SUNS 4353 Thursday 14 January 1999

Development: Asian economic crisis a warning to rich nations

United Nations, Jan 12 (IPS/Thalif Deen) -- The Asian economic turmoil is a warning to the world's richer nations that they cannot remain insensitive to the spreading crisis in developing countries, Indonesian Foreign Minister Ali Alatas said Tuesday.

"The crisis sent a strong message to the developed countries that if this economic storm were allowed to unleash its full fury, they, too, in the end will sink with the rest of us in a global recession or even depression," he said here.

Addressing the 133 developing nations that make up the Group of 77, Alatas said that the crisis - which began in Thailand in July 1997 and spread to Indonesia later in the year - has dealt a crushing blow to the developing world and to the cause of development.

"Some of the most dynamic developing economies saw their banking and corporate sectors brutally shaken to the point of near-collapse," he added. Tens of millions, he said, were driven below the poverty line of a per capita income of less than a dollar a day. "The quality of life of entire populations suffered a sharp decline."

Alatas, who chaired the Group of 77 in 1998, handed over the leadership to Guyana's Foreign Minister Clement Rohee who will be its chair through December 1999.

"When Indonesia assumed the chairmanship of our group a year ago," said Alatas, "we were bracing ourselves against the fury of a financial and economic crisis that started out as Asian but eventually revealed itself as having a global character as its adverse effects spilled over to other continents."

Alatas pointed out that globalisation per se was not at the root of all the troubles, but he blamed the failure of the international community to manage this mighty force, which could have been a blessing to all humanity, instead of "favouring the strong and ravaging the weak."

He also blamed the crisis on an "unbridled liberalisation of markets" and the drive by richer nations to create openings for their investments, as well as the unrestricted money-market flows and exports of manufactured products.

The crisis - which, from Thailand and Indonesia spread to South Korea, Philippines, and to a lesser extent Malaysia and Singapore - moved the International Monetary Fund (IMF) to provide bailout packages to the affected nations.

The IMF granted assistance worth some 58 billion dollars to South Korea, 43 billion dollars to Indonesia, 17.2 billion dollars to Thailand and 1.0 billion dollars to the Philippines. In November 1998, as the crisis hit Latin America, the IMF provided 41.5 billion dollars in financial bailouts for Brazil.

Guyanese Foreign Minister Clement Rohee told delegates that past experience had shown that globalisation and liberalisation cannot be relied upon for safe passage into the global economy.

"Indeed, the best efforts of the countries of the South to apply the globalisation prescriptive and to liberalise their domestic economies by opening them to powerful market forces have brought, for most, unprecedented economic crises," he said.

"We have witnessed staggering increases in income disparities at home, and uneven development leading to a widening gap between rich and poor countries, between the North and the South," he added.

Rohee argued that globalisation had really heightened the vulnerability of the economies of the South, while eroding countervailing mechanisms which seek to mitigate its adverse effects.

He said developing nations must be given the traditional tools, including financial assistance, debt relief, improved infrastructure, sufficient levels of investment, appropriate technology and guaranteed access to markets. "Only in this way will they have any hope of becoming participants - instead of mere spectators - in the global market place."

U.N. Secretary-General Kofi Annan told delegates that, from his perspective, the economic and social challenges of 1999 were shaping up to be every bit as numerous and complex as those of the past year. "Many of the countries of the Group of 77 were hit very hard by events of 1998," he said. "They know all too well that the global crisis is far from over."

Annan said the numbers he saw continued to shock and dismay: millions of workers losing their jobs; millions of children dropping out of school; food staples doubling and tripling in prices, placing them beyond the reach of people who are already needy and suffering. Safety nets, he said, remain few and non-existent while crime and violence are on the rise.

Even those countries that have managed to avoid or contain the damage face the perennial challenges of feeding their people, fighting against poverty, protecting the environment, promoting human rights and providing democratic governance and transparent public administration,

he added.

Annan said multilateral institutions, such as the United Nations, have a key role to play in this effort. "If the dark cloud of crisis has had a silver lining, it is that the past year was especially fruitful for

international economic cooperation at the United Nations," he noted.

"Dialogue has been strengthened, issues and assumptions have been re-visited, and through it all, the Group of 77's voice has been central," Annan said.