October 3, 1984

October 3, 1984 | Backgrounder on International Organizations

The U.N.'s Economic Credo: The Way the World Doesn't Work

(Archived document, may contain errors)

384 October 3, 1984 THE UmNm'S ECONOMIC CREDO THE WAY THE WORLD DOESN'T WORK INTRODU CTION As the 39th General Assembly of the United Nations gets down to business this month in Manhattan, its rhetoric and resolutions will flow in a well-worn path ters, the U..N. will be hostile to the free enterprise system and nearly ignore market econo m y successes throughout the.world. The U.N.'s views on economics not only are predictable, they ,have be come a kind of perverse credo--providing the fabric for the agenda and programs of U.N. agencies, commissions, conferences, and other organizations. Ex a mples ITEM: At a general meeting of the U.N.'s Food and Agriculture Organization in Rome in November 1983, the bloc of less developed countries, commonly known as the Group of 77, won approval of a proposal designed to transfer benefits from the developme n t of plant germ plasms from the industrial countries to the develop'ing ones. The Group of 77 insisted that natural resources such as plant germ plasms. are part of the Ilcommon heritage of mankind1 and thus should be shared by all nations. This initiativ e would impede the access of industrialized nations to germ plasm material and severely weaken their proprietary rights to commercial plant varieties developed from the materia1.l principle is also being applied to the deep seabed, the moon outer space, an d the vast continent of Antarctica.

ITEM A consumer protection code that would erect nontariff barriers to trade--such as controls on product advertising safety, quality, and pricing--is being considered by the U.N When it addresses economic mat The l'comm on heritage I Seeds of Dissention Sprout at FAO Science, January 1984, p. 148. 1 Economic and Social Council. These measures are advocated by those seeking government regulation of markets.2 ITEM: The U.N. Commission on Transnational Corporations has draf t ed a Code of Conduct for multinational corporations. The Code instructs the U.N. to encourage its member-nations to estab lish tfsocioculturaltl objectives and require private enterp'rise to follow these Ilcultural patterns" set by government ITEM nationa l Property Organization proceedings in an attempt to revise international patent regulations. The result of these revisions would be to deny traditional patent protection to Western-based-multinational corporations and thus reduce signifi cantly their ince n tives to take the risks-and make the investments required for economic development. The losers would be the vast impoverished populations of developing countries who would lose acces.s to Western-based technologies and innovations Since 1974, the Group of 77 has dominated the World Inter ITEM: A code defining rules for corporate licensing and sale of technology as well as other forms of Iltechnology transfer," is being negotiated by the U.N. Conference on Trade and Development If 'the UNCTAD majority, led by the 'Group of 77 and encouraged by the Soviet bloc, had its way, multinational corporations would be harassed and deprived of their proprietary rights through codes governing technology transfers, business practices, patents, and trademarks.

ITEM: Third World and other activists, which are accredited nongovernmental organizations (NGOs) with the World Health Organi zation WHO have laid the groundwork for a WHO-sponsored mar keting code for pharmaceuticals. Such a code would restrict the world availability of medicines to a small.group of Ilessential drugsll and would destroy the patent and trademark system pharma ceutical companies now use that compensates them for the high cost of research. UNCTAD is also becoming involved in this effort even though such activity is outside its mandate.

ITEM: In a meeting this May of the U.N. Committee on the Review and Appraisal of the Implementation of the International Develop ment..Strategy of the Third U.N. Development Decade, the Group of 77 drafted a pr oposal demanding extra wealth transfers of nearly 9 billion from the industrial nations to the poor nation The See United Nations Economic and Social Council Consumer Protection Report of the Secretary General U.N. Document E/1983/71, May- 27, 1983.

United Nations Commission on Transnational Corporations Draft United Nations Code of Conduct for Transnational Corporations New York, United Nations Document E/C.l0/1983/S/5, June 2, 1983.

