17 May 2001

Brussels

Mr. President

Your Excellencies

Ladies and Gentlemen

With a population of 10,000 people living on 9 tiny islands of no more than 10 square miles of total land area in the central Pacific ocean, Tuvalu is the smallest country in the LDC category of nations. The size of my country however does not mean that we escape the socio-economic conditions facing other LDCs. Like any other developing small island state Tuvalu has its own unique development constraints and challenges that it cannot alone effectively deal with. It is against this background that my delegation and the Government of Tuvalu has looked forward toward this Third UN Conference on LDC as a mechanism to further the dialogue on how best to address these issues, including the nature and type of external support required of our development partners. It is on this note that I thank you Mr. President for allowing me this opportunity to make these few remarks.

During the last 4 days we have heard so much about the special problems and needs of the LDCs and the failure of the previous two Programs of Action to stem the socio-economic deterioration in the LDCs. The overarching goal of the next Program of Action over the coming decade will be on poverty eradication. While we fully support this goal it is important to note that each country may view poverty differently. For the Pacific LDCs and Tuvalu in particular, we feel that given our socio-economic situation it is more a ‘poverty of opportunity’ that applies rather than the standard definition of poverty that is strictly based on a one dollar or less per capita income per day. I call it ‘poverty of opportunity’ because in our country there are limited opportunities for employment and income-creation; there are problems with access to quality education and basic health care services; access to water and the lack of domestic inter-island shipping services, to name just a few. I am comforted nonetheless to note that these issues are being addressed in the draft Program of Action that is currently being discussed this week.

Mr. President, the issue of climate change, global warming and sea-level rise is a top concern and is critically important for the small island Pacific LDCs. Tuvalu is made up entirely of flat low-lying coral atolls rising a mere 2 to 3m above sea level. Scientists have predicted that given current global trends in carbon emissions and the resulting sea level rise, countries like Tuvalu and Kiribati will be completely submerged within the next 50 or so years. We are already witnessing signs of this devastating phenomenon. We have seen in recent times one or two of our small islands being completely washed away by the rising seas, the increasing erosion affecting our foreshores and coastal areas, the decline in water quality and the loss of coral reefs. The continued rise in the sea level will be catastrophic for Tuvalu and other small island states. It will not only destroy animal life and vegetation, but it will mean a complete annihilation of our entire societies. Implementing the carbon emissions reduction targets prescribed under the Kyoto Protocol is our only best hope to avoid such a devastating catastrophe. We applaud and are grateful for those countries that have agreed to abide by the Kyoto Protocol. The recent decision by the United States not to sign the Protocol however is regretful and we urge the United States to reconsider its position. Tuvalu and other Pacific LDCs may be viewed by the industrialized nations as strategically unimportant to them in terms of their national security and economic interests, but the Kyoto Protocol may be the only means to safeguard the survival of an entire living society.

Let me now turn Mr. President to the issue of globalization. While we certainly have our own concerns on the impact of globalization and liberalized trade, particularly on its potential to erode or undermine our core cultural values and practices, we recognize the potential long-term benefits it can bring in terms of increased capital, trade, investment and technology flows. However, we have not been able to take full advantage of these opportunities, owing primarily to supply-side constraints, including insufficient financial resources, inadequate physical and social infrastructure; lack of skilled human resources; and low technological capacity. Specific geographical constraints aggravate the impact of these impediments. Strong actions are therefore required to help LDCs integrate beneficially into the world economy and reverse their marginalization in global trade, finance, investment and technology flows. In this respect, addressing supply capacity weaknesses by building productive, human and institutional capacity will be crucial.

Mr. President, when Tuvalu achieved nationhood 23 years ago, it did not have any physical economic infrastructure in place, except a small airport and an inter-island vessel, and it lacked financial and skilled human resources. Tuvalu’s future was described as bleak and many observers did not think Tuvalu would survive nationhood. The country had development problems thought to be too enormous to overcome. It was too small, remote and isolated, too poor. Today, those who had doubted the worthiness of Tuvalu nationhood have been proven wrong.

During the last two decades Tuvalu has steadily matured economically and politically. National infrastructure has greatly expanded to include power supply and satellite telecommunications reaching out to all island communities and villages. As remote as we are, the internet has brought the world to our doorstep, and in return Tuvalu is spreading its top-level internet domain name, dotTV, around the world. We provide free and compulsory education for everyone right through secondary schooling. We now have a better-trained and skilled workforce. We have improved health care services, including water and sanitation. We have a stable democratic government. The national Government has devolved its powers and control on outer islands development through Te Falekaupule, the traditional decision-making body comprising of island community elders and chiefs. We have forged new partnerships with various development partners and multilateral organizations, including the United Nations, of which Tuvalu became its 189^th Member State upon its admission last September.

