Mr. Chairman, your Excellencies, ladies and gentlemen,
I would like to express my appreciation for your inviting me to this meeting
and for giving me an opportunity to share the UNECE views on the future perspectives
of the region and its sub-regional country groupings, including the Organization
of the Black Sea Economic Cooperation, in the light of the on-going global
and regional development trends.
The main challenges which countries in the UNECE region will face at the
global and regional levels can be summarized as follows:
1. globalization as demonstrated by the development of international trade,
the dynamics of FDI, the rapid expansion of the information society, migration,
growing interdependence in security issues
2. EU enlargement which is most likely to take place in 2004
3. the tendency towards the end of transition with an increasing number
of newly emerging market economies among the former transition economies.
The multilateral framework of cooperation at different levels is supposed
to ensure that responses to the new challenges are adequate and efficient.
The United Nations care role is to shape globalization towards sustainable
development and to share its benefits as widely as possible.
Recent global United Nations events have focused on different aspects of
shaping globalization, like financing for development (WCF&D, Monterrey
2002), population ageing (WAA, Madrid 2002), sustainable development (WSSD,
Johannesburg 2002) and the digital divide (on-going preparations for WSIS,
Geneva 2003). However, the commitments taken at these highly debated and visible
political occasions require a strong engagement of governments and civil society
at the national level. An effective and broad framework of policy dialogue
at the regional and global levels is also required.
EU enlargement should not represent a new division that would stop prosperity
and stability of the region. The multilateral framework, in harmony with existing
or developing bilateral relations, should promote a cooperative policy dialogue
between the EU and acceding countries and country-groupings like BSEC whose
membership includes one EU country.
The transition process differs considerably among countries in transition.
Progress achieved in reforms, restructuring, and building market institutions
is most advanced in the acceding countries. These economies (including Russia)
are now recognized as market economies. Diversity among the non- acceding
countries in making progress towards a market economy is considerable. The
different levels of progress in countries in transition of the region may
require different policies, different approaches in implementation, different
actions, etc. At the same time the multilateral framework of cooperation provides
an opportunity to exchange experiences, better practices and coordinate some
activities if necessary, like the WTO negotiations, etc.
I would like to have a quick look at the challenges and potential responses
at the level of the Black Sea Region. The effects of globalization on the
countries in the sub region have been far from uniform. It appears that, despite
the significant comparative advantages (educated population, qualified labour)
in the former socialist countries, many have been failing in terms of economic
growth. In general they have not regained the GDP levels they had reached
before the economic and political transformations began. Moreover, since the
early 1990s, a serious erosion of these comparative advantages has been observed
in a number of Member States of BSEC (Russian Federation, Ukraine, Republic
of Moldova, Georgia, Armenia, Azerbaijan, Bulgaria and Romania).
In recent years most of the non-EU member States of BSEC have enjoyed surprising
economic growth but at the same time in many of them the complex Human Development
Index has declined, most notably in the Russian Federation, Republic of Moldova
and Ukraine, due to the deterioration of their education and health care systems.
The striking trend is growing poverty in many of the member States - in
Armenia this affects 44% of the population but it is also prevalent in the
Republic of Moldova, Georgia, Azerbaijan and Albania and is accompanied by
a sharp increase in income inequality.
In a number of the countries, the Gini coefficient has doubled since 1990,
from 20-30 per cent to 40-60 per cent. This has had a profound effect on many
other social development indicators, including a declining primary school
enrolment, shrinking life expectancy at birth, proliferation of communicable
diseases, particularly HIV/AIDS.
These negative changes constitute a real threat to the sustainability of
the development process and peace in the region, and they have to be addressed
both at the national and regional levels.
In part, these differences in performance could be attributed to such specific
factors as the different initial conditions, size, geographical location and/or
the impact of links with the EU. However, the findings of our recent assessment
of the readiness of countries in transition, from the perspective of an emerging
new economy, indicate that such differentiation is also an outcome of a number
of other factors, among which institutional reforms, public policies and political
commitment have played a much more profound role. Therefore, one of the most
important challenges facing the sub-region today is the reversal of this dividing
trend.
