Speech by the Former President of the Kyrgyz Republic Roza Otunbayeva at the 55th Session of the UN Commission on Social Development, February 1, 2017

Speech by the Former President of the Kyrgyz Republic Roza Otunbayeva

at the 55th Session of the UN Commission on Social Development,

February 1, 2017

Roza Otunbayeva, former President of the Kyrgyz Republic

 

Excellencies,

Distinguished Guests,

 

I want to start by thanking for the privilege, on behalf of the Club de Madrid, to lead this jointly sponsored discussion on “Strategies for eradication of poverty to achieve sustainable development for all.” Let me thank the UN Commission for Social Development for long term and fruitful cooperation with the Club de Madrid to enhance the quality of global debates on key social and economic issues, and for guiding worldwide leaders, communities, citizens and organizations in processes of policy and decision-making.

Two UN’s Sustainable Development Goals - Goal 1 on elimination of poverty and Goal10 against inequality - are bound tightly together with two ambitious goals adopted by the World Bank in 2013: end global extreme poverty and promote shared prosperity in every country in a sustainable way.

According the World Bank data “In 1990, when the world population was 5.2 billion, 36 percent of the world lived in extreme poverty. Today – with 7.3 billion people -- an estimated 12 percent live in poverty. Over the past 25 years, the world has gone from nearly 2 billion people living in extreme poverty to fewer than 1 billion.” These facts before 2015 gave a base to Bill Gates’s firm assertion that by 2030 poverty will be gone forever. Muhammad Yunus is of the unshakable belief that poverty by this time will be placed and demonstrated only in the Museum.

 

But 1 billion is still a giant number. It is more than the population of some continents!

 

“What is poverty? Poverty is 2.5 billion people not having access to financial accounts. Poverty is 1.4 billion people without access to electricity. Poverty is also putting children to bed without food. And poverty is not going to school because everyone in the family needs to earn a few cents each day.”

 

Who is poor, who is he or she? The Poor are rural, young, poorly educated, mostly employed in the agricultural sector and live in larger households with more children.

According to Oxfam research: “Seven out of 10 people live in a country that has seen a rise in inequality in the last 30 years. Between 1988 and 2011 the incomes of the poorest 10 percent increased by just $65 per person, while the incomes of the richest 1 percent grew by $11,800 per person – 182 times as much.”

Women, who are often employed in low pay sectors, who face high levels of discrimination in the work place, and who take on a disproportionate amount of unpaid care work often find themselves at the bottom of the pile. On current trends it will take 170 years for women to be paid the same as men.

Today’s debates on poverty eradication, based on intensive research by scholars and institutions, such as the latest reports by WB, EBRD, and Oxfam, are a rich, professional resource, and based on massive work, evidence and initiatives on the ground. The Club de Madrid, the network of over 100 former heads of State and Heads of Government that came into office through a democratic process introduced its vision of Shared Societies exactly 10 years ego and we believe that poverty reduction is not only a question of social protection and money transfers, though that is important. To be effective it requires a Shared Society where everyone can play their full part, seek to fulfill their aspirations and share the responsibility for the development of that society. We believe in societies that are not owned by any one sector or one group of society but belong to everyone. If groups are marginalized, they will be disadvantaged and poor. During the past decade of activity very distinguished political personalities, members of the Club, met with many people in all continents, talked to the leaders of the governments and states, including new emerging countries, sharing with them the vision and principles of the Shared Societies Concept: a country will be successful not only when it occupies a high position in all sorts of economical competitive lists, but when no one in the society will be left behind in the development process.

Therefore we argued throughout the Post-2015 process for a Shared Societies Approach: inclusion, participation and ensuring no one is left behind and all can realize the future they want. The Members of the Club de Madrid were encouraged that those principles be retained throughout the SDGs and now look to see that they are applied in the practice of implementing the Goals. Otherwise we will fall short.

