Section 17. Increasing gravity of North-South Problem


1. Economic and social activities of the United Nations


Looking at the economic and social activities of the U.N. family in terms of the size of spending in 1972, total expenditures amounted to about $1,000 million, which consisted of the expenditure of more than $100 million by the U.N. Secretariat-about half of its regular budget-outlays of more than $600 million worth of technical and food aid to the developing countries from various funds such as the U.N. Development Program, financed by voluntary contributions by member countries, and slightly less than $500 million allocated to all of the U.N. specialized agencies. These expenditures accounted for 90 per cent of the total spending by the U.N. family as a whole. The fact that the budget of the Department of Economic and Social Affairs accounted for half of the U.N. Secretariat's regular budget shows the importance of the economic and social activities of the United Nations. The most important feature of such activities is that the United Nations directly handles development aid programs. This is why the United Nations is called the world's third largest aid organization, after the World Bank group (whose loans and investments in 1972 totaled $3,100 million) and the Agency for International Development (whose aid in 1972 totaled $1,700 million). (The French Government's development aid totaled $1,080 million.) It is in this context that the developing countries, which are aid-receiving countries, are said to be getting the greatest direct benefit from the activities of the United Nations at present.

Needless to say, the United Nations has come to undertake such large-scale activities primarily because of pressures from the developing countries. However, since it has expanded its activities as occasion demanded, they inevitably give the impression that they lack coordination. Therefore, the United Nations is making attempts to give consistency to its aid policy and to all its activities in the economic and social fields. For example, the United Nations worked out the "International Development Strategy for the Second U.N. Development Decade" (see "Diplomatic Bluebook for 1971" for its contents). The strategy is aimed at maximizing the welfare of the world throughout the 1970s by forming a united front of the member countries with their sense of solidarity (or the sense of "World Community") as an impetus, against poverty, disasters and ignorance in the world and it is believed to have succeeded in systematizing to a considerable extent the concept of cooperation through the United Nations.


2. Emergence of the "North-South problem"


It was in the 1960s that the "North-South problem" came to attract the attention of the world, in contrast to the "East-West problem," from the standpoint that the widening economic gap between the developing countries, most of which are located in the Southern hemisphere, and the developed countries in the Northern hemisphere, would threaten the peace and prosperity of the world.

The newly independent countries regarded the United Nations, an international organization based on the one-nation-one-vote principle irrespective of the size, strength and resources of its members, as an organization through which they could obtain from the developed countries international cooperation in trade and development necessary for their economic development which could consolidate the foundation of their independence. On the other hand, the advanced countries of the West found it necessary to prevent the A.A. group from becoming radical, for fear of disturbing the balance between the East and the West resulting from the massive entry into the U.N. of the newly independent countries in Asia and Africa around 1960. Therefore, they judged it wise to help promote economic development, an urgent and important problem for the newly independent countries, through the United Nations. Furthermore, to make use of the West's economic aid capabilities effectively, the proposal for the "U.N. Development Decade" was made on the initiative of the United States, and it was decided to hold the U.N. Conference on Trade and Development (UNCTAD) to meet the wishes of the developing countries.

Later, the developing countries organized the "group of 77" with 7'I countries that met at the end of the first UNCTAD in the belief that the best way to maintain their bargaining power in the United Nations was through their unity. (At present, the group consists of 96 countries, excluding China, South Africa and Israel.) At subsequent UNCTAD meetings, these countries attended as a group under the guiding principles of either the "Algiers Charter" or the "Lima Action Program," and established the practice of coordinating their position in the conference hall by adopting the group representation system. Of course, the members of the "group of 77" have come to show differences of position on some problems among themselves, reflecting the difference in the stage of development. However, they have usually acted in the cause of their major common interest by overcoming minor differences.

Because of the need to cope with this situation, the advanced countries of the West have come to act in concert as much as possible both by coordinating their opinions through the OECD and by designating a spokesman for the group. The Soviet Union and other Eastern European countries have also been asked by the developing countries for development assistance. However, the Eastern bloc has often stayed outside of the discussions not only because of their political stand that the Eastern European countries are not responsible for the backwardness of the developing countries which was caused by the Western European countries' colonialism, but also because of their poorer performance in economic cooperation compared to that of the advanced countries of the West.

