- The Washington Times - Wednesday, February 16, 2000

NEW YORK U.N. Secretary-General Kofi Annan is proposing a global "New Deal" in which rich countries would reward poor nations that adopt policies to promote growth, investment and social welfare benefits for the poor.

"Nations cannot pursue economic growth at the expense of social pillars," Georg Kell, an economist on Mr. Annan's staff, said in an interview yesterday.

Mr. Kell was referring to traditional U.N. development goals that include both economic growth and government policies to ensure that the benefits of growth are shared by all.

The term "New Deal," coined by President Franklin Delano Roosevelt during the Great Depression, marked a vast expansion of the size and scope of the U.S. government to include caring for the nation's poor.

By borrowing the term last weekend at the opening session of the U.N. Conference on Trade and Development (UNCTAD), Mr. Annan apparently sought to soften the rancor of anti-trade activists who paralyzed the World Trade Organization in Seattle last year.

But in doing so, the secretary-general strikes a sour note with many economists, who fear that economic growth and rising living standards can all too easily be derailed by well-meaning moves toward government largess.

" 'New Deal' talk is ominous," said Brett Schaefer, an economist at the Washington-based Heritage Foundation. "It's granting the

UNCTAD or the U.N. or some other agency powers of taxation and redistribution… . It also raises the question of who could oversee it, and how it would be enforced."

Mr. Annan, who is a little more than halfway through his five-year term, has repeatedly spoken on the topic of globalization.

He was the first U.N. secretary general to address the blue-chip private sector and public policy-makers at the recent World Economic Forum meeting in Davos, Switzerland.

Last month, he launched an initiative named "global compact" aimed at improving relations between the business sector, governments and nongovernmental organizations.

He has also passionately seconded the view of Michel Camdessus, the just-retired director of the International Monetary Fund, that the Group of 8 industrial nations should be expanded to include other countries.

In his speech in Bangkok on Sunday, Mr. Annan urged wealthier nations to share patented medical and technological advances, and to ease demands that poor nations slash government spending.

Mr. Annan has also repeatedly appealed for private investment and debt relief for the world's poorest countries, particularly those in Africa.

Ian Vasquez, director of the Project on Global Economic Liberty at the Cato Institute, said there is broad consensus about globalization's potential benefits.

But he added that transparency, not mandates, is the key to correct inequities that arise as the world's economies become increasingly interdependent.

"Countries should be more transparent in their operations," Mr. Vasquez said. "They should move away from pegged exchange rates [and] open up their banking systems to international investment, which would have an [oversight] effect."

Over the last four decades, the UNCTAD has evolved into something of an informal trade group for the developing world, but without the rule-making authority of the World Trade Organization.

Mr. Kell said that Mr. Annan's only authority in global commerce is "moral authority."

He also dismissed concerns that that the United Nations might try to piggyback its agenda onto the WTO, which has the powers to enforce its trade rules.

The "post-Seattle fear is that … developing countries may reverse the decadelong era of liberalization," which includes dismantled trade barriers and policies to attract foreign investment.

Developing nations, Mr. Kell said, "all want to export themselves out of misery."

The call for a global New Deal, he added, is an appeal to the public sector and private businesses to make that possible.

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