Declaration by Switzerland

Pronounced by

Ambassador Walter Fust

Director General

Swiss Agency for Development and Cooperation

Head of Delegation

in the

Third United Nations Conference

on the Least Developed Countries

(Brussels 14-20 May 2001)

Check against delivery

Mr. Chairman

First of all, on behalf of the Swiss delegation, I should like to congratulate you on your appointment as Chairman of this Third United Nations Conference on the Least Developed Countries (LDCs). I also take this opportunity to thank Belgium, the host country of this Conference, and the European Union, which has its headquarters here, for their substantial contribution to its successful preparation.

Since the inception of its international cooperation policy in the Nineteen Sixties, Switzerland has made the LDCs a major priority, especially in its bilateral programmes, feeling that it is unacceptable for the international community that a whole category of countries should remain on the fringes of economic and human development. Consequently, on the basis of considerable practical experience acquired in the field with its LDC partners, Switzerland has made every effort to ensure that the Brussels Conference produces significant, concrete results. I also have pleasure in informing you that our government has decided to substantially increase its official development aid over the years ahead.

A review of the situation of the LDCs at the end of the Nineties shows that it has unfortunately changed little since the review conducted in Paris in September 1990, more than 10 years ago. In fact, the Second Programme of Action does not seem to have achieved more than the 1981 one did: the situation of the least developed countries has not improved over the past twenty years, and in some cases, it has even deteriorated.

There are many reasons for this, and in some cases, the negative effects are combined and compounded. Firstly, many LDCs have experienced – or are still experiencing – armed conflicts or political instability which have undermined their normal development potential. Moreover, although modest progress has been observed, a lot remains to be done in many countries when it comes to promoting good governance. Then, it has to be admitted that Official development assistance has not reached the desirable level. In addition, previous Programmes of Action did not take sufficient account of the vulnerability of numerous mountainous, land-locked, island or desert LDCs. Lastly, one of the reasons for the failure of these two Programmes of Action is the lack of involvement of multilateral institutions which never became genuine partners because the alliance between them was not strong enough.

As a result, most of the problems identified ten years ago unfortunately remain. This situation makes it even more urgent for a certain number of challenges to be taken up. The Swiss delegation would like to highlight five of them which it sees as being crucial.

The first challenge is that of debt. The debt reduction initiative in favour of "heavily indebted poor countries" (HIPCs), in connection with the alleviation of poverty, offers many LDCs a new chance. This reduction in their debt obligations enables them to release resources for additional measures geared to poverty alleviation. However, debt reduction is not a panacea for all ills. Care also has to be taken to avoid LDCs becoming trapped in a spiral of excessive debt in the long term. They have to pursue a strict and prudent economic policy which creates a climate favourable to private initiative and investment. The LDCs must diversify their economies and concentrate on sectors with the greatest added value. Moreover, it is vital for them to improve their debt management. Several programmes for developing human and institutional resources are in progress in order to build appropriate capability, and Switzerland actively supports these efforts.

The second challenge is linked to continuing sectoral reforms. The LDCs have already made considerable endeavours in this area, but much still remains to be done. Switzerland intends to continue supporting any process designed to consolidate the initiatives undertaken, particularly in three fields which it regards as important. The first is the promotion of social justice, especially through increasing health budgets, more specifically for maternal and child health and AIDs prevention, the promotion of basic education for children of both sexes and improved access to drinking water supplies. The second is environmental protection, with a view to making the LDCs less vulnerable. And then there is job creation and income generation. In this connection, both formal and informal small and micro enterprises offer tremendous growth potential. With this in mind, vocational training, the introduction of modern technology that takes account of local constraints, better quality control of manufactured goods and support for their marketing are aspects which Swiss cooperation intends to continue to support.

The third challenge is access to the markets of the industrialized countries, but also access to the markets of other developing countries. Here, I should like to emphasize the importance in our eyes of lowering the customs barriers of developing countries in respect of exports from the least developed countries, as well as of efforts to achieve regional integration. Switzerland supports these efforts. It already offers least developed countries a generous system of preferential rates but wants to go even further. Consultations are in progress about the gradual introduction of zero duty on all products from LDCs. Lastly, Switzerland contributes to the financing of business capacity-building programmes, and more particularly to strengthening the Integrated Framework on behalf of the LDCs.

The fourth challenge concerns regional cooperation, not only between the least developed countries but also with their neighbours which have more advanced or emerging economies. The small size of certain LDCs, their restricted domestic markets or even their geographical constraints make the development of this regional cooperation essential. In this case too, Switzerland is willing to support South-South initiatives in areas such as environmental protection, technology development and transfer, strengthening of the financial sector – more specifically when it comes to liberalizing payment and transfer traffic – or vocational training. Such modes of cooperation make it possible to blaze a trail towards encouraging regional integration of LDCs allied with economies of scale.

The fifth and last challenge is by no means the least important : it involves human rights and governance. Pursuit of efforts to improve governance is an absolute prerequisite for taking up the four challenges I have just described. Proper management of public affairs is vital for strengthening debt management capability, for the success of sectoral reforms, for improving the framework for commercial transactions and for putting in place procedural arrangements for regional cooperation. We realize that these reforms are difficult and time-consuming. However, close involvement of the public sector and civil society has to be constantly encouraged in order to ensure the follow-up and evaluation of the processes initiated. What is more, there should be further decentralization of powers and financial resources to promote more effective public spending. Among other advantages, better governance will foster diversification of sources of development funding. Under this head, reform of taxation should aim for expansion of the tax base, in particular with appropriate taxation of income and wealth. Reform of the financial sector is needed to better harness savings, especially in rural areas. Modernized governance will also make it possible to make better use of Official development assistance and to stimulate the input of other types of financing. Need I say that Switzerland is willing to be involved in LDC efforts in this field.

I have mentioned five challenges which are inter-dependent. Over and above the Programme of Action adopted, we will have to base ourselves on the lessons learned over the past twenty years. While quantitative objectives are important, it is above all essential to mobilize political will and the partnerships required to launch a dynamic development process; and here, Official development assistance will of course play a key role. Nor should we forget that considerable constraints still exist in LDCs and that reducing their vulnerability will be a slow process. For all these reasons, it is crucial for implementation of the Third Programme of Action to involve all multilateral institutions, the World Trade Organization, the World Bank, the International Monetary Fund, the regional banks and United Nations Funds and Programmes.

Thank you for your attention.