[Congressional Record Volume 144, Number 147 (Thursday, October 15, 1998)]
[Extensions of Remarks]
[Pages E2191-E2193]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E2191]]
                     SPEECH OF JAMES GUSTAVE SPETH

                                 ______
                                 

                        HON. JOHN EDWARD PORTER

                              of illinois

                    in the house of representatives

                       Thursday, October 15, 1998

  Mr. PORTER. Mr. Speaker, I would like to bring to the attention of 
the House a speech delivered by James Gustave Speth, the Administrator 
of the United Nations Development Programme (UNDP) and the highest 
ranking American at the United Nations (UN). Mr. Speth will be leaving 
UNDP soon but in his five-year tenure there, he has been a 
distinguished representative of the U.S. and transformed UNDP into one 
of the most effective agencies assisting development in the Third 
World.
  In this speech, Mr. Speth focuses on the disconnect between the 
United States' ever-increasing interdependence with the rest of the 
world, specifically with the developing world, and the absence of U.S. 
leadership in international affairs, including at the UN. As Mr. Speth 
states very poignantly, ``The country that has benefitted most from 
globalization and has the greatest stake in its success, seems deeply 
reluctant to shoulder the load that our position in the world requires 
of us.''
  As the world works to restructure and make more effective global 
financial systems, a similar renovation must be applied to those 
guiding development assistance and cooperation. Mr. Speth provides a 
five-point plan for these reforms, and outlines ideas that encompass 
more than the traditional forms of development assistance.
  I hope that Members will take the time to read this speech and the 
U.S. will re-engage soon in the world and provide the needed leadership 
backed with real resources, both financial and human.

  Non-Benign Neglect: America and the Developing World in the Era of 
                             Globalization

                        (By James Gustave Speth)

