Åre, Sweden 25 May 2005

Euro-Atlantic Partnership Council (EAPC) Security Forum H.E. Kemal Derviş, Director-designate, UNDP Minister Freivalds, Secretary General, ministers, colleagues, friends. It's good to be here, it's good to have Sweden host this very important first meeting of partnership--and particularly Sweden--I think we all owe thanks to Sweden, because despite the fact that, as you reminded us last night, that you also had your imperial ambitions in the past; Sweden has been a steadfast supporter of peace, of human rights, of the rights of women, gender equality, development and the United Nations system. Talking of the rights of women and equality of women, let me give special salute to the ministers of Croatia and Macedonia and of course of Sweden. We hope that you will lead the way into greater numbers in the future. My topic will be more on the link between security and economics and I'd like to share with you at the beginning a quick story. When I went to Sarajevo right after the ceasefire, with President Jim Wolfensohn of the World Bank, we visited the four religious community leaders of Sarajevo--or at least their representatives, the Muslim leader was not in town. We visited the Catholic leader, the Jewish community leader, the Orthodox and the Muslim. I can't go into details; these were very important visits, interesting visits. But when we visited the Imam in the Mosque, Jim Wolfensohn asked him, 'After all that has happened can you live in peace with your neighbours and particularly with the Serbs?' And the Imam answered, 'Well that depends on you Mr. Wolfensohn.' Mr. Wolfensohn didn't quite know what he meant. And he said, 'Yes, it depends on you helping us quickly; providing micro-credit for small enterprises, rebuilding the roads, rebuilding the basic infrastructure. If you do that, then our minds will turn to the future not to revenge and we will try to build the future and we can indeed live in peace.' We learned when we left the Mosque that this Imam had lost two of his daughters in an extremist Serb mortar attack just three months before the meeting. It was a touching story and a reflection of the link in people's minds between economic development, economic resources, and peace and security. Now I should immediately add the link is not a simple one. It is not just the struggle against extreme poverty or just the provision of means that will allow security. I think hope and belief in the future, which is the essence of a stable society, of a progressive society and of peace needs more than just pure economic development. It also needs empowerment, a sense of fairness, good governance, I would say democratic freedoms--so one has to take it as a package--and I must say that the United Nations, I think, have led the way in the past with the human development reports. The United Nations Development Program has been issuing them for years emphasizing the links between the various dimensions of economic development; arguing that economic development is not just a question of increasing per capita income; but is also a question of democracy, good governance, gender equality and the empowerment of people. So I think it is in this context that one has to look at the interaction between security and the struggle for security and safety and peace and the economic effort at development and at fighting poverty. It has to be multidimensional. It has to be comprehensive. And I think it has to include the development of democracy. I'd like to make a few points relating to the interaction between economics and security--and particularly post-conflict reconstruction and recovery. The first point was already made by Minister Freivalds just a few minutes ago, has to do with speed. It is very important that the resources and not just the resources but also the plans for action are ready in time and that the international community can act quickly. I think in the case of Bosnia in '95, the international community was ready with blueprints because we had started working with the European Union, the World Bank and others, on the immediate post-war reconstruction plans. There were the blueprints, the financing allocations were already conceptually ready and it was possible to move fast. In other cases, it wasn't, and I think the world and the countries suffered from it. But I think one has to distinguish between the immediate post-conflict phase and the medium term recovery phase. In the immediate post-conflict phase, what is of course needed is provision of resources, of food, of basic services, and it's clear that at that time it's the public sector that has to provide it, public agencies provide it. The private sector is not ready to act, cannot act yet. The risks are too great, it is not yet safe to work and so there is a heavy public sector and international relief component in that phase and its important. It needs to be there, the resources need to be there. But at the same time as we move on, and that for example, I think in Bosnia was successful that part of the reconstruction effort. But as we move on towards economic recovery and real development we have to move to different types of interventions and different types of economics. If the relief phase continues for too long, it actually provides negative incentives for private activity and private investment. It creates an aid dependence which will actually prevent true development and may create problems for the long term growth of these countries; and we've seen that in several cases. So as we move beyond the immediate post-conflict reconstruction phase it is very important to mobilize the private sector and to do everything we can to generate the right incentives. The most obvious case, for example, is when you distribute food free--which is necessary in the beginning--but if you continue too long, without thinking of the incentives in agriculture, you actually prevent domestic production and what I will call true recovery. So the second phase is much more difficult, I think, and we haven't quite learned how to handle it. Indeed in the Balkans, after years, one cannot say that the economic situation is very bright in the western Balkans. So we have to move towards that. Now here there is a kind of contradiction which I think we have to deal with. The public help phase is based on free provision of resources. Later on, if we want the private sector to lead the effort, obviously the resources can no longer be free; there has to be the right pricing and the right incentives. But at that point, we quickly move to a situation where the public agencies, the public policy, cannot really support the private sector in very creative ways. One doesn't want to subsidize. So one moves from a situation of complete free resources to one where one expects things to work on a purely commercial basis. And I think we have to find the transition mechanism whereby during that period there is actually some public resource availability to support private sector activities, to pool the risk, and to allow the private sector to become the