A member of the Madrid Club, the former President of Finland Martti Ahtisaari says: after almost six decades of working in the international arena I am firmly convinced that the fate of our societies lies in equity. Scandinavian countries have offered to the world an extremely successful model of egalitarian society. They have demonstrated the efficiency and wisdom of the truth that the point is not only how to create wealth, but also how to use it, to build a just, fair, sustainable society.

The World Bank operates with the terms Shared prosperity and Social Inclusion: Poverty can be reduced through higher average growth, a narrowing in inequality, or a combination of the two. Achieving the same poverty reduction during a global slowdown in growth requires even more equal income distribution, efforts to foster growth need to be complemented by equity-enhancing policies and intervention.

Inequality of opportunity in terms of education, jobs and income became a focus of the 2016-2017 Transition report of the EBRD. Transition for all: equal opportunities in an unequal world. Reform processes can get stuck, or even go into reverse, in the absence of sufficient inclusion. Without inclusion, pro-growth reforms are not politically sustainable. President M.Ahtisaari is absolutely right: GDP and Democracy are not enough for creating wellbeing in nations. They are perhaps necessary but not sufficient conditions for wellbeing. The critical questions are how the prosperity is shared, how democracy is used, and for what purposes.

Summarising all these studies and discussions based on the best global knowledge now available on how to meet these challenges, and outline a strategy to end extreme poverty we have learned three words: Grow, Invest, and Insure. And these goals can be best achieved in the context of a Shared Society.

1) Economic growth of every country is and remains the solid source of its poverty eradication. The best example is China – over the last 30 years the country has helped 500 m people out of poverty. 60 m still living in poverty are on the current agenda of the government. The heart of this endeavour’s indisputable success lies in a construction of good transportation infrastructure. New or improved rural roads reduce transportation costs, facilitate the relocation of labour, foster the diversification of livelihoods, enhance access to markets and services, and promote human capital investments. The World Bank’s 2016 Report “Taking on inequality. Poverty and Shared prosperity” makes an excellent presentation of investment needs in rural roads along with communication and power infrastructure. We recognize the timely importance and a strong future for the recently established Asian Infrastructure Investment Bank. Landlocked countries with a full basket of poverty and income inequality problems - states like Kyrgyzstan - need it today even more.

2) Investment in people through education and health in order to build equal opportunities for everyone is an integral part of our Shared Societies concept. Among the strong evidence-based high-impact inequality reducing strategies known today, I will pick Early Childhood Development, which is a relatively new sector of Education, even for developed countries. It is based on multilateral ongoing studies and practices. “Invest in child as much and as early as you can” became a motto of millions of parents, governments, institutions. The book of Masaru Ibuka, the founder of Sony Corporation, “After three is late”, is extremely popular in our part of the world. His belief was that ECD produces powerful long-term economic benefits for countries as well as individuals. Kindergartens were an integral part of socialist industry: mothers, working day and night, put children into the public Kindergartens; preschool education was by the standard of those years exemplary. Central Asian countries have a huge shortage of Kindergartens: only 23% of preschool age children in my country are able to go to the regular Kindergartens, including private and also newly established community based institutions (CBK). They may also undertake 400 hours preparatory classes to be ready to study in the elementary school. In fact preschool enrolment rates among the poorest quintile are less than a third of the rates among the highest quintile. My Foundation has run for three years the summer Kindergartens high up in the remote mountain pastures for the shepherds’ children, a very vulnerable group of agricultural workers. I am a firm believer that the effects of intervention in this period will last a lifetime. Children from poor households should receive sufficient early development support, just like their wealthier peers. Last summer we worked with more than 3 thousands children in 87 camps in the mountains. We do believe that investing in ECD among underprivileged children can help prevent the emergence of inequalities in cognitive development and health status and, by enabling a more successful accumulation of human capital among individuals who would otherwise lag throughout the rest of the life cycle, improve future earnings and life chances.

We have to consider smart education and health policies, especially for women and children. Entering the digital economy we must support and enable people to adjust to a fast-changing world.

3) We must ensure the sustainability of the levels of equality achieved, provide social cohesion, political and social stability. We must ensure fair sharing of national wealth and promote fair burden-sharing. This is the best policy to prevent and reduce poverty, stop inequality.

