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Ê
À>ÛiÊ iÜÊ-iÀiÃ
'AD76A )HHJ:H
>C 6 #=6C<>C< 7DGA9
4HIS NEW SERIES OF SHORT ACCESSIBLE THINK
PIECES DEALS WITH
LEADING GLOBAL ISSUES OF RELEVANCE TO HUMANITY TODAY )NTENDED
FOR THE ENQUIRING READER AND SOCIAL ACTIVISTS IN THE .ORTH AND
THE 3OUTH AS WELL AS STUDENTS THE BOOKS EXPLAIN WHAT IS AT STAKE
AND QUESTION CONVENTIONAL IDEAS AND POLICIES $RAWN FROM MANY
DIFFERENT PARTS OF THE WORLD THE SERIES AUTHORS PAY PARTICULAR
ATTENTION TO THE NEEDS AND INTERESTS OF ORDINARY PEOPLE WHETHER
LIVING IN THE RICH INDUSTRIAL OR THE DEVELOPING COUNTRIES 4HEY
ALL SHARE A COMMON OBJECTIVE n TO HELP STIMULATE NEW THINKING
AND SOCIAL ACTION IN THE OPENING YEARS OF THE NEW CENTURY
'LOBAL )SSUES IN A #HANGING 7ORLD IS A JOINT INITIATIVE BY :ED
"OOKS IN COLLABORATION WITH A NUMBER OF PARTNER PUBLISHERS
AND NON
GOVERNMENTAL ORGANIZATIONS AROUND THE WORLD "Y
WORKING TOGETHER WE INTEND TO MAXIMIZE THE RELEVANCE AND
AVAILABILITY OF THE BOOKS PUBLISHED IN THE SERIES
0ARTICIPATING .'/S
"OTH %.$3 !MSTERDAM
#ATHOLIC )NSTITUTE FOR )NTERNATIONAL 2ELATIONS ,ONDON
#ORNER (OUSE 3TURMINSTER .EWTON
#OUNCIL ON )NTERNATIONAL AND 0UBLIC !FFAIRS .EW 9ORK
$AG (AMMARSKJÚLD &OUNDATION 5PPSALA
$EVELOPMENT '!0 7ASHINGTON $#
&OCUS ON THE 'LOBAL 3OUTH "ANGKOK
)"/. -ANILA
)NTER 0ARES /TTAWA
0UBLIC )NTEREST 2ESEARCH #ENTRE $ELHI
4HIRD 7ORLD .ETWORK 0ENANG
4HIRD 7ORLD .ETWORKn!FRICA !CCRA
7ORLD $EVELOPMENT -OVEMENT ,ONDON
LÕÌÊÌ
ÃÊ-iÀiÃ
#OMMUNITIES IN THE 3OUTH ARE FACING GREAT DIFlCULTIES IN COP
ING WITH GLOBAL TRENDS ) HOPE THIS BRAVE NEW SERIES WILL THROW
MUCH NEEDED LIGHT ON THE ISSUES AHEAD AND HELP US CHOOSE
THE RIGHT OPTIONS
-ARTIN +HOR $IRECTOR 4HIRD 7ORLD .ETWORK 0ENANG
4HERE IS NO MORE IMPORTANT CAMPAIGN THAN OUR STRUGGLE TO
BRING THE GLOBAL ECONOMY UNDER DEMOCRATIC CONTROL "UT THE
ISSUES ARE FEARSOMELY COMPLEX 4HIS 'LOBAL )SSUES SERIES IS A
VALUABLE RESOURCE FOR THE COMMITTED CAMPAIGNER AND THE EDU
CATED CITIZEN
"ARRY #OATES $IRECTOR 7ORLD $EVELOPMENT -OVEMENT 7$-
:ED "OOKS HAS LONG PROVIDED AN INSPIRING LIST ABOUT THE ISSUES
THAT TOUCH AND CHANGE PEOPLES LIVES 4HE 'LOBAL )SSUES SERIES
IS ANOTHER DIMENSION OF :EDS lNE RECORD ALLOWING ACCESS TO
A RANGE OF SUBJECTS AND AUTHORS THAT TO MY KNOWLEDGE VERY
