Special address by Wlodziemirz Cimoszewicz Minister of Foreign Affairs of Poland during TIGER's conference on "Globalization and Catching - up in Emerging Market Economies"
Poland and globalization
Ladies and Gentlemen,
First of all I would like to thank Professor Kołodko for this invitation and giving me the opportunity to address such eminent audience.
Globalization is a relatively new factor in world affairs. All of us, governments, non-governmental organizations, members of the business community, academics, researchers and ordinary citizens are in fact learning to live in a globalizing world.
I would like to share with you some of my views on the role of Poland in that new situation. Since I am not an economist, I would like to focus on those problems of globalization that pose dilemmas to politicians.
Political decisions are usually commensurate with the current potential of the state, and – at the same time – are or should be compatible with its long-term interests. Political decisions are usually pragmatic, yet they also reflect values embraced by those who make them. Many of those decisions have to be made and are in fact made on the basis of estimates and forecasts. This involves certain amount of risk because, as you know, not all economic and political forecasts come true.
There is no doubt that globalization constitutes a huge challenge to all players. No state, no government, no business organization can ignore that challenge, irrespective of their size or field of activity. I would argue that individual citizens must also take globalization into account while making their individual choices.
Whether we like it or not we are part of a globalizing world. In this respect, the principal role of the government leaders as well as other politicians in Poland is two-fold.
First to provide the citizens with adequate information and explain to them what is going on. Second to create the best possible conditions for the development of the national economy and for citizens to pursue their individual interests and goals in a globalizing environment.
As the Minister of Foreign Affairs I see many chances and challenges facing my country and its citizens at present. We have a historic chance to fully reintegrate and catch up with the rest of Europe. I believe that the best way to realize that strategic goal is through Poland’s membership of the European Union.
There are people in Poland who dispute this. Some of them even argue that we would be better off if we did not join the EU. I strongly disagree with that view.
And this brings me to the topic of your conference. One of the characteristics of globalization is an increasing role of regional organizations such as the North American Free Trade Association, the European Union or MERCOSUR to name just a few. Also in Asia and Africa we have seen several attempts to create similar organizations. I would call this process globalization through regionalization.
Poland is a country sharing its border with the European Union. Some of our neighbors are likely to join the EU. The European Union is our main trading partner. We have converging interests and shared views on a wide range of issues. EU membership is for numerous reasons a natural and logical choice for a country located in Central Europe. Inside the EU Poland will have a greater influence on global affairs than outside the Union. It will be a truism to say that it is better to be an active participant in historic processes than a passive witness.
Ladies and Gentlemen,
According to the traditional view, a state’s international position depended on its military and economic clout and other attributes of power, such as land area, size of population and per capita income. Those factors still continue to carry some significance.
But globalization brings in other criteria to the fore. They include a state’s capacity to adapt, the efficiency of its structures, ability to generate new technologies, its economic competitiveness, and a quality of its system of ongoing education to cope with changes.
The challenges related to Poland’s entry to the European Union are in fact similar to those posed by globalization. The scale of the effort required can be well illustrated by a recent report by the World Economic Forum.
That report gave Poland a relatively low ranking among 75 nations, with respect to economic competitiveness, technological advancement, efficiency of our public institutions, and the quality of our macro-economic environment. It was encouraging to some extent that we were mentioned among the countries steadily improving the competitiveness of their economies. On the other hand, it was depressing that, for example, we ranked only forty-fifth on the corruption scale.
So, there are serious reasons for concern and a huge amount of work ahead for Poland to be able to fully integrate with the European Union and compete globally.
Therefore, Poland’s attitude toward the various components of globalization and our influence on its shape is not an abstract issue - it is something that impacts the present and future of our citizens.
Ladies and Gentlemen,
I would like to review those features of globalization that constitute a new political quality in international relations and bring in new challenges. I would arrange them in the following order:
· Globalization is transnational; it removes all kinds of barriers and leads to the emergence of a global market.
