60. Mr. President, may I, on behalf of my Government and the delegation of Singapore, congratulate you on your election to the important office of President of the thirty-second session of the General Assembly. Your election is a tribute to your personal qualities as well as to your country, Yugoslavia, a leading member of the non-aligned group, of which Singapore is a member. Your election to this high office is the culmination of your brilliant career in law, journalism, diplomacy and government service. The realistic and pragmatic approach you advocated in your presidential statement for this session.
61. I should also like to thank the previous President, Ambassador Hamilton Shirley Amerasinghe, who presided over the difficult thirty-first session of the United Nations General Assembly with his customary flair, intelligence, eloquence and fairness.
62. The Secretary-General has again steered the United Nations through a difficult year and our thanks and felicitations are extended to him once more. I would especially highlight the skill and tact with which he has presided over the Cyprus talks and the unpublicized good work he has undertaken in specific human rights cases and in the improvement and streamlining of the international civil service that supports the functions of the United Nations. We are indeed fortunate to have Mr. Kurt Waldheim, a man of great experience and few illusions, to hold this most difficult and thankless job.
63. This year we welcome two new Members: the first, the Republic of Djibouti, yet another new nation from Africa that is joining our ranks. I should also like to welcome the Socialist Republic of Viet Nam, which happens to be a member of the region in which we live and a neighbour of ours. We extend to both our best wishes for peace and prosperity.
64. My Government welcomes the joint statement of 1 October of the American and Soviet Governments on the Middle East. We have long been convinced that the solution to the Middle East problem lies in the willingness of the Government of Israel to recognize the right of the Palestinians to a homeland of their own, and the reciprocal willingness of the Palestinians, including the PLO, to recognize the State of Israel and to respect its independence, sovereignty and territorial integrity. The issue of borders must be settled by negotiations on the basis of the principles of the non-acquisition of territory by the use of force and the right of States to live within secure and recognized borders. My Government remains convinced that Security Council resolutions 242 (1967) and 338 (1973) provide the framework for the search for peace in the Middle East.
65. As for the question of southern Africa, my Government welcomes the Security Council's decision in its resolution 415 (1977) to authorize the Secretary-General to appoint a commissioner for Zimbabwe. We share the view that the United Nations should co-operate with the administering Power and the United States to help to bring about a negotiated settlement in Zimbabwe. We hope that this effort to bring about a non-violent transition to majority rule in Zimbabwe will be successful. We also hope that the ongoing talks between the Government of South Africa and representatives of the five Western members of the Security Council will lead to an internationally acceptable solution in Namibia. As for South Africa itself, the abhorrent system of apartheid should give way to a new polity in which the minority will recognize the rights of the majority and the majority will respect the rights of the minority.
66. Overshadowing the issues I have briefly touched upon and, in the long run, pertinent to their resolution, is the world economic crisis which shows no sign of receding. There is a responsible body of opinion which contends that a second great depression, far more catastrophic than that of the 1930s, is possible within the next few years.
67. If this prognosis is correct, then no nation in the world can escape its consequences, and the first casualties will be among the 100 or so Members in this Assembly listed as poor and developing. For a number of the poorer countries-the so-called "fourth world"-the consequences could be permanent crippling, economically as well as politically. The effect of the recession on the developed world so far has appeared in the emergency of some 15 million unemployed. However, without underestimating the seriousness of this to the developed world, it is nevertheless necessary to put this distress of rich nations in proper perspective. In the developed world unemployment does not entail starvation or subhuman distress. The unemployment relief conferred in the developed countries exceeds by far the normal earnings of some 30 per cent of the world's population, who are estimated to earn SUS 100 or less per year.
68. Moreover, the 15 million unemployed in the rich countries are far outnumbered by the hundreds of millions of workless who existed, and whose numbers have increased in the third world, even in the boom years.
69. In making this point, I am not minimizing the distress that unemployment is causing in the rich developed world. But whereas unemployment is a question of distress in the developed world, for some 50 per cent of mankind, employment or unemployment represents the difference between barely living and dying slowly. This is the prospect. Since the restoration of health to the world economy would require considerable self-discipline and sacrifices on the part of all nations, the point I have just made is relevant when it comes to apportioning the burden of responsibility for curing an ailing world economy.
