T Manuel: World Association of Newspaper Conference and World Editors
Forum

6 June 2007

President of the World Association of Newspapers, Mr Gavin O'Reilly,
President of the Newspaper Association of South Africa, Mr Trevor Ncube,
Chief Executive of the World Association of Newspapers, Mr Timothy
Balding,
President of the World Editors Forum, Mr George Brock,
Distinguished delegates,
Ladies and gentlemen

Thank you for the invitation to address this distinguished forum. I should
not hide the fact that the task is indeed daunting – given both the audience
and the fact that I have missed so much of what has preceded this lunch.
Despite our presence here in Cape Town, the focus of media attention this week
has shifted to the G8 Summit in Heilligendamm, on the German Baltic Coast. For
the past few weeks, the preparations for this Summit has seen the bulk of copy
from Germany focusing on the demonstrations, both peaceful and violent – at
times threatening to overshadow the purpose of the Summit itself.

As though on cue, temperatures have been raised by early initiatives and
disagreements on climate change and the tasks at hand compounded further by
announcements on missiles and where they should be pointing. All of this
overshadows a few key initiatives taken by the German Government to enlarge the
discussions on key developments by the inclusion of the "G5" – Brazil, China,
India, Mexico and South Africa; as well as a different set of discussions with
important African countries on development on our continent.

Added together, these matters must raise fundamental questions about
globalisation – present and future, and perhaps tangentially whether the G8 can
claim to be the only voice on global economic developments at a time when the
shifts of development and output change the global balance of power. At hand is
the contradiction of development sustained high rates of growth has seen the
inclusion of hundreds of millions of people into the world’s market economy,
and of a decline in global poverty due to growth in the emerging economies; yet
there are growing disparities in wealth and incomes both within and between
countries.

Against this backdrop, there are important questions about who wins, who
loses and who cares. Amartya Sen addresses the problem as being that of global
poverty and global fairness, he writes, "So what about global inequality and
poverty? The distributional questions that figure in explicit or implicit form,
in the rhetoric of both of the so-called anti-globalisation protestors and of
the no-nonsense 'pro-globalisation' defenders need some critical scrutiny.
Indeed this issue has suffered, I would argue, from the popularity of some
oddly unfocussed questions."

He then proceeds to explain that part of the central problem is an
over-reliance on the logic of the market and that 'global capitalism' is
typically more concerned with markets than with, say, establishing democracy,
or expanding public education, or enhancing social opportunities for the
‘underdogs of society."

He further argues that the inequalities of globalisation are closely tied to
a number of institutional failures that have to be overcome. I am sure that we
have all heard these arguments sufficiently often for them to sound almost
trite. But what perspective do we take on this and with what consistency do we
allow these ideas to be articulated? Or does this matter at all? Is solving
this problem any less interesting than reporting merely on the protests or the
defence?

The issue is clearly about the policy choices that a country or group of
countries makes, about the room they have to exercise those choices and about
the fundamental precepts that inform their choices. Yet another Nobel Laureate,
Joseph Stiglitz raises the challenges more forthrightly in arguing,
"While policies based not on ideology but on a balanced perspective of the role
of the markets and the government are more likely to promote growth and
efficiency, there is a broader vision which I would like to try to
articulate.

"It is based not just on an understanding of our economy but of our society
and it goes beyond the materialistic values that are paramount in the growth
and efficiency agenda. There are three cornerstones: social justice views about
equality and poverty; political values, particularly democracy and freedom; and
views about the relationship between individuals and the communities in which
they live."

We must accept that these processes determine who wins, who loses and by the
margin of each. But, there are other faculties that come into play that relate
to the capabilities of the nation state. Kemal Dervi, presently the
administrator of the United Nations Development Programme writes:
"There is really nothing that automatically leads to the inclusion in the world
economy of countries that have been marginalised by history, geography, civil
war, governance failures, and or foreign power struggles on their soil.
Globalisation does not "work" for these countries.

The linkages that exist between them and growing parts of the world are
insufficient. Some optimists think that global growth will eventually 'reach'
these countries as it will, the poorest parts of India and China.
Unfortunately, there is nothing inevitable about this. To make an extreme
comparison: there is no reason for the growth of the world economy to benefit
the moon! China and India can use the apparatus of the nation-state to 'create'
linkages between their own prosperous regions and their poor regions. Somalia
and Sierra Leone can do very little on their own to create equivalent linkages
between themselves and the dynamic parts of the world economy.

Clearly, without a more balanced report on both the winners and the losers,
especially those trapped by history, we will not have a basis to improve on the
way in which the world functions, the manner in which institutions function and
the way in which globalisation plays itself out across the globe. And, if we
cannot fix what is so obviously imperfect, then the losers from globalisation
will either shout more loudly, or they will disengage from the process – either
way the struggle for a more equitable and fairer world will be vanquished. And
that is not an outcome from globalisation that most of us will be able to live
with.

