Wednesday, February 27, 2008

Lethal Handshake?

Last week witnessed a repeat of the 'Battle of Seattle' with angry protesters confronting the World Bank and the IMF. Why is globalisation such an emotional issue the world over? Are organisations like the WB, IMF and the WTO really as black as they are painted, and are the NGOs and pressure groups the angels of mercy, asks Kuldip Dhiman


AFTER successfully thwarting the World Trade Organisation meeting in Seattle last November, activists, protesters, pressure groups, NGOs and anti-globalisers took to the streets once again last week at Washington DC during the spring meeting of the World Bank and the International Mometary Fund. The battleground this time was just a block from the World Trade Organisation's headquarters, and two blocks from the White House.

Having undergone rigorous training sessions on civil disobedience, street blockade, and dealing with tear gas, the protesters were intent on disrupting the meeting. Looking at their belligerent mood, it appears that some of the NGOs and activists have become more powerful than the organisations they oppose. One activist of the splendidly named "50 Years Is Not Enough Network" said, "We are very concerned about the role the WB and the IMF have played funding and supporting dictators, funding projects that harm the environment."

Forming a loose alliance called the "Mobilisation for Global Justice", the activists see the IMF and the WB as the 'parent organisations' of the WTO. The diverse and incongruous groups are supported by the umbrella association of US trade unions, the AFL-CIO, that sees globalisation as inimical to their interests.

Globalisation is all things to all people. In the wake of the furore over the issue, let us follow up the various arguments put forward by intellectuals of the warring camps.

In the last two decades or so, there has been an increasing pressure by the big players on less developed countries to enter free trade regimes. The critics point out that these rich countries are making the poor countries open up not to help the poorest of the poor but to serve their own selfish interests. By the year 2020, there will be eight billion people in this world, the critics of globalisation fear, of which six billion will have been left out in the cold.

But why are the big players and the activists suddenly interested in the welfare of the Third World? Since it is becoming more and more difficult to produce goods cheaply in the developed countries, the multinationals are finding it economical to operate in the Third World. The developed countries have the capital, technological know-how, and the resources; the poor countries, on the other hand, have human and natural resources.

Professor Noam Chomsky compares globalisation to colonisation: "One aspect of today's globalisation, as compared with a century ago, is that the movement of people is less free. Capital can flow quite freely; labour can't."

The other severe criticism of the WB and the IMF is their total disregard of the environment. But does an increase in trade, ask the supporters, necessarily damage the environment? Does not it improve the quality of life and the environment? Some economists now argue that trade results in economic growth, which in turn spreads education, and education ultimately makes people aware of their environment. Economic growth gives people more purchasing power which is then used for paying for a cleaner environment. According to neo-classical economists, a country on the path of progress, initially does witness a strain on its natural resources, but this is reversed when the economy begins to prosper.

While the protesters in the streets believe that the Bretton Woods Twins, as the WB and the IMF are called, are contributing to world poverty, the main item on the agenda of the spring meeting was finding ways to fight poverty and to reduce Third World debt.

A report recently released about global poverty by the World Bank, highlighted how the global financial crisis of 1997-98 had hampered efforts to alleviate poverty, and widened the divide between the rich and poor. While the poverty rate did decline in some large countries, notably China, it rose in many other nations in 1998. Apparently, 1.2 billion people all over the world were getting by on less than $1 a day.

The bank's World Development Indicators said 57 per cent of the globe's population, living in the world's poorest 63 countries, was existing on just six per cent of total world income, while people living in wealthy countries with one-sixth of the world's population received 80 per cent of the global income.

Interestingly, IMF Managing Director, Stanley Fischer said, "We have the same goal as the demonstrators. We want to reduce poverty all over the world," What he did not say was that this concern for the poor is a relatively new item on their agenda, brought about by the immense heat generated by pressure groups all over the world.

Defending the principle of open economy, Fischer said: "All the evidence is that the best way to grow is to integrate into the global economy . . . (globalisation) represents the only way we are going to raise people around the world to the same level as people in industrialised countries."

As of December 31, 1999, the IMF had credit and loans outstanding to 93 countries for an amount of SDR 57.5 billion, in other words about $ 75 billion. In spite of all their shortcomings, the organisations have been doing their bit. Fischer challenged the protesters to offer an alternative approach to fighting global poverty.

Michael Moore, Director of the WTO, was disturbed about the stand taken by the activists. "I am again disappointed that somehow we are not getting our message across. To blame the WB for world poverty is like blaming the Red Cross for the First World War and the Second World War. The WB is here to lever up money at low rates of interest to help developing countries. And the idea that you should stop a meeting of ministers who are here to find more effective ways, and to get more effective resources to fight AIDS and HIV, is an enormous contradiction."