driving force for growth. A special report prepared by Prime Minister Paul Martin of Canada and former President Ernesto Zedillo of Mexico, for the UNDP, details actions in that area and I think we have to look much more carefully at how to do this in the medium term post recovery phase. Clearly resources are not enough. They have to be deployed in the right policy environment, they have to be- there has to be transparency, there has to be competition and an overall productive economic environment. So there has to be some policy advice, some policy conditionality. The international community that does provide these resources cannot provide them without any conditions or without any plan of how these resources will be used. It's very important to have these resources but it is equally important, history teaches us, to get the right policy environment where these resources are deployed. We've had examples of countries, of course the ex-Soviet Union is an obvious example, where huge resources were invested--40 percent, 45 percent of GDP--with not very good results over decades. So policy is important and therefore policy conditionality and policy advice is important. Now that gets me to my next point that I think this advice or these conditions, if you like, the international community has to provide them in an environment of legitimacy, of participation, of discussion with local leaders and local opinion makers and an overall environment where the various international institutions be it the United Nations, the Bretton Woods Institutions or regional institutions such as the EU, are considered as legitimate by the recipients, by those who benefit from these resources, and are not considered as foreign institutions trying to impose things but are truly considered as global or regional institutions which are owned by and perceived as being on the side of the people. Now here we have a long way to go to be honest. We are talking of democracy, it has to also go to the international area. We cannot let democratic legitimacy and democratic freedoms stop at the borders of the nation state. The G7 are an important and useful institution- or the G8. But clearly the G8 cannot set itself up to run the world economy. So I think many of the reform proposals that are in the "In Larger Freedom" document prepared by the Secretary-General reflecting the findings of the High-Level Panel are very, very important at this stage in the beginning of the 21st century. We have to move, if we want to develop democracy, if we want to develop legitimacy, if we want to deploy these international resources in an environment where countries around the world, people around the world, consider the international system as legitimate, we have to have international institutions and of course we have to have a United Nations that is both effective in its actions but also reflects the world of today. There are many, many aspects of these proposals. Of course the Security Council is probably the most controversial and it will be difficult, and it's complicated, I realize that. But I want to ask you, really, can we have a Security Council in 2010- or 2007, where 1.1 billion Indians living in a democracy, in a dynamic democratic country, don't have a permanent say in the Security Council? Can we ask world citizens to consider the United Nations system and the international architecture as legitimate and can we ask them to believe we are sincere if we don't open the doors here and if we don't get better participation and better representation of billions of people in the developing countries? I think if we are honest with ourselves we have to agree that there are some changes that are definitely needed. There's another proposal by the Secretary-General which I think is very important and could be a potential breakthrough in the way we handle partnerships and also in the way we design reconstruction efforts and post-conflict recovery and that is the Peacebuilding Commission. I think we need an institution within the international system, within the United Nations system, that brings together the experience gained in the past that is built in a way where everybody can see they are represented and they can participate. That explicitly designs partnerships and focuses on these difficult interactions between economics and security as well as the difference phases of reconstruction. So I would think that if we approach the Peacebuilding Commission in a constructive way and build it as the institution that can bring people together and also that can think medium term and bring together the various experiences, I do believe it could be an excellent contribution to the international institutional architecture. Resources of course are also important. We must increase the resources to achieve the Millennium Development Goals. All leaders of the world in the year 2000, at the beginning of the century, got together and committed themselves to this goal. I think we still have another ten years, a lot can be done, we have some success stories. But the resources are needed and of course the good policies are needed, and the private sector as a partner is needed in this whole effort. I haven't started my new job yet at the UN. It's an exciting job, I know it's going to be difficult but it's perhaps one of the most exciting jobs in the world, to work on the Millennium Development Goals, to work on development and on increasing freedom and security with- in partnership with so many others. But allow me please, at this stage yet while I'm not officially a UN official yet- just a few days after I said goodbye to my colleagues in the Turkish Parliament, allow me just 2-3 minutes to talk as a Turk. Turkey, through geography and through history, has a very interesting role- potential role and place. President Clinton, when he visited Turkey a few years ago, delivered a great speech to the Turkish Parliament where he underlined the role of Turkey as a bridge in the 21st century, the potential of Turkey in helping bringing different cultures, backgrounds and geographies together and in building strong partnerships. Turkey by history, by geography is Asian but is also very Mediterranean. It is of course a member of NATO but, at the same time, it has strong links to the Middle East and is a Muslim country. It is actually a deeply religious country but at the same time a strongly secular country. And of course it is European, having placed itself in Europe for a long time, perceiving itself as European and participating in so many of the European institutions. I would say it is European perhaps a little bit like Spain--strongly in Europe but also with strong links outside Europe as Spain has with Latin America and the Spanish speaking world. So I think Turkey has this special potential to help bring people together at this time in history and I trust that Turkey will play this role with courage and determination and I also trust that the many friends of Turkey in this room will help her play this role and thereby bring us all together. Thank you very much.