Jean-Daniel Gerber, the Swiss State Secretary for Economic Affairs tonight spoke of the ‘major challenge of poverty reduction’ and the urgent need for reforms in the rich world’s economies.

Jean-Daniel Gerber, the Swiss State Secretary for Economic Affairs tonight spoke of the ‘major challenge of poverty reduction’ and the urgent need for reforms in the rich world’s economies. He noted that the world’s development aid last year amounted to US$ 68.5 billion, while agricultural subsidies in the rich world came to US$ 300 billion, and military spending was at US$ 1,000 billion. It was urgent to give the developing countries better access to rich-world markets, and to accord debt relief, he said.

He was speaking to the Caux Conference for Business and Industry. ‘In a globalized world, with improved means of travel, people will migrate from South to North, from East to West – and we already gerber.jpg (1301005 bytes)see this movement towards Europe and North America on a daily basis,’ he noted. His previous government job had been to deal with the influx of refugees in Switzerland.

Gerber saw three major areas of threat to world economic stability: the fragility of the financial system; the rise of protectionism and bilateral trade agreements, which were by-passing the multi-lateral system and might push it to collapse; and the dangers of poverty and economic imbalances. The financial crisis of the 1990s had been marked by a wave of corruption and scandals, he noted, ‘a gangrene that has not spared Europe and the United States’. ‘We’ve seen the weakness of internal and external control mechanisms, and failings in accounting systems and transparency,’ he said. Gerber noted the major paradox of our times: ‘The United States represents both the most important factor for macro-economic instability, through its massive deficits, and the best actor in terms of economic performance.’

Gerber expressed concern at the rapid moves by the United States and the European Union towards bi-lateral trade agreements – more than 40 have been signed in recent months. ‘They avoid the cumbersome multilateral process in which the balance of power is more evenly shared,’ he said. ‘The North has always preached the benefits of the market economy to poorer countries and to the Soviet Union and its allies. Now we are able to witness that our recipes are working. So what are we in the North complaining about?’ Gerber asked. The strong competition from these newly developing countries ‘demands a serious adaptation of our economic structure’ – reforms were needed in almost every sector, he noted. The failure of the Doha Round of trade talks under the World Trade Organization was a cause for serious concern, he said.

Throughout his talk, he noted the signs of hope and encouragement – growth rates starting to creep up, signs of some progress on trade talks. He also hailed the impressive developments in Eastern and Central Europe, where between 1979 and 2002, the OECD countries had invested over US$ 800 billion. ‘These funds did not disappear without trace, as some critics persisted in saying,’ he said, ‘but instead they made a significant contribution to economic development.’ Our children, and our children’s children, he concluded, ‘will look back on an unbelievable revolution’. But he warned of the dangers of ‘excessively harmful capitalism’. ‘History has taught us that such a development would have its revenge, through the ballot box at best, or through civil war at worst.’

The Swiss economist was giving the second of a series of prestigious public lectures which punctuate the six weeks of conferences at the international centre of Initiatives of Change. “Globalization: Closing the Gaps” is the theme of this 32nd annual Caux Conference for Business and Industry. ‘Narrowing the gap between ideals and interests’ is the overall theme for the international conferences which opened in Caux on July 8th, and which continue until 19th August.

Conference Summary

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