U.N. General Assembly, Committee on the Review and Appraisal of the Imp le mentation of the International Development Strategy for the Third United Nations Development Decade, First Session, May 7-25, 1984, Agenda Item 3 Review and Appraisal of the Implementation of the International Develop ment Strategy A/AC.219/L.1, May 10 , 1984 3 Group of 77 blueprint ignored the failures of "command economies1' to meet the economic needs of their populations It also ignored the critically important domestic free market policies that Third World countries could enact to help their economic development.

This approach to economic issues forms an agenda that is against free enterprise and the market and is for centralized planning, protectionism, and subsidization of inefficient programs and industries. This agenda permeates the resolutions, d ocuments, conference topics, and rhetoric of the U.N. What is worse, the U.N. provides economic advice to developing states that overlooks the world's most impressive development "success stories"--in Taiwan, South Korea, Singapore, Ivory Coast, and Sri L a nka. These nations have eschewed the philosophy of centralized govern- ment-controlled and mandated economic planning and other disin- centives to free market expansion. U.N. economic organizations, on the other hand, appear to espouse these ideas as a ba sis for policies that have proved disastrous for Tanzania and Bangladesh and dozens of other.Third World nations.

The U.N.'s anti-private sector bias finds its way into significant parts of the organizationts development machinery. While sustainable econom ic growth depends chiefly on private sector activity, the U.N. Development Program (UNDP the princi- pal economic development organization, provides virtually all of its services and funding directly to governments At the core of the U.N..economic agenda i s the New Interna- tional Economic Order NIEO whose fundamental goal is to enrich the developing nations at the expense of the industrial countries. NIEO orthodoxy embraces government planning rather than the efficiency of the marketplace; it champions th e idea that all nations have an equal claim to the fruits of man's output rather than that of rewards being distributed according to merit; and it rests on the naive faith that wealth simply exists in nature rather than being produced through creativity, r i sk capital, and hard work system-from the General Assembly and the U.N. Economic and Social Council to the Secretariat's Department of Public Informa tion and the many specialized and voluntary U.N. agencies through- out the world In the more than $300 mi l lion worth of economic research that the U.N. annually produces, the data are often altered and the results manipulated to conform to NIEO premises comprise only a small share of the wor1,d's official development assistance,b the U.N. has a fundamental re s ponsibility to provide NIEO is promoted in almost every corner of the U.N While contributions to U.N. agencies for development work a Figures for 1981 show contributions to U.N. agencies for grant aid for development work to be around 2.2 billion--about 3 percent of total net flows of financial resources to developing countries. Source: Rutherford M. Poats, Development Cooperation: 1983 Review (Paris: OECD, 1982 pp 178, 218-219. 4 sound advice to the developing world. Instead, the U.N. tries to convince th e developing countries that economic growth can be attained merely by demanding resource and technology transfers from the industrial states It is time that the U.N. give a "fair hearing" to the princi ples of free enterprise and private property and to ar g uments against overregulation of the marketplace. This must become a top priority for the U.S which in 1982 contributed $683 million just to U.N. development programs and agencies It is not, after all, the U.S. that needs to learn the lessons of free ente r prise It is the poor, less developed nations of the Third World that stand to lose the most from U.N. advocacy of an economic ideology that, if fully implemented, would perpetuate their plight. The U.S. should evaluate carefully its participation in U.N. develop ment programs and economic forums and should ask whether its U.N contributions actually improve the economic welfare of the Third World's 3.4 billion inhabitants.

THE ECONOMIC MANDATE OF THE U.N.

While the U.N.'s primary purpose originally was mai nte'nance of international peace and security, the preamble to the Charter also calls for the U.N. "to promote social progress and better standards of life in larger freedom,l' and Ifto employ international machinery for the promotion of the economic 'and social advancement of all peoples.Il A number of the Charter's 111 articles focus on international social and economic cooperation.

