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APPENDIX D

STATEMENT BY THE DIRECTOR-GENERAL

Mr Chairman,
Honourable Ministers,
Excellencies,
Distinguished Delegates and Observers,
Ladies and Gentlemen,

I am delighted to welcome participants to the Ninety-fifth Session of the Council. I do so with particular warmth, since, at this precise moment in time, my colleagues in the Secretariat, I myself and the whole of FAO are expecting much of you, your discussions and your work.

The present session is being held just as spring is turning into summer, and I am not merely referring to the calendar. This is a particularly important phase in the life of the Organization. The preparatory work of spring is nearly over: the ears of grain have formed and are starting to fill out; the blossom on the fruit trees, the olive and the vine is just giving way to the young fruit. It is now summer's task to turn the grain golden and to ripen the fruit. Similarly, FAO has reached the point where almost all the preliminary work has been concluded: the reports of the major Committees (on agriculture, fisheries, food security, plant genetic resources, etc.), the Summary Programme of Work and Budget, accompanied by the opinions of the Programme Committee and the Finance Committee; the expert contribution to the Review of FAO, on which the above Committees still have to say their final word. It is now up the Council to clarify and to revitalize these major questions in the calm sunshine of its wisdom and to bring them to maturity so that they are ready for harvesting - I mean, for the decision of the Conference.

Mr Chairman, your agenda is so full than I can hardly mention all the items in my statement today, even if I restrict myself to the most important ones. Moreover, I do not wish to anticipate your discussions and I shall therefore limit myself to mentioning a few questions to which I attach particular importance.

The first, and one of the most alarming, is of course the state of food and agriculture. I say it is alarming because in 1988, for the second year running, the world consumed more staple foods than it produced. This was, as you know, mainly due to the fact that the United States and Canada experienced their worst drought in half a century. The deficit was only met by drawing on stocks. This means that, at the opening of the 1989-90 season, reserves represent barely 17 percent of projected requirements for this period. This is just about the bare minimum we believe essential to guarantee world food security.

The 1988 harvests have, on the other hand, been mainly good in developing countries. In Africa, the improvement was largely due to the fact that locust infestation has been almost entirely eliminated. This battle has been won thanks to the unceasing efforts on all sides in recent years. The infested countries have themselves worked desperately hard; donor countries and organizations have rivalled each other in generosity; lastly, I am proud to say that FAO has played a leading role in mobilizing world opinion, repeatedly bringing together donors and affected countries, coordinating the organization of relief at the source and in the field, and providing the
countries under attack with effective technical assistance. We can now draw breath, but without relaxing our vigilance, because this insidious enemy, the desert locust, can never the wholly conquered. To paraphrase the well-known saying, we have won a battle but we have not won the war. Indeed, a few new outbreaks have been spotted in recent weeks, and we have just held a meeting on the subject here in Rome.

This victory, combined with other favourable conditions, has had a very positive effect on agricultural production in Africa. Many low-income, food-deficit African countries have brought in excellent harvests. As a result, the average consumption of food staples in many developing countries has improved. Obviously, there is always the other side of the coin; bumper harvests have led to problems of surpluses for about twenty African countries. In several of these countries, the price of cereals on local markets has fallen to levels which will discourage farmers from sowing in 1989. Once again, we have the vicious circle; "surpluses-falling prices-reduction in sowing".

At the same time, the decline in North American production made prices shoot up on international markets, particularly those of wheat and coarse grains, thus swelling the import bill for deficit countries. Even if, as foreseen, the cereal imports of developing countries increase by only 3 million tons because of the good harvests I have just mentioned, the cost of these imports may well rise by some 5 thousand million dollars. At the same time, food aid is expected to fall by about 25 percent. It is of course the food-deficit countries that will be hardest hit by this situation, despite the fact that many of them have low incomes and are already staggering under the burden of debt. In 1988 per caput consumption of staple foods fell in 44 food-deficit developing countries, of which 25 are low-income countries. It is once again on the shoulders of the poor that the weight of suffering and privation will fall most heavily.

Production in 1989 promises to be better. For cereals as a whole, an increase of 140 million tons is expected; but of course uncertainty continues. Even with the best scenario, it now seems certain that production will not rise enough to permit resumption of normal consumption trends and replenishment of stocks to the minimum volume required for food security. Worldwide food security will remain precarious throughout the 1989-90 season. This is all the more worrying since, in addition to the reduction in food aid just cited, the International Emergency Food Reserve is almost exhausted. As a result of the commitments it had to undertake in 1988 because of disasters and other crises, the Reserve was nearly empty at the beginning of this year. Fuelled from one day to the next, it has considerable difficulty in meeting needs, so its resource base should be strengthened and made more predictable. Similarly, interventions by the World Food Programme and various bilateral donors to encourage local purchases, triangular transactions and barter agreements will not be enough to put the situation right. The international community will have to do much more, at all levels.

