Mr Chairman,
Mr President,
Honourable Governors,
Distinguished Delegates and Observers,
Ladies and Gentlemen,

Addressing your session here, fourteen years after I left IFAD, and twenty-one years after I addressed the First Governing Council upon my election as first President of IFAD in December 1977, is a great honour as much as it is a unique experience. I wish to thank you, Mr President, for extending this invitation which I take as an opportunity for reflection.

In my statement to the First Governing Council I said: "The will and determination of the developed donor countries, the developing donor countries and the recipient developing countries to establish an institution more responsive to the needs of our times, has made this day a reality. It has been possible because of the spirit of compromise and cooperation required to balance different interests. This, to me, augurs extremely well for the future of the Fund".

The most urgent question on our minds then was: What could we expect of this Fund? How would its performance match expectations? Would the Fund be able to achieve its overriding objectives of growth with social justice? The answer was yes.

We envisaged that the Fund had to be concerned with, not only the capacity of the developing countries to step up their agricultural production, but also with the eradication of hunger and famine among the hundreds of millions in the world. Furthermore, we expected to be judged by the achievements of our projects at the field level, through ensuring that the project benefits intended for the poorest underprivileged groups do, in fact, reach them.

IFAD was created for the purpose of addressing the complex problem of rural poverty. It acquired a remarkable global image due to its innovative operations, directed at alleviating rural poverty and fighting hunger and malnutrition through designing and implementing appropriate projects and investments that lead to increasing food production and improving the living conditions of the rural poor. To maintain its success, IFAD should continue to explore new practical concepts and devise effective tools to reach its target groups, in order to increase their productivity and income and help them maximize their contribution to the process of sustainable development.

IFAD's unusual tripartite structure was obviously of great relevance for the future of international cooperation, both in the North-South context, and in the context of the very important relationship between the Organization for Economic Cooperation and Development (OECD) and the Organization of Petroleum Exporting Countries (OPEC).

Within the Preparatory Commission, which I chaired between 1975-1977, the OPEC countries led the way in the establishment of IFAD. OECD countries agreed only after long and difficult discussions. Negotiators who backed the proposal had to work on two fronts. First, they had to convince OPEC countries to provide a large share of the Fund's resources, nearly equal to the share of OECD countries, since this would give them the right to an effective role in determining international development policies, and widen their relations with developing countries. Second, negotiators had to convince OECD countries of the value of their effective participation in a fund where decision-making was not under their full control. When we succeeded in bringing the majority of participants to sign the Agreement Establishing IFAD, each party considered this to be their own victory. OPEC countries acquired, for the first time, a decisive role in international development. OECD countries felt that they helped secure OPEC funds to finance development operations. Developing countries discovered that the Fund would provide a role that had been denied to them in other international financial institutions.

It is regrettable that some OPEC countries did not grasp the real value of IFAD. During the First Replenishment, OECD countries agreed to contribute 60% of the resources while OPEC contributed 40%. Saudi Arabia's support made this First Replenishment possible, as its additional contribution encouraged other OPEC countries to meet their obligations. However, the problem of proportional share increased in magnitude following the Second Replenishment, and, accordingly, IFAD's resources diminished, threatening its effectiveness and continuity.

Today, many OPEC countries are concentrating on granting direct assistance through their national development funds. I do not consider this a negative factor, since the need for help is great and the presence of more development agencies and funds can accelerate development in poor countries. However, direct aid from individual countries does not eliminate the need for international development cooperation, which is essential if a positive impact on rural agricultural development in poor countries is to be made. IFAD still constitutes the best means of accomplishing this because it concentrates on helping poor groups in rural areas of developing countries and because its administrative structure allows close cooperation between developing and developed countries on policies, decision-making and implementation.