As beneficiaries of globalisation, the media must acknowledge that there are
losers. As nation-states, we cannot abrogate our responsibility to those who
lose out in the global shift of resources, goods and services. To make our
world a better place, we must have the honesty to admit that the losers in the
globalisation game are almost always those who are poor to start off with,
those living in fragile states, those who have not received a decent
education.

In our increasingly interconnected world, it is becoming increasing costly
not to care. Towards the end of the second world war, when the world was facing
a set a daunting challenges, challenges principally of reconstruction but also
to provide an enduring security, global leaders decided to form three
institutions, the International Bank for Reconstruction and Development; the
International Monetary Fund (IMF) and the body deferred for 55 years, the
International Trade Organisation. The two that were established were born of
compromise – some of which still bedevil these bodies, but they initiated their
work. A year later, in a major rethink, the League of Nations was replaced by a
significantly revamped successor, the United Nations Organisation.

What is significant about this period was that the leaders of key world
states recognised the crisis and responded with institutions. While the context
is very different today, it is instructive that world leaders were of the view
that the major global challenges facing us then could be tackled better through
joint, collective effort. Does this view have traction today?

A few decades ago the world's economy was dominated by the United States,
Europe and Japan, constituting roughly 75% of global Gross Domestic Products
(GDP). Today, the world is a very different place. Global GDP is about US$50
trillion. Of that amount, in current US dollar prices, the G7 makes up about
57% and the rest of the world 43%.4 In current PPP prices, the rest of the
world accounts for more than 55% of world GDP and the G7 45%. Rapid growth in
population and inclusion into economic activity has made possible a dramatic
rise in GDP in many developing economies. In economic terms, India, China and a
number of emerging markets are now major players in the world economy, and
given projections of growth will overtake many of today’s largest economies in
20 or so years.

The pattern of global governance has to change to respond to these changes.
If our institutions are to be strong, representative and robust enough to
tackle the major problems of the world, then the status quo must be
challenged.
If we accept the reality that the integration of the world's economy has
outpaced its institutions by far, then we must also accept that equilibrium
will not be possible without institutions capable of constructing the policy
consensus. And, in order to do this, the legitimacy of the multilateral
institutions is paramount.

Yet, there is very little disagreement on the fact that the IMF and World
Bank are constrained by a huge deficit of democracy. The G20, at its
Ministerial meeting held in Melbourne in November 2006, agreed on the need to
reform them. This meeting was attended by, amongst others, both Mr Paul
Wolfowitz, in his capacity as World Bank President and Mr Rodrigo de Rato, IMF
Managing Director.
The communiqué adopted was emphatic in its statement, "We reiterated the
position expressed in our October 2005 Statement that the selection of senior
management of the IMF and the World Bank should be based on merit to ensure
broad representation of all member countries. We welcomed consideration of any
steps to ensure a fully transparent process for the selection of the IMF
Managing Director and the World Bank President."

I need not remind anybody present here that the World Bank is just in the
process of appointing a President. The commitments made by all G20 Member
states, including both the US Treasury and the Federal Reserve Bank have been
completely ignored. The (sole) candidate, Mr Bob Zoellick, is competent and has
a credible track record both as a manager and a conciliator. I have no doubt
that in a fair contest, with a properly constructed panel; Bob Zoellick would
probably emerge as one of the strongest candidates. The problem is that the US
administration lacked the courage that its candidate needed by way of support.
It relied on what Joe Stiglitz recently described as, "the appointment of the
President of the World Bank is perceived as a birthright of the USA." And so,
the legitimacy of both the institution and the candidate are compromised.

On the voting structure of these organisation too, we must pose serious
questions. The organisation's structure is based on a shareholding formulated
in 1944 during World War Two. The United States holds 18 percent of the
shareholding, and while there has been some variation to the shareholding
structure, the USA as the biggest shareholder still has veto power. The
presidency of the World Bank should not be determined merely by its
citizenry.
As some of the world's leaders gather in Heilligendamm to tackle issues ranging
from global climate change to development in Africa, from world trade to
security; we must constantly raise the voices of the people not there, not
represented at that table.

The major problems of the world affect all its citizens and we can only
begin to develop solutions to these problems when we change towards a more
inclusive system of global governance. There is a need to revive the discourse
on global public goods, to recapture the global commons to recognise the
interdependence and interconnectedness of our changing world, more importantly,
to design a set of institutions and governance arrangements to meet the needs
of everyone.

And newspapers must continue to ask difficult question, 'who wins, who
loses, who cares?' Or perhaps it simply does not matter the issues are not
sufficiently racy, there are no dramatic pictures, and healing sells fewer
newspapers than gore.

Thank you.

Issued by: National Treasury
6 June 2007