Reuters / By Irwin Arieff
UNITED NATIONS (Reuters) - Developing nations, whose needs are often brushed aside by investors, should play a greater role in setting policy and priorities in the financing of global development, U.N. Secretary-General Kofi Annan said on Monday.
"We should long ago have put behind us the idea that development priorities can be decided in clubs where only rich countries have real influence," Annan said.
Hoping for better distribution of investments among poor nations and more stable private capital flows, Annan spoke at the start of a meeting convened to prepare for a United Nations conference on financing for development to be held early 2002.
The conference is part of a campaign by Annan to press governments, corporations, investment firms and international organizations to do more to help the world's poorest nations and their citizens share in the benefits of globalization.
Ahead of the conference, he has proposed some measures, such as lifting trade barriers on poor nations, be studied.
With most capital, large companies and financial institutions based in rich nations, rules for global investment are generally set there.
Many developing countries also rely heavily on foreign loans, particularly from the Washington-based International Monetary Fund and World Bank, which periodically come under fire for appearing to impose economic policies on borrowers.
Annan said developing nations "are the countries where development has to happen. It is their people who have to be rescued from poverty."
The goal of the conference is to identify public as well as private financing policies that should be applied to development at both the national and international levels.
Annan said the policies should try to ensure the stability of private capital flows, "so that they do not become the cause of crises throwing millions back into poverty, as happened in parts of Asia, Latin America and Eastern Europe after 1997," he said.
SHRINKING AID
Developing nations must increasingly look to private investment and trade growth to finance their needs because foreign aid is shrinking.
Countries offering foreign aid on average dedicated just 0.24 percent of their economic output to such aid in 1999 compared to 0.33 percent in 1992, according to a recent report prepared by Annan as part of the planning process for the 2002 conference.
While donor countries have widely agreed that foreign aid should equal 0.7 percent of their economic output, only a handful of countries -- including Denmark, the Netherlands, Norway and Sweden -- have consistently met that target in recent years, according to U.N. figures.
Annan has set up a panel of experts to advise him on the measures to be put forward at next year's conference.
Mexico's former President Ernesto Zedillo heads the panel. Other members include former Secretary of the Treasury Robert Rubin and Jacques Delors, former president of the European Commission.
To prepare for the conference, Annan also prepared a 64-page report identifying 87 promising measures for further study.
One of the options put forward in the report, issued two weeks ago, was for the world's wealthy countries to lift all trade barriers on goods and services exported by poor nations.
Annan also recommended that poor countries be empowered to regulate short-term capital flows in times of crisis, though he cautioned that such restraints "cannot be used as a substitute for sound and appropriate macroeconomic policies.":