These general provisions have allowed the U.N. to take an increasingly active role in global economic matters. The arm of t he U.N. primarily responsible for coordinating the economic and social work of the U.N. and its specialized agencies and institu tions is the U.N. Economic and.Socia1 Council (ECOSOC ECOSOC's regulatory agenda has included 0 drafting a Code of Conduct for Multinational Corporations under the auspices of the Commission on Transnational Cor porations 0 drafting Guidelines for Consumer Protection 0 establishment of guidelines for international cooperation against tax evasion and avoidance and drafting a model tax treaty; establishment of an Ad Hoc Group on International Standards of Accounting and Reporting 0 0 conducting hearings on the role .of multinational corpora tions, their employment practices, and their llsociocultural impact" in South Africa and 5 n establishment of an Ad Hoc Group on Transborder Data Elows under the auspices of the Commission on Transnational Cor porations.

Other organizations that participate in the economic agenda of the U.N. and must report to the U.N. General Assembly through ECO SOC include 0 0 c7 a THE The Committee on Science and Technology for Development which, among other things, is charged with strengthening developing countries' scientific and technological capa- bilities U.N. Industrial Development Organization (UNIDO whi ch among other things, provides an international exchange of technolgical information on multinational corporations U.N. Environment Program (UNEP which has, among other things, drawn up a register of potentially toxic chemicals.

This became part of the U. N. master list of banned, severely restricted, or withdrawn products to be used in activist campaigns against chemical and pharmaceutical manufacturers International Labor Organization (ILO), which in 1977 issued the Tripartite Declaration of Principles c o ncerning Multina ti'onal Enterprises and Social Policy U.N. Conference on Trade and Development (UNCTAD which among other things, has drafted a Code of Conduct of the Transfer of Technology that would demand developing country access to proprietary techno logy and future improvements to that technology from the industrialized states World Intellectual Property Organization (WIPO), which administers the Paris Convention on Industrial Property.

The developing countries have sought to change this conven tion i n a way that would weaken patent protection and dis courage Western-based multinational corporations from technological innovation World Health Organization (WHO which drafted and sponsored the 1981 International Code of Marketing of Breast-Milk Substitut es, which places extensive restrictions on the sales promotion activities of the infant formula industry and U.N. Development Program, which is the central coordinating agency for most U.N. development activities.

U.N. AND NIEO During the past decade, U.N. economic policies and programs have been.influenced by the so-called New International Economic 6 Order. Known generally as NIEO, it was promulgated during the tumultu'ous 1974 General Assembly session various U.N. charters, declarations, and programs of action, the NIEO influence appears as demands for increased aid, preferential markets for exports of developing countries, and centralized planning.6 In the aggregate, these ideas comprise an economic philosophy hostile to the free enterprise system and b lind to the market economy. NIEO ignores the fact that private sector trade and investment sustain industries, employ people, and transfer useful technologies throughout the developing world.?

The provisions of NIEO also call for the regulation of multinational corporations and foreign investment and the authori zation of nationalization and expropriation with compensation to be determined by the courts of the nationalizing countries.

Recent st atements by U.N. supporters and observers have argued that NIEO and the I1distributionist1l ideology of the U.N ari! becoming IIa thing of the past no longer on the agenda of the Group of 77. Yet Iqbal Haji, a senior economist at the U.N concedes that "Al l the basic tenets [of NIEO] are there, they're just packaged differently-.'I8 The Group of 77 not only has ignored free market successes in the developing world but also has sought to promote regulatory'machinery that will prevent such success elsewhere A s translated into The General Assembly The 38th General Assembly, which met in 1983, adopted 83 resolutions and 18 decisions on development and Ileconomic and financial matters Some of these were relatively straight forward in calling for economic or 'Ispe c ial1l assistance for specific developing countries. Others, however, again demon strated that the General Assembly remains at the head of U.N attacks on the free enterprise system. It is the U.N. body that nearly always ignores the lessons of development s uccess in many of the countries in the Pacific Basin and in such countries as Sri Lanka and the Ivory Coast Examples from the 1983 General Assembly session A Resolution on Consumer Protection (Resolution 38/142 which requests the Secretary-General to exte nd Ifall possible assistance towards the finalization and adoption of the draft guidelines." These guidelines advocate replacing a General Assembly Resolutions 3201 and 3202.