70. I am fully aware that highlighting the greater measure of suffering in the poorer countries is not going to heighten moral sensibilities in the developed countries to a point where they would be willing to undertake sacrifices on behalf of their more desperate brethren. This is as true of rich countries as of the richer developing countries: nobody wants to help anybody else at their own expense. It is a sad fact of life that in lean times—such as those we are going through—the milk of human kindness dries up. Moral appeals make greater impact only if they are also empirically valid. Therefore the main thrust of my thesis and argument is not that the rich nations should help the poorer nations as a moral obligation but that, by helping the developing countries, they would in fact be helping themselves.
71. Clearly there is a multiplicity of causes responsible for the present crisis but, in my view, the most fundamental of all, and one which the developed countries have tended to gloss over, is that a world economy where the ratio of per capita income between rich and poor nations is about 13 to 1, where less than a third of the world's population, comprising the rich nations, generate over 70 per cent of its income, must be intrinsically unsound.
72. What is described as a global economy in fact consists largely of trade and exchange between a third—only a third—of the world's population. In 1972, before the advent of the so-called oil crisis, rich countries, with less than 30 per cent of the world's population, carried out 53 per cent of world trade among themselves.
73. As against this, the growth rate of exports of developing countries—the poorer countries-as a percentage of world trade has declined steadily since the end of the war. It fell from 31.2 per cent in 1950 to 17.4 per cent in 1972, whereas that of the Western countries rose from 60 per cent to more than 72 per cent over the same period.
74. There are as many explanations as there are economists for the present economic crisis, but it is generally agreed that the main element in the crisis is the inability of the industrial economies to expand further. The crisis is attributed to saturation of world markets and a decline in demand.
75. This is true if the world market is conceived of as being confined only to a third of the world's population. Their market has possibly reached the saturation point, and the world economic crisis will persist and worsen so long as rich countries regard the global economy and world markets largely in terms of 30 per cent of the world's population. The remedies applied so far have in fact been postulated on the basis of this fallacy, and predictably, inflation and unemployment continue to bedevil the international economic system.
76. The present economic crisis has its fundamental cause in the developed world—the rich countries—and predates the fivefold increase in the price of oil. The oil price certainly aggravated the crisis, but it did not originate the crisis.
77. The genesis of the present economic crisis antedates the oil crisis. The Bretton Woods Conference is the conventional starting-point of post-war world economic history. That Conference was certainly not perfect, but it is also true that the crisis began and intensified as the world, for political rather than economic reasons, departed from the spirit and underlying principles of the Bretton Woods agreement". The Bretton Woods arrangement worked from the end of the war to about 1958, and it worked well. In retrospect, it is clear that the Bretton Woods arrangement was accepted, not out of deep convictions about its validity, but because in the circumstances then prevailing there was no conflict between national self-interest and its principles.
78. After the end of the Second World War, only the United States wars in a favourable position for providing the necessary international economic leadership. It had the vision and foresight to formulate policies with an international perspective based on the premise that world prosperity was indivisible. The United States made available capital and liquidity, directly and through multilateral institutions, while its industries provided the hardware for European and Japanese post-war reconstruction. In the process, American trade policies were liberalized. The most spectacular results of American aid were produced in the more advanced societies. By 1958, partly as a result of United States aid, Europe and Japan had not only fully recovered from the devastation and destruction of war, but had developed the capacity to compete with the United States.
79. The turning-point was when the dollar shortage developed into a dollar glut and the first cracks appeared in the Bretton Woods arrangement. In August 1971, the United States removed the convertibility of the dollar into gold. That was the start of the crisis. Devaluation of the dollar followed in December of the same year. In February 1973 the second dollar devaluation took place, and by March 1973 the Bretton Woods system of fixed exchange rates had broken down.
