[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

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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.

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