The large-scale structural adjustment programmes that many developing countries are obliged to accept are yet another threat to their food prospects. These programmes often lead to a sharp deterioration in the living conditions of the poor, while their positive effects remain uncertain and are slow to materialize. This is why measures must be designed to check the immediate negative effects of structural adjustment on the least favoured, while ensuring that the latter are not excluded from any growth resulting from the adjustment efforts.

FAO is ready to cooperate to the utmost in taking the social factor into account in adjustment programmes, as in all action by the international community to help the Third World pull through the critical phase and begin its convalescence.

Progressing from the critical phase to convalescence; I would gladly use these words to describe the financial situation of the Organization.

So far this year, the payment of both current contributions and arrears is considered unsatisfactory. Thirty-six Member Nations have paid in full, and it should be mentioned that several countries with serious financial problems have made arrangements to meet their obligations. Others, unfortunately far more numerous, have not been in a position to do likewise and have still paid nothing this year. Our two largest donors - whose contributions together account for 38 percent of the total budget - are in this situation. We know neither when nor how they intend to settle their obligations; and the arrears of the largest contributor for the years 1986, 1987 and 1988, amount to more than 78 million dollars. In these circumstances we are absolutely not in a position to say how the cash flow situation will develop between now and the end of the year: everything depends on the remittances we receive.

I now have a few more figures on the arrears, and I think you would be interested to hear them. This is concrete, not subjective. Total arrears, including those for 1989, amount to 250 million dollars. Four countries alone account for 188 million dollars out of this figure, and they are not the poorest ones either.

As you know, we reduced our expenditure by 25 million dollars in 1987 and by 20 million in 1988, through "savings and programme adjustments", to use the hallowed phrase. What a euphemism, and what bitter realities lie behind it! In fact, these are not savings but rather curtailments of our programmes, including programmes of fundamental importance for our Member Nations. Despite all our efforts to cushion the impact, we have been and still are unable to forestall the adverse consequences of these cuts, not only in the present but also in the future. You can see for yourselves. We have left 200 posts vacant and have had to cancel dozens and dozens of publications and meetings. We have sometimes had to dismantle with our own hands the enterprises we had patiently prepared and whose implementation had brought a wealth of hope. To give only one example, the unavoidable reduction in assistance to AGRIS and CARIS member countries and centres risks dislocating these world networks, and jeopardizing for a long time to come the progress laboriously achieved in recent years. Similarly, with the suspension of our major reviews - CERES, Unasylva, World Animal Review, Food and Nutrition, and so on - our Organization can no longer make its voice heard by the general public or in the universities, ministries and nerve centres of development activities. Along this path, however, as along that of virtue, failure to advance means falling back.

This is why I consider extremely unfair the remarks one occasionally hears, along the following lines: "There was a cut of 25 million dollars in 1987, and 20 million in 1988, but the Organization has survived and continues to do good work. That shows it is always possible to make savings." This is unfair, Mr Chairman. This attitude reminds me of the
peasant who decided to save more and more on his donkey's feed, until he gave it nothing at all, and who complained to his neighbours, "Just when it was beginning to get used to eating nothing, this stupid animal has gone and died on me!"

The slight improvement in remittances that I mentioned just now allows us to hope for a certain revival in 1989, a sort of budgetary convalescence. But in fact, we have still had to whittle away some 15 million dollars from this year's budget, because of unforeseen expenditure arising from binding decisions by the United Nations General Assembly and the International Civil Service Commission. These concern rises in various items of staffing costs, particularly post adjustment, education grant, and the employer's Pension Fund contribution.

To mention one last financial point and to show how fragile our convalescence still is, I will add that we have to settle bills amounting to 100 million dollars. If we are to honour them, it is imperative that countries in arrears with the payment of their contributions, including the major donor, do all they can to meet their obligations as soon as possible, as our governing bodies have repeatedly urged them to do. The future of FAO is at stake.

