Features

GLOBALISATION: PAST, PRESENT, FUTURE

Kate Prendergast, Fahamu

2001-11-22, Issue 43

http://pambazuka.org/en/category/features/4394

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The effects of global poverty have been much in the news this week. At a World Bank meeting in Ottowa last weekend, there were prominent calls for an increase in aid from richer to poorer nations. Gordon Brown, the UK Chancellor, called for rich countries to double the aid they give to the poor, while Clare Short, the UK Development Secretary strongly criticised America for "almost turning its back" on the rest of the world. It was a "paradox" that a country that prided itself on its generosity gave only 0.1 percent of its GDP in international aid, compared to Britain's 0.3 percent and the UN target of 0.7 percent, she said. At a recent meeting of EU development cooperation ministers in Brussels, increasing member contributions of aid was high on the agenda, while at the WTO meeting in Doha, the developing world won a significant victory over the right to medicines at times of public-health emergencies.

European diplomats, Clare Short and the World Bank have all cited the ‘Bin Laden effect’ as having a galvanising effect on richer nations view of poverty across the world. The terrorist attacks created an "historic opportunity" for the international community to make a concerted effort to try to solve global poverty, Short said. “The suicide bombers of September 11 appeared not to come from poor countries, but the conditions which bred their bitterness and hatred are linked to poverty and injustice." The World Bank too has come to the view that poverty alleviation in states like Afghanistan is needed to stop them becoming breeding grounds for terrorism, while the World Trade Organisation has promised to address the marginalisation of least developed countries and contribute to a durable solution to world debt. With such a concerted interest in global poverty from many of the biggest players this week, it is hard to believe that half of the world's population still lives on less than $2 a day, while the richest 20 percent consumes more than 80 percent of the world's resources,

But as George Monbiot has argued in this week’s UK Guardian, one of the reasons why the current institutions charged with managing the global economy – the IMF, World Bank, and more recently, the World Trade Organisation - have failed to deliver economic justice and sustainability is because they were not designed to do so. Despite the recent resolutions from the World Bank and WTO on debt cancellation, and a concern for greater global economic equity, these reforms are not, in Monbiot’s words, “in the WTO’s gift”.

As Monbiot demonstrates, the architects of the modern world economy had a vastly different vision than the system we have ended up with today. Many economists at the Bretton Woods conference in 1944 were aware that issues of economic justice would have to be addressed if greater commercial freedom was to work. Among the proposals made at Bretton Woods were calls for an international trade organisation, which as well as working to reduce tariffs would also protect workers rights, transfer technology to poorer countries, and regulate the world economy to prevent big corporations from becoming too dominant. But, Monbiot reports, US corporations blocked the proposals. GATT – the general agreement on tariffs and trade - was strung together on a temporary basis to bring down trade barriers, while negotiations for a proper trade body continued. It never saw the light of day; GATT turned into the WTO, and the moment was lost.

The ITO was not the only institution proposed at Bretton Woods. John Maynard Keynes, the British economist, is often credited as the mastermind behind the IMF and World Bank, the major institutions to emerge from Bretton Woods; but Monbiot argues that in fact, Keynes was bitterly opposed to them, believing that if such institutions managed the world economy, they would preside over deepening inequalities between rich and poor. Keynes called instead for an “international clearing union” which would redeem imbalances in trade, and cancel debt, by the radically simple method of charging creditors the same rates of interest on currency surpluses as those charged to debtors. But, the British delegation, lead by Keynes, was also forced by the US to back down. The US threatened to withdraw its war loan unless Keynes withdrew his proposal, and he ended up having to agree to the bodies that later became the World Bank and IMF.

The problem with the World Bank, IMF and World Trade Organisation is, therefore, that they are constitutionally designed to fail in delivering greater economic justice in world trade. All they can do, in Monbiot’s words, is “set maximum standards for global trade, rather than the minimum standards which might restrain big corporations”. In other words, the IMF, World Bank and WTO police existing inequalities that have been allowed to develop on behalf of richer nations: world debt, tariff inequalities, the lack of regulation; and despite noises to the contrary, pursue these inequalities further in the name of liberalisation.

This is perfectly illustrated by the rejection by WTO of the recent proposal made in Doha, Qatar, by seven African countries that WTO study the impacts of trade liberalisation measures imposed by structural adjustment programmes (SAPs). The proposal - submitted by Kenya, Mozambique, Nigeria, Tanzania, Uganda, Zimbabwe and Zambia - was made in response to the original draft declaration issued by WTO General Council chair Stuart Harbinson in September. These countries pointed out that many developing countries were subjected to "an over-ambitious liberalisation programme" as a result of structural adjustment reform policies that did not offer flexibility in their tariff-cutting exercises. These countries were, as a result, experiencing widespread unemployment and the collapse of local industries.

What is now needed therefore is not the spectacle of Gordon Brown promising to deliver more aid to developing countries, desperately needed though that aid is, nor of the WTO promising everything and delivering nothing. As Monbiot puts it, “if the men who had planned the Bretton Woods conference knew that in 2001 we would be arguing about about how much aid to give to poor nations, they would have packed up and gone home. The stated purpose of their meeting was to render generosity redundant.”

The recent WTO negotiations may be a potential indicator of the way the future of such institutions may develop. While the negotiations at Doha were only a partial success for developing countries, they were also far from a neo-liberal victory that many in the developed world would have liked. Important areas of negotiation have effectively put on hold, to be dealt with in the future; and perhaps most importantly of all, developing countries are prepared to fight their corner much harder than in previous rounds. But, the inadequacy of the WTO as an institution capable of managing these issues was also very much in evidence, and the effectiveness of its future in increasing doubt. Without root and branch reform of world economic institutions, greater economic equity – a more distant dream now than in 1944 – is never going to be established, and the credibility of such institutions restored.

Tinkering with poverty
http://www.guardian.co.uk/Columnists/Column/0,5673,602342,00.html

Doha Dreams?
http://www.fpif.org/commentary/0111dohaconc.html


WTO rejects Africans' request for study of SAP effects before more tariff cuts

http://www.brettonwoodsproject.org/topic/adjustment/a26africadoha.htm

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