       I should begin by introducing you to the world in which I 
     have worked for the past five years as Administrator of the 
     United Nations Development Programme (UNDP). UNDP is a 
     serious development assistance actor, managing over $2 
     billion annually through offices in 130 countries. I've now 
     visited over half of them to review our programs. 
     Overwhelmingly, we focus on the poorest countries, and our 
     core mission is to help to end the poverty which, by any 
     reasonable definition, is the lot of about 3 billion souls. 
     We see good governance as the key to poverty eradication and 
     are now devoting half our resources to it.
       Visits to seventy of the countries where we work have left 
     me inspired, depressed, alarmed, angered and sometimes 
     baffled. But I am left with one dominant impression. It is 
     the persistence of hope, the determination, the endurance of 
     the poor in the midst of the unimaginable deprivations they 
     suffer.
       In war-ravaged Kandahar, Afghanistan, where there is little 
     or nothing left, I met with elders who collectively decide on 
     issues that touch the lives of all villagers such as 
     improving the water supply and road repairs. Near Guayaquil, 
     Ecuador, I saw women leading the construction of new housing 
     and schools in desperately poor and polluted neighbourhoods. 
     Near Nairobi, Kenya, women are making a livelihood by 
     gathering and composting scraps from the local market, and in 
     Uganda communities are sponsoring training and support 
     centres to encourage local private enterprise development. 
     These are some of the seeds of hope planted in the rough 
     terrain of poverty; your development dollars at work.
       But the accumulation of all such efforts--large and small--
     is still no match for the scale of the poverty challenge. 
     Among the 4.4 billion people who live in developing 
     countries, almost three-fifths live in communities without 
     basic sanitation; almost one-third are without safe drinking 
     water; a quarter lack adequate housing; and a fifth are 
     under-nourished.
       For the 1.3 billion people who live on less than a dollar a 
     day, there can be no doubt that poverty is a brutal denial of 
     their human rights. Perhaps the most basic human right 
     challenged by poverty is the right to life. Nearly a third of 
     the people in the least developed countries, most of them in 
     sub-Saharan Africa, cannot expect to live beyond forty. And 
     women, as we know, are the hardest hit, both by poverty and 
     by a vast array of powerful restrictions, laws and other 
     barriers.
       And poverty is increasing, growing as fast as global 
     population. In over 60 low-income countries, individual 
     consumption has declined by about one percent annually over 
     the past 15 years. In Africa today, consumption per capita is 
     20 percent lower than in 1980.
       Global poverty amidst global abundance translates into huge 
     and growing disparities between rich and poor. The trend is 
     towards much greater inequality, not less. The gap in per 
     capita income between the industrial and developing worlds, 
     far from narrowing, more than tripled between 1960 and 1995, 
     moving from a gap of $5,700 to one of more than $17,000.
       So the world I see when I visit our program countries and 
     our donor countries is deeply divided. It has become more 
     polarized, both between countries and within countries. The 
     risk of an evolution towards an unstable, frightening, two-
     class world, with a huge global underclass, is quite real.
       Now, all of the above is based on data available before the 
     current world financial crisis and the so-called Asian 
     contagion. Before the crisis, widespread poverty and economic 
     depression were already the norm for much of the world. 
     Indeed, most of the world was already in crisis. In 1995, in 
     more than 100 countries, per capita income was less than it 
     was 15 years earlier. As a result, more than a quarter of 
     humanity is worse off today than 15 years ago. For example, 
     most countries of the former Soviet Union, including Russia, 
     saw their real GDP decline dramatically between 1985 and 
     1995--most of them by 40 to 80 percent. Some 150 million 
     people have been pushed into poverty in the former Soviet 
     Union. This is the combined population of France, the United 
     Kingdom, the Netherlands, and the Nordic countries.
       But now comes the crisis. Starting in Asia, it has deepened 
     and spread beyond expectation, and good sense, cutting the 
     growth rate of the world economy in half, plunging more than 
     a third of the world economy either into recession or sharp 
     deceleration, and threatening a global recession.
       The crisis remains worst at its epicenter. Indonesia, 
     Thailand, the Republic of Korea, and Malaysia each had 
     admirable records in human development and poverty reduction, 
     but there has been an enormous reversal of fortune which has 
     impacted most heavily on the poor within these countries. Let 
     us be clear: everywhere the poor are paying the heaviest 
     price for this mismanagement of global finance. Indonesia, 
     the world's fourth most populous country, will likely see its 
     economy shrink by more than 15-20 percent in a single year. 
     Others at the epicenter will see declines of 5 to 10 percent. 
     The fledgling Indonesian middle class has fallen into poverty 
     and the social consequences of this downward trend are 
     horrendous. World Vision estimates that 8 million children 
     have dropped out of school in Indonesia owing to poverty, and 
     that low income families are now spending 85 percent of their 
     income on food alone. Famine has hit remote parts of the 
     country and malnutrition is widespread.
       In Thailand, the story is also bad. The ILO reports that by 
     the end of this year unemployment in Thailand could well 
     increase three-fold over last year, resulting in an 
     additional two million Thais without jobs. This picture 
     repeats itself again and again in the region. If current 
     trends continue, the World Bank estimates that the number of 
     poor people in Indonesia, Thailand, Malaysia and the 
     Philippines will more than double--from some 40 million to 
     more than 100 million. One estimate is that half of 
     Indonesia's 200 million people will fall below the poverty 
     line.
       This downturn is not going to be confined to the Asian 
     tigers and to other emerging market countries. It has already 
     had its effect on those countries which are too poor to be 
     considered emerging markets. Africa's overall growth for 
     1998, once expected to exceed 4 percent, is now projected to 
     be about 1 percent.
       These economic declines can easily translate into political 
     instability and social unrest. Sporadic rioting and looting 
     have broken out in East Asia, along with attacks on ethnic 
     communities. What began as a financial crisis is tearing at 
     the region's social and political fabric. It has become a 
     deep human crisis--a social crisis for the poor and near-
     poor, with possibly severe consequences for fragile 
     democracies and stability in countries where delivering 
     prosperity has been key to social cohesion.
       Over the past five years, I have often asked myself: does 
     this world of underdevelopment, poverty and suffering matter 
     to the United States? Were the financial crisis not lapping 
     at our own American shores, one would have to wonder. All too 
     often, the United States certainly behaves as if this world 
     did not matter much to it.
       Our economic interdependence with the rest of the world, 
     including the underdeveloped world, has not been matched by a 
     willingness at a policy level to engage the world. Take the 
     case of development assistance. In 1956, 63 percent of all 
     development assistance came from the United States. Last year 
     it was down to 13 percent. In 1960, 4 percent of the U.S. 
     budget went for development and international affairs in 
     general. Today, that figure stands at less than 1 percent. 
     When you compare the percentage of gross domestic product 
     devoted to development assistance among the other 
     industrialized countries, the U.S. ranks dead last. 
     Contributions to the UN's development work remain modest, and 
     the $1 billion plus owed to the UN remains unpaid.
       Declining developing assistance is part of the larger 
     picture. Basically, the issue is our country's flagging 
     commitment to international leadership. Some 40 U.S. 
     embassies, consulates and branch offices have had to be 
     closed in the last 6 years. Coverage of international affairs 
     in the major national newsmagazines has dropped by 50 percent 
     since the early 1990s. The country that has benefited most 
     from globalization, and has the greatest stake in its 
     success, seems deeply reluctant to shoulder the load that our 
     position in the world requires of us.
       Perhaps the most telling critique of American policy is 
     that offered by Jeffrey Sachs of Harvard:
       ``America has wanted global leadership on the cheap. It was 
     desperate for the developing world and post-communist 
     economies to