· It increases the interdependency of markets and production, making them more uniform.
· It accelerates distribution of, and increases access to goods and services.
· It enhances the role of transnational institutions and multinational corporations - which press for further liberalization of trade.
· It exposes the insufficient ability of international financial organizations, and national economies, to quickly adapt to new challenges and deal with the emerging threats. That points to the need for reforming not only the IMF, but also the whole international monetary system.
· It changes the concept of “national sovereignty” because the significance of political sovereignty seems to be losing out to economic sovereignty.
· It also involves expansion of different cultures, and resulting changes in social awareness. It enriches cultures, brings in more uniformity, but is also threatens the cultural identities of some communities.
· It may increase the gap between the rich and poor. Both globally and within individual states.
· It has already created a new division between pro- and anti-globalists.
· It also contributes to growing unemployment in some regions.
Ladies and Gentlemen,
The impact of globalization on Poland remains to be fully defined. However, one has to take note of the following:
· External factors are becoming increasingly significant; several recent crises in the world economy exposed the susceptibility of national economies and their poor capacity to adapt. Fortunately Poland has managed to avoid major financial problems so far and I hope it will continue to do so. But the examples of Mexico, Thailand, Russia or Argentina to name just the few demonstrate how national economies can suddenly suffer as a result of global changes;
· Globalization poses a serious threat to those sectors of the financial market where a high degree of internationalization and liberalization is combined with underdevelopment and lack of adjustment of the institutional structures and instruments;
· Liberalization of trade leads to more intense competition. That is why Polish producers will have to upgrade their competitiveness. On the other hand, they have to receive more vigorous support of the state. This includes a more trade promotion-oriented activities of Polish embassies and consulates abroad through “economic diplomacy”.
· Globalization lends added urgency to the need for modernizing the structure of production, overcoming the information gap and raising the quality of education in Poland.
· And finally as I mentioned earlier, it provides a powerful argument for joining the European Union – since the Union will constitute for Poland a crucial environment for adjusting to globalization, enhancing economic security and upgrading the competitive capacity of the economy.
Ladies and Gentlemen,
Poland has been fully involved in GATT/WTO negotiations and implemented the liberalization decisions of the Uruguay Round. We also reduced tariffs on information technology products, liberalized trade in industrial goods in the framework of multilateral agreements like CEFTA.
Attracting foreign investment has been an important component of the national economic policy. The Ministry of the Economy has drafted a strategy to boost investments and the guidelines of a bill on supporting investments. We were involved in works on an international investment agreement. On a regular basis representatives of the Polish government participate in debates on the current and future economic challenges to the international community.
Let me take this opportunity to elaborate on our position regarding the co-steering of the process of globalization.
We are aware that globalization can also bring some potentially negative consequences for Poland. We think that their risk can be significantly reduced. That is why we are in favor of the following steps:
· Regulations concerning the liberalization of trade, its pace and forms, as well as access to markets, should not undermine the interests of the weaker partners and should take into account the scope of their abilities to fulfill their obligations;
· All parties involved should ensure greater cohesion of the global economic policy and its better coordination;
· There should be an ongoing analysis of the adjustment of international trade institutions and rules with regard to the principle of extending opportunities and reducing threats;
· Benefits of globalization should be regularly reviewed and aid to the least-developed and most-indebted countries should be redistributed.
Ladies and Gentlemen,
In the years to come, Poland’s involvement in globalization will primarily consist in obtaining membership of the European Union. We are going to actively participate in shaping the united Europe. We will be making our contribution to the process aimed at creating an economic organism capable of competing with other economic powers, raising the living standards of its citizens and promulgating common values.
Let me underline that we will do our best to make sure that Polish views are taken into consideration at every stage of the process.
The European Council recommends that EU states increase their spending on research, development and education to 3 per cent of the GNP by the year 2010. Meeting that target will not be easy for Poland. However, we realize the importance of upgrading education in the process of catching up with Europe.