The U.S. alone imports more than $60 billion worth of goods 'from the developing world--more than double the total development assistance from the West.

Quoted in the Interdependent, U.N. Association of the United States, May June 1983. I 7 free market system with one in which governments determine what is bought and sold 0 A Decision that takes note" of a report by the Secretary General on the role of the Ilpublic sector in promoting the economic development of developing countriesll (Decision 38/430 Obviously, there were no reports of the Secretary General that extolled the value of the private sector in promoting economic development.

Transfer of Technology calling for a sixth session of the U.N. Conference on this Code under the auspices of the U.N.

Conference on Trade and Development UNCTAD Among other things, this Code would con done government intervention in setting specific contract terms for finance, renegotiation technical aspects, and mechanisms for technology transfer.g 0 A Resolution of the'Internationa1 Code of Conduct on the The Economic and Social Council (ECOSOC ECOSO C is responsible for initiating activities and making recommendations relating to economic development, world trade industrialization, science, technology and multinational (or transnational) corporation (MNCS).

In addition to the issues addressed by speci fic expert groups on commissions reporting to ECOSOC (such as the Commissi,on on Transnational Corporations), ECOSOC oversees two major ac tivities that affect MNCs and attack the free enterprise system the Consumer Protection Guidelines and Implementatio n of the Venezuelan Resolutionll (General Assembly Resolution 37/137 concerning the export of !'hazardous substances.Il The stated primary aims of the Consumer Protection Guide lines are Ifto improve consumer protection, encourage standards of conduct for p roducers and distributors and curb business practices which adversely affect consumers.1110 Yet the Code denies con sumers the basic right to weigh costs and benefits associated with purchase of a particular product by assuming that a govern ment is able t o determine consumers' "economic interests" better than the consumers themselves. By letting government determine what product information is llnecessary,Il the Code denies consumers the right to choose whether they want the costs for additional informati o n included in the price.of a product. Although the U.N draft has yet to be adopted, the U.N. is encouraging individual UNCTAD Legal Policies Section of the Technology Division Draft Interna tional.Code of Conduct on the Transfer of Technology: Present Pos ition,"

The CTC Reporter, No. 12, Summer 1982.

Organizations Regulating Guidebook (Washington, D.C Organizations Monitoring Service, 1984 p. 74 lo International Business-Government Counsellors Inc The International International 8 countries to adopt simil ar guidelines in developing countries will be denied free choice and forced to pay higher prices for a wide range of protectionist measures implemented by their governments and based on the U.N. model commonly referred to as the V7enezuela Resolution, its sponsor It requested the U.N. Secretary-General to prepare a list of substances harmful to health and environment. The result is a list of banned, withdrawn, or severely restricted products to be updated periodically. The list contains generic and brand-n a me products, the names of manufacturers, and a sum- mary of the reasons for the decisions of the governments that have banned, withdrawn, or restricted the products This means that consumers In late 1982, the General Assembly adopted Resolution 37/137 bec a use of Besides being vague and leaving some key phrases undefined (thus making compliance difficult this General Assembly resolu- tion probably will spur new barriers to trade in several product markets.ll desirable in another, but export to such a market would be re= stricted under the resolution. Additionally, product approval delays in one country might impede the marketing of the product in another country because of Itregulatory lag." Not only does this scheme suggest that individual governments shoul d determine what information is llnecessaryll for their populations, but it assumes that the global authority of the U.N. is even more "om- niscient" than the national governments themselves A product banned in one country might be highly Forums Dealing wi t h Development Issues In May 1984, the IICommittee on the Review and Appraisal of the Implementation of the International Development Strategy for the Third U.N. Development Decade" convened under General Assembly auspices to review and appraise the U.N.'s development strategy. During the meeting, Mexico submitted a development policy proposal on behalf of the Group of 77. This document has now been incor- porated into another draft report, which reflects more the opinions of all the members of the Committe e but reveals the commitment of the Group of 77 to the NIEOIs radical development ideology In its concept for a "just global .trading system,Il for example, the Group of 77 proposal specifically rejects any kind of "international trading system incompatibl e with the new inter- national economic order.Ill2 This is a repudiation of free trade. To make this point, nowhere in the provisions on trade does the document address the needs to eliminate tariffs and nontariff l1 Mary A. Fejfar, Regulation of Business b y International Agencies (St Louis, Missouri Business, November 1983 p. 35 General Assembly Document A/AC.219/1.1 May 10, 1984, op. cit., Art. 15 Washington University Center for the Study of American p. 3 9 barriers to trade; to reverse policies which re s ult in the subsi dization of inefficient domestic producers and interfere with the principle of dynamic comparative advantage; or to refrain from intergovernmental price setting arrangements which artificially raise the price of exports ment as a working paper for the Committee, and the Committee utilized it as a basis for further work during the summer of 19