We are shaping the future of the Organization as we prepare the Programme of Work and Budget for 1990-91. When I say "we", I do not mean just the Secretariat. In fact, following the guidelines set out by the Conference and the decisions you took last November, the governing bodies are participating more and more closely in its preparation. At their Joint Session in 1989, the Programme and Finance Committees examined the first draft of the Programme of Work and Budget, which I had submitted to them in line with this decision. They were able at that stage to give their opinion on priority fields, increased costs and budget projections. On this basis, I prepared the Summary Programme of Work and Budget which the two Committees reviewed last month and which is now submitted to you with their comments. They recommend its approval. I shall listen with much attention and interest to what you have to say about it, and I shall attach great importance to your opinions when preparing the integral and definitive version on which the Conference will finally pronounce.

As you can see, the proposals before you represent not only the fruit of analyses by the Secretariat of the priority needs of Member Nations and its aspirations concerning the resources with which it must be provided if it is to meet these needs. They also reflect the points of view expressed by Member Nations from all corners of the earth, expressly chosen by you to ensure that, in both the preparation and the execution of programmes and budgets, the wishes of the Conference are scrupulously respected. Now more than ever, the scale and gravity of the problems to be solved require absolutely that the Organization speak with one voice. This is why, from the start, the Programme of Work and Budget for 1990-91 was aimed at "helping Member Nations to unite in a consensus for [its] approval", as explicitly recognized by the Programme Committee and the Finance Committee. The two Committees "expressed the hope that this consensus would emerge in the very near future".

For my part, I sincerely believe I have spared no effort to make this consensus a reality. As regards the budget level, I was at first strongly tempted to propose an increase that would have regained the ground lost after the 45 million dollars were lopped off in 1987 and 1988. On reflection, and despite the urgency of meeting the needs of Member
Nations, I decided against this since such a proposal would have entailed a rise of nearly 5 percent. This would not only have been badly received by the major contributing countries who are in genuine difficulties, but also and above all it would have meant an excessive burden on developing countries, many of which are already crushed under the weight of debt.

In the end my proposals amount to a net increase of 5.5 million dollars, or 1 percent. This a symbolic rise, dictated by a concern not to remain absolutely stagnant when worldwide food and agricultural problems are becoming increasingly vast and complex, and the population on our planet is expanding every year by about 90 million. I know all too well that the increase requested is not enough to meet needs, particularly since rising costs are likely to cancel it out or even lead to negative growth.

As a result of the economy measures adopted in 1988-89, I am not asking for any funds to cover additional costs for consultants, travel and reclassification of posts. These amount to about 3 million dollars, which we intend to absorb; if these costs were to be deducted, the net increase proposed would be brought down to 0.45 percent, even more of a token figure.

This has been my trend of thought in preparing a Programme and Budget marking a certain return to normal. I have done everything, sometimes with a heavy heart, to reach a reasonable budget which I devoutly hope will gain general approval and open up a new period of stability. This thinking may be summarized as follows; the desire for an increase in line with needs, tempered by a concern to avoid adding to the burden on Member Nations; fear that increasing costs may eventually lead to negative growth; the wish to reach a consensus. I was surprised to see to what extent this line of thought reappears in the measures taken by the Programme and Finance Committees, particularly as expressed in the Report of the Joint Sessions in January-February and May 1989. I see this parallel as a happy omen for understanding and general agreement on the proposals that will eventually be submitted to the Conference.

As to the Review of FAO conducted by the Programme and Finance Committees with the aid of experts, you will be given a progress report on this study. I do not want to dwell too long on a matter which is still developing, but merely to share with you some preliminary thoughts.

At their Joint Session to study the experts' report, the two Committees worked in perfect harmony. After the opening session, I refrained from attending the meetings, since I wished to respect the silence needed to work in a calm and serene atmosphere. My task, as expressly requested by the Conference Resolution, is to comment on the conclusions of the Programme and Finance Committees. Since the latter will not be adopting their final report until their September Session I cannot, until then, comment on a document which does not exist. I cannot start preparing my own report for the November Session of the Council until I have received the report from the Committees. I need hardly say that I hope with all my heart that the work of the Joint Session in September will take place in a like atmosphere of serenity, and that the Committees will reach general agreement on the proposals to be submitted to the Conference.

Nevertheless, I believe that I must make a few points at the present time. In all probability, some measures already seem desirable to the two Committees. Without anticipating their conclusions, logic will surely dictate recognition and consideration of the fact that the implementation of new measures will require additional financial resources. It would be
unrealistic to imagine that FAO can be strengthened and made more able to meet the needs of Member Nations without giving it the resources to do so. Our governing bodies certainly understood this when, in 1974, the World Food Conference stressed in its recommendations the need to reinforce FAO. As you will remember, these recommendations were the origin of our Global Information and Early Warning System, the Food Security Committee, etc. How did our governing bodies react? They approved a 1976-77 budget with a programme increase of 23 percent compared to the 1974-75 biennium - 31 million in constant dollars.