80. Another factor responsible for expansion of the world economy until recently was the explosion of technological innovations in major industrialized countries, particularly in the United States. Those innovations brought about increases in productivity, and therefore in living standards, and further resulted in the creation of spectacular new industries like television, jet travel, digital computers, wonder drugs and synthetics. Those new industries in turn created new and better-paid jobs in industrialized countries. Unemployment therefore virtually vanished and labour shortages developed.
81. One consequence of this for the third world was the transfer from the developed to the developing countries of bio-technology industries. This transfusion was largely initiated by transnational corporations, which, in the process, forged new links in global interdependence. Investments- flowed from the industrialized countries to the developing countries, whose products were in turn exported to the industrial North.
82. Between 1965 and 1973, industrial output as a result of this in the developing countries grew by 7.3 per cent, the comparable figure for the industrialized rich countries being 4.7 per cent. So the poorer countries, despite many disappointments and blunders, were by the 1970s responding to the Western exhortation to modernize, industrialize and go in for trade—not aid.
83. Today, however, instead of congratulations and encouragement being extended to the developing countries, the cry in the rich countries now is that they must be protected from the cheap-labour products of the developing countries. Pressure is now being exerted to prevent international corporations from investing in the developing countries on the grounds that transnational are morally evil and bent on exploiting the wretched in the developing countries. Unfortunately, some third-world countries were sufficiently confused as to join this campaign to liberate the developing countries from the alleged ills caused by transnational corporations. The odd thing, however, about this campaign is that, although the transnational corporations are situated in the developed rich countries, not a single one has been shut down, either by law or industrial action.
84. The thesis that is dearly projected to the developing countries is that transnational corporations are all right for developed rich countries but bad for developing countries. However, to judge by the experience in my own country, transnational have on balance been economically beneficial. They have brought new jobs, higher earning capacity, increased skills and management expertise which we would not have been able to acquire on our own.
85. Today, new jobs are fewer in the rich countries. Among other reasons, it is because of the slackening of technological and productivity. Economic measurements of growth suggest that something like one fourth to one half of gross national product growth is attributable to technological progress. The petty world of quotas, tariffs and neo-protectionism is not going to provide the needed jobs that technological innovation can create. According to some economists, were the countries of the European Economic Community to put up trade barriers, for example, their current total of 5.5 million unemployed, far. from decreasing, would be likely to double.
86. The argument that the jobs of the workers in the developed countries are being threatened by cheap labour from poor countries is a myth. By the standards of workers in the affluent countries, wages are certainly lower in the third world. But for the workers in the poor countries, the transfer of low-technology industries has meant jobs for people who had none and the acquisition of skills that vastly increase their earning capacity. Their wages may not provide them with butter, but they do get bread.
87. So protectionism is not a defence against cheap labour; it is protection for high-cost industries. It does not create new jobs, but deprives poorer countries not only of jobs but also of the opportunity through free and fair competition to provide inflation-plagued consumers in the rich countries, with cheaper goods and therefore higher incomes. Increased earnings in the poor countries would in turn provide the incomes to buy the sophisticated industrial products of the richer countries. It is ridiculous to chant piously about interdependence and a global economy when the developing countries are denied even the opportunities to compete in the markets of the developed world on the basis of merit, quality and price. Third-world industries can survive only by selling cheaper. So protectionism is an attempt to shift the burden of unemployment on to poor nations that cannot afford even to put their jobless on the dole.
88. It is even more ridiculous that high-technology societies with highly trained labour forces should, in addition to producing jet aircraft, rocket engines, computers and other complex industrial marvels, also fight the poorer countries tooth and nail in order to produce unnecessarily expensive plastic buckets, T-shirts, shoes, undergarments, and pyjamas on the basis of protected markets. As stated by the Ministers of Foreign Affairs of the Group of 77 in their declaration issued at their meeting in New York on 29 September 1977:
"The renewed trend towards protectionism in the developed countries is a cause of deep concern because of its negative impact on the export earnings of developing countries and on their terms of trade, employment policies and development efforts." One passionately hopes that in the not-too-distant future, and well before the probable great crash, there will be an explosion of technological innovation in the developed world that will reverse trade policies whose effects would be to wipe out in the countries of the third world the pitiful advance in industrialization they have made during the last 30 years.