[[Page E2192]]

     buy into its vision, in which globalization, private capital 
     flows and Washington advice would overcome the obstacles to 
     shared prosperity, so that pressures on the rich countries to 
     do more for the poorer countries could be contained by the 
     dream of universal economic growth. In this way, the United 
     States would not have to shell out real money to help the 
     peaceful reconstruction of Russia; or to ameliorate the 
     desperate impoverishment and illness in Africa. . . .
       ``Washington became skittish at anything or anybody that 
     challenged this vision. When developing country leaders 
     pointed out that development was much harder than it looked; 
     that their economies were falling further behind in 
     technology; that they were being destabilized by financial 
     flows they could neither track nor understand; that falling 
     commodity prices were taking them further from the shared 
     prosperity that they had been promised; that unattended 
     disease was ravaging their societies; that the wreckage of 
     Soviet communism would take real aid, not just short-term 
     loans to overcome; or that they were still drowning in debt 
     ten years after America acknowledged the need for debt 
     relief; all these honest reflections were taken as hostile 
     challenges to the vision of shared prosperity because they 
     put at risk the notion of cost-free American leadership.''
       There are many lessons to be learned from the spreading 
     global crisis. And since the contagion is in fact approaching 
     even the United States, perhaps we will learn them. Indeed, 
     rarely have so many hoary myths and half-truths been 
     dispatched so quickly and thoroughly.
       Gone are the myths that globalization is working well, that 
     most of the developing world is doing fine economically, and 
     that Asia is blazing a trail for other developing countries 
     to follow.
       Gone too is the myth that trade and private capital are 
     reliable substitutes for development assistance. In lucid 
     moments, political leaders know that development cooperation 
     works. That is why whenever there is a high-stakes crisis--
     from the Middle East, to Bosnia, to Indonesia--development 
     resources are mobilized to support peace and stability.
       And gone are the notions that progress can be left to the 
     wisdom of the market, that government is hardly necessary. If 
     the state is needed to save the market from itself, imagine 
     how much more it is needed to save people.
       And at least weakened, for the moment, is the tendency by 
     America to view itself as relatively immune from the troubles 
     of the developing world.
       Too many Americans have nestled comfortably behind these 
     and related myths, but they are now revealed for what they 
     are--simply convenient concoctions.
       So let me return to the question: does the world of 
     underdevelopment and poverty matter of the United States?
       Looked at objectively, the short answer is that the 
     developing world means a lot for America today, and it will 
     mean even more in the next century. By the year 2000 four out 
     of five people in the world will be living in the developing 
     countries. When we consider market growth for American 
     products in the next century, the center of gravity will 
     continue to shift toward the developing countries. Since 
     1987, more than two-thirds of all American export growth has 
     occurred in the emerging markets, and this has generated 
     roughly two million new jobs in the United States.
       Interdependence can also be negative. The U.S. is now 
     entering a period of substantial trade deficits as ships 
     leave West Coast ports virtually empty and return with Asian 
     goods selling at bargain prices. In the Port of Seattle 
     alone, imports are up 37 percent over last year and 
     exports are down 24 percent. The crisis will increasingly 
     affect American jobs. The financial and economic problems 
     of the developing world are also having a major impact on 
     U.S. investments. For example, the California Public 
     Employees Retirement System has lost more than $2.7 
     billion in emerging market investments in the past year.
       Beyond our positive stake in the economic health of the 
     developing world, Americans have a large stake in what we 
     might call the ``avoidance agenda''--the avoidance of 
     humanitarian emergencies, national and regional conflicts, 
     environmental deterioration, terrorism, illicit drugs, the 
     spread of diseases, illegal migration, and other human and 
     ``natural'' disasters. We now see plainly that economic, 
     environmental and political problems do not need passports to 
     travel around the globe. Many of these threats stem directly 
     or indirectly from poverty, inequity, joblessness and social 
     disintegration. No one would attribute such problems solely 
     to under-development, but underdevelopment is surely part of 
     the disease. And development--sustainable, people-centered 
     development--will almost always be part of any cure.
       I can state fairly simply the most important take-home 
     lesson from my years at the United Nations: None of the 
     admirable goals that the U.S. has pursued around the world--
     not peace and stability, not human rights and 
     democratization, not the expansion of trade and markets, not 
     environmental protection, not population stabilization, not 
     an end to hunger and extreme deprivation--not one of these 
     can be accomplished except in the context of successful 
     development--equitable, sustainable successful development. 
     And that kind of development does not have a snowball's 