While we have made some notable progress in the last two decades, much remains to be accomplished, particularly in the area of transport infrastructure. Given the scattered nature of the islands, inter-island transportation continues to be a major constraint to the development of the outer islands and the promotion of trade and investment. The Government of Tuvalu is investigating the possibility of privatizing the shipping services so as to ensure greater efficiency and better service delivery. In terms of international transport, Tuvalu has recently decided to invest in the only foreign airline serving between Tuvalu and Fiji, a strategic policy decision taken to safeguard Tuvalu’s access to a reliable, regular and affordable air service, as well as allowing Tuvalu to gain experience in the operations and management of an airline.

Because of the limited financial and narrow resource base of our economy, our capital development programs were used to be financed entirely by ODA grants. Over the recent years, the Government has gradually provided from its own resources funding for its development budget. This year the Government is financing from its own resources about 90% of the development budget. The increased participation of the Government in its own development has been the result of the prudent manner in which it has managed its finances over the years, as well as its continuing efforts to identify and formulate innovative schemes that bring in extra cash into the country. These schemes include the marketing of the internet domain name dotTV and the Tuvalu Trust Fund, a financial investment facility that is invested abroad.

Mr. President, I would like to spend a moment or two and talk about the Tuvalu Trust Fund because this is a unique facility that may be of interest to other LDCs and development partners alike. As I mentioned earlier, when Tuvalu achieved independence in 1978 it faced a bleak financial prospect with a very low capacity to earn foreign exchange and no financial reserves. The Fund was set up in 1987 under an International Agreement signed by Tuvalu and 3 development partners who had initially contributed to the Fund, which were New Zealand, Australia and the United Kingdom. The Fund was set up to help finance chronic budget deficits, underpin economic development and achieve greater financial autonomy. Initial contributions amounted to A$27 million. The capital of the Fund must be maintained in real terms before any distribution can be made to Tuvalu. The Fund is invested in a balanced portfolio of assets reflecting the requirements of the Fund to: one, maintain the real purchasing power of the Fund; and two, provide a regular stream of income to help meet Tuvalu’s development needs. In the first 10 years of the Fund’s operation, it grew to A$45m with a real rate of return averaging 6.5% per annum providing A$25m to Tuvalu in revenue. Since 1991 the Government has been able to increase real expenditure by 8.6% per annum, in large part due to the Fund’s performance. The Fund is now worth over A$85m. A key feature of the Fund is its management structure: it has a Board of Directors comprising of Tuvalu and the other 3 original contributors; professional funds management; monitoring of Fund performance by actuarial consultant; and an Advisory Committee to monitor and advise the Government and the Board on Tuvalu’s economy.

The Fund has continued to receive contributions from other donors, including Tuvalu, which has now become the largest contributor to it. Donors that are willing to contribute to the Fund but cannot do so because of their own criteria and procedures have found alternative ways of participating in the Fund. For example, the EU through its Development Support Program with Tuvalu is providing annual grants to the Government to finance projects in specific areas, and in return the Government is required to channel into the Fund the same amount of funds that the EU has allocated for projects. The Fund has had an enormous impact on Tuvalu and has certainly made Tuvalu achieve a sense of greater self-reliance. In view of the success of the Fund we would like to invite other development partners to consider contributing to the Tuvalu Trust Fund as a vehicle for Tuvalu attaining sustainable development.

In terms of ODA and its effectiveness, Mr. President, we fully support the untying and removal of conditionalities of aid. There is much also to be done in aid coordination among and between the development partners in order to minimize duplication and harmonize aid procedures and criteria. We also encourage development partners to engage greater participation of recipient LDC countries in discussions on international aid policy in order to strengthen partnerships and enhance the effectiveness of ODA. It is from our experience, that a successful ODA-financed program is one that has greater local commitment and ownership of the program. It is absolutely vital therefore that LDCs need to widely consult within their localities in order to cultivate local ownership and commitment to any program being designed for implementation.

Although the challenges faced by LDCs are formidable, they are not insurmountable. Through joint action and meaningful cooperation between LDCs and our development partners could the continuing marginalization of LDCs be reversed and set us on the path toward achieving sustainable development and a better future for all mankind.

I would like on behalf of the people and Government of Tuvalu to thank our development partners for the support and cooperation we have received thus far in the pursuit of our development aspirations. We look forward to working closely with all of you and we are confident that together we shall be able to overcome our development problems and fulfill our development goals. May the grace of God be with us as we journey together over the coming decade.

Tuvalu mote Atua (Tuvalu for God, God for Tuvalu)