and that is the contrast between South Asia and the Philippines, to take two important countries. Thirty years ago South Korea was a very poor country, which had just come out of a very costly war, into a not particularly advantageous climate, and which had no doubt received significant American aid for its national security, but when we look at the development aid received by South Korea, it has been very limited. And beside that, you have a country like Argentina, a country which is very similar in terms of population but which is infinitely richer, possibly one of the richest countries in the world in arable land and mineral resources, including, we now know, energy resources. And you look at these two countries, which from the start have been heavily in debt. You see one country going up and the other coming down. Why has one, South Korea, gone up? Because South Korea placed its bets on industrialisation and investing in its people. Ten or twelve years ago I was in the United States for one year with an extraordinary man who had been a presidential candidate three times for Korea, who had been seriously injured in an assassination attempt set up by the government of the time which had military tendencies, which had left him handicapped, but who had fantastic courage. And I remember what Korea was like ten or twelve years ago, the Korea where people were terrorised and issued with death threats and where they tried to kill political opponents. Today, whether you like it or not, there is democracy in South Korea, there are unions in South Korea, South Korea is now accumulating assets, has accumulated surpluses, has achieved commercial stability, which means it is starting to benefit from the efforts it has made. Look at Argentina, infinitely more blessed at the beginning, with peace, which has wasted its resources over thirty years of bad domestic government, achieving no democratic progress until recently. And in the same vein, look at the Philippines, which are also part of Asia, but that part of Asia which is not succeeding. Eighty families have a slice of the cake, yet this country lets its young people live in the most dire poverty, selling cigarettes one by one to motorists on street corners, in the pollution and heat, instead of using a tool in a factory and earning their living as they are capable of doing. Why? Because the Philippines have opted for the Latin American model, strong foreign protection and strong internal protection. In the Philippines you won't find any credit. You have a good idea, you have people who want to help you and who are willing to act as guarantors: but you have no access to a bank because saving is reserved for the rich families who have always ruled this country and who consume its wealth among themselves. And they can do it because the country is protected from outside.
Once, on one of my assignments, I spoke with the President of the Philippino Chamber of Commerce, Mr. Lim. I will never forget that extraordinary conversation. I had come to encourage European investment in the Philippines. And he said to me, "Listen carefully, European investment in the Philippines, sure, in any sector where there are no Filipino businesses, OK. But where we have Filipino businesses, we don't need you." I said, "But that's insane! We can bring you capital, we can bring you technology, we can promise employment because we're competitive, we can export, we will develop your country." "Ah," he said, "but you will ruin Filipino businesses!" I said, "Obviously we'll ruin a few, that's not important — except of course for the shareholders of these businesses — but for the people, the workers, it's a remarkable opportunity to achieve what has been achieved in a series of Southeast Asian countries, using direct international investment to promote truly competitive industry, and for the Filipinos to experience the same level of economic performance as the rest of the ASEAN."
Those are the sort of difficulties you encounter, and that's why I disagree, totally disagree with Mr. Martin. Of course I believe there has been oppression and environmental damage but I see it as the key to Asia's success — and it is an undeniable success, standards of living are rising, inequalities are diminishing and once again I will compare it to Latin America. Look at the UNDP figures: they invest in education, and trade union rights are appearing in a series of countries. It's true that I recently read in a newspaper about an Indonesian minister saying if he saw a demonstrator in the street, he would have him arrested. So there are still problems, there is a fight to be won, but at least the cake is getting bigger and it can be shared out. The worst situation is when you have a combination of poverty, dictatorship and an absence of civil and trade union rights. I tell you, in Asia, things are changing, and to deny the progress made in Asia as you are doing, I find dangerous, because ultimately it is a way of saying, "The developing countries can only make a better living if the North changes its attitude." That is completely wrong. The North cannot solve the problems of the South. The South has to take life in its own hands and to solve the problems on its own.
Thank you. Now, Mr. Budhoo please.
Thank you. It has been an amazing morning. It seems to me that emotionalism and subjectivity have taken over totally. That, in a sense is not a bad thing, because quite frequently, when people speak about the IMF and the World Bank and what they have done to southern people, you have to be emotional and you have to be subjective. And those who defend the IMF/World Bank they, too, must become emotional and subjective. The IMF and the World Bank, they also are emotional and subjective.