The only solution the protesters believe is to dissolve these organisations. Others feel that this would surely be a self-defeating exercise. What is required is reform, not outright censure.

Talking about reforms, Sarah Hogg, chairman of Frontier Economics, says that the WTO is less in need of institutional reform than the World Bank or the IMF. They are larger, older, and have far more of an independent existence. The WTO has only a small secretariat to service negotiations. It does not raise or lend money. It does not set the rules for world trade. It merely arbitrates on disputes between member states as to whether the rules for international trade they themselves set have been kept or broken. Responsibility for environmental standards, labour rights, and so on should be kept off the agenda. The WTO has a hard enough job tackling trade abuses. When governments want to tackle environmental abuses, they should get together under a different umbrella.

"When economies are in recession," argues Hogg, "we are less inclined to question the benefits of economic development. When things are going well, we are more inclined to dwell on its side effects."

Coming back to the question: Why are, then, some countries reaping the benefits of globalisation, while others are sinking into poverty? Professor Francis Fukuyama, the author of The End of History and the Last Man, believes that the fault lies in their approach. "Globalisation has certainly modernised a very large and important part of the Third World which is a good deal of Asia and important parts of Latin America, making winners of what we thought as losers 20-30 years ago."

He believes that most of the people who have been left behind, had not really tried to adapt themselves. They are paying heavily for the wrong economic models adopted by their respective governments. And though they have now changed their policies, how could they expect miracles overnight.

Then there are countries that have deliberately exploit their own people, and their neighbours to further their own political agenda. Ethiopia, for instance, is engaged in a suicidal war with Eritrea in spite of being in the grip of a severe famine. Its Prime Minister, Meles Zenawi, has bluntly told the UN that he will not bow to international pressure to end the war to help the relief effort, although the two-year-long war is costing him $ 1 million a day. All this precious money could have been spent on development projects. Defending the war, Zenawi says, "You don't want to have a full tummy before you protect your sovereignty." Such leaders drag their people into a catastrophe first, and then go about with a begging bowl, forgetting that beggars couldn't dictate terms.

The point is multinationals, the agents of globalisation, do not profess to be charitable trusts. They are investing in the Third World because they see money there. They obviously don't mind if the poor get some benefits in the bargain.

The protesters are no angels of mercy either, since most of them are only furthering their own political ideologies when they talk about debt relief, environment and human rights. Why didn't they protest similarly when half of the world had no civic and human rights behind the iron curtain? Where were they when 2000 students were massacred at the Tiananmen Square? The NGOs must realise that though they certainly have a right to protest, they should be prepared to recognise that they are not always in the right. "The WTO's critics," cautions Hogg, "should recognise the extent to which their lines of attack conflict, or can be turned against, the people for whom they claim to speak. The protesters from rich and poor countries do not have the same agenda. Their crossfire weakens the only institution that exists to see fair play. Sometimes the dragon needs protecting from St. George."

One aspect of the "Seattle Battle" that went largely unnoticed was that the demonstrations got so much media exposure for the activities and the violence that followed, not because of NGOs but because of The US labour unions, who had an axe to grind. Some of the labour groups were complaining about loss of jobs because of globalisation. They had signs like General Electric: US's biggest exporter of jobs. So much for transnational labour solidarity.

Watching the great intellectuals and activists fight for his rights in the worldwide debate is the common man whom everyone is exploiting to further their own ends in his name, but whom no one seems to consult. The common man's plight is not unlike that of Karl Marx's wife who living life in grinding poverty is supposed to have said: "I wish he would stop writing about Capital, and make some instead."


  "It is invisible handcuffing of democracy"

He teaches Geography at The Jackson School of International Studies, University of Washington, but his concerns are not limited to the classroom. Matthew Sparke, is not just a vehement critic of globalisation, he is also an activist who was among the hundreds of protesters last November in Seattle. He spoke to Kuldip Dhiman about his fears of the market-driven forces.

Why do you so actively object to organisations like the WB, IMF and the WTO?

I should like to use three metaphors to bring to life my argument against the organisations you just mentioned: the first metaphor is that the WTO and its allies are the tip of the iceberg of globalisation. Second, it is the "invisible handcuffing" of democracy, and finally it is like an onion — the more you slash into it, the more you cry.

