THE SECRETARY-GENERAL'S ADDRESS TO THE WORLD ECONOMIC FORUM: 'MARKETS FOR A BETTER WORLD'

SG/SM/98/16
Davos, Switzerland, 31 January 1998

Secretary-General Kofi Annan adresses the World Economic Forum at Davos, Switzerland, on 31 January 1998.

I am pleased to be back in Davos and to be here again amongst all of you. I would like to extend my thanks to my good friend Klaus Schwab.

It has been said that the job of Secretary-General of the United Nations is very much akin to that of a company's Chief Executive Officer. This is true, to some extent. The Member States can be thought of as the board of directors. The world's people are the shareholders. Development programmes and peacekeeping operations are our main stock in trade, though we have many other less well-known products.

But the comparison stops there. How would you react if your board members -- all 185 of them -- micro-managed your business, gave you conflicting mandates and denied you the resources needed to do your job? What would you do as head of a club whose leading members don't pay their dues? What would you think of corporate governance that does not permit borrowing to offset this funding crisis? So if you think of me as a chief executive officer, remember that I am also equal parts juggler and mendicant.

Despite all these built-in problems, the United Nations has been transformed since we last met here in Davos. The Organization has undergone a complete overhaul that I have described as a 'quiet revolution'. We are becoming better equipped to face the challenges of a new global era. And we are in a stronger position to work with business and industry.

If reform was the dominant theme of my first year in office, the role of the private sector in economic development was a strong sub-theme. A fundamental shift has occurred. The United Nations once dealt only with Governments. By now we know that peace and prosperity cannot be achieved without partnerships involving Governments, international organizations, the business community and civil society. In today's world,
we depend on each other. The business of the United Nations involves the businesses of the world.

The United Nations system brings to this relationship three distinct advantages: universal values; a global perspective; and concrete programmes. I will turn first to our day-to-day operations. That work -- the work of the Secretariat, its funds and programmes, and the specialized agencies around the world -- contributes quietly but significantly to the smooth functioning of the global economy.

Economic interdependence among nations places a premium on frameworks and institutions. I am sure we would all prefer the rule of law over the law of the jungle. I am confident that we would choose sustainable gains, within a stable and predictable system, over an unstructured and unregulated global environment. We need rules of the road and norms to guide relations between individual and communities. This is true of the global village as it is of the village each of us may have come from.

Technical standard-setting, for example, in areas such as aviation, shipping and telecommunication, provides the very foundation for international transactions: the system's 'soft infrastructure'.

Our advocacy of human rights nurtures democracy and good governance, two essential weapons in the fight for human freedom and the battle against corruption.

Our efforts to eradicate poverty bring hope to those in despair and create new markets and new opportunities for growth.

Our peacekeeping and emergency relief operations in war-torn nations bring the stability needed to regain the path to long-term development.

Our untiring efforts to codify international law, and build societies based on the rule of law, also promote regulatory consistency and peaceful change. International law also has a strong preventive aspect: the Law of the Sea, for example, was put in place before the unbridled exploitation of the world's marine resources could occur.

We also promote private sector development and foreign direct investment.

We help countries to join the international trading system and enact business-friendly legislation. And we promote microfinance for women, small-traders and entrepreneurs.

Business has a compelling interest in the success of this work. Creating wealth, which is your expertise, and promoting human security in the broadest sense, the UN's main concern, are mutually reinforcing goals. Thriving markets and human security go hand in hand; without one, we will not have the other. A world of hunger, poverty and injustice is one in which markets, peace and freedom will never take root.

A second contribution of the United Nations is that it approaches the challenges and problems of an interdependent world from a global perspective. Globalization has knit us together and helped generate a sustained period of economic expansion.

But is economic integration enough to alleviate poverty and narrow the widening gap between rich and poor? How can we best integrate developing nations into the global economy and ensure that they participate as fully partners? What attraction can markets hold for those who cannot afford to enter the marketplace?

