(via live video-link)
London, February 26, 2001

Can you hear me? Thank you Gordon… my audio had disappeared – there were some seconds missing.
First of all, let me say how grateful I am to Gordon Brown and to the other organisers of this conference. In my view it is not just an opportunity to set out new proposals and new commitments on this crucial issue: poverty. I want it to be at the core of the next G7-G8 meeting in July. I see your conference as welcome evidence of steps forward we have been making in coping with this issue -- which is not enough obviously to solve it, but it is for sure much more promising than some of our short-sighted actions of the past. I remember in the 80s when I was just a young Finance Minister when in the G7 meetings we devised one plan after the other to tackle the debt of poor countries. I don’t think I am unfair if I say that the focus of such plans at the time was much more on our banks’ stability than on the reduction of poverty in the indebted countries. Nowadays, and mainly after the Cologne Initiative, our approach is much more comprehensive. And, rightly so, I would say, that cancellation is not conceived as a necessary reduction of an unbearable burden for the indebted countries, but is also conceived as the initial though essential step for going towards the reduction of poverty, going to the roots of poverty which means both for children and for women. I agree with those speakers who said before me that the problem of poverty is mostly a problem of women in poor countries, and going to the problem for children and women means going first of all to health and education. To preserve their life expectancies. To give them the necessary training to grow in life and to have better perspectives in their own lives and for their own countries. I won’t enter here into details. Your discussion will do it and the Italian Finance Minister Vincenzo Visco, who is supposed to attend your conference, will tell you later on about the proposals the Italian Presidency intends to submit to the G8 in July.

There are just a couple of points I want to stress here: Mostly to underline the fact that tackling health and education means devoting new resources – our own resources, private companies’ resources, and also, of course, poor countries’ resources – through these gigantic jobs. In other words to care really about health and education in poor countries does not mean to spend words, to give guidelines, to devise Plans of Actions. It implies spending resources and redistributing costs in the world for these noble tasks. Just a couple of examples: Think of the health systems, of the costs of medicine. Already in Okinawa we decided to take action to reduce the costs for poor countries and poor users of such badly needed medicines as the HIV drugs and the like. Now pharmaceutical companies have done something throughout these months, but this is not enough. If you reduce the price of a medicine from 100 dollars to 10 dollars you do something, but the price remains beyond the reach of those poor countries and poor users. So we have to do more. And there is a cost to be paid. Costs for our finances and costs for the finances of poor countries.

Education. Again, education means training. Education means more schools. Education also means giving families the right incentives for them to send their children to school And we have to be very realistic. Unless there is a counterbalance to the incentives they have to give their children to employers, to give their children to armies, well, it will be quite difficult for them to accept having their children in school, which means subsidies for these families, which means, again, higher costs. Now being it so, it should be quite clear to all of us that the crucial task remains as it was, as it is, and as it will be: To foster growth in indebted countries, because without growth these resources will be beyond the range of what is feasible. Not just in absolute terms but also for aspects of macroeconomic stability that are already emerging. To give health and education the necessary attention requires more public resources, requires high or even higher levels of public expenditures in poor countries. And such levels might easily endanger macroeconomic stability unless GDP goes up. Therefore, the essential task, as I was saying, remains to increase the rate of growth of GDP in these countries.

Now what are we supposed to do, let’s say, as a priority to achieve these goals? I understand that many of us are now concentrating on topics such as the digital divide, introducing new technologies into poor countries to prevent the divide from becoming wider… This is something we have to do. I agree with it. And in the G7-G8 we will devote special attention to this task. But let us be frank with ourselves and with the world. This is not our immediate task in the sense that the result of these actions are necessarily medium-term results. The immediate increase of GDP in poor countries depends on something else. It depends on the liberalisation of trade. Therefore, before thinking of the necessary actions – NECESSARY I repeat – to reduce the digital divide, if we want to be credible, if we really mean that we want their GDP to go up, we have to take immediate action to liberalise trade. We know the figures – they are well publicized, precisely in these days. Liberalisation of trade might mean plus 14% in exports of the HIPC and other poor countries. It might imply over 1% increase in their GDP. That’s where the credibility and good faith of our industrialised countries is at stake. This is something that I said in Okinawa. This was already, at the time, the commitment of Italy. This has now become the commitment of the European Union. Because the Commission of the EU has taken the courageous, if you like, stand, which costs our countries. This is a cost we have to be ready to pay. Liberalisation of trade. Abolition of quotas. Reduction and abolition of tariffs. These are the immediate measures that we have to take. The digital divide aspect comes after, and becomes credible if we take these measures in relation to liberalisation.

Let me say also one word on non-trade barriers. We are perfectly aware of the fact that beyond the trade barriers there are regulations, technical standards and other aspects of regulations that will present objective barriers to free trade. And this too is something we have to care about. There is one aspect we tend to underline when we speak about these matters to our friends in indebted countries and in poor countries generally: The protection of industrial and intellectual property rights. Now it is very correct to tell them, “You have to protect intellectual property rights, otherwise FDI is somehow discouraged.” But we also have to think of the fact that nowadays there are too many areas that are covered by our intellectual property rights. IPR were invented to protect investments, to give the necessary incentives to investment in research. Now there are many rights that protect providers of goods and services behind which there is no significant investment. Therefore these rights are a sort of taxes that poor countries pay to companies of our countries with no objective justification. When we ask other countries to protect IPR, we, on our part, have to accept the fact that the area of these rights has to be reduced. I hope that the G8 countries will set an example even before a welcome and expected WTO Round. This is their responsibility, after all. These G8 countries have a special responsibility and they have to catch up with it (live up to it). But poor countries as well have their own responsibilities. I welcome the African Renaissance Program where African leaders tell their own countries and the countries of the continent, “Things have to be done differently.” It is essential for African countries to stop ethnic clashes. It is essential for them to select rulers devoted more to public than to private affairs. It is essential for them to adopt transparent rules in handling the new resources that we have to pool into their economies and into their social systems. In other words, all of us have to do things differently. And if we do, our children, your children, our women, your women will live in a better world.

I thank you for your attention.
OK. Thank you Gordon.

Source: Presidency of the Council of Ministers Web site