Tutorial #6

: What were the central aims of the developing countries in the North-South Debate and how far did they achieve them?

Introduction Inequality and disparity in life quality and incomes have divided the world into two hemispheres, namely north and south hemisphere. Both hemispheres are divided mainly by four major dimensions: politics, technology, wealth and demography. Global North is comprised of industrialized countries characterized by its democratic government, technologically innovative with aging and wealthy population. The southern hemisphere or Global South comprises of developing countries which some of them have many of industrialized countries characteristics, but none of them have all characteristics above.1 The divide caused by inequalities and disparities between both hemispheres has created feeling of envy, resentment and exploitation on Global South as most attempts to gain leverage against the global north are opposed by developed countries in order to maintain their dominant position in world politics and economy. The struggle between both hemispheres for their own interests creates a debate that replaces West-East rivalries, and continuously occurs in international forums and issues. This essay aims to explore central aims of developing countries in the North-South debate and to assess the Global South achievements in reaching their objectives. Emergence of Third World Countries/Global South Almost all of third world countries emerged after Second World War. Exhausted and devastated, the colonial powers started to lose their colonies in spite of their intention of holding colonial territories after the Second World War. Upsurge of nationalism and political consciousness in colonial territories added with United States (US) reluctance to support colonialism made their intention never realize as decolonization process has already started in Asia that later followed by African states. These newly-independent states later found themselves between two opposing blocs in Cold War, US-led capitalist West bloc and Soviet Union (USSR)-led communist East bloc. The term Third World then used to distinguished these new states between First World of industrialized and democratic countries and Second World of USSR and its communist allies. However, after the fall of USSR in 1991, this states classification changed as the First World now becomes the Global North and the Third World becomes the Global South, while the Second World now describes a handful of countries in transition which have yet to join World Trade Organization and accepts its rule of free markets and free governments. The use of term Third World to refer developing countries, although still widely used, is considered no longer useful now as it carries Cold War baggage.2 Content North-South Debate Realizing the gap between them and developed countries, the central aim of developing countries is surely to reach the same level of developed countries by development and industrialization. This was done internationally by gaining fair price for their commodity, access to developed countries market and receiving foreign aid in form of financial and technical assistance. They
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Kegley, C. W. (2007). World politics; trend and transformation. Belmont: Thomson Wadsworth. Pp. 133 Ibid.

mostly used United Nations (UN) in achieving these objectives as their quantity in General Assembly allows them to press the institution to favor their interests and keep focusing on them, although developed countries higher position in Security Council and other international financial institutions in UN limits this leverage. The Global South Struggle An early struggle of developing countries in financing their development came up with proposal of a grant agency under UN called SUNFED (Special United Nations Fund for Economic Development) in 1953. Its control is divided equally between main contributors and other members while its fund in form of grant is used to finance economic and social infrastructure. The proposal gained wide support of developing countries and a few of developed countries but received opposition particularly from US. Lacked fund and support from developed countries, the proposal was put off and replaced by International Development Association (IDA), a branch of World Bank that provide soft loans for developing countries in September 1960. However, its voting power is based on contribution; therefore the decision-making is mostly on hold of developed countries as the main contributors. This way, developed countries is able to deflect the pressure, fulfill developing countries needs while maintain their grip on international development finance.3 The same also happened in creation of International Finance Corporation (IFC) in mid-1950s that was meant to promote investment in developing countries. The issue was taken out of UN and placed in World Bank where developed countries had dominant voices, thus shutting the Council or General Assembly to discuss or influence the statutes of the Corporation.4 NAM and G-77 Recognizing their lack of economic power and opportunities and potential political power which lay on their hand as sovereign states these new independent developing states started to create a new bloc to represent their interest and priorities. Refusing to follow either East or West bloc, the new bloc called themselves as Non-Aligned Movement (NAM). It has its origin out of AsiaAfrica conference held in Bandung, Indonesia in 1955. This was later followed by NAM first summit in Belgrade, Yugoslav in 1-6 September 1961 which called for cooperation among developing countries, discussed problems in international trade, aid for development and technical assistance. Before the establishment of NAM, developing countries had joined forces on a more ad-hoc basis. During the formation of the World Bank in 1944, Latin American countries succeeded in having development regarded as equally important as reconstruction. In the beginning of General Assembly (GA) developing countries from the south succeeded to demand more equitable regional representation of GA Vice Presidents and of judges chosen to serve on the International Court of Justice. Furthermore, during GATT (General Agreement on Tariffs and Trade) negotiations, agroup of 13 countries from the South succeeded to make concession from the rich countries for poorer countries.5 The Non-Aligned Movement then led into creation of bigger coalition of developing countries, namely G-77 (Group of 77) at UN on 15 June 1964. It is a grouping of 131 developing countries