     chance in Hades of succeeding unless we forge a new framework 
     for development cooperation, and back it up with real 
     commitment and financial resources. I must commend both 
     President Clinton and the World Bank's Jim Wolfensohn for the 
     leadership they showed on these issues at last week's annual 
     meetings of the Bank and the IMF.
       So let us take a leap of faith here--faith, and hope, that 
     enough Americans do care, that enough leaders are far-
     sighted, that we can see the farther shore beyond Wall Street 
     and the daily closing of the stock market and even beyond the 
     immediate financial crisis, and that we want a leadership 
     agenda worthy of our great nation. What would it be?
       Yes, we must act urgently on the current emergency, 
     including the proposals to lower interest rates and take 
     other steps to stimulate demand and reinvigorate the world 
     economy. And, yes, we must also act to prevent the spread of 
     the current financial crisis. But we must do so in a way that 
     supports growth in a much wider group of countries than those 
     hit by the Asian contagion, including those countries whose 
     deep, abiding poverty was never relieved by high growth. They 
     have been in long-term recession, often struggling to regain 
     the income levels they had twenty or even thirty years ago.
       Yes, we need a new international financial architecture to 
     protect countries and people reeling from the effects of 
     vast, unregulated movements of capital. But we also need to 
     act on the fact that most countries, including virtually all 
     the low-income countries, never benefited from foreign 
     investment and loans; that most countries have banking and 
     regulatory systems and governance capabilities far less 
     developed than the Asian tigers; and that only 0.2 percent of 
     global commercial credit reaches the poorest 20 percent of 
     the world's people. Special programs are needed to address 
     these pre-emerging market challenges as well.
       Yes, we need much larger social investments and social 
     safety nets from the development assistance community to 
     protect the poor victimized by recession in Indonesia and 
     elsewhere. But we also need antipoverty development 
     assistance such as that UNDP and others provide to help the 
     other hundreds of millions of families who live in the prison 
     of poverty.
       Yes, we need to allow certain countries to temporarily 
     suspend debt repayments--a standstill--while they renegotiate 
     new terms on what they owe. But we also need to go far beyond 
     current arrangements for reducing external indebtedness 
     which, for the developing countries and countries in 
     transition, has climbed to over U.S. $2.2 trillion. Two-
     thirds of this is long-term public debt. In Africa, 
     governments are now transferring four times more to 
     international creditors than they spend on basic health 
     and education. New initiatives to relieve both bilaterial 
     and multilateral debt burdens are clearly in order.
       Yes, we need new institutional arrangements for better 
     governance of the global monetary system and economic 
     globalization. But we also need norms and rules of the road 
     to guide globalization in other ways--to protect and benefit 
     poor countries and poor people, the environment, workers, 
     consumers, and investors. Globalization is on trial, and a 
     growing backlash from many quarters could threaten the 
     process itself--killing, or at least weakening, the goose 
     that lays the golden eggs. Multilateral challenges require 
     multilateral solutions, and the United Nations has an 
     important rule to play in helping to make globalization work 
     for people and for human development.
       In short, we need a new architecture for development 
     cooperation, not just a new architecture for international 
     finance. Let me mention five elements of this new 
     architecture for development cooperation--elements we are 
     working to build into our program at UNDP.
       First, we must broaden the scope of development cooperation 
     to include not only development assistance but also trade, 
     debt management, private investment and capital flows, 
     private sector development, and access to technology. These 
     elements must all be made supportive of a more equitable and 
     sustainable world, not inimical to it. Also, the strictly 
     government-to-government foreign aid of the past should go to 
     the dustbin of history with the Cold War. The new development 
     assistance must focus on being synergistic with private 
     sector development and the strengthening of civil society as 
     a whole.
       Second, the relationship between industrial and developing 
     countries needs to be redefined. Common interests and 
     complementary needs of the rich and the poor, as well as 
     global goals forged through the United Nations, must provide 
     the basic rationale for new partnerships and compacts. Global 
     challenges require cooperative, global solutions. We must act 
     in concert, preventively, to attack the root causes of 
     today's threats because we cannot afford to cope with the 
     future tragic consequences of neglect. Development assistance 
     is an essential part of the cost-sharing needed for global 
     compacts.
       Third, a new development framework is needed to consolidate 
     the emerging concept of sustainable human development. Too 
     often, development cooperation has been shaped by short-term 
     military, political and economic interests. Past aid has not, 
     for the most part, been used for poverty eradication and 
     human development. We must now ensure that scarce funds 
     address the most