The task is not easy. To reverse the trend – as discussed at the FfD Conference
- commitments in ODA need to increase and more focus on trade, FDI and better
governance is also required. One of the UNECE efforts is to have an impact
on donors so that they recognize the importance of the increased ODA to the
least- developed transition economies. However, this would need a reconsideration
of the situation in some of the developing countries.
In per capita terms and in terms of the structural development challenges,
countries like Armenia, Republic of Moldova, Georgia, Azerbaijan and Albania,
as well as most of the successor countries of the former Yugoslavia and Central
Asian countries could be rightly qualified as being developing countries.
To compare: some members of the developing country group have a per capita
income in PPP which is 2-3 times the level of the per capita income of the
poorest BSEC countries. In terms of structure and level of development, developing
countries such as the Republic of Korea and Singapore are much more advanced
than any of the above listed BSEC member States. Their per capita income is
respectively PPP $18,110 and $24,910, while the per capita income of Georgia,
Republic of Moldova, Armenia, for example, is respectively PPP $2,860, $2,440
and $ 2,880. Even Botswana has a per capita income 3 times bigger than that
of Azerbaijan.
The non-EU BSEC countries also lag behind in FDI. FDI in 2001 in USD in Azerbaijan
represented 20 million, in Armenia 70 million, but in Poland 6823 million,
in Czech Republic 4400 million. Stimulation of FDI by a business-friendly
environment, good governance, etc., is a key task for the countries.
Recently the BSEC member States adopted a New Economic Agenda, which aims
at furthering the integration of their economies through liberalization and
joint development projects. It is a very comprehensive plan, embracing practically
all the areas of economic activity. In my view, it should be better prioritised
taking into consideration the shortage of investment, as well as the well-known
constraints that discourage the inflow of FDI to the sub-region.
Regarding the intention of the BSEC member States to develop a Black Sea
Economic Dimension, a number of important differences between the BSEC countries
and those of the Northern Dimension should be not ignored. As the past experience
of many sub-regional free trade arrangements demonstrates, without structural
support of the weakest members of groupings, the benefits would not be evenly
distributed. Preliminary thorough expert analysis and discussion are needed
in order to minimize the risk of failure. The UNECE in cooperation with the
EU, BSEC and other sub-regional groupings and initiatives could provide assistance
in this regard. The UNECE is planning to hold a round of workshops and seminars
devoted to future cooperation in the post-EU enlargement Europe and work on
the project of the Common European Space.
The relationship between the environmental, economic and social dimensions
of the development process is well recognized. However, in practice, policy-makers
seldom apply an integrated approach in their decision-taking. Immediate returns
are often preferred at the expense of mid-term and long-term development perspectives.
This, however, could undermine the sustainability of the development process.
The need to change current policies was once again underlined at the Johannesburg
Summit on Sustainable Development. Heads of State and Governments committed
themselves to undertaking a number of important actions and policy modifications
in such areas as energy, production and use of chemicals, management of water
and other natural resources, keeping the social implications of new policies
in focus.
For the UNECE region and the BSEC sub-region, in particular, implementation
of the Johannesburg Summit decisions means another important challenge, especially
with regard to water resources. In this respect, I would like to inform you
that UNECE is reviewing its programme of work in order to more effectively
assist its member States in meeting this challenge. Our main focus will be
on south-east Europe and the CIS.
Finally, focusing on UNECE/BSEC cooperation, I would like to stress that,
in my view, the Commission’s relevant expertise, such as in trade facilitation,
quality standards, energy efficiency, economic analysis, statistics and environment,
could be much more effectively employed to the benefit of the BSEC Member
States. So far, our cooperation has been restricted to two areas: transport
and enterprise development, particularly the development of small- and medium-sized
enterprises (SMEs). I think we need a consultation mechanism, which could
allow a joint planning and implementation of activities.
Thank you.