84. Western diplomats at the U.N. confirm, however, that the ideas in the document.are still very much alive and continue to describe the negotiating position of the Group of 77 The Group of 77 intended this docu BIASED RESEARCH AND REPORTING AT THE U.N I The Group of 77 campaign against the free enterpxise system is supported by often tendentious and heavily politicized research and reporting conduct e d within the U.N. itself and by outside consultants. I In May.1981, the U.N. admitted funneling $432,000 to 15 foreign newspapers to promote the New International Economic Order and the economic needs of the Third W0r1d.l Business Week that year suggested that "this may be the tip of political efforts by developing countries, with the aid of the Soviet bloc, to use the U.N. to reshape the world economy.t114 Claiming that evidence was "mounting that the U.N.'s $300 million plus economic research programs ar e being manipulated to promote the NIEO, the article demonstrated how the Ilpervasive" tampering with economic research at the U.N. involved some of the world body's most prominent agencies.

Trade and Development (UNCTAD) deleted an entire section of a con sultant's 1979 study on structural problems in the slow-growth steel industry, because it painted too negative a scenario for developing country steel producers. It was rewritten to stress the advantages of giving developing countries a larger piece of th e market 0 The Future of the World Economy, a major study prepared by a research team led by Nobel Prize winner Wassily W. Leontief of New York University was altered by a high-level Soviet official in the New York-based Economic and Social Affairs Departm e nt ESA) of the U.N. Secretariat. The ESA study, undertaken to analyze how the NIEO might best be achieved, was altered to produce an "unsustainably high" 7.2 percent average potential growth rate for the developing countries from 1970 to 2000. the study's original draft, the U.S. research team had concluded that a 5.4 percent growth rate was probable I A report in Two examples:15 0 The director of one division of the U.N. Conference on In l3 Bernard Nossiter U.N. Gave $432,000 to the Foreign Press to Publi s h Its Views The New York Times, May 28, 1981. l4 "A Third World Bias at the U.N Business Week, July 20, 1981, p. 156. l5 Ibid. 10 There is further evidence to indicate that the United Nations economic agencies and organizations and the Secretariat itself c ontinue to ignore documented evidence refuting their pro-statist anti-free enterprise arguments found, for example, in the Department of Public Information, and in the U.N. Centre on Transnational Corporations Examples of biased reporting are Department o f Public Information The Secretariat's Department of Public Information has the responsibility Itto promote to the greatest possible extent an informed understanding of.the work and purposes of the United Nations among the peoples of the wor1d.I' Its 1946 M andate from the General Assembly specifically prohibits it from engaging in ltpropaganda.lf Yet in dealing with the world economy, DPI pro duces a staggering amount of what, in.fairness, can only be termed llpropagandall against free market solutions and i n favor of the model offered by the centrally planned economies of Eastern Europe and the Soviet Union DPI endorses'the widely refuted U.N. argument that the problems of the world economy have been exacerbated by multina tional corporations. A 1982 issue o f the DPI/U.N. University publication, Development Forum, contained an article which main tained, among other things, that !Ithe unprecedented TNC [transna tional corporation] penetration of the world economy has become a leading catalyst in the global cr i s'is of mounting unemployment inflation and stagnation."16 DPI ignores the overwhelming evi dence that multinational corporations have provided developing countries greater access to world markets, and developed new job opportunities in the countries wher e they invested In addition to numerous radio broadcasts promoting the pro-NIEO rhetoric of the U.N DPI has published Towards a World Economy That Works: Questions and Answers. This volume serves as a "travel guide to the strange path of U.N. ideology that argues that the world economy would work much better if it adopted NIEO blueprints.