Adams, N. A. (1993). Worlds apart; the north-south divide and international system. London: Zed Books. pp. 5758 4 Ibid. p. 59 5 Lund, J., & Swart, L. (2010). The group of 77; perspectives on its role in the un general assembly. New York: Center for UN Reform Education. p. 6

as of now, as the original name (G-77) was kept due to its historical significance.6 The bigger coalition was created after joint declaration by developing countries on 11 November 1963 during preparatory session of UN Conference on Trade and Development (UNCTAD, which will be explained more later). Indeed, the creation of G-77 was closely tied with formation of UNCTAD, as both was largely shaped by economic thought originating in Latin America especially from Raul Prebisch who lead preparatory committee of UNCTAD. Furthermore, the Joint Declaration of Seventy-Seven Developing Countries that marked the establishment of G77 was actually made at the conclusion of first session of UNCTAD.7 Although closely related to each other, G-77 differs from NAM in way that it gives more focus to economic issues. While NAM has taken on a wider scope of issues beside development such self-determination, anticolonialism, anti-racism, peaceful coexistence with the East and West blocs, disarmament, democratization of international institutions and question of Palestine, G-77 stresses upon economic development and other financial matters within the UN system. The coalition was formalized as the G-77 developing countries in October 1967 with the adoption of the Charter of Algiers. The Charter highlighted the shrinking share of developing countries due to import barriers and decline in terms of trade for primary commodity exporters while called for a new trade policy for development.8 Both the Nam and G-77 worked out ways to discuss and decide major foreign policy issues which most of them were pursued through the UN. They were most successful in the UN between the early 1960s and mid-1970s, when they managed to enlarge, for their benefit, the Security Council and the Economic and Social Council (ECOSOC). They succeeded to set up an enlarged disarmament committee, a committee on decolonization, a special committee on apartheid and UNCTAD. NAM also was a proponent in Palestine question in which NAM struggled for Palestinians rights. The struggle has resulted on GA resolution on the right of return for Palestinians refugee and reaffirmed the inalienable rights of the people of Palestine.9 On another hand, G77 has succeeded in creating UNCTAD, which kept negotiations on commodities, trade and investment on the UNs agenda. Together with NAM, it also worked to create New International Economic Order (NIEO, which also will be explained further later) in the seventies. It later initiated the creation of new institutions such as the UN Industrial Development Organization (UNIDO) and the International Fund for Agricultural Development (IFAD).10 G-77 also greatly influenced the work of the Second Committee of the GA that deals with financial and economic matters. This is due to the consensus driven nature of the Second committee and the super majority held by the G-77 in the GA. The majority leverage held by G77 also makes it has significant power in the UNs Fifth Committee, much to the Global North countries resentment. As a committee that deals with UNs administration and budget, the Fifth Committee is used by G-77 to have more money allocated to development, although G-77 should give in to the Global North as the biggest UN donors in some issues. 11

About the group of 77. (n.d.). Retrieved December 10, 2011, from The group of 77 at the united nations: http://www.g77.org/doc/index.html. 7 Ibid. 8 Sneyd, A. (n.d.). Group of 77. Retrieved December 10, 2011, from Globalization and autonomy: http://www.globalautonomy.ca/global1/glossary_entry.jsp?id=OR.0044. 9 Morphet, S. (2004). Multilateralism and the non-aligned movement: what is the global south is doing and where is it going? Global Governance, 517-537. pp. 525-526. 10 Lund, J., & Swart, L., op. cit. p. 14. 11 Ibid, p. 29