What I want to say is, I want to get out of this emotionalism and this subjectivity. It depends on how we see the institutions. I see it from the perspcetive of the desperation of poor people in the South. In all the countries that are supposed to be success stories there have been and still are more and more and more impoverisation and death and destitution. The lives of people have been devastated in all the success stories. But I want to get away from that. I just give some facts. The first is: What has been the response of the international community, other arms of the United Nations, to the policies of the IMF and the World Bank. You just need to look over the last 2 or 3 years — reports from UNCTAD, UNICEF, UN Economic Commission for Africa, Asia, Latin America, even UNDP, the FAO — to see that all these institutions have condemned categorically the IMF and the World Bank for what UNICEF claims has been an outreach against humanity. What is happening today in relation to the IMF/World Bank policies is the most systematic genocide of children ever perpetrated in the history of human civilization. This is recognised internationally. Those who want to hide behind it and forget it, that is their own problem. It is known to the G7 governments, certainly is known to the officials of all the major organisations as the EU.
The second thing I want to say is — let me give you some of my experiences as a past staff member of both the IMF and the World Bank. When I resigned from the IMF in 1988 I wrote a booklet, an open letter of resignation, in which I accused the IMF of statistical and non-statistical fraud, perpetrated systematically over years against the people and the government of Trinidad and Tobago. The government of the country had to appoint two commissions — an international commission and a domestic commission — of eminent world known economists who had to look at these allegations and said that everything I said was absolutely true. In fact, one of the commissions said that I even underestimated the extent of the fraud. The IMF has refused to respond to the charges made by two international commissions at the request of the government. When I left the institution the chief adviser to the managing director of the IMF made a public statement in which he said that Davison Budhoo is someone who is trying to change the international system. This was taken at a press conference in London two years ago. The Fund was asked to give a response. They said we have nothing to say about this. This is the sort of psychology, internally, that reflects the policies and programmes of the IMF in the Third World. I don't want to say any more, but the position that we have put this morning is the position from the desperation of the South, it is also the position from the staff itself of the IMF/World Bank. There is no consensus in the staff. The staff of the World Bank itself are fully aware what is happening. Many of the internal staff are fully aware and are very supportive of the programmes and the policies and the form that we are suggesting for the institution. These are facts.
We will take this as a statement. Maybe, something additional from Mr. Arruda.
As concluding remark I would like to defend, first of all, our right to dream, because you said that we have been imagining an alternative world. Our reason to come from the South here was not with an attitude of arrogance to tell you that we know the answer and we have only one answer. We are coming to you with the spirit of dialogue and search for collaboration with you to overcome problems that are no longer only South-problems, but also North. We believe that they are rooted in the same causes, and that is what we are talking about. Our reasons to be imagining an alternative world is because we believe that the current world is pointing towards a very dangerous direction.
We see reality with two dimensions. One is the current reality, the other is the potential that is hidden inside that current reality. Our belief is that we have to be aware of what is coming up in order to avoid a growing disaster especially for the peoples of the world, not only the South. So, that is why we believe that we can and should dream. But the second belief is that our dream is not unreal. It is not based on abstractions, but rather on existing social relations on a world scale. It is based on the fact that there is material, enormous concentration of wealth in the hands of a growingly small number of people. And that is in the official documents of the UN and so on. On the other side there is a growing number of people being marginalised, not only being exploited or suffering, but being marginalised from the market system. And we would like to just question — that is the end of my comment — not to give any more evidence or any discussion, but just question the basic assumption that is behind your arguments and that we believe we don't agree with — we should continue to discuss in order convergence — and that is the assumption that the market-centered type of economy can resolve problems for the world. We do not believe in that. And we are now listening to the World Bank changing its own rhetoric and talking about people-centered development. We are not the only ones who believe that this kind of development must emerge, we just have to give a real people content to that proposal and that is our challenge. Let us think over together. What would be a "people-centered development"?
Thank you. (applause)