Speech

February 23, 2003
Kuala Lumpur

Prime Minister Shri Atal Bihari Vajpayee's Speech at NAM Business Forum on South-South Cooperation

The Prime Minister Shri Atal Bihari Vajpayee, addressed the Non-aligned Movement Business Forum on South-South Cooperation, at Kuala Lumpur,

I thank the Asian Strategic and Leadership Institute and associate organizations for inviting me to this Forum. This is a welcome initiative. It enables business and industry from our countries to interact with political and economic decision-makers. I am especially pleased to be in the company of the Honourable Presidents of Indonesia and South Africa and the Prime Minister of Thailand at this event.

Many people question the relevance of NAM in the changed global context. I think the best answer to such scepticism is contained in the theme of this Business Forum – namely, Remaking NAM by Enhancing Cooperation and Building Bridges.

It is true that NAM’s political agenda has changed with the end of the Cold War. Its campaigns for de-colonisation, disarmament and anti-apartheid achieved great success. By the very nature of things, they consumed most of its energies in the first three decades of its existence.

However, NAM’s developmental agenda has lost none of its relevance. South-South Cooperation and North-South engagement were permanent elements in NAM’s discourse. They made limited progress under the shadow of the Cold War. Sadly, the progress on these imperatives has not been very rapid even after the end of the Cold War.

Meanwhile, globalisation, which has arrived as the defining trend in contemporary world affairs, has provided a new context for redefining NAM. For all the developing countries, globalisation has meant new challenges, as well as fresh opportunities. It has also thrown up issues that determine stability and security in the world in the 21st century. Thus, our unrealized goals of development and our shared vision for a peaceful tomorrow should unite us in NAM even more cohesively in the era of globalisation than the political goals of the Cold War era.

The numbers that prove this point are numbing. 10 million people have been annually joining the ranks of the poor in the last decade. A quarter of the world’s population lives below the poverty line. Over a billion people are under-nourished. Over a billion people survive on less than 1 dollar a day. Malaria, tuberculosis and HIV/AIDS are mainly diseases of the poor, who cannot afford medical treatment for them.

In our Millennium Declaration of 2000, we set ourselves the goal of poverty eradication by 2015. At the World Food Summit, we pledged to halve hunger by 2015. If we are to achieve these goals, South-South Cooperation and North-South Engagement have to be more than mere slogans. They have to be invested with sound understanding and a strong will for action. And that action has to be mainly in the area of economic cooperation and business interaction.

The end of the Cold War also meant the end of statist models of economic growth. It enabled many NAM countries to devise their own road to economic reforms, based on the virtues of private enterprise and competition, with the State playing a promotive and facilitatory role. Success stories along this journey abound. One of them has been scripted right here in Malaysia, under the leadership of Prime Minister Mahathir.

In India, too, economic liberalization has yielded positive results. Within the last decade, nearly 15% of our population has been lifted above the poverty line – and that means 150 million people. Our economy has acquired globally competitive strengths in many sectors, most notably in Information Technology.

Yes, globalisation has created an objective basis for mutually beneficial relationship among reforming economies. However, we cannot be blind to the fact that it has not rewarded most developing countries with growth and development. 116 Non-Aligned countries, representing two-thirds of the world’s population, still contribute barely 20% to the global GDP. Their economic growth was slower in the 90’s than in the 70’s. In most developing countries, per capita incomes have been falling, unemployment is rising and income disparities are widening.

This is happening because the systems and processes of the global economy, dominated by developed countries, are not sensitive to the needs of the developing countries. Volatile capital flows have sparked off economic crises successively in Mexico, South East Asia, Brazil and Argentina. There has been a glaring asymmetry in the distribution of gains from trade liberalisation as developed countries find newer ways to protect their markets. Transfers of capital resources to Least Developed Countries have fallen sharply. Sustained negative net capital transfers are leading these countries into a debt trap.

The re-making of NAM, therefore, lies in articulating a strong developmental agenda. At the core of this agenda should be our demand for a reform and reorientation of globalisation.

We should press harder for reform of the international financial architecture. Volatility of capital flows must be checked. Resource flows to poor countries should be accelerated – through affirmative action in certain cases, as in Africa. International institutional conditionalities that have frequently slowed economic recovery, rather than speeding it up, should be reviewed.

An allied issue is the development of an objective mechanism for sovereign risk ratings of developing countries. We need a more participatory evaluation system, based on cooperative engagement between lending and borrowing countries through international public institutions.

There are similarly trade issues of crucial interest to NAM member-states. Our sheer numbers suggest that we can influence decisions at the WTO to promote our collective interests. For example, we can harmonise our positions and pool our resources to –

frustrate efforts to block technology to treat diseases and epidemics that afflict millions;

prevent unilateral action that denies market access;

fight against those provisions of TRIPS and other WTO Agreements which impede our developmental efforts;

reject unacceptable trade linkages; and

monitor implementation of WTO commitments by developed countries and seek redressal for non-implementation.