FEW PUBLISHERS HAVE TRIED ) STRONGLY RECOMMEND THESE NEW
POWERFUL TITLES AND THIS EXCITING SERIES
*OHN 0ILGER AUTHOR
7E ARE ALL PART OF A GENERATION THAT ACTUALLY HAS THE MEANS TO
ELIMINATE EXTREME POVERTY WORLD
WIDE /UR TASK IS TO HARNESS
THE FORCES OF GLOBALIZATION FOR THE BENElT OF WORKING PEOPLE
THEIR FAMILIES AND THEIR COMMUNITIES n THAT IS OUR COLLECTIVE
DUTY 4HE 'LOBAL )SSUES SERIES MAKES A POWERFUL CONTRIBUTION
TO THE GLOBAL CAMPAIGN FOR JUSTICE SUSTAINABLE AND EQUITABLE
DEVELOPMENT AND PEACEFUL PROGRESS
'LENYS +INNOCK -%0
LÕÌÊÌ
ÃÊ
(OW TO MANAGE THE WORLD ECONOMY n AND MORE FUNDA
MENTALLY WHETHER HUMANITY WISHES IT TO GO IN AN EVER MORE
MARKET
ORIENTED TRANSNATIONAL CORPORATION
DOMINATED AND
CAPITAL
FOOTLOOSE DIRECTION n IS THE MOST IMPORTANT INTERNATIONAL
QUESTION OF OUR TIME )N THIS SHORT AND TRENCHANT HISTORY OF
THOSE BODIES n THE 7ORLD "ANK )-& 74/ AND 'ROUP OF
3EVEN n WHICH HAVE PROMOTED THIS ECONOMIC GLOBALIZATION
7ALDEN "ELLO
s POINTS TO THEIR MANIFEST FAILINGS
s EXAMINES THE MAJOR NEW IDEAS PUT FORWARD FOR REFORMING
THE MANAGEMENT OF THE WORLD ECONOMY
s ARGUES FOR A MUCH MORE FUNDAMENTAL SHIFT TOWARDS A DECEN
TRALIZED PLURALISTIC SYSTEM OF GLOBAL ECONOMIC GOVERNANCE
ALLOWING COUNTRIES TO FOLLOW DEVELOPMENT STRATEGIES SENSITIVE
TO THEIR OWN VALUES AND PARTICULAR MIX OF CONSTRAINTS AND
OPPORTUNITIES
LÕÌÊÌ
iÊÕÌ
À
7ALDEN "ELLO IS THE FOUNDING DIRECTOR OF &OCUS ON THE 'LOBAL
3OUTH A POLICY RESEARCH INSTITUTE BASED IN "ANGKOK 4HAILAND
0RIOR TO THAT HE WAS EXECUTIVE DIRECTOR OF THE )NSTITUTE FOR
&OOD AND $EVELOPMENT 0OLICY &OOD &IRST IN /AKLAND #ALI
FORNIA %DUCATED AT 0RINCETON 5NIVERSITY WHERE HE DID HIS
DOCTORATE IN SOCIOLOGY IN HE SUBSEQUENTLY TAUGHT AT THE
5NIVERSITY OF #ALIFORNIA "ERKELEY WHERE HE WAS A RESEARCH
ASSOCIATE WITH THE #ENTER FOR 3OUTH %AST !SIAN 3TUDIES #UR
RENTLY HE IS INTER ALIA 0ROFESSOR OF 3OCIOLOGY AND 0UBLIC
!DMINISTRATION AT THE 5NIVERSITY OF THE 0HILIPPINES
! RENOWNED CAMPAIGNER FOR INTERNATIONAL JUSTICE AND DE
VELOPMENT AND ONE OF THE LEADING INDEPENDENT CRITICS IN THE
3OUTH OF CURRENT GLOBAL ECONOMIC ARRANGEMENTS HE WAS THE
RECIPIENT IN OF THE 2IGHT ,IVELIHOOD !WARD (E IS THE
AUTHOR OF NUMEROUS BOOKS INCLUDING
4HE &UTURE IN THE "ALANCE
