I have the honor to speak on behalf of the European Union.
“The Candidate Countries Turkey, Croatia* and the former Yugoslav Republic of Macedonia*, the Countries of the Stabilisation and Association Process and potential candidates Albania, Bosnia and Herzegovina, Montenegro, Serbia, and the EFTA countries Iceland, Liechtenstein and Norway, members of the European Economic Area, as well as Ukraine, the Republic of Moldova, Armenia, Azerbaijan and Georgia align themselves with this declaration.
Poverty eradication is at the forefront of international attention. Finding ourselves at the midpoint on the path to 2015 and the ultimate objective of reaching the Millennium Development Goals (MDGs), we hear the calls from outside these august halls from civil society, academics, and even rock stars to make poverty history. Indeed, it is our common responsibility to do away with poverty in our day. We are already witness to significant regional progress in the achievement of the MDGs in Latin America, China and India, but recognize the challenges facing Sub-Saharan Africa and South Asia in attaining these objectives.
Economic growth has been a crucial building block in fostering the above mentioned progress. Although global growth rates will moderate in 2007, after a period of several years of robust growth, it is expected that those countries with high rates of growth over the last years will continue to benefit from favourable trends that can positively impact sustainable development. The past several years of high growth rates will most likely continue, most notably in Africa. Notwithstanding recent successes in this regard, reductions in the number of conflicts worldwide, expanded political liberalization and substantial improvements in governance, we note with regret that poverty remains a serious concern, namely in Africa.
We take this opportunity to address a special word about Africa, which remains the continent of committed attention of the EU. In December 2007, the EU-Africa Summit will take place in Lisbon. A joint EU- Africa Strategy will drive our partnership to a new level.
Although economic growth is central to eradicate poverty it alone is not sufficient for development. Growth can improve peoples lives when linked with adequately managed economic, financial (fiscal), social and environment policies. To promote equal opportunities, it is important to look for those who are most in need and promote growth in which the poor, both women and men, have the capability to participate in and benefit from sustained economic growth. This is one of our main concerns. Therefore, it is appropriate that we are here today discussing how to assure that economic growth becomes more pro-poor.
The complexity of the linkages between growth and poverty reduction is particularly important in the context of this discussion. In spite of clear signs of hope in what concerns the decline in global poverty, the challenges involved in reaching the MDGs through combating and eradicating poverty, hunger, illiteracy, disease and, in general, all inequalities in so far as they hamper or impede the equal enjoyment of human rights and equal opportunities for all, persist and, in some cases, have even become greater. The Secretary Generals report for this meeting highlights the experience of Sub-Saharan Africa in this regard, where economic growth has improved since the mid-1990s, but the incidence of extreme income poverty in the region has remained high due to rapid population growth, inequality and limited job creation.
There is no doubt that long-term high growth can only be driven by a vibrant private sector. The challenge lies in ensuring that growth of the private sector is pro-poor, and that poor women and men can contribute to and benefit from private sector growth. Governments have an important role in supporting and sustaining this. The benefits of growth are extended to the entire population only by addressing the challenge of extreme income inequality, and by ensuring equal access to productive resources such as land, agricultural services, credit, access to health, education, employment and other opportunities. People with limited resources, along with the rest of the economy, should be the drivers of growth, not passive recipients. Policies that explicitly promote economic and social inclusion and gender equality, empowerment of the disadvantaged and social investment are required to ensure that growth is pro-poor.
In this context, we wish to highlight the importance of the informal sector of the economy in many countries as a source of employment for the poor. The substantial potential of the informal sector should be realised, including through its integration into the formal economy in a way that does not stifle its entrepreneurial spirit. Informal sector businesses must become a better vehicle for strengthened private sector development and poverty reduction.
Efforts to eradicate poverty call for the development of national development strategies, designed with the participation of all interested stakeholders, integrating all the sectoral policies and programmes, in order to create and maintain equitable economic policies that do not adversely affect the poor, but rather, enhance their opportunities.
National development strategies, policies and approaches for the promotion of poverty reduction through sustained economic growth have followed different models, based on the economic, social and political country-specific contexts. Practical implementation has also varied considerably but there appears to be no doubt that the impact of growth on poverty depends on the social and economic conditions, including the initial extent of income poverty, and that while growth is fundamental for sustained poverty reduction, it may not reduce inequality. On the other hand, there is evidence that education, adequate infrastructure and macroeconomic stability have a favourable effect on both growth and the distribution of income. As indicated in the Secretary Generals report, the role of productive employment is critical for pro-poor growth. Full employment and decent work for all bring together the economic and social objectives of sustainable development for the eradication of poverty.
Furthermore, for national development strategies and poverty-eradication and growth policies to succeed, and also for effective aid management, sound institutional capacity is key. The Secretary Generals report for this thematic debate clearly states that democratic accountability and the existence of clearly established citizenship rights and obligations are among the institutions necessary for linking the poor to growth.
In the EU Member States, the National Employment Plans and the National Plans for Social Inclusion translate, in practical terms, such development strategies and enable the on-going monitoring and evaluation of the results achieved. In this sense, the EU believes that social development and equity are central to sustaining economic growth over the long term, as outlined in the Copenhagen Summit.
The empowerment of the poor, including women and young people, is essential in this context. They need to be empowered to participate in the Poverty Reduction Strategies and other policy making process. These processes have to be accountable to the interests of the poor, so that policies take into account the risks and vulnerabilities they might face. An extended dialogue is also needed to include the participation of a broader civil society to better understand those risks and impacts. Poor people also need to be given access to financial services so that they can enhance their own development.