I am asking much less, but it must be borne in. mind that the Conference should perhaps envisage - as the regulations moreover provide - an additional allocation for the implementation of future recommendations. We have made every humanly possible effort to combine zero budgetary growth with expansion of technical activities. We have managed this through a sort of acrobatic act over several biennia and my making drastic cuts in support services. The Administration and Finance Department and the Department of General Affairs and Information were the first to suffer the results of action which brought administrative costs down from 24 to 17 percent of the budget. am being objective, not subjective. These are accurate figures, recognized by the Finance Committee. But the limit has been reached, and I must call attention to the need to provide resources to meet the tasks we have set ourselves. I shall therefore be submitting to the Joint Session of the Committees in September an estimate of the cost of certain measures envisaged as part of this exercise. I must admit that some of these measures would not cost any money, but others certainly would.

The future of FAO depends on the resources at its disposal to meet new and increasing needs. Let me quote one example, unfortunately very serious. I mean the sudden appearance in North Africa, more precisely Libya, of a fearful insect pest hitherto found only in the western hemisphere. This is an insect which attacks wild animals, livestock and even human beings, as indicated by its Latin name, Cochliomya hominivorax. The screw-worm fly is well known to stock-raisers in the Americas. It is a fly that lays its eggs in the open wounds or even the tiniest scratches of warm-blooded animals; the larvae burrow into and extend the sore, attracting new egg-laying females. The infection spreads and can lead to death. It has already done serious damage to animals and, alas, to human beings in Libya. Well-endowed by nature for both travel and propagation, the fly could easily spread over the whole of North and Northwest Africa, the Near East and Mediterranean Europe.

To ward off this very great danger - which could prove even more horrendous than the desert locust - FAO immediately called for measures to help countries at risk. Funds have already been deposited. But much more money and also widespread international cooperation is needed to eliminate this scourge. Although, on this side of the Atlantic, we know next to nothing about screw-worm fly control, the United States and Mexico have an efficient but very expensive technique of insect sterilization. We shall therefore be making the same efforts as we made for locust controls: mobilizing public opinion, appealing to donors, coordination and action. Our Organization alone, Mr Chairman, is equipped to play this role. I shall of course keep the Council informed of the latest developments. Bearing in mind that the eradication of a mere fly is going to cost tens and even hundreds of millions of dollars, the need for resources in line with needs becomes blindingly obvious.

We are not dealing with inert but with living matter, and with human beings. In view of population expansion and the persistent economic crisis in the poorest (often debt-strapped) countries, it must be recognized that there can be no lasting solution without an expansion of our activities and therefore of our resources. This idea has, however, been challenged since 1983. I ask you, how can anyone seriously discuss the future of an organization if it is to be condemned to non-growth? Reasonable and realistic growth must be assumed.

The FAO Council has characteristically taken into account and in its stride the realities of the moment. One of the most striking realities of our time is the creation, expansion and consolidation of the European Economic Community. It seems now that the Community, which has long been represented in our governing bodies by observers, would like to become a full member of the Organization.

This is an honour for us, and one we can only see as a tribute to the value and importance of our activities. At the same time, it is clear that a question of this order, for which we have no precedent, raises a host of problems demanding thorough study. The request reached the Council too late for detailed analysis of all its implications. As indicated in the document submitted to the Council on this matter, you may perhaps wish to put this item on the Conference agenda for their decision - not only, I think, for this particular case, but also in general: how should such requests from inter-governmental organizations be treated? At all events, my colleagues and I are of course ready to carry out the instructions of the Conference or the Council.

The problems thus posed will no doubt require a considerable amount of legal work. There is another legal question which causes us serious concern, namely, the Organization's immunity from jurisdiction in Italy. This problem has long cast a shadow over our excellent relations with our host country, but we thought we had reached a modus vivendi. Now, however, an action brought against FAO in the Italian courts is putting forward the idea that working relations between the Organization and its General Service staff fall within the competence of these courts, and that Italian labour laws should be applicable in this respect.

The report of the Programme and Finance Committees devotes a section to this affair. I feel it my duty to mention it to you, since it challenges the operations of FAO and the status of all the organizations in the United
Nations system.

If the action went ahead, in other words, if Italian law were deemed applicable to certain categories of FAO staff members, we would find ourselves in an untenable situation in which administration of the Organization would become impossible. The authority of Member Nations and that of the Director-General would be undermined. An inadmissible discrimination would be established among our staff. One Member Nation alone could make its own decision as to the employment conditions of most of our staff, and modify the financial burdens on the Organization just as it pleased. We cannot function if we have to follow a national system, whatever it may be.