! 3IAMESE 4RAGEDY $EVELOPMENT AND $ISINTEGRATION IN -ODERN
4HAILAND WITH 3HEA #UNNINGHAM AND ,I +HENG 0OH
$ARK 6ICTORY 4HE 5NITED 3TATES 3TRUCTURAL !DJUSTMENT AND 'LOBAL
0OVERTY WITH 3HEA #UNNINGHAM
0EOPLE AND 0OWER IN THE 0ACIlC 4HE 3TRUGGLE FOR THE 0OST
#OLD 7AR
/RDER
$RAGONS IN $ISTRESS !SIAS -IRACLE %CONOMIES IN #RISIS WITH
3TEPHANIE 2OSENFELD
"RAVE .EW 4HIRD 7ORLD 3TRATEGIES FOR 3URVIVAL IN THE 'LOBAL
%CONOMY
$EVELOPMENT $EBACLE 4HE 7ORLD "ANK IN THE 0HILIPPINES
i}L>â>Ì\Ê`i>ÃÊvÀÊÊ
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$EGLOBALIZATION )DEAS FOR A .EW 7ORLD %CONOMY WAS lRST PUBLISHED IN
AND THIS NEW UPDATED EDITION IN BY
IN "ANGLADESH 4HE 5NIVERSITY 0RESS ,TD 2ED #RESCENT "UILDING
-OTIJHEEL #! 0/ "OX $HAKA
IN "URMA #AMBODIA ,AOS 4HAILAND AND 6IETNAM 7HITE ,OTUS #O ,TD
'0/ "OX "ANGKOK 4HAILAND
IN #ANADA &ERNWOOD 3T -ARGARETS "AY 2OAD (WY 3ITE 6
"OX "LACK 0OINT .OVA 3COTIA 7? 7
IN )NDIA "OOKS FOR #HANGE 2ICHMOND 2OAD "ANGALORE
IN -ALAYSIA 3TRATEGIC )NFORMATION 2ESEARCH $EPARTMENT 3)2$
.O : 0ETALING *AYA 3ELANGOR
IN 3OUTHERN !FRICA $AVID 0HILIP 0UBLISHERS 0TY ,TD 'ARlELD 2OAD
#LAREMONT 3OUTH !FRICA
IN THE REST OF THE WORLD :ED "OOKS ,TD #YNTHIA 3TREET ,ONDON C ?;
J@ AND 2OOM &IFTH !VENUE .EW 9ORK CN JH6
WWWZEDBOOKSCOUK
#OPYRIGHT ¥ 7ALDEN "ELLO
4HE RIGHT OF 7ALDEN "ELLO TO BE IDENTIlED AS THE AUTHOR OF THIS WORK HAS
BEEN ASSERTED BY HIM IN ACCORDANCE WITH THE #OPYRIGHT $ESIGNS AND
0ATENTS !CT
#OVER DESIGNED BY !NDREW #ORBETT
$ESIGNED AND SET IN -ONOTYPE "EMBO AND 6!' 2OUNDED BY %WAN
3MITH ,ONDON
0RINTED AND BOUND IN THE 5NITED +INGDOM BY #OX 7YMAN 2EADING
$ISTRIBUTED IN THE JH6 EXCLUSIVELY BY 0ALGRAVE -ACMILLAN A DIVISION OF
3T -ARTINS 0RESS AA8 &IFTH !VENUE .EW 9ORK CN
!LL RIGHTS RESERVED
! CATALOGUE RECORD FOR THIS BOOK IS AVAILABLE FROM THE "RITISH ,IBRARY
JH 8>E DATA IS AVAILABLE FROM THE ,IBRARY OF #ONGRESS
#ANADIAN 8>E DATA IS AVAILABLE FROM THE .ATIONAL ,IBRARY OF #ANADA
>H7C PB #ANADA
>H7C PB )NDIA
>H7C PB -ALAYSIA
>H7C HB :ED "OOKS
>H7C PB :ED "OOKS
ÌiÌÃ
!CKNOWLEDGEMENTS AND $EDICATION \IX
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4HE CRISIS OF THE GLOBALIST PROJECT \XII 4HREE MOMENTS
OF THE CRISIS OF GLOBALIZATION\XIII 4HE NEW ECONOMICS
OF 'EORGE 7 "USH \XVI 4HE ECONOMICS AND POLITICS OF