Even at conferences and training sessions, which DPI organ izes for the benefit of nongovernment organizations (NGOs), DPI continues to promote its anti-free enterprise, p ro-statist propa ganda, instead of using such a valuable opportunity to instruct NGOs how to actually promote development more effectively. At a DPI conference in New York in September, for example, conference participants were directed to trade items of u nequal value so that one participant always received something of less value than what he traded away According to one of the conference organizers this extended exercise was carried out merely to demonstrate to the attendees "what it feels like to be poo r .'I No exercise time l6 "The Ever-Grasping Drive Development Forum, November 1982, p. 3 11 was used to show the participants how.to develop free market and pro-growth solutions and thus to learn how to break away from conditions of poverty and poor econom ic development.

The Centre on Transnational Corporations The U.N. Centre on Transnational Corporations was established in November 1975 by ECOSOC as an autonomous body within the U.N.

Secretariat to serve as a focal point for all matters relating to multinational corporations As the IlSecretariatIl for the U.N.

Commission on Transnational Corporations and its subsidiary intergovernmental bodies, the Centre has played a key role in form ulating the Code of Conduct for TNCs by providing an exten sive amount of documentation for use by the Commission's dele gates In preparing a 1983 report on "Transnational Corporations in the Pharmaceutical Industry of Develoning Countries,I1l7 for exampl e , the Centre has made little attempt to seek the views of the' international pharmaceutical industry on the challenge of improving access for the populations of developing countrie-s to necessary pharmaceuticals at lower prices. The Centre ignored the dem o nstrated advantages of less regulation of the industry in countries that have removed barriers to the free market. In general, the Centre did little to improve the negotiating ability of developing countries with the international pharmaceutical manufactu rers--a task that is very much part of the Centre's mandate.

The U.N. Centre is also strangely selective about the re search that it uses to support its pro-regulation, anti-free market arguments. For example, when officials of the U.N.

Centre were asked why they did not cite a 1982 speech by Dr.

Sanjaya Lall, an Indian economist, who for many years has analyzed the international pharmaceutical industry, they maintained it was hardly equal to a study The 1982 speech reflected Dr. Lall's strong position th at, in India, industry has become greatly lloyer-regulatednl by government and demonstrated a reversal from Lallls former positions previously espoused in his 1973-1979 papers. In its so-called research, the Centre chose to make reference to the earlier p apers but completely ignored Dr. Lall's more recent position, which was well known to the U.N. Centre's staff.

The United Nations Institute for Training and Research UNITAR UNITAR, with headquarters in New York, was established in 1965 to "enhance the effe ctiveness of the United Nations in l7 U.N. Centre on Transnational Corporations, Transnational Corporations in the Pharmaceutical Industry of Developing Countries New York: United Nations, 1983).

