Czech Republic, 2009

My country, the Czech

Republic, has always appreciated the role that the

United Nations has played in strengthening security,

stability and prosperity in the world. I want to assure

Members that we will continue to participate in the

activities of the United Nations. We firmly believe in

the importance of this Organization and want it to be

efficient and effective. For that reason, we support the

reform of the Security Council so that it will more

adequately reflect the political and economic realities

of the world today, as some speakers have stressed here

today. Changes are necessary and we are ready to start

discussing them very seriously.

This year, in our part of the world, we

commemorate 20 years since the fall of communism,

since the moment when my country — together with

other States of Central and Eastern Europe — regained

freedom and sovereignty, and was again able to resume

the place in the community of free and democratic

countries that it enjoyed when the United Nations was

founded in 1945.

In the 20 years that have passed since those

historic events, we succeeded in building a stable

political democracy and in transforming our economic

system into a functioning free-market economy. I am

mentioning this because I believe that our experience is

relevant to the ongoing discussions about how to solve

the economic problems that the world faces today.

We are meeting at a time when the world is in the

midst one of the deepest economic crises since the

Second World War. The financial crisis, which

originated in the United States two years ago, quickly

spilled over into most other countries and led to a

severe decline in economic activity all over the world,

a substantial decrease in international trade and capital

flows and an increase in social and economic

instability in a large number of countries on all

continents.

The United Nations — as a unique worldwide

Organization — and its specialized institutions have

become an important global platform for discussing

alternative steps and policies that could, one hopes,

help to overcome the crisis and diminish its impact.

The measures that have been implemented to date have

contributed to the fact that the world has succeeded in

avoiding a repetition of the situation in the 1930s. We

also succeeded in avoiding a repetition of a massive

protectionist reaction to the crisis. Protectionism in all

its forms should be resolutely condemned here today.

We see the first signs that the economic crisis has

reached bottom, or come close to it. Nevertheless, we

find ourselves at the beginning of a difficult and very

complicated post-crisis period. There are many reasons

for the fragility and vulnerability of this phase, but I

should like to refer to just a few.

First, attempts to increase aggregate demand led

to unprecedented expansion in public expenditure and

public debt. As a result, a large number of United

Nations Member States are facing or approaching a

debt trap. Those huge fiscal deficits will harm future

economic growth. Secondly, international flows of

private capital, which contributed so substantially to

rapid economic growth in recent decades, are

decreasing and becoming less reliable. Thirdly, a

decrease in international trade will undermine the

continuation of export-oriented strategies of many

emerging markets.

It would be a tragic mistake to fundamentally

impair economic freedom in favour of State or

supra-State regulation just now. Long-term experience

shows us that it is thanks to free markets and free

entrepreneurship that we enjoy the current material

well-being and economic progress. Business cycles,

accompanied by economic downturns, recessions and

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crises, did exist, do exist and will exist in the future. In

spite of them, the world has been — at least in the past

two centuries — characterized primarily by economic

growth and growing prosperity.

When looking for an appropriate reaction to the

problems connected with the current crisis, we should

build on the idea that the crisis was basically a failure

of Governments, not of markets. The manipulation of

monetary policy in an attempt to artificially prolong

the period of growth, the irrational subsidization of

demand in the housing sector and the failures in

financial-market regulation contributed substantially to

the crisis. Let us not delude ourselves into believing

that economic cycles and their consequences can be

prevented by more extensive Government regulation or

by aiming at global governance of the world economy.

This issue has its important territorial and

geographic aspects as well. We have to pay attention to

the needs and interests of all kinds of countries — rich

and poor, developed and developing. Global economic

development will benefit from the removal of barriers,

not from creating new ones, because barriers would

substantially complicate poorer countries’ access to

foreign markets, as well as their ability to develop by

their own means.

Economic recession and large increases in public

debt have reduced the possibilities available to today’s

world to meet such goals as combating climate change.

I do not intend to go into details of this issue here now,

but we should carefully follow it because of unfinished

scientific debate and pay attention to the costs and

benefits of our future decisions.

I do, however, want to emphasize that the

measures proposed to combat climate change represent

another heavy burden for both developed countries,

which are falling into deep fiscal deficits now, and for

developing countries. This is happening in a context in

which rich countries, often pushing this agenda at

international forums, are losing their ability to

compensate poorer countries for the impact of those

additional costs.

The Czech Republic, as a successor State to

Czechoslovakia, which was one of the founding

Members of the United Nations, has always

participated actively in all kinds of United Nations

activities. It intends to do so in the future as well. It is

in our interest that the Organization remains a

respected high-level forum that contributes to

prosperity, stability and peaceful solutions to the

conflicts of today’s world.