OVEREXTENSION \XX
Ê£Ê ÌÀ`ÕVÌ\Ê/
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&ROM TRIUMPH TO CRISIS \ -ULTILATERALISM IN
DISARRAY \ 4HE CRISIS OF THE NEOLIBERAL ORDER \
4HE CORPORATION UNDER QUESTION \ #RACKS IN
MILITARY HEGEMONY \ 4HE DEGENERATION OF LIBERAL
DEMOCRACY \ 4HE SPECTRE OF GLOBAL DEmATION \
4HE RISE OF THE MOVEMENT \ #ONTRADICTORY TRENDS
AFTER 3EPTEMBER \ @)MPERIAL OVERSTRETCH \
,IBERAL DEMOCRACY LOSES \ 0ORTO !LEGRE AND THE
FUTURE \
ÊÓÊ >À}>â}ÊÌ iÊ-ÕÌ ÊÊÌ iÊÌiÀ>Ì>Ê-ÞÃÌiÊ ÎÓ
4HE RISE OF 5.#4!$ \ 4HE "RETTON 7OODS
TWINS VERSUS THE 5. $EVELOPMENT SYSTEM \
4HE SOUTHERN CHALLENGE IN THE S \ 2IGHT
WING REACTION AND THE DEMONIZATION OF THE SOUTH \
2ESUBORDINATING THE SOUTH \ 4HE 7ORLD 4RADE
/RGANIZATION THIRD PILLAR OF THE SYSTEM \
4HE 'ROUP OF 3EVEN AN INTERNATIONAL DIRECTORATE \
ÊÎÊ -`iÃÌi««}Ê iVÀ>VÞÊ>ÌÊÌ
iÊ ÕÌ>ÌiÀ>Ê}iViÃÊ x
4HE 7ORLD "ANK \ 4HE )NTERNATIONAL -ONETARY
&UND \ 4HE 7ORLD 4RADE /RGANIZATION \
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4HE )-&S 3TALINGRAD \ 4HE PAST CATCHES UP \
-ELTZER AND THE 7ORLD "ANK \ 4HE 74/ ON THE
ROAD TO 3EATTLE \
ÊxÊ / iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ]Ê£nqÓääÓÊÊ ÇÇ
2EFORMING THE GLOBAL lNANCIAL ARCHITECTURE \
&ROM STRUCTURAL ADJUSTMENT TO POVERTY REDUCTION \
.ON
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MAKING AFlRMED \
$ECISION
MAKING AT THE 74/ &ROM 3EATTLE TO
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!N ECONOMIC SECURITY COUNCIL \ 4HE -ELTZER
#OMMISSION PROPOSAL \ 4HE @BACK
TO
THE
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SYSTEM SCHOOL \ 'EORGE 3OROSS ALTERNATIVE
SYSTEM \
ÊÇÊ / iÊÌiÀ>ÌÛi\Ê i}L>â>ÌÊ £äÇ
$ECONSTRUCTION \ $EGLOBALIZING IN A PLURALIST
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0ARTS OF THIS BOOK ORIGINALLY APPEARED IN A REPORT PREPARED FOR
THE #OMMISSION ON 'LOBALIZATION OF THE 0ARLIAMENT OF THE &ED
ERAL 2EPUBLIC OF 'ERMANY ) WOULD LIKE TO THANK 5LRICH VON
7EIZËCKER %LMAR !LTVATER -ARIANNE "EISHEIM AND THE OTHER
MEMBERS OF THE #OMMISSION AND ITS STAFF FOR THEIR ENCOURAGE
MENT AND CO
OPERATION
2OBERT -OLTENO OF :ED WAS AS USUAL EXTREMELY HELPFUL IN
MOVING THIS PROJECT FROM CONCEPTUALIZATION TO PUBLICATION AND )
AM VERY GRATEFUL FOR THIS
-Y CO