A Technical Paper 12 each of the chapters of the volume ach ieving the major objectives of the Organization, particularly the maintenance of peace and security and the promotion of eco nomic and social development.Itl8 Since 1975, UNITAR's research has emphasized the establishment of the New International Economic Order (NIEO) and reflected a bias in favor of NIEO and against free market ideas and their.proved track record of success in the developing world I A chapter on IIInternational Trade for example, begins In the present decade the main factor conditioning t h e debate on international trade has been the common awareness of the exhaus tion and structural crisis of the monetary and commercial system agreed upon in the postwar period unanimous recognition of the need to replace the old order has grown, in recent y ears, a heated debate on how. to judge the system functioning until now, on the causes of its collapse and on the replacement alternatives Ir2 The Ilunanimous recognitionll cited by the study's authors is based only on the views of like minded NIEO theori s ts, who have rejected the views of free market theorists and economists virtually out of hand But out of the virtually Another chapter on IITransnational Enterprisestt begins with the claim that Itthe economic power acquired by such enterprises makes them one of the most important political forces within the present international power structure. Their capacity to influ ence decisively the decision-making process, together with the fact that there are no institutional mechanisms to orient and control their activities, frequently transforms these enterprises into a nucleus of conflicts. On more than one occasion they have actually intervened in other nations' internal affairs.tt21 i UNITAR ignores documents that illustrate the positive con tributions of mult i national corporations to economic development the many examples of developing countries that have succeeded in l8 The United Nations, Everyone's United Nations New York: 19791, p. 146 l9 Jorge Lozoya, Jaime Estevez, and Rosario Green, Alternative Views of the New International Economic Order, WITAR/CEESTEM (Elmsford, New York Permagon Policy Studies 1981 20 Ibid p. 54 21 Ibid p. 65 13 breaking out of the oppressive cycle of poverty and "developmenttt by creating attractive climates for multinational invest ment; and the views of many well-known and respected economists, such as Lord Peter Bauer and Dr. Melvyn Krauss, whose writings on free market approaches to development are known world wide.

U.N DEVELOPMENT ACTIVITIES The central coordinating agency for mo st U.N. development activities is the U.N. Development Program (UNDP Its purpose is to provide sys,tematic and sustained assistance in fields related to technical, economic, and social development of develop ing countries In 1982, UNDP funded some 5,400 p r ojects in agriculture, industry, education, power production, transport communications, health, public administration, housing, trade and related fields. These activities are financed by the volun tary contributions of U.N. members U.S. contributions to U NDP in 1982 were $127.3 million, approximately 19 percent of the UNDP budget. While UNDP's goals of improving economic conditions in developing countries are laudatory, there'are serious problems with the way that UNDP tries to promote development.

Economi c growth is sustained by vigorous private sector activity, yet UNDP directs all its services and funds to the governments of developing nations. As UNDP resident representa tives in Indonesia, Malaysia, and Thailand told The Heritage Foundation during int e rviews in those countries last year, ob taining recipient government counterpart funding and involvement or financial support from the multilateral development banks is a prerequisite for a UNDP project tries merit counterpart (or recipient nation) fundin g U.N. evaluation of a project's results can only be carried out with the agreement of the government concerned is spent in the private sector, the government ministries still decide which private entity will receive funding.

The problem of public sector b iases is also evident in the nonmarket, noneconomic goals of many programs. A project is often less concerned with meeting actual consumer demands with cost-effective production techniques than with fulfilling politi cal criteria, such as subsidies to urb an areas. This appeared to be the case, for example, at a U.N. Habitat project in Jakarta.

It was described by the Country Technical Adviser (CTA) as the Development of a National Urban policy for Indonesia and as a chance for the Indonesian government to Itpurposefully shape the national urban pattern. It national liberation movements--such as the Southwest Africa People's Organization (SWAP0)--is particularly questionable. SWAP0 and other groups such as the Palestine Liberation Organiza tion (PLO which h a ve sought power by violence and terrorist tactics, receive funds and diplomatic and rhetorical backing from The clients of UNDP are the governments of developing coun The governments must be convinced that UNDP projects Even if some portion of UNDP funds T he development rationale behind UNDP financial support for 14 4 various parts of the U.N. system. UNDP, in particular, is a major backer of these groups whose activities have nothing to do with economic development. From 1977 to 1981, UNDP gave approxi ma t ely 21 million to national liberation movements in Africa alone governments formulating their development plans. Among other things, this takes the form of surveys, studies, and research to locate investment opportunities. Preinvestment studies are very m uch a part of most UNDP projects.