Within our concept of Shared Societies we have identified 10 areas of policy commitments that complement one another towards achieving a Shared Society. We are clear about what has to be done, we have a whole Portfolio of Policies and Practices that document the ways in which it has been done by others. And because the process of building social cohesion usually starts at the top we call on all leaders to endorse and act according to these 10 Commitments. We do not say that Governments have to do it all but they have to create an enabling environment which helps communities to do things for themselves. Governments, and the international community, should build systems to protect against conflicts, disasters and the rapid spread of disease. Unfortunately it was not the case in the post-communist world after enormous transformations and changes in 1987-1992, when governments attempted to harness the destructive forces of change and build social and economical institutions that can best use all the possibilities the new situation opened, and make sure that people can find themselves and use all their capacities, knowledge and skills. Until today neo-liberalism is the main economical theory applied in the major part of our area. According to it, wealth accumulated at the top will trickle-down to the rest of society, and there is no need for government involvement. Oxfam’s research has revealed that over the last 25 years, the top 1% have gained more income than the bottom 50% put together. Far from trickling down, income and wealth are being sucked upwards at an alarming rate.

After a quarter of a century of experience of living in a system which brought inequality and protracted poverty, I join my voice with the IMF who identifies that the direct cause of inequalities is neoliberalism. Our current extreme, unsustainable, unjust situation is the result of the very design of our economies and the principles of our economics. The super-rich have mushroomed over the last 30 years, billionaires in every country, the widening gap between rich and poor, are the human face of the rapid increase in the concentration of wealth and increasing return from capital. Isn’t it our general vision, that countries that have attracted a bunch of giant worldwide businesses must be the most successful? And therefore we are ready to give them any tax holidays, and tax breaks they want. Every country advocating trickling-up economics has its own Forbes list of the richest people. Governments, blindly led by the open market doctrine, continue the privatization of former public services, from major transportation to hospitals. And the most tragic in our development is when the super-rich can buy the political outcomes they want, seeking to influence elections and public policy. Today it is not just an assumption, it is a reality in many countries. The recent Oxfam research report “An economy for the 99%”, must be, to my mind, translated into all languages. It opens eyes on the inner mechanism of enrichment processes, how fortune multiplies, how the rich dodge tax in offshore havens, avoiding criminal prosecution in the most developed countries, buying their affluent properties. The Report is full of striking numbers and cases of the incompatibility of riches and poverty in the world. It helped me to understand why we can’t succeed in my and other countries to foster the cooperative movement, to build and strengthen social enterprises, how our law makers delay with the scaling up of taxes on land and property in first instance.

In light of the lack of progress and mindful of the challenge to bring about the changes embedded in Agenda 2030, last year the Club de Madrid established a working group to look at the link between Shared Societies and Environmental Sustainability in the context of the Sustainable Development Goals. It is just finishing its report and it supports the view that the current social development paradigm and the global economic system are not fit for the purpose of implementing Agenda 2030, and a new more effective paradigm must be based on inclusive participative decision making in Shared Societies.

Responsibility-sharing

Solid academic publications, courageous investigative journalism, cooperation with progressive business companies, the tireless efforts of the international community on poverty eradication and elimination of inequality, in the context of developing Shared Societies, should be supported by the political will and decisive actions of every heavy-weight political alliances. First of all I mean G-8, G-20, EU, BRICS and regional political unions. They must use their influence, and all means at hand to put transparency measures on tax in offshore-havens, in the worldwide banking systems, master new tax policies, new business models, protect wage levels, and promote decent work for millions. Such activities are especially important in a new anti-globalization atmosphere that we live in.

I would equate the role and importance of these political and economical unions with the role of giant modern cities – megapolises, which like locomotives of development, absorb all jobless, people in search of work from surrounding regions, mostly from the countryside. Their indisputable role in poverty eradication has been widely recognized and fairly praised. These political alliances must lead, pursue and implement the UN SDG agenda 2030 worldwide, in their regions and in their own country offering to member-states the best practices, training, and support.