Thus, the "North-South problem" in the United Nations came to be accepted as such. And it has gradually become clear that the process of searching for such international cooperation has the character of adjusting the interests of the North and the South. Since the consensus on international cooperation arrived at through this process is nothing more than the greatest common measure of the interests of the North and the South, it is necessary to sustain efforts over a long period of time if the "North-South problem" is to be solved. This state of affairs was clearly reflected in the third UNCTAD held in Santiago in April through May 1972.


3. "North-South problem" at the third UNCTAD


At the Santiago conference, the "Declaration and Principles of the Lima Action Program" was the most important ground for the arguments of the developing countries, as bad been expected. (See "Diplomatic Bluebook for 1971" for the contents of the program.) The program aimed at two points, namely, (i) obtaining definite commitments on the occasion of the third UNCTAD from the developed countries for development cooperation necessary to make the second U.N. Development Decade a success, and (ii) securing the developing countries' voice in the center of the world economic system by taking advantage of the period of upheavals in the international monetary and trade systems.

The developed countries, for their part, seemed rather determined to try to avoid making new commitments. For the developed countries, the timing of the third UNCTAD was not necessarily opportune. As for the "North-South problem" in the conventional sense of the word, for instance, the development strategy which defines in detail the fields in which the developed countries should contribute throughout the 1970s, was adopted only a year and a half before, and hardly a year had passed since the Generalized System of Preferences (GSP), which is regarded as the greatest achievement of the UNCTAD, was put into operation. Moreover, the United States, the biggest aid-giving country, had decided, far from putting the GSP into force, to curtail its foreign aid expenses, on the ground that its international payments position had worsened.

As regards the link between SDRs and development finance which was the most important objective of the developing countries, the developed countries had to be even more prudent because the international monetary system, which is the very foundation of the world economy, was groping for a way to reconstruct itself. The developed countries attached great expectations to the multilateral trade negotiations scheduled to start in 1973 as a trump card that could prevent the spread of protectionism and expand the world economy. However, they had only begun to study the procedures for the New Round of International Trade Negotiations by the start of the third UNCTAD. Ultimately, various developed countries, including Japan which accepted the target of 0.7 per cent for ODA, could manage to express their political will on the aid problem which could be handled within the bounds of their own efforts. However the world economic situation was too fluid for the developed countries to make concrete commitments on problems that required adjustment of interests among them, such as the problem of monetary and trade systems mentioned above in (ii) of the objectives of the "Lima Action Program."

Anyhow, as a result of the discussions by 132 countries for about 40 days, the conference adopted 47 substantial resolutions. About two-thirds of the resolutions were unanimously adopted, and they can be regarded as the expression in written form of the world's consensus at the present stage on various aspects of the "North-South problem," irrespective of whether they could actually be translated into action or not. However, as is evident from the process of preparing the resolutions, they were products of compromise through negotiations and their contents are far from meeting the demands formulated in the "Lima Action Program." It is expected that the developing countries will reiterate their arguments in all forums hereafter. Especially, the resolutions, in which agreement was reached on the establishment of the Committee of Twenty in the IMF in connection with international monetary reform, as well as on the need to take concrete measures to secure the interests of the developing countries in the New Round, have guaranteed the developing countries' right to speak .and are likely to exert a far-reaching influence in the future.

As for the developed countries, they were able in the past to handle the "North-South problem" within the UNCTAD in the form of collective bargaining between the North and the South, however, it is likely that the interests of the developed countries will become even more complicated and adjustment among them more difficult because the developing countries, as a heterogeneous entity, will take part in the discussions on important problems over which the developed countries cannot easily adjust their own interests among themselves. In other words, not only the United Nations but also GATT and the IMF which discuss international economic problems including those of the developing countries, will always have to take the interests of all developing countries into consideration in the process of settling their problems. In this sense, the third UNCTAD clearly showed that the "North-South problem" has an aspect of the process of adjusting interests between the North and the South in addition to that of development cooperation.


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