After Cold War ended, NAM had to reconsider its strategy. There are no more East-West blocs rivalries which NAM based its creation upon and after Belgrade summit in 1989, NAM recognized needs for strategy of integration in the world and a more flexible attitude towards the Global North. Although, it should be admitted that, by the end of Cold War, NAM and G-77 lack cohesion between their members as their level of development has differed their once common interests. Even in developing countries sphere, countries in Latin America (except Cuba) have been neither consistent, nor united in their positions toward the Global North, nor has their alliance with the Global South always been solid. This maybe because of countries in Latin America gained their independence more than a century later than many other countries in the Global South and thus didnt share the same degree of anti-colonial sentiments.12 The lack of cohesion also happened in G-77 as the members disagreed upon priorities in development policies. Developing countries that have fast-growing economies stresses on institutional efforts especially relating to trade while the poorer countries wish to keep the focus on ODA (Overseas Development Aid).13 UNCTAD One of Global South achievement was establishment of UNCTAD (United Nations Conference on Trade and Development). It was first proposed by a group of Latin American states, and then later gained support of most developing countries. The idea itself was met with cool reception by Western developing countries, led by the US. However, as the developing countries with their expanding numbers and growing unity, they could not prevent the idea from happening although they opposed it. It was known as the most successful period for the Global South in the struggle, as such unity and discipline among developing states was remarkable considering the great diversity that they have in social and economy aspects. A preparatory committee lead by Raul Presbich was made to make necessary arrangement and prepare agenda for the conference and his role was influential in guiding the conference. UNCTAD then came into being in 1964 with aim to maximize the trade, investment and development opportunities of developing countries and assist them in their efforts to integrate into the world economy on an equitable basis. The reason why Western developing countries reacted negatively to such an idea was that they feared the conference would tamper the financial institutions that served their economic interests. To dampen the growing demands of developing countries, some concession were made such as IMF scheme to save developing countries from export short-falls of their primary commodity. GATT (General Agreement on Trade and Tariffs) also started to look at developing countries problem while World Bank created IDA (International Development Association).14 Once it was known that the conference was aimed on vague issues of trade and development the idea was welcomed light-heartedly. Although the conference was known to have little immediate practical benefit or concessions to developing states, it was seen as the moment of unity and solidarity of developing countries even on issues where their interests substantially diverged. One of UNCTAD achievement was GSP (Generalized System of Preferences), a system in WTO (World Trade Organization) that allow least developed countries enjoys lower tariff than usual in member states. OPEC One of developing countries leverage is their commodities power that is shown in oil crisis between August-December 1973. The four-fold price increase imposed by OPEC (Organisation
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Ibid, p. 8 Ibid, p. 41 14 Adams, N. A. op. cit., p. 82

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of Petroleum Exporting Countries in response of US decision to supply the Israeli military during the Yom Kippur War shook the world economy. The shock created rift within NATO (North Atlantic Treaty Organization) and forced US to end its support to the war.It shows the host countries power against control of seven major western oil companies known as the seven sisters. This move inspired other raw commodities producers to emulate OPEC. In 1967, CIPEC (Counseil Intergouvernemental des Pays Exportateurs de Cuivre) was established with founding members such as Chile Zambia, Peru and Zaire. The Bauxite producers followed the suit in 1974 by creating the International Bauxite Association with founding members such as Jamaica, Guyana, Suriname, Guinea, Sierra Leone, Yugoslavia and Australia. However, compared to OPEC, the later organizations lacks cohesion and possibilities of substitution materials reduced their power in international economy. It should be noted that this strategy could not be used often. From 1981 onwards, nominal and real oil prices dropped until 1998. This is because of technical progress to save power and alternative energy resources such as nuclear power have been developed and boosted as high price of oil made it unviable anymore. OPEC also has lost its grip on oil prices as new competitors emerged. Britain, Norway and also Mexico became large producers of oil. Thus oil prices drop in 1896 triggered a shock for OPEC members which heavily dependent on oil exports for their incomes.15 NIEO In moment of shock from oil crisis, the developing countries took chance to propose a new international economic orders that tried to restructure international economic relations after fall of Bretton-Wood system in early 1970s. The process was started in 1974 when a draft Declaration on the Establishment of a New International Order was presented before General Assembly. Generally, the demands in NIEO were of three kinds, namely y Asserting general rules and principles of which should guide international economic relations y Calling for international action on specific issues or for changes in international institutions or the creation of new institutions and mechanisms y Calling for the developed countries to take a specific actions or measures at the national level favorable to developing nations In realization, two demands first mentioned above (changes in general rules and policies of developed countries) had very little impacts while in the third demand there were some fulfillment. These were realized in form of IMF concessions (reforms and adaptations), integrated commodities programs and preference for developing countries in WTO. Conclusion The central aim of Global South in North-South debate is development to reach the same level with developed countries. In international economic relations, the Global South has achieved so many successes especially in tariff preference and establishment of UNCTAD. In that moment, developing countries were able to show their solidarity against developed countries and by doing so; they could gain concessions from the global North. However, now it has lost its momentum, developed countries have regained their composure after oil shock and developing countries now lacks of cohesion with their own different interests.

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Raffer, k., & Singer, H. W. (2001). The economic north-south divide: six decades of unequal treatment. Cheltenham, UK: Edward Elgar Publishing. pp. 126-127