89. But technological innovation alone cannot restore vigour to the international economic system. If the world economy is defined in terms of, and limited to, the economies of the rich North, then there is no way out of this crisis. The capacity of the North to absorb the products of its industries and enterprises has reached the point of near saturation. The debate about the limits to growth is applicable only to the handful of rich nations. Their economies possibly can grow no further. But if the world economy is defined to include the third world, then it is only in the initial stages of growth. As I pointed out earlier, the present crisis has its origins in the fierce competition among the industrialized nations for shrinking northern markets. After all, 70 per cent of the commerce of the countries of the Organisation for Economic Co-operation and Development is among member States.
90. If the world economy is to be truly global, then the developed world must turn its attention to the 75 per cent of the world's population that remains poor but with vast untapped resources and potential markets for the goods and services of the rich countries. But, so long as that 76 per cent account for less than 20 per cent of the world's income, the markets remain potential rather than actual.
91. The development and modernization of that 75 per cent could well perform the functions that the post-war reconstruction of a war-devastated Europe and Japan performed for the world economy up till the 1970s. It is estimated that about 7 million more Americans will need to find jobs between now and 1981. France will need a million and a quarter new jobs; Japan, some 3 million new jobs. I do not know how many millions more will enter the labour market in other developed countries. Crippling the economies of the third world through protectionism will not provide new jobs in developed countries. It is more likely to increase unemployment. And at the moment the developing countries import nearly 70 per cent of their requirements from the countries in the Organisation for Economic Co-operation and Development. If the earnings of the developing countries are reduced through protectionism, there must be a corresponding decrease in imports from the developed world.
92. The way to overcome the economic crisis, then, is for rich countries to pursue policies which will convert the great and almost unlimited needs of the developing majority of mankind into effective monetary demands. This can be done by permitting them to earn more by selling freely, and by encouraging the flow of investments into the third world to set up industries which produce goods far more cheaply. Such a policy will reduce living costs by making available cheaper goods to consumers in developed countries.
93. Equally, the increased incomes that poorer countries will earn would be spent quickly on imports from industrialized countries. In a very real sense, growing prosperity in the poorer countries will not only bring life to the listless economies of the North, but will also create demands for skilled personnel and expertise from the developed countries.
94. This, of course, requires a new sense of realism and a more responsible approach on the part of developing countries to economic development. They must accept the fact that the road to prosperity is paved with rocks rather than roses. Co-operation between the rich and poor nations should not be on the basis that the former has a moral obligation to the latter, but on the basis that each must benefit fairly from the endeavour, though not necessarily equally.
95. But my address is directed primarily to the developed nations. My criticism of their current policies is not inspired by a spirit of sterile confrontation but out of a realization that they, as well as we of the developing world, have a common interest in preserving an international economic system which is essentially sound, but which has got into difficulties largely because those who operate it have the wrong instruction manual.
96. In short, we have for the first time in human history the foundations of a world economy—not simply a Western economy. We lack the vision and the courage to think and act according to the imperatives of a world economy. Basic to a world economy is an international division of labour, not on the basis of masters and serfs, but as partners. The world economic system falters simply because those who exert the greatest influence on it are forcing it to work on behalf of the privileged nations by applying to it ancient precepts like protectionism and a kind of neo-mercantilism.
97. The world economy as now constituted requires an international division of labour it is to move forward. As one economist said recently, "The international division of labour also comes under the law of evolution of the species."
98. This plea to the rich nations for enlightened economic leadership may be, as one third-world leader put it at the end of a conference, a dialogue between the deaf. The capacity of the poorer nations to retaliate is limited. But their weakness — the weakness of the third world- constitutes a sort of perverse strength. Despite their powerlessness, they have the potential ability to disrupt the international economic order by simply becoming poorer and poorer. They will inevitably be pushed over the brink if the rich nations persist in their present economic policies. If and when this happens, given the logic of an interdependent world, the rich nations too must, not long after, be dragged into the abyss. Should this happen, the only bitter consolation I can offer is that a people inured to poverty and suffering for many, many decades can better endure their vicissitudes than can those accustomed to better things.