Poverty often has a female face. The promotion of gender equality and the enjoyment of human rights by women are goals in their own right, a question of social justice and also a core value of the EU, including in EU development policy. These goals are also instrumental to achieving the Millennium Development Goals and other internationally agreed development goals. Sustainable achievements in poverty reduction and development and the empowerment of women, including their political and economic empowerment, are closely interlinked. Women in many countries have fewer economic and political opportunities to improve their well-being and that of their families. Eliminating discrimination and gender inequality contributes directly to poverty reduction and growth through womens participation in the labour force and through their earnings.
The commitments expressed in the Monterrey Consensus reflect a broad-based development approach that include sound macroeconomic policies aimed at sustaining high rates of economic growth, full employment, poverty eradication, price stability and sustainable fiscal and external balances. These commitments integrate social concerns in economic policies in order to extend the benefits of growth to all, including the poorest. Environmental objectives must be an integral part of this broad-based approach. For the EU, combating poverty will be successful only if equal importance is given to investing in people, protecting natural resources, securing rural livelihoods and investing in wealth creation.
In line with the primary responsibility for development, which rests with the governments of developing countries themselves, effective and sustainable domestic resource mobilization in developing countries, especially through the strengthening of the national tax base, is essential and most effective within a framework of democratic governance, sound macroeconomic policies and transparency. Foreign direct investment is an important complement to domestic investments. In order to ensure continued and strengthened flows of sustainable foreign direct investments, efforts need to continue to achieve transparent, stable and predictable investment climates. Public investments in basic infrastructure, the development of human capital and of institutional capacity are all relevant for sustained economic growth.
The increasingly relevant role that some developing countries are having in shaping the world economy and subsequently the emergence of new donors from within developing countries is a positive sign and must be encouraged, within a framework that ensures the quality of aid.
The Secretary Generals report duly underscores the potential role of regional macroeconomic policy coordination in promoting pro-poor sustained economic growth. In this respect the report cites the European Union as a successful example. Building on our home-grown experience, the EU is a staunch supporter of regional coordination mechanisms in other parts of the world.
The European Union provides over half of the worlds aid and has committed to increase this assistance together with its quality and effectiveness, in line with the Paris Declaration on Aid Harmonisation and Increasing Aid Effectiveness. We have collectively surpassed the 2005 the Official Development Assistance (ODA) target of 0,39% of gross national income and remains committed to reach the target of 0,7% of gross national income by 2015. Since 2005, EU member states have also committed to significant efforts in debt relief. Last year we witnessed important progress in deepening debt relief to the poorest countries trough the implementation of the Multilateral Debt Relief Initiative (MDRI) by the African Development Fund, IDA and IMF. The ongoing HIPC initiative also saw substantial progress. This debt cancellation should free up national resources for other development related purposes.
The EU is currently engaged in the negotiations with ACP countries of Economic Partnership Agreements (EPAs) which are development instruments aiming at contributing to poverty eradication and integrating ACP countries into the global economy, through regional integration. The EU sees a great deal of potential in the EPAs and we look forward to the discussion about this subject on the Round Table 2 during the launching of Development Cooperation Forum.
Aid for Trade, that links trade with development, has gained increasing importance and attention with the realization that many of the poorest countries lack the capacity to take advantage of open markets. Increased and more effective Aid for Trade is needed to support developing countries, in particular LDCs, to be better integrated into the world economy and to use trade as an engine of growth and poverty reduction in the context of sustainable development. The EU is actively participating in the Aid for Trade discussion and is hoping to conclude a Joint European Aid for Trade Strategy by the end of 2007.
A successful conclusion of the Doha Round trade negotiations depends on developed and developing countries alike. We believe that a serious substantive engagement by all concerned, namely WTO members, is needed if we want to avoid economic costs and damage to the multilateral trading system, especially for developing countries. We consider that adjustment costs from trade liberalisation are usually small compared with the overall gains from more liberalized trade. However, these gains and costs which result from trade liberalisation must be shared in an equitable way among all trading partners. Trade policy should be viewed as mutually supporting national policies that will promote structural adjustment by the efficient allocation of labour and capital. In this sense, we must pay particular attention to Small and Medium Enterprises (SME) in order to promote a better adaptation to globalization challenges.
Indeed, in this interconnected world, the interdependence of national economies is becoming increasingly evident. At the core of our efforts should be ways to create conditions and opportunities for countries and peoples to better benefit from globalization. In this context, we highlight the importance of addressing the social dimension of globalization. Furthermore, the EU considers that good governance at the international level is also essential to promote transparency, dialogue and cooperation among countries.
In this context, the EU welcomes the ongoing consultations by the IMF to address global imbalances, supporting policies to reduce them while sustaining economic growth. This will be done through exchange rate policies and domestic economic policies in a way that foster domestic stability because unstable domestic conditions can cause severe disturbances to external stability. Consequently, the EU continues to support the efforts underway in governance reform at the World Bank and IMF including giving developing countries a stronger voice in decision-making. We believe the two main goals are to ensure that the distribution of quotas adequately reflects the member countries economic weight and role in the global economy and financial system and their ability to contribute financially, as well as strengthening the voice of low income countries in the IMF. The EU remains committed to ensuring the effective participation of developing countries and countries with economies in transition in the International Financial Institutions. We recognize that governance reforms are essential to the continued effectiveness and credibility of those institutions.
* Croatia and the former Yugoslav Republic of Macedonia continue to be part of the Stabilisation and Association Process.”