In the economic sphere, Poland has initiated adjustment moves in the framework of the OECD and the WTO, concluding the relevant liberalization agreements. During the third round of the WTO ministerial conference in Seattle, Poland supported the EU’s position, assuming that the main goal of the Round was to ensure increasing benefits to all WTO members and the fullest possible involvement of developing countries in the Round. At the same time, Poland emphasized that the main beneficiaries of liberalization should provide greater economic support to developing countries.
We are involved in work on reforming the international financial structures, particularly the IMF and the World Bank. Poland is in favor of the IMF introducing an early warning system. The participation of Poland in international financial organizations also allows us to count on their backing in crisis situations. The implementation by Poland of safeguard norms and codes will help protect our economy from rising susceptibility to the threats of globalization. It is the IMF – along with other organizations – that authored those norms.
Poland’s membership of the IMF means that international financial norms and standards are already incorporated in Polish legislation, thus providing a degree of protection to Polish financial markets. At present, IMF missions conduct bi-annual reviews of Poland, and we cooperate with the IMF on counseling, technical assistance and training.
For several years Poland has been participating in the initiative to reduce the debt of Heavily Indebted Poor Countries (HIPC), and a program of credit adjustment – which is known as the Poverty Reduction and Growth Facility. Poland has observer status in the Aid Committee of the OECD. The total amount of the Polish foreign aid exceeds 40 million dollars annually. A huge portion of that aid is used to finance high education and post-graduate studies. I refer here only to government aid which does not include donations and support provided by non-governmental organizations.
Assistance in the form of official development aid (ODA), transferred bilaterally, reached some 13 million dollars. The biggest recipients of Polish aid included several European states like Ukraine, Belarus, Lithuania, Latvia, Serbia Montenegro, and Albania. We also made donations to several Asian and Latin American countries, for example in the form of debt relief. Our aid to African states was relatively low and amounted to 0.9 million dollars.
The share of Poland’s ODA and government assistance in the GNP was considerably lower than the average for the member states of the Development Aid Committee of the OECD. We are not able to increase that volume given the current situation of the Polish economy,
It should be stressed, however, that – to the best of our modest possibilities – the Foreign Ministry has over the last three years systematically extended the scope of foreign aid and diversified its forms. We have taken several steps to invigorate our aid to states undergoing transformation and to developing countries.
Let me also note that we have backed EU proposals concerning tariff-free and contingent-free access to markets of products from all least-developed countries.
In the framework of multilateral aid, we have made contributions to the International Development Association, the Montreal Protocol, UNESCO, WHO, UNDP, FAO, UNIDO and several others (in 1999 – for the first time were able to support the UN High Commissioner for Human Rights and the High Commissioner for Refugees).
Polish delegations played an active role during two important international events addressing the challenges of globalization, the UN Millenium Session and the Monterrey Conference.
During the Millennium Session of 2000 Poland emphasized the need for implementing the principle of solidarity, which – along with rule of law - is one of the essential conditions of maintaining peace. We also argued that reduction of poverty and balanced development were the greatest challenges of the age of globalization.
Poland endorsed the declaration of the Millennium Summit, which called for halving the number of people suffering poverty and hunger by the year 2015. The reduction of poverty requires solidarity, but also – a coherent policy. We have called for UN efforts to introduce an international economic order enhancing stability and predictability in world trade, and the creation of a new financial architecture.
Another venue was the UN conference on financing development, held last year in Monterrey, Mexico. On that occasion Poland shared its experiences of a country receiving development aid and simultaneously implementing economic reforms.
Poland, fully supports the Consensus of Monterrey, which elaborates ways of implementing the Millennium Declaration and includes proposed systemic solutions. We share the view that national and international financial resources are to be mobilized for development, that trade is the driving force of development, that more intensified international financial and technical cooperation is needed to support development.
We agree that the possibility of external debt relief should be seriously considered for HIPC countries, which are facing deteriorating development conditions and unfavorable terms of trade. Also for the purpose of simulating development every effort should be made in order to raise cohesion and compatibility of international monetary, financial and trade systems.