This is true for all the organizations in the United Nations family, for which the status of international civil servant is fundamental. There cannot be any United Nations organization without the status of international civil servant. This is what ensures the independence, integrity and commitment of UN staff. It must be the same for all categories. Any attack on this status is an attack on the international nature of our organizations.

When FAO accepted the offer to establish itself here, it did so on the basis of guarantees written into one of the laws of this country. Can these fundamental guarantees be challenged after 38 years? The Italian Government, which has backed us so faithfully over all these years, cannot fail to share our anxiety and to seek in its wisdom for solutions that preserve our status and our ability to act for the good of the international community. In this conviction, I appeal to it, and I hope to meet as soon as possible with the Minister of Foreign Affairs of our host country to examine possible courses of action.

In reply, the Minister of Foreign Affairs delegated his Secretary-General to come and see me a few days ago, together with Mr Valenza, the Ambassador of Italy. We had a very friendly talk, covering all aspects of this affair. I am pleased to be able to tell you that the Italian Government is fully aware of the extent of the problem and its far-reaching ramifications for all international organizations in Italy and for the United Nations system in general. He will continue his endeavours to ensure that the immunity enshrined in the Headquarters Agreement, which is both an international treaty and a law of the Italian Republic, is fully respected. The Government of the host country is prepared to negotiate any amendment to the Headquarters Agreement which may prove necessary in this respect.

Mr Chairman, against this background I turn now to the Council and ask it to give me the benefit of its wisdom in seeking a solution that will preserve the rights of the Organization without injuring our host country. I am determined to do all in my power to avoid any rift which might jeopardize in any way the relations of friendship, confidence and exemplary cooperation we enjoy with the country that has sheltered us for nearly 40 years.

On this delicate question, as on all those I have mentioned today, I fervently hope that Council discussions will take place in a climate of calm, serenity and tolerance. It is normal and indeed healthy that all opinions are not exactly the same on every point in an assembly which, like your own, represents all parts of the world. The purpose of our big meetings is precisely to enable everyone to know and understand the others' point of view, so that all these points of view can be brought closer and lead to decisions taken in common, in a consensus respecting the diversity of concepts and sensibilities.

In hoping that a consensus may be reached on important questions, am I chasing moonbeams or cherishing illusions? Not at all, and there are plenty of positive examples. I shall mention only two, which seem to me all the more striking since they concern delicate problems.

In the first place, the Committee on Agriculture, which includes all Member Nations, reached an agreement on the inclusion of the so-called "prior informed consent" clause in the International Code of Conduct on the Distribution and Use of Pesticides. As you know, the idea was to ensure that
pesticides banned or subject to severe restrictions in exporting countries could not be shipped to importing countries without the latter being informed of the banning or restrictive measures and without their being able to make a free and fully-informed decision to accept these imports. This is a big step forward. This would appear to be simply a matter of common sense, but the question involves so many divergent interests that it could have turned into a real apple of discord. However, the Committee on Agriculture, having surmounted the remaining difficulties, has recommended that the Council endorse the proposed modifications with a view to their final . adoption by the Conference.

The same spirit of consensus marked the work of the Commission on Plant Genetic Resources, which held its Third Session in April 1989, The idea that these resources, the common heritage of mankind, should be preserved and freely available for use, seems to lead logically to recognition of the rights of farmers who for generations have conserved and patiently improved them. Here again, clashes of interest hardly boded well for an agreement. Nevertheless, the need to control unauthorized collection and to ensure for the farmers of today and tomorrow a fair share of the profits was the overriding factor in the decision of the Commission, concerned both to ensure that justice was done to the farmers' past contribution and to ensure its continuation. By consensus, the Commission requested me to submit to the Conference, through you, a draft resolution supporting the concept of farmers' rights.

Much remains to be done to put these important initiatives into practice. FAO will help in every way it can. As of now, we feel strongly supported in our efforts by these two emblematic instances of open-mindedness towards the reaching of consensus. Yes, Mr Chairman, despite all difficulties, consensus is possible if we only want it: here is the concrete proof. I am sure that the Council, without renouncing the diversity which is its strength, will wish to take its place in the chain of consensus which leads to fruitful decisions.

No ear of grain is identical with another. This does not prevent the harvester putting them all together in one sheaf, which will eventually end up as the daily bread that feeds us all.

To wish, as I do with all my heart, every success for your work, is to express the hope that the Council will contribute to the ripening, as I said at the start of this address, of this abundant and generous harvest so badly needed by humanity.

Thank you.

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