[[Page E2193]]

     pressing needs of people, particularly the poor, and we must 
     reinforce this commitment by an unequivocal acknowledgement 
     that freedom from poverty is a fundamental human rights of 
     all people.
       Fourth, we must learn from past mistakes and ensure the 
     development cooperation supports the polity and not just the 
     economy; that it is country-driven and not donor-driven. The 
     challenges of growing poverty and widening inequity will not 
     be met without democratization and good governance. 
     Development cooperation must be fully committed to these 
     ends. Assistance projects must also be owned by the people 
     they are intended to help, because these projects respond to 
     their actual needs and because, through their participation, 
     they themselves helped design the project. Development 
     assistance must empower the poor--economically, socially and 
     politically--not marginalize them.
       Finally, we must have the foresight to increase development 
     assistance, not reduce it. We know much better now--often 
     from sad experience--how to succeed in development 
     cooperation. Yet, right at this confluence of greater need 
     and greater opportunity, we find tragically that resources 
     are declining, not increasing. Development assistance has 
     declined for five years running, and is now at an historic 
     low. This trend that must be reversed, or we will pay dearly 
     later--in missed economic opportunity, with emergency relief, 
     with peacekeeping forces, through the spread of disease, 
     environmental deterioration, illegal migrants, refugees, or 
     terrorism. Certainly, we will pay through the great pall cast 
     on the human spirit by the knowledge that we have not acted 
     to help relieve poverty's suffering when we could so easily 
     have. An enlarged volume of assistance is absolutely critical 
     right now, for example, if we are to avoid the ``Sophie's 
     Choice'' problem of increasing assistance to Asia without 
     further diminishing assistance to Africa.
       We must see development assistance not as an alternative to 
     private investment but, for much of the world, as an 
     essential building block to a vibrant private sector and 
     successful financial markets. We must see development 
     assistance not as a handout but as a solid investment in 
     ``global public goods,'' including peace and a more equitable 
     and habitable world from which we all benefit. And we must 
     seek development assistance not only from traditional sources 
     but also from new and innovative sources of finance.
       These are challenging objectives. But let's make no mistake 
     about it: the policies the U.S. adopts today, in the context 
     of the globalizing world, with regard to development 
     cooperation and the United Nations--these are defining 
     decisions for the United States. They will define the values 
     for which our country stands. The world is watching, and 
     expects a lot of America. Let us not disappoint them--or 
     ourselves.
       Thank you.

       

                          ____________________