Can markets solve the problems facing the environment? Can markets deal with the negative side effects of globalization: 'problems without passports' such as increased trafficking in drugs, arms and people?

Can we find ways to cope with the kind of volatility we have seen in Asia and elsewhere, and minimize its impact on ordinary people? The poor and vulnerable are already suffering disproportionately. Could such turmoil spark social unrest or even threaten peace and stability?

Some of these dilemmas have been with us for several years now. Others are as new as this morning headlines. All must be addressed on a global scale. Interdependence is a two-way process. What happens in developing countries affects the developed nations, and vice versa. There are winners and losers; victims and beneficiaries. There are people who have lifted themselves out of poverty, and others who remain mired in deprivation.

In short, as globalization advances, it is clear that a global marketplace can only work effectively if it is able to address its own shortcoming and contradictions. As I said here last year:

'Today, market capitalism has no major ideological rival. It biggest threat is from within itself. If it cannot promote both prosperity and justice, it will have succeeded'.

This brings me to values. It is here that the United Nations is best know and most important.

Every society, from Asia to the Americas, is the product of values, of shared bonds and deals. Global society, if it is to flourish, must also work from shared norms and objectives. Fortunately, the basis of that common understanding already exists; it is found in the United Nations Charter.

Freedom, justice and the peaceful resolution of disputes; social progress and better standards of living; equality; tolerance and dignity; these are the universal values set out in the Charter. They define the true human interest.

They are also a pillar of the global economy. That is because markets are also reflection of values. Markets do not function in a vacuum. Rather, they arise from a framework of rules and laws, and they respond to signals set by Governments and other institutions.

Indeed, without rules governing property rights and contract; without confidence based on the rule of law; without an overall sense of direction and a fair degree of equity and transparency, there could be no well-functioning markets, domestic or global. The UN system provides such a global framework -- an agreed set of standards and objectives that enjoy world-wide acceptance, and within which markets are able to function.

For all these reasons: because we work to fulfil a broad vision of human security; because of the assistance that we -- and sometimes only we -- provide; and because we promote a value system of time-tested legitimacy, I have no hesitation in declaring that a strong United Nations is good for business. We help create the environment within which you can function and succeed.

Our is an era of internationalism, not isolationalism. But not everyone realizes this. Therefore, I need you, national leaders and innovators in your fields, to bring this message back home to your Governments, your colleagues, your customers. Your voices can be especially influential among those who might still be looking inward.

The United Nations and the private sector have distinct strengths and roles, and we still overcoming a legacy of suspicion. But if we are bold, we can bridge those differences and turn what have been fledgling arrangements of cooperation into an even stronger force.

Already we can boast of many examples of successful cooperation. The world's Rotary Clubs, for example, backed strongly by the business community, have given more than $400 million to the World Health Organization's efforts to eradicate polio.

We are defining collaborative projects with the International Chamber of Commerce. My good friend Ted Turner is placing vast resources behind an array of vital United Nations programmes.

And here in Davos, a new Business Consultative Group has been meeting to bring CEOs and international institutions together around one table with one purpose: to work together and to work cooperatively.

I can hardly imagine a corporation in the world today that cannot find some connection to the United Nations's diverse agenda. That is particularly true of those that are represented here in Davos. I have the highest regard for your abilities, your concern for human well-being, and your power. I know how much you have to offer.

Friends, the advent of a global economy may seem irresistible and inevitable. To many it has brought great riches and heralded a new age of possibility. To others it seems exclusionary, exploitative, intrusive and even destructive.

What we must remember is that globalization has not just happened; it has been the result of deliberate policy choices, many of them made in your own boardrooms, in conferences halls such as this and through international cooperation at the United Nations.

Leaders of Government and business continue to have choices. So let us choose to unite the power of markets with the authority of universal ideals. Let us choose to reconcile the creative forces of private entrepreneurship with the needs of the disadvantaged and the requirements of future generations. Let us ensure that prosperity reaches the poor. Let us choose an enlightened way forward towards our ultimate, shared goal; a global marketplace that is open to all and benefits all.