Poland’s position was convergent with the position of the European Union on general issues. We shared the views expressed by the European Union which underline the responsibility of each country for its own situation. We can also see the necessity to condition international aid on observance of human rights, respect for cultural and religious diversity, enhancement of the rule of law and democratic institutions, protection of the environment and combating of corruption.
Poland endorsed the implementation of effective management systems in developing countries – particularly in Africa. We also lend our support for increased regional cooperation. On the other hand, we are more cautious regarding a proposal to immediately and unconditionally open the domestic markets of developed countries to products coming from least-developed states.
However, despite the universal support for the Millennium Declaration and the actions proposed in Monterrey, the chances for their implementation are regretfully slim. Even if aid targets were reached, their effectiveness would be largely undermined by waste and corruption in the recipient countries. That does not mean that aid is totally ineffective, but that higher financial donations by wealthy countries will not solve the issue by themselves.
Ladies and Gentlemen,
We should also keep in mind that globalization is not restricted to the economy, finances and mass communication. Though not every one was aware of this before September 11 – globalization also includes national and international security. Perhaps the international community had to experience the cruel lesson of September 11 to realize this - and be spared even greater dramas in the future.
The globalization of security – or of threats to security – takes quite concrete forms. These include international terrorism, organized crime, the danger of proliferation of weapons of mass destruction, and the growing threat of cyber-wars.
One could also add to this list the specter of uncontrolled migration which is likely to cause social unrest and give rise to political extremism. These threats are interconnected which makes it more difficult to monitor and contain them. Some commentators and politicians point to the uncontrolled, asymmetrical character of globalization as the main source of those threats. They blame the richer and more developed countries for the negative side-effects of globalization, like the growing gap between the rich and poor, the undermining of cultural identities and so on.
The globalization of security poses new challenges before the international community and individual states. We must resolutely and effectively combat those threats and address their underlying causes. International cooperation is essential here. Poland is involved in such actions in various ways.
Last night I returned from a meeting of the North Atlantic Council in Reykjavik. It marked an important stage in preparations for the November NATO summit in Prague. We are in the midst of a far-reaching reform of the Alliance, designed to better adapt it to new security challenges. The reform, which we want to complete in November, will – in a way – amount to globalization of NATO, entailing the possibility of crisis response and security-enhancement operations around the world. That is unavoidable, since the UN finds it more and more difficult to cope with that role.
On the other hand, we wish to adapt the United Nations system to cope more efficiently with the underlying causes of the global threats to security. The various UN bodies, including the Bretton Woods institutions, are irreplaceable here.
There also is an enormous role for the European Union, which – in addition to global undertakings – has focused on its own backyard, that is to develop and intensify its so called third pillar related to justice and home affairs. Collaboration within the third pillar is as important in counteracting global security threats as the rapid reaction forces, which can be deployed to cope with a dramatic situation that could not be averted by other means.
I have made this digression to underline the fact that the each state, Poland included must be able to deal with a broad scope of issues related to globalization. This involves far more than merely reacting to the situation on the stock exchange.
In conclusion, let me note that since September 11, the international community has changed its approach to the problems of security. There is a wide recognition of new threats connected with the development of communications, new technologies, access to weapons, and growing frustration and anger against the beneficiaries of globalization. Retardation and poverty are increasingly seen as a conducive environment for terrorist activity, though - naturally - they cannot justify it. Awareness of this is most evident in the developed states.
Finally, I would like to say a few words to students attending our conference. It is you who will have to grapple with the problems of globalization when you get your degrees and graduate. You will soon join the ranks of those who are building the modern Polish state and Polish economy. It will be your challenge to provide a more prominent place for Poland in the European Union and in the world that is constantly changing and getting more and more global. Poland needs your contribution. I have no doubt that you will be able to successfully meet that challenge.
Thank you for your attention.