Let me describe to you how a multinational company through the aegis of the WTO can twist the arms of a poorer country. The Government of Guatemala decided to do what it could to encourage women to breast-feed. Now a big baby food company cried foul saying that the government regulation represented a non-tariff barrier to global products. They threatened to sue the government of Guatemala in the WTO context, but even before it got to that stage the government of Guatemala felt sufficiently pressured to repeal.

Could you propose a better alternative?

I think we have to think of alternatives at two or three different levels. There are internal things in the WTO that can be changed, for example I would begin to see the leaders from around the world consider the dispute settlement process within the WTO being redrawn in a legal way so that when a particular dispute is taking place and there is a key environmental issue at stake, or human rights issue at stake in the dispute, another global agreement on enviroment issues or human rights issues can be invoked from one of the other parties as kind of legitimate legal argument within the WTO.

In other words, if you have a situation like the one over sea turtles, where the US wants to keep out shrimp that have been caught in ways that kills sea turtles, then there should be an ability for a government like the US to repeal to another global agreement on saving sea turtles or whatever it is. In the process, right now there is no such ability to invoke those outside the agreements. Right now the WTO runs by its own rules.

This is strange. Pressure groups keep blaming these organisations for damaging environment and endangering life, yet, when these organisations pass laws to protect environment, as in the case of sea turtles you just mentioned, you cry foul.

It is a totally market driven system of catching shrimp. The nets that people used to catch shrimp, normally catch sea turtles too and kill them. Thousands are killed every year.

But there are these nets on the market that enable you to catch shrimp without killing the turtles. They are not expensive, and they would save a whole species of animals, so it makes good environmental sense. And it is that kind of intervention in economic life that the WTO is handcuffing the governments with.

I am not sure if I follow your answer to that, however, if it is as bad as that, then you don't become a member of the WTO, or go begging for monetary aid. Why don't the other countries form their own trade organisations? Why are so many countries so eager to become members, even communist giants like China? If the open market is not working, the closed market is also a big disaster.

That is a complex situation, I can't venture into that sort of prognostications. I would like to say that the biggest market for goods from the Third World is North America and Europe. That's where consumers with buying power are right now. They don't want access to countries like Nigeria.

The leaders of the under-privileged countries have a very clear sense when they join the WTO, they want to have access to the global market.

There is a clear reciprocal interest in Third World markets but it is for very different kinds of products. I don't think the answer is to partition the world into the aligned and the non-aligned on trade grounds, Honestly, I am a Leftist, and I really don't think that is a viable option. What one wants instead is democratic access to the global trading system that comes with forms of democratic protections and accountability for the populations of poorer countries of the world.

I think the consequences of belonging to this system are only now slowly beginning to emerge. People don't realise the implications of the laissez fare approach to organised capitalism and the negative consequences it is going to have. That's why the intellectuals are looking ahead and trying to predict what is going to happen down the road.

Intellectuals often get it terribly wrong.

Right, but there are intellectuals are on both sides of this issue, but by and large the economists believe that the free trade system, the liberal model will actually produce good development gains for the Third World, and make it more developed and prosperous. Yes, some GDPs do go up. But there are also cases like South Korea and Taiwan that could be pointed to and said that this could be the solution, but in other countries, what you see is increasing polarisation, and you have a gap of great swelling of the upper middle class, of the nouveau riche in the cities, but in the farms and in settlements outside cities, you see increasing poverty and increasing lack of options.

But I think the real importance of these protests that took place by fairly privileged people in the West against the WTO is that these might force governments to think of development in broader terms rather than just the GDP. Obviously, you can't suddenly impose higher labour standards, environment standards. The first step is to conceive development in broader terms, you don't want just greater GDP, you want people to live in a relatively pollution-free environment, you want them to have clean drinking water, access to good education, the boons of development that everyone longs for the world over.

This might be of interest to your readers, Marx was writing an article on free trade for a group of people in Belgium. He was never able to go there to deliver it, but he asked first of all whom was free trade for. A big question. It is free for the big bourgeoisie, but then he ends up saying, "What should I as a socialist do in this context do? Do I support it, or do I go against it? Because obviously I don't like what it stands for." At the end of the essay, he says that free trade will ultimately proletarialise the world, and create a world in which there will be a global working class and a global possibility of a solidarity among the workers of the world. On the basis that free trade will lead to conditions of material production that will be global, then, I support free trade. I draw many good insights from Marx, and I think he is a fantastic theorist of capitalism. I think that that the days of thinking about a global revolution are gone and the dangers of talking about global revolution are apparent to me. So you are left with this sort of conundrum, but I think, at least fighting for more democratic possibilities at the global level can lead to another kind of socialism.

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