Naturally, in a large and diverse community such as ours, there are bound to be differences. We have to recognise, however, that our differences have often been exaggerated to our disadvantage. It is a tactic, familiar from our colonial days, of dividing us on peripheral issues, so that we remain apart on the central ones. We sometimes forego our long-term interests by settling for short-term gains.

On all crucial developmental issues, almost all of us have an identity of views. However, this has not been translated into unity at the negotiating table.

Even where our interests do not coincide precisely, we can build broad coalitions. We showed this at the Doha consensus, which correctly put the needs of the poor above the commercial interests of a few multinational companies.

The challenge before us is: How do we remake NAM through business and economic interaction? I would like to offer a few suggestions.

Strengthening regional cooperation offers time-tested framework for rapid and mutually beneficial growth. ASEAN has shown this with striking results. This can, and needs to, be replicated in other regions. However, this requires one condition to be adhered to. Economic cooperation has to be depoliticised and made immune to bilateral issues.

In our scramble for the increasingly saturated markets of the advanced countries, we ignore the growth possibilities from South-South trade and investment linkages. There are countries that are leaders in certain sectors, and at the same time there are NAM countries where those very sectors are underdeveloped. Today, Malaysian firms are building highways in India and Indian companies are building railway projects in Malaysia. Such linkages can be multiplied literally a hundred fold in the areas of energy security, food security, infrastructure development, enrichment of human and institutional resources, tourism, entertainment and media.

For this, we need to devise effective channels of business and developmental interaction with each other. Today, sadly, we do not even exchange information and data of great mutual interest. It is a shame that valuable developmental experiences from Bangladesh’s micro-credit institutions or Tanzania’s malaria-controlling bednets should remain confined to a few regions. Meanwhile, other developing countries are either busy reinventing the wheel or importing inappropriate technologies or services from advanced countries for the same applications.

In the jargon of today, most of us are fully wired. Yet we do not seem to be connected with each other. Our researchers, businessmen and bankers are routinely sending data, contracts and money in real time across thousands of miles to USA and Europe at the click of a mouse. But we do not exchange information with countries around us on the more basic realities.

The most crying need, therefore, is for an information exchange system. I am told that Indian business and industry have made a beginning in this direction by launching a NAM Business Portal during this Summit. I believe this is a valuable initiative, but it can prosper only if it can pick up participation from NAM countries around the world.

Exchanges through the Internet are cheap, effective and comprehensive. We can better network our chambers of business and industry, and think-tanks on international economic issues, to exchange perspectives on the world trading system and even synchronize our negotiation positions on important issues.

For years, NAM has been arguing the merits and demerits of a permanent NAM Secretariat, with competing claims for its location and disagreements on the scope of its activities. With one website on the Internet – or a network of such websites – we can virtually perform many functions of a NAM Secretariat, located in cyberspace and accessible to all.

I believe there is another initiative, which NAM can spearhead for the reform of the international financial architecture. We know that unstable capital flows can severely disrupt developing economies. There is less ready acceptance of the idea that such flows should be regulated by an international levy. I believe this is a reform whose time has come. It combines in one effective measure an instrument to protect weak economies from the volatility of capital, to enhance investor confidence through stability of capital markets, and to generate valuable developmental resources.

Conservative estimates of capital flows in recent years indicate that even a token tax of a quarter percent could generate annual revenues of the order of $300 billion. If this were to form the corpus of a Global Poverty Alleviation Fund, we can make dramatic progress towards the objectives, which we outlined at the Millennium Development Summit and the World Food Summit.

It has been argued that it would be difficult to accurately monitor financial flows and hence to operate this tax regime. The counter to this argument is that U.N. Security Resolutions 1373 and 1456 ask countries to take the most stringent measures to monitor terrorist financing channels across the globe. Such measures, to which all countries are committed by chapter VII of the UN Charter, would be of far greater magnitude than those required for monitoring and taxing capital flows.

The striking conclusion from the journey of NAM is that ours is a story of huge missed opportunities. The one positive lesson, however, is that now we know how not to miss the opportunity in the future.

Sometimes, people ask: Now that the Cold War is over, where is the Peace Dividend for NAM countries? I believe that the dividend lies in making development the main new business of NAM. We know that good business always yields a handsome dividend. There is every reason to believe that NAM’s new agenda, based on a partnership between government and industry within and among member nations, as also with countries of the developed world, would yield faster economic growth, all-round development and a better quality of life for all. That is the long-term peace dividend all of us should strive for.

Thank you

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