Michel Camdessus' Plenary Remarks

Allow me to be unconventional if I may. Not only because this meeting is a very special gathering, but also because I am still feeling the impacts of an unusual experience I had last week. I was in Korea, having lunch with President Kim Dae-Jung of Korea and a group of ministers from Southeast Asia. We were talking, of course, about economic recovery from the Asian crisis, and all of the ministers were excited, because Korea is doing superbly well, Indonesia is reemerging, and so on. And while we were discussing the kinds of lessons we should retain from the crisis, President Kim abruptly turned to me and asked, "What should we do now to narrow the gap between rich and poor? Could you start the discussion?"

I had a moment of panic indeed. I reached for something intelligent to say - when, suddenly, someone else interjected, and I was saved. But I reassured myself that I would return home from this meeting in New York with substantive thoughts to share with my constituents about combating global inequities.

The first thing I do know is that the poorest in the world need help from the richest in the world. So recognize, please, your responsibility for making the world economy work on all of its engines, and not only the American engine. We must understand that this is a globalized world, and that the responsibility for the success of the entire world rests with each individual country, whether it be a developing country, an emerging country or a large industrialized country. If Thailand makes mistakes - I'm sorry, Minister Paribatra, for putting it that way, I realize it's an oversimplification - then Brazil and Indonesia will pay the price.

My second message is a call for solidarity. I speak of solidarity because the 20th century is about to end with a major failure. Thirty or 40 years ago, the wealthy countries of the world, with the exception of the United States, pledged that by the year 2000 they would devote 0.7% of its GDP to official development assistance. Our current commitment to assistance is only 0.2% of the world's GDP, and still the percentage is dropping. Bizarrely enough, while over the last decade we watched the downward trend grow ever steeper, we also multiplied our pledges to effect positive change in the world, from halving the number of people living in extreme poverty by the year 2015, to universal primary education, to gender equality and dramatic reductions in infant and child mortality. I charge those making such pledges to be serious about them, and to enact methods of gauging their nations' level of commitment to those pledges, year after year.

My third message is that you must draw the proper conclusions from what you see. In Africa, for instance, you have pledged debt relief with the Jubilee 2000; do that, but do it well, by ensuring that these new resources are applied to social purposes. Many people say, forgive the debt and forget. But make sure that this alleviation serves lasting development and that the recipient countries adjust their economies, reform their governments, fight corruption and improve their overall productivity.

In Argentina, for example, the cuts in spending made by the government were attributed to the invisible hand of the IMF. When I see demonstrations against the IMF, I feel sorry, because of course underlying them is a tremendous amount of human distress. But there is also a certain amount of ignorance about how an economy works, and possibly also an insufficient national consensus on what the national priorities should be. There are still a lot of reforms to introduce. For social efficiency to really reach the poor, you need to have exemplary administration and management of social spending. I'm sure you will agree with me that there is still progress to be made on that front.

Look clearly, too, at the situation in Africa and observe that the worst enemy of poverty reduction and development there is war. We must do something to halt this catastrophe. In particular, try to follow the recommendations of the UN Deputy Secretary General to the African countries: work to maintain zero defense spending and to reduce purchases of munitions.

Our task is to find worldwide responses to worldwide problems. You must do something to strengthen the institutions you have given yourself to bridge the growing gap between the globalization of problems and the persistent national sovereignty over political solutions. Countries have institutions to bridge the gap. By all means, stimulate them, oblige them to reform; but at the same time, lend them absolute and total support.

I had all of these points in mind when the President of Korea challenged me last week to open a discussion on the poverty gap in Asia, but still I was not satisfied. And so when later in the week I visited with the chairman of a Buddhist community in Korea, I posed the same question to him. His reply was simple. Empower the poor, he said, and - as the poorest of the poor - empower our women. And this, too, is part of the message I leave with you.

Michel Camdessus is Managing Director and Chairman of the Executive Board of the International Monetary Fund.