Final Communiqué

8th Plenary Session

23-26 May 1990
Seoul, Korea

Over the past twelve months, the world has undergone dramatic and unexpected changes. The democratic transformation of Eastern Europe and the accelerating process of democratization in Africa, Asia and Latin America, accompanied by a burgeoning acceptance of the principles of the market economy, have moved us closer to being One World.

While these developments are welcome, they nevertheless carry with them obvious risks of destabilization. Social and economic insecurity may sharpen cultural differences, trigger political nationalism and intensify religious fundamentalism.

Instead of pursuing global approaches to the complex array of global challenges, bilateral or limited regional solutions tend to prevail. This may endanger the potential for positive change inherent in the present developments. We urge national governments to devise adequate approaches to managing global interdependence.

I. POLITICAL DEVELOPMENTS IN ASIA

1. The winds of change, however, have not yet fully reached Asia, a continent dominated by ethnic, religious, cultural, ideological and economic diversity. In East Asia, strong economic performance has provided political stability. In contrast, real and potential conflicts exist in Central Asia. In the Middle East, where recent developments have raised tensions, the dangers of conflict are very real indeed. We urge restraint, negotiations and respect for human rights in this area.

2. In spite of an ideological hardening, China seems determined to proceed further with economic reform. The Council firmly believes that this reform process should be encouraged.

3. As the world's largest creditor nation, Japan will have an increasing role to play in the international arena. Its position in the international political and financial community should be commensurate with its economic and financial power and responsibilities, particularly in relation to its contribution to development aid.

4. The dramatic changes taking place in the world today demand equally dramatic and courageous decisions by the governments of South and North Korea, a nation which still remains divided. The members of the InterAction Council, concerned by this tragedy, urge the governments of the two Koreas to take the following actions as a first step toward peaceful unification:

(a) The leaders of South and North Korea should agree to meet -- without preconditions -- as soon as possible.

(b) From a humanitarian view point, both governments should permit immediate visits and unrestricted communications between members of separated families in South and North Korea.

(c) To enhance mutual confidence between the two Koreas, both governments should legalize travel by the citizens of the two Koreas to and from the South and the North.

5. Given its diversity, the early emergence of a meaningful regional organization in Asia remains doubtful. Instead, a policy of good-neighborliness should be encouraged and growing intra-regional trade enhanced through an increased horizontal division of labor.

6. The arms negotiations, which have already led to military force reductions in Europe and which point to still further cuts in both nuclear and conventional arms, have not yet been accompanied by parallel discussions related to the Pacific Region.

7. The InterAction Council, therefore, urges the Soviet Union and the United States of America, to initiate negotiations to reduce their military forces - particularly air and naval forces - in the Pacific region and the Indian Ocean. Such discussions should take account of the interests and views of the other powers in the region.

8. All governments concerned in the area should establish negotiating mechanisms to deal with the respective conflicts and issues in order to strengthen security in Asia and the Pacific, starting with US-USSR talks.

II. CURRENT DEVELOPMENTS IN EUROPE AND THEIR CONSEQUENCES FOR OTHER REGIONS

9. The astonishing developments which have taken place in Eastern Europe over the last twelve months pose important questions, not only for Europe, but for the world community as a whole.

10. The InterAction Council warmly welcomes the fact that the long-standing desire of the people in the two German states to live together as one nation and to decide their common future, is about to be finally realized. The task which now confronts the German people is to bring about unity in such a way as to ensure that German unification is compatible with the interests of Germany's neighbours.

11. The Council believes that the proper mechanism to pave the way for a united Germany to take its seat in the international community as a nation endowed with equal rights under international law, should be the so-called 2 plus 4 process (the Federal Republic of Germany and the German Democratic Republic plus France, the United Kingdom, the Union of Soviet Socialist Republics and the United States of America) in which Poland would participate where appropriate. In addition to the necessity of ensuring European stability, this process must take account of the dynamics of internal unification. It is the understanding of the Council that the unified Germany will be integrated within the European Community. This is in the interest of other European States.

12. While recognizing the need for the European Community to further deepen its political and economic integration and taking into consideration the fact that negotiations with the European Free Trade Association (EFTA) are under way, the InterAction Council urges the European Community to elaborate the modalities by which other European countries (members of EFTA or the Council for Mutual Economic Assistance (CMEA) or non-members), can in due course be associated with the European Community.

