Reports on trade, finance among issues considered in Second Committee in October.

Reports on trade, finance among issues considered in Second Committee in October

The Secretary-General's report on "International co-operation in the fields of money, finance, debt, resource flows, trade and development' (A/40/708), reviewed in October by the Second Committee (Economic and Financial), indicated common agreement that various problems confronting the international economy were interrelated and solutions required action on a number of fronts.

The paper was based on information obtained through consultations with Governments, United Nations bodies and specialized agencies.

Developing countries indicated that some recent problems facing the international economy were manifestations of structural imbalances in the system. They called for improved coordination of macro-economic policies of major developed countries; reform of the international monetary system to take into account changes in economic relations since Bretton Woods, and equitable participation in the decision-making process affecting the global economy.

While recognizing the importance of domestic policies for economic growth, many countries, called for greater emphasis on investment, growth and supply-oriented policies for long-term development.

The debt crisis could not be seen in isolation from other aspects of international economic relationships. A growth strategy based on external borrowing had been advocated during the 1970s.

Developing countries stressed that growth in their exports was essential for their economic development, but a liberalization of international trade was needed for this to occur.

The continuing weakness of prices of primary commodities, so important to export earnings of many developing countries, had serious implications, including the capacity of those countries to repay their external debt.

Aspects of the international monetary system required reform and improvement.

Developing countries strongly urged the convening, under United Nations auspices, of an international conference on money, finance and trade.

Developed market economy nations recognized the importance of a coherent approach to the problems of money, finance, debt and trade. They hoped that the 1985 meetings of the IMF Interim Committee and the IMF/World Bank Development Committee would provide a new opportunity to discuss external indebtedness, flow of resources and trade policies.

Some developed countries affirmed their commitment to official development aid targets, and some supported an increase in World Bank capital. Stress was laid on efficiency in aid use, and greater efforts by developing countries to mobilize and effectively use domestic resources.

All developed countries agreed that free flow of international trade was essential for the prosperity of the world economy and urged, as did developing countries, export expansion. A number of developed countries had called for a new round of multilateral trade negotiations.

On money, finance and debt issues, developed countries generally stressed the importance of sound domestic policies and continuing adjustment efforts, particularly in major borrowing countries. While a global view of the debt problem was needed, debt restructuring, according to many developed countries, had to be undertaken on a case-by-case basis. They accepted that developing countries' efforts had to be supported by adequate external finance and trade liberalization.

The present international monetary system had served the international economy well and needed strengthening rather than a major overhaul.

Countries with centrally planned economies viewed the present economic crisis as a result of the working of the Western world's economic system, with its unequal relationships among countries. They supported the convening of an international conference on trade, debt, money and finance.

They ascribed primary responsibility for developing countries' economic backwardness to former colonial policies, transnational corporation activity and economic policies of some developed market economies.

The debt and resource flow problem could not, in their view, be dealt with in isolation. They called for increased access for developing countries to new sources of credit, a curb on tax and other privileges that foreign private investors enjoyed in these countries and on their profits, and an increase in the flow of official development assistance from Western countries to developing countries.

Inequitable trade relationships among nations had caused many of the problems of developing countries, according to countries with centrally planned economies. They called for a fair relationship between prices of raw materials, food and manufactures, and viewed with concern growing protectionism in international trade. These countries argued that an international monetary system based on one or more domestic currencies was inherently unstable and should be dispensed with.

Review of Palestinian, African, other matters

Palestinian matters and issues related to Africa were also discussed in the Second Committee in October in connection with the report of the Economic and Social Council (A/40/3).

Other subjects discussed by the Committee under this item were: international economic security; the world population situation; food and agriculture; contributions to the World Food Programme 1987-1988; the International Drinking Water Supply and Sanitation Decade; the World Tourism Organization, and mobilization of financial resources for industrial development.

On Palestinian matters, reports related to permanent sovereignty over national resources in the occupied Palestinian and other Arab territories; economic development projects in the occupied Palestinian territories; and assistance to the Palestinian people.

The study on permanent sovereignty over national resources (A/40/381-E /1985/105), dealing with both land and water resources, relied mainly on United Nations reports and other sources, as it was not possible to send a fact-finding mission to the territories.

Since 1967, the report stated, water supply and management of water resources in the occupied territories had been under the control of Israel's Water Commission. Restrictive policies led to the curtailing of water use by West Bank Arabs. From 1967 to 1977, drilling of new wells by Arab farmers was practically prohibited, while Israeli settlers were permitted to drill 30 new wells, the study indicated.

International law clearly established the duty of the occupying Power to protect the rights of the occupied peoples over their natural resources, it was concluded. A breach of such obligations "involves a duty to make reparations'.

Israel criticized the Secretary-General's report saying that it represented the final product of "an annual political and propaganda campaign' waged against his country. The standard of living, residential construction, health, education and agriculture in the territories had improved considerably under Israeli administration, he said.

The Secretary-General reported on economic development projects in the occupied Palestinian territories (A/40/367-E/1985/116), detailing progress made in implementing resolution 39/223 which called for the lifting of Israeli restrictions imposed on the economy of the occupied Palestinian territories and facilitating establishment of a seaport in the occupied Gaza Strip. Israel considered the resolution "biased and politically motivated', adding that the ports of Ashdod and Haifa were "fully open to the inhabitants of Judea, Samaria and the Gaza district'.

In the debate, Egypt appealed to the international community to prevent the provisional occupation of the Palestinian territories from becoming a fait accompli. Israeli practices in the occupied territories would lead only to a deepening of hatred; "reconciliation cannot be achieved by force', it said.

Debate on African issues included the topics of the Transport and Communications Decade in Africa and the Industrial Development Decade for Africa; measures to ensure the effective and accelerated implementation of the Substantial New Programme of Action in the African least developed countries during the second half of the 1980s; food and agricultural production in Africa; the critical situation of food and agriculture in Africa; and the state of countries stricken by desertification and drought.

Photo: The hard task of development confronts the third world on a daily basis. Laying a water pipe in Botswana.