Opening address
by Ms. Danuta Hübner
United Nations
Under-Secretary-General
Executive Secretary of the UN Economic Commission for Europe
at the Ninth
Meeting of the OSCE Economic Forum
“Transparency
and Good Governance in Economic Matters”
Prague, 16 May
2001
Excellencies,
Colleagues,
Ladies and Gentlemen,
UNECE has traditionally prepared its contribution to the
debate on economic issues of importance to the OSCE mission in the region. Any
debate like this one should begin with the recognition of tremendous
achievements of the economies of our region in the last decade. However, only
few of those countries that have embarked twelve years ago on a process of
building democracy and market economy have graduated from the group.
There are also countries like Yugoslavia that suffer from
having stayed for a decade outside the process of democracy building, of market
reforms and international cooperation. The role of the international community
today is to assist Yugoslavia to embark forthwith upon the process of catching
up in all crucial areas with the rest of the region. We know today much better
than a decade ago how to do it efficiently and effectively.
We know today that in spite of a lack of transition theory,
in spite of very diversified experience and lessons, there are some fundamentals
of transition. The major one is about the role of institutional change and
consequences of institutional failure. We have learnt that it takes time to
establish them, also to learn them – this takes even more time. We know today
that in the meantime the institutional vacuum emerges and illegal activities get
institutionalised. In the meantime therefore policies matter strongly, and they
continue to do so when institutions are already in place and fully-fledged.
Proper policy management in terms of timing, sequencing,
choosing instruments, coping with risks, trade-offs and side effects is the
major challenge of a transition policy. The need for seeking proper proportions
in policy making, matching structures of labour and capital markets, applying a
large measure of pragmatism – these are other lessons of transition so far.
Continuity matters, much depends on political leaderships
and on vigorous private sector. Successful economies are those where
international commitments were high on the agenda and played a role of an
important external anchor, where confidence developed facilitating inflows of
foreign direct investment and where the rule of law and good governance were a
rule.
It is true that transition has been taking place in a
deeply changing world and in a changing Europe, and that an essential dimension
of transition is the opening up of economies. Therefore, the international
environment matters for transition. We know today that globalization generates
tremendous opportunities thus benefiting those who have capacities to take
advantage of those opportunities, but globalization also generates risks. When
they dominate, globalization acquires that dimension of exclusion rather than
inclusion. Good governance is an asset essential for this process.
The European economy, the stabilization role of EMU and the
inclusive character of enlargement have been providing stability environment for
transition.
Today countries of our region need high growth rates. They
all need high growth to be able to create new jobs as unemployment level is
skyrocketing (15% on average, up to 40% in some areas), to be able to continue
or to complete major structural reforms for which overall economic stagnation
would be a major stumbling bloc, to achieve visible improvement in living
standards as poverty and income inequalities have spread in some countries.
Only few transition economies managed so far to pass the
GDP level of the pre-transition period. Even though the last year was
exceptionally good for this part of our region, with an average of 6% growth of
GDP, it should be seen as growth from a very low level. In case of many
countries, these statistics are distorted, as there is a high level of
unrecorded economic activities, reaching sometimes up to 40% of GDP. With the
current level of the advancement of reforms, taking into account uncertainties
in the international environment, last year’s high growth rates, so badly
needed, might prove unsustainable. To make them sustainable, macroeconomic
stability is of importance. Much progress has been achieved in this regard and
there is definitely much better understanding and stronger commitment to
macroeconomic stabilization. We have countries with economies in transition that
really meet the Maastricht criteria, but the majority is far from safe levels of
macroeconomic stability.
Institutional advancement also contributes here. It
facilitates stabilization and the choice of a good policy mix. Most of the
countries, however, still face the need of public finance reform. There is
hardly any controversy in understanding that macroeconomic stabilization,
essential as it is, does not replace institutional, structural and social
reforms. In many countries social security systems remain unsustainable. Reforms
of health and education systems are not high on the agenda which makes the
long-term perspective not at all bright. The awareness of the importance of and
policies for science and technology development are part of government agenda in
only few countries. There has been a major progress in the role of private
sector in those countries in terms of its contribution to growth, structural
change, developing market culture, institutional advancement, in providing job
opportunities. Further progress is, however, needed in establishing
institutional, legal and financial infrastructure conducive to enterprise
development.
In the course of the whole decade of transition, but with
even more strength recently, the regional integration has played a meaningful
role in building market system, democracy and in strengthening cooperation.
Today nearly all of 26 countries are - in one or another way - linked with the
European Union, from accession negotiations in the case of Luxemburg and
Helsinki group of 10 countries to stabilization and association agreements at
different stages of development – in case of South East Europe – to
cooperation agreements in case of the Community of Independent States.
Experience shows how essential this kind of an external
anchor can be to accelerate reforms and growth, and to enhance economic
cooperation in Europe, particularly if accompanied by packages of assistance.
Another factor contributing to reforms, policies, growth
and cooperation has been the membership in other regional and global
institutions and organizations: WTO, OECD, Council of Europe, OSCE,
international financial institutions, and also the UNECE.
A better use of mechanisms of internationally binding legal
instruments and guidelines, particularly of importance in the environmental
field, but also with regard to trade, investment, energy and transport, are an
already tested instrument facilitating cooperation, access to markets and
improving investment climate.
In most countries of the region, awareness of the need for
governments to work closely with such partners as non-governmental organizations
and private businesses has matured. At the national level there is certainly a
need to be more open to non-governmental organizations. Transparent
public-private partnership is increasingly needed not only to address economic
tasks but to share responsibilities in the social sphere, including poverty
eradication and protection of the vulnerable.
Rise of poverty has become a serious concern in our region.
Its upsurge undermines stability and transition, capacity to reform, but also
affects access to education and health. It is not a temporary phenomenon. Its
persistence calls for poverty eradication programmes and protection of the
vulnerable in particular, but first of all children and youth and ethnic
minorities who, in most countries, are most affected by the erosion of welfare
services provision.
The issue of environmental protection will be discussed
separately but as I am coming from the UNECE, where so much work is being done
in this regard, let me just stress the need to promote a comprehensive approach
to sustainable development. I hope that the Johannesburg process and our
regional preparatory forum in September will be of help to OSCE.
Last week in the UNECE, we had our annual seminar and
session on institutions’ role and the consequences of institutional failure.
We also had a debate on regional dimension of the Millennium Declaration. We
discussed how to better address in our region the challenges of poverty and the
vulnerable, of the environmental problems, of good governance, of peace
building. All that is of
fundamental relevance to OSCE concerns. I hope we are now better poised to
address together concerns that the economic dimension of OSCE will focus on in
the years to come.
Let me conclude by expressing my gratitude to all
delegations that expressed their recognition of and appreciation for the
UNECE’s contribution to the OSCE Forum. We have always responded with great
interest and responsibility to all requests coming from the OSCE to contribute
to your work. On various occasions we have also offered our views on how to make
the best use of the OSCE mandate in the field of economy and environment in the
context of stability and security. We are ready to hold jointly an expert level
seminar in Geneva that would take us closer to a blueprint of the new strategic
role of economy and environment. I would also like to mention that we have
already developed close cooperation with some of OSCE field offices with regard
to the promotion and implementation of our conventions. In the UNECE we count on
it very much.
Thank you very much for you attention.