We have concerns with latest intentions of the US President to cut US contribution to the UN. Pledges of developed countries given to MDGs – to contribute 0.7% of their gross national income (GNI) to developing countries, mostly to fight poverty and build equality – never have been met, except by Scandinavian countries. During the last decade the majority of donor countries do not comply with their pledges, using the excuse of the world slowdown. Meanwhile global challenges need decisive and weighty responses from the international community. The global South badly needs much bigger portfolios and permanent, nonstop activity of the Global Education Foundation (GEF) to help to improve infrastructure of shattered schools across the globe; build new facilities for Kindergartens; help families with decent nutrition, starting from babies to the pupils of the elementary schools; provide students with text books; publish books, train teachers, support sending teachers to remote places, where they are in great need. We hope that aid to people will be provided by the aid community, in the first instance to the children, despite other burning issues on the international agenda. And the Shared Societies Concept tells us that this has to be done in partnership and consultation between countries and between donors and the ultimate recipients of aid. The US based Global Financial Integrity (GFI) and the Centre for Applied Research at the Norwegian School of Economics tallied up all of the financial resources that get transferred between rich and poor countries each year: not just aid, foreign investment and trade flows but also non-financial transfers such as debt cancellation, unrequited transfers like workers’ remittances, and unrecorded capital flight. Result was stunning: the flow of money from rich countries to poor pales in comparison to the flow that runs in the other direction. In 2012 North-South transfers estimated $ 1.3 trillion, South-North almost 3 times more $ 3.3tn. Since 1980 $16.3 tn has been drained out of the global south. To compare: $16.3 tn is roughly the GDP of the United.

How to assess poverty

  

The goal of sustainable development is to end poverty in all its forms everywhere and to promote the wellbeing of all. The SDGs should be used to set clear metrics for government performance to the year 2030. We should insist on significant, measurable progress on reducing poverty, inequality by 2030, with clearly set milestones.

As a member of the Leadership Council of the Sustainable Development Solutions Network (SDSN), I want to draw your attention to the SDG Index and Dashboard which has been developed together with the Bertelsmann Stiftung. SDSN is led by the Columbia University Professor Jeffrey Sachs, who is the official adviser to the previous, and now to the new, SG on this matter.

It is not an easy task for governments to start to implement SDGs, which pursue strategies to combine economic development, social inclusion, and environmental sustainability. Goals 1 and 10 out of the 17 SDGs will be over time under constant scrutiny in order to assess progress. We must identify priorities, determine weak points in implementation, and stay on track towards the goals. The SDG Index creates for the first time a measure of the SDG starting point in 2015 at the country level. It will help every country identify priorities for early action, understand the key implementation challenges and identify the gaps that must be closed in order to achieve the SDGs by 2030.

Very important point - poverty standards. Currently, the extreme poverty line which is the poverty standard set by the Post-2015 Development Agenda is still $1.25 a day.

I think this figure is too low to assess the multidimensional nature of human development. The average poverty line of 15 least developed countries was $1.25 a day in 2012, and the median of the poverty lines of 75 countries was $2 a day. After that, the IFIs set the extreme poverty line of $1.25 a day. It is obviously not reasonable for the SDG still to use the poverty line of $1.25 a day set in 2008 for the year 2030.

New ways of poverty alleviation should be explored

Poverty alleviation and sustainable development supplement each other. Poverty alleviation covers many fields such as health, women protection and environment. We should pay more attention to the combination between poverty reduction goals and other SDG associated targets, including the combination of poverty reduction with climate change, education, gender issues and so on. On the one hand, we can attract more international assistance and international cooperation resources for the fields other than poverty reduction (such as environment, education and health) to provide financial and intellectual support for domestic poverty reduction. On the other hand, we can fully achieve poverty reduction under a broader framework of international development. In theory, the eradication of poverty is a kind of public service that should be provided by national government and a kind of global public service where joint global efforts are required.