Development Organization in Jakarta, for example, showed this author over half a dozen Iffeasibility studiesv1 for various projects in Indonesia from rattan furniture to juice processing. The trouble was, all of the projec ts turned out to be disappointing either financing was refused by local banks, or it had not even been actively sought A former UNDP official remarked Such studies should be a means to an end, and not an end in themselves and their actual implementation s h ould be the rule, not the exception lf22 The role of economic incentives for individual entrepreneurs and businessmen and the effect of government policy in distorting those incentives has become one of the persistent themes in recent World Bank publicati ons. This seems not to have had much impact on U.N. development activities and is thus not part of U.N. development literature. Rather, the ideology of the New International Economic Order continues to play the lead role in U.N. development guidelines.

The policy-making body of UNDP is comprised of a majority of recipient rather than donor nations. This has led to an orienta tion unlike that of other multilateral institutions, such as the International Monetary Fund (IMF) or the World Bank, where control r emains i'n the hands of the free world industrialized countries.

In UNDP, the states that have most actively supported the New International Economic Order make UNDP policy One purpose of UNDP is to provide technical assistance to A CTA with t he U.N. Industrial CONCLUSION The war against economic freedom, the free enterprise system and the multinational corporations permeates the U.N. structure.

This ideology not only is antithetical to U.S. interests and policies, but more important, stifles economic growth and develop ment in the Third World. Thus, U.N. policies may ensure that developing countries remain perpetually dependent on U.S. and Western aid and perpetually hostile to American economic values and principles.

The U.S. State Departmen t should give high priority to convincing nations to end U.N. negotiations for many of the 22 Sudhir Sen, "Farewell to Foreign Aid at the United Nations Worldview August 1982, p. 7 15 proposed international marketing and distribution regulations and codes . Failing this, the U.S. should reduce its participation in those U.N. bodies, agencies and commissions that promote these restrictions. In particular, the U.S. should end its participa tion in negotiations for a Code of Conduct for Transnational Corporati o ns, which have continued for almost ten years in 17 formal and informal se'ssions, and have served only to perpetuate a statist, anti-free enterprise view of the multinational corpora tion in the developing world. Multinational corporations have begun alr e ady to monitor. their own activities in developing countries and, particularly during the past decade, have entered into agreements with recipient nation governments to respect national sovereignty and to ensure a better balance of mutual benefits The Con g ress should consider withholding the U.S. share of U.N. funding for the Centre on Transnational Corporations 2.4 million) and a portion of the U.S. support for the Department of Public Information (around $4.5 million). Both of these organiza tions have p romoted a hostile view toward the free enterprise system and its ,contributions to economic development and instead have promoted the model.of a statist, highly-regulated, govern ment-controlled economic system for developing countries.

The Reagan Administ ration should support enthusiastically Senator Larry Pressler's (R-SD) bill called the International Organizations Public Procedures Act (S.1910 which proposes through publication in the Federal Register, to bring to the attention of the U.S. public and b u siness community all interna tional marketing and distribution regulations that might impede the exports of U.S. agricultural and other products. Legislation should be considered which similarly would require publication in the Federal Register of other U . N. actions inflicting burdens on U.S. business million to U.N. agencies and programs involved in international I1development activities.I1 Congress should investigate carefully whether these contributions, channeled through U.N. programs and agencies that reflect the anti-free enterprise, pro-statist philosophy of the U.N. system, actually spur development. The evidence seems to indicate that they probably inhibit development.

The U.S in particular, should seek support from other indus trialized member-sta tes of the United Nations to change the composition of the policy-making body of the U.N. Development Program to place its effective control in the hands of the major donor states, as in the International Monetary Fund and World Bank. And Congress should a sk whether U.S. funds for development might be spent better in direct bilateral aid programs for Third World countries. These countries are cheated the most by the U.N. bias on economic development In 1982, the United States contributed approximately $683 Roger A. Brooks Roe Fellow in United Nations Studies

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