13. The InterAction Council suggests that serious thought be given to the economic unification and political organization of the European continent as a whole.

14. In this regard, the admission to the Council of Europe of those East European countries which have applied for membership, satisfied the requisite conditions, and ratified the conventions, represents an important step towards further and more comprehensive European integration.

15. The Council believes that European stability requires a reduction of the indigenous armed forces in central Europe and concurrently a reduction of foreign troops based on central European soil. In this context we urge an early conclusion of the Vienna Talks on Conventional Forces in Europe (CFE) and their extension to cover reductions to ever lower levels.

16. The Conference on Security and Co-operation in Europe (CSCE) process has played a pivotal role in the recent events in Eastern Europe and provides a useful framework for further all-European co-operation. The Council takes this opportunity to pay tribute to the signatories of the Helsinki Final Act, whose vision paved the way for the changes we are now witnessing.

17. While wholeheartedly welcoming the democratic changes in Eastern Europe, the Council nevertheless voices its concern at the signs of a resurgence of xenophobic nationalism, racism and revanchism which could have a damaging effect both on European integration and on European security.

18. Ultimately, political stability in Eastern Europe depends on economic improvement. To this end, the Council believes that the democratic process hinges on the efforts made by each country to restructure its economy. However, significant financial flows from the West, largely in the form of grants and on a scale comparable to that of the post-war Marshall Plan, would be highly desirable.

19. As a first step in this process the debt burden of Poland and Hungary, and subsequently of all those European countries which embark on a process of democratisation and economic liberalisation, should be alleviated.

20. While welcoming the moves in Eastern Europe towards economic liberalisation, the Council considers it imperative that the market economy should combine efficiency and equity. Governments must play a positive role in ensuring that differences in income do not lead to permanent social injustice and that unemployment resulting from economic change does not become a long-term phenomenon.

III. GLOBALIZATION OF FINANCIAL MARKETS AND ITS IMPLICIT DANGERS

21. It is evident that Eastern Europe's economic requirements, combined with the needs of developing countries, make it extremely undesirable for the United States' twin deficits to be further financed by external sources. There is an urgent need to increase the world's capital formation and savings. The United States must put its fiscal house in order, finance its own fiscal deficit domestically, and transform itself into a net capital exporter by the mid-1990s. At the same time the current account surpluses of the Federal Republic of Germany and Japan should be redirected to alleviate the needs of the developing countries and Eastern Europe.

22. The InterAction Council notes with approval the Report by the Independent Group on Financial Flows to Developing Countries, which is annexed to this final statement, and the positive response it has received from the leaders of many countries. We would urge that this report be widely distributed to Governments and international organizations and considered by the United Nations. At their forthcoming summit in Houston, the leaders of the industrialized countries should agree to implement its recommendations.

23. The Council welcomes the decision of fifteen developing countries to hold a summit meeting in Kuala Lumpur, Malaysia in June 1990 to examine their future development policies.

24. The Council stresses the importance of declarations by leaders of the industrialized countries that official development assistance (ODA) earmarked for developing countries will not be diverted elsewhere. However, the Council is concerned at the significant reorientation of private investment away from developing countries towards Eastern Europe and urges the industrialized countries and the international financial institutions to develop a system of incentives which would favour investment in the South.

25. As a means of promoting the integration of CMEA countries into the world economy, they should be accepted as members of the International Monetary Fund (IMF), the World Bank and the General Agreement on Trade and Tariffs (GATT). Furthermore, they, and certain other countries, in particular the Republic of Korea, should be granted special status in the Organization for Economic Co-operation and Development (OECD). The Republic of Korea should be encouraged to emerge as a donor nation.

26. The GATT Uruguay Round is now reaching its final stage. Its successful completion would strengthen international trade (in goods as well as in services) and cross-border investment. Its failure would trigger protectionism. The Council therefore calls on the Negotiating Parties to produce an agreement that, in particular, takes full account of the interests of the developing countries.

27. The Council shares the concern that in important instances the deregulation of financial markets has eroded disciplinary constraints on imprudent financial behavior. It therefore believes it is imperative that regulatory authorities explore the possibilities for reducing systemic risks. Among other steps, more stringent capital requirements for lenders and improvements in settlement procedures are urgently needed. Independent and autonomous central banks have an increasingly important role to play. This should be reflected in appropriate legal and political provisions.