Despite the reduction of income in the OPEC countries since the establishment of IFAD, it still makes more sense for them to support the Fund than to increase their contributions to some of the other international financial agencies. This is because IFAD is still the only organization in which OPEC and other developing countries comprise majority of the votes. IFAD remains the ideal medium through which OPEC countries can truly influence international development policies.

In order to involve OPEC countries more, it might be needed to explore some approaches that had not been considered when IFAD was established. One idea would be to offer IFAD's technical assistance and participation in projects in the OPEC countries themselves, in support of their own rural agricultural development plans.

Suggestions have been put forward that would allow IFAD to obtain loans from commercial banks. This, however, requires guarantees from member countries, posing the question of how to share those guarantees. Moreover, one could ask: what is the difference between providing a bank guarantee for a development loan and directly contributing to IFAD? An agreement on guarantee-sharing will lead to the same vicious circle of Replenishment. What is needed actually is a political agreement among countries, rather than a simple mathematical formula.

IFAD was originally founded on the basis of an agreement between OPEC and OECD countries. Gross national income of OPEC countries was at its peak then, and political conditions regulating their relations were entirely different. At that time, it was possible to reach common stands and decisions in the two categories of developing countries: oil exporting countries through OPEC, and developing countries as members of the Group of 77. When IFAD was established, votes were equally distributed among the three categories.

Agreement following the negotiation on resource requirements and related governance that required amending the Agreement Establishing IFAD seemed inevitable. What is highly important is keeping the unique character of IFAD and its concept of partnership among the OECD, OPEC-developing countries and other developing countries. Hopefully the new arrangement will provide an incentive to all member countries to increase their contribution to IFAD resources otherwise the new arrangement would be unnecessary.

In a lecture at Michigan State University in 1983, I said: "It seems that whatever happens in one country affects the others, either directly or indirectly. Whether we like it or not, we are gradually becoming a world community, for which we have to bear a common responsibility".

Indeed, we are. Yet, this transformation, as we are witnessing in the mid-1990s, does not ensure that poor countries will be freed from the vicious circle of need and hunger. The strange paradox is that, with the decline in the intensity of international conflicts and the end of the "cold war", there has been a significant decrease in the volume of development assistance for poor countries. It would regretfully seem as if the era of polarization had not provided better conditions for assistance for poor countries. This should not be allowed to happen.

Today, twenty-one years after the establishment of IFAD, close to one billion people still live in poverty, hunger and malnutrition in rural areas of developing countries. While urban poverty is a growing phenomenon, the rural poor still account for around 80% of the total number of poor people in these countries. Rural poverty is still a major threat to world peace. But rural people are the largest numerical superpower in the world. This is a fact that contains both enormous problems and great potential.

For all of this, the spirit of IFAD is needed today more than ever. The creation of IFAD was a significant event in international relations. It represented an international response to the prevalence of hunger and poverty in the world. IFAD is a pioneer agency that deserves not just to survive but to become stronger. When the Fund had sufficient resources, it attained a degree of efficiency rarely achieved by other development organizations. IFAD kept a limited staff, with efficient administration. Its administrative expenditure did not exceed 5% of its loans when the level of resources was appropriate. This is a very low rate compared to other development financial organizations. Ensuring efficiency while maintaining low administrative costs requires a certain minimum of resources. Unfortunately, recent negotiations on the replenishment of IFAD's resources did not yet secure that minimum level.

The need for a new covenant on international development cooperation is more urgent now than it was even when IFAD was established. This covenant will set the foundations of a new world development order based on an international partnership in abundance and wealth that goes beyond instant first-aid donations in emergencies.

As I said at the outset, IFAD's mission is a mission of hope, bringing hope of a life of greater material well-being and heightened dignity to the struggling millions of the rural poor in the developing countries, and reflecting the hope of all of us for a better tomorrow.

IFAD remains a model of international cooperation aimed at establishing a new world order based on justice and prosperity, in which equality among developing countries is attained by sharing abundance rather than partaking of poverty. IFAD deserves our full support.