2006/11/09

Kofi Annan condemns finances flowing from South to North

Social Watch

Montevideo, November 5 -- "We all hoped globalization would bring us closer together; yet in some respects, it has driven us further apart", said UN secretary general Kofi Annan in his speech to the Ibeoramerican Summit that ended Sunday in Montevideo.

Annan emphasized that "inequality and poverty are persisting challenges". Latin America "has the world's highest degree of inequality in terms of income distribution, with 220 million people living in poverty".

Yet, "net financial flows still go from poor to rich countries -- like water flowing uphill".

The metaphor of "water flowing uphill" is the central theme of the Social Watch report 2006, which was launched in Montevideo in the eve of this summit of Spanish and Portuguese speaking countries. Such a graphic image of how finances are flowing contrary to how they are needed was not usual in official UN documents. The water metaphor for finances has been frequent in the statements of international financial institutions, but the traditional discourse has been to emphasize the need of "flows" (of aid, loans or foreign investment) to stimulate economic growth which in turn would "trickle down" to benefit the poor.

Instead, Annan emphasized that "achieving balanced, sustainable development also means addressing global inequities". In Latin America, he added "that is not about aid. It is partly about debt and volatile capital flows. But most of all, it's about the fair distribution of gains from international trade. That includes revenues from primary commodity exports, and the free movement of goods, people and ideas".