28. The Council firmly believes that the establishment of a European central bank system favoring the rapid develpment and use of a common currency - the Ecu - would represent a significant step towards the stabilization of monetary fluctuations. In the long run a system of stable exchange rates between the dollar, the yen and the ecu (open to other countries who might wish to join) should be created. Such a system inevitably requires much closer co-ordination of monetary and fiscal policies than presently exists.

IV. ENVIRONMENT - POPULATION - DEVELOPMENT

29. Ecological issues will be the dominating political challenge for the 1990S and well beyond. Developing and industrialized countries, corporations and individuals alike must pursue sustainable economic activity, development and the use of natural resources.

30. The Council endorses the report submitted by Mr. Miguel de la Madrid Hurtado on the recommendations of a High-level Expert Group on "Ecology and the Global Economy".

Provided suitable economic instruments are applied, economic growth and environmental protection can be compatible. The urgency of environmental problems dictates that a broad range of remedial devices be employed. The market mechanism and related economic instruments - such as prices, taxes, leasable permits, charges, property rights and information disclosures - can provide both signals and incentives. Experience has demonstrated that market mechanisms need to be complemented at times by administrative targets such as limits for sulphur dioxide emissions and gasoline-usage standards for motor vehicles. The InterAction Council proposes that the polluter-pays principle should be the point of departure for policy development, both nationally and internationally. This will also avoid trade distortions.

31. The InterAction Council strongly urges the early implementation of the agreement reached at The Hague in April 1989 calling for the establishment of a High Authority to set an internationally binding policy framework with regulatory powers.

32. This could comprise a convention on global environmental matters incorporating binding commitments for the reduction of emissions. Pending the completion of such negotiated agreements, the InterAction Council urges the major polluting countries to associate in a climate protection club whose members would voluntarily observe agreed emission targets. Moreover, the Council calls for the creation of a facility to provide additional resources to assist developing countries in the development and implementation of environmental programmes, including R&D programmes and the transfer of environmentally benign technology.

33. The InterAction Council calls on Governments

- to measure economic progress more properly through revisions in economic and social statistical systems,

- to adopt policies providing for the internalization of the costs of environmental degradation and pollution into public, corporate and private decision-making,

- to set and enforce progressively lower targets for emissions and pollution standards.

34. Energy policies are key to arresting global warming. The Council's 1989 proposals, suggesting a three-stage abatement strategy, are still valid:

- in the short-term, improvement of energy efficiency and conservation,

- in the medium-term, a shift in the mix of energy sources from coal to oil and then to gas,

- in the long-term, a massive research and development programme into the economical use of renewable sources of energy, especially of nuclear fusion, solar energy (photovoltaics) and geothermal energy on a large scale. Such a programme should be financed by governments and carried out by the scientific community and specialized research centers.

35. The Council calls for an intensification of efforts, co-ordinated by the International Atomic Energy Agency (IAEA) to find solutions for safe and stable nuclear waste disposal and safe procedures for the decommissioning of nuclear reactors.

36. The InterAction Council calls for urgent adjustments in industrialization and consumption patterns in the industrialized countries. Underdevelopment, poverty and population growth are also major causes of environmental degradation. The InterAction Council reiterates the paramount importance of adotping policies aimed at stabilizing global population at eight to ten billion. To that end, the Council enjoins every developing country to formulate a long-term population programme. Resources allocated to international population assistance programmes for contraception should be doubled, accompanied by a programme of education on family planning.

37. Africa is a continent in crisis. Population growth continues to outpace economic and social advance. Food imports climb. Average GNP per capita has been declining. Seventy percent of the people are dependent on the land for their living, but the land's capacity to produce is ebbing away under the pressures of rapidly growing numbers of people. The InterAction Council draws attention to the fact that Africa alone cannot resolve its crisis.

38. There is no short-term solution to the three fundamental problems of explosive rates of population growth, destruction of the physical environment, and the lack of human and institutional infrastructure. Action to address these problems must start in Africa. Africa and the international community must work together to redress the present marginalisation of the continent by launching a Global Coalition for Africa.

39. The operation currently undertaken by the 24 most prosperous countries for the newly emerging democracies and market economies in Eastern Europe could be a model for similar action in other parts of the world provided it was tailored to the conditions and circumstances prevailing there. Central America and the Caribbean are already being considered and other regions, particularly Africa, would certainly also qualify for such an undertaking.

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