WORKERS IN &OCUS ON THE 'LOBAL 3OUTH AND THE 3OCIO
LOGY $EPARTMENT OF THE 5NIVERSITY OF THE 0HILIPPINES 50
PROVIDED A VERY SUPPORTIVE CONTEXT FOR THIS PROJECT AS DID THE
3OCIOLOGY $EPARTMENT AND THE #ENTER FOR 3OUTHEAST !SIAN 3TUDIES
OF THE 5NIVERSITY OF #ALIFORNIA AT ,OS !NGELES 5#,! WHERE
THE lNAL STAGES OF THE WRITING TOOK PLACE ) WISH TO EXPRESS MY
PROFOUND GRATITUDE TO THESE INSTITUTIONS AND FRIENDS
-OST OF THE IDEAS EXPRESSED HERE EMERGED OUT OF A COLLECTIVE
ENTERPRISE FROM A TRULY GLOBAL MOVEMENT IN WHICH ) HAVE HAD
THE EXTRAORDINARY LUCK TO PARTICIPATE )T IS TO ALL THE lNE PEOPLE
IN THIS MOVEMENT THAT ) WOULD LIKE TO DEDICATE THIS BOOK 4O BE
ESPECIALLY NOTED ARE COLLEAGUES COMRADES AND CO
WORKERS IN THE
7ORLD 3OCIAL &ORUM 73& /UR 7ORLD IS NOT FOR 3ALE #OALI
TION THE !SIAN 0EACE !LLIANCE AND THE )NTERNATIONAL &ORUM ON
'LOBALIZATION )&'
!NURADHA -ITTAL .ICOLA "ULLARD -ARYLOU -ALIG 2OBIN "ROAD
*OHN #AVANAGH 3HALMALI 'UTTAL !ILEEN +WA $EBI "ARKER "ARBARA
'AERLAN !NGKARB +ORSIEPORN *IM (EDDLE -ARYBETH "RANGEN
Ý VÜi`}iiÌÃ
&RED :ANORIA 4ESSIE :ANORIA -IKA :ANORIA )KE DE LA #RUZ 0ROSY
DE LA #RUZ 3URANUCH 4HONGSILA !MI &ERRER 0ATRICK -C'RATH
!NNETTE &ERRER !LLISON (ANDLER AND 6ERNIE #APARAS SUPPLIED
MUCH NEEDED ENCOURAGEMENT INSPIRATION AND FRIENDSHIP AT VAR
IOUS POINTS DURING THE WRITING PROCESS
&INALLY ) CANNOT THANK MY WIFE -ARIA %LENA !BESAMIS ENOUGH
FOR HER UNFAILING SUPPORT FRIENDSHIP AND COMPANIONSHIP THROUGH
OUT
7ALDEN "ELLO
,OS !NGELES
", 7",
/ iÊ
ÀÃÃÊvÊÌ iÊL>ÃÌÊ*ÀiVÌÊ
>`ÊÌ iÊ iÜÊ VVÃÊvÊiÀ}iÊ
7°Ê ÕÃ
3INCE THE %NGLISH EDITION OF THIS BOOK APPEARED IN /CTOBER
) HAVE HAD MORE SPACE AND TIME TO SPECULATE AND WRITE ABOUT THE
MEANING OF RECENT DEVELOPMENTS IN THE PROJECT OF GLOBALIZATION
4HIS &OREWORD BRINGS TOGETHER MY LATEST THOUGHTS ON THE SUBJECT
)N THE 7ORLD 4RADE /RGANIZATION WAS BORN 4HE OFFSPRING
OF EIGHT YEARS OF NEGOTIATIONS THE 74/ WAS HAILED IN THE ESTAB
LISHMENT PRESS AS THE GEM OF GLOBAL ECONOMIC GOVERNANCE IN THE
ERA OF GLOBALIZATION 4HE NEARLY TWENTY TRADE AGREEMENTS THAT
UNDERPINNED THE 74/ WERE PRESENTED AS COMPRISING A SET OF
MULTILATERAL RULES THAT WOULD ELIMINATE POWER AND COERCION FROM
TRADE RELATIONS BY SUBJECTING BOTH THE POWERFUL AND THE WEAK
TO A COMMON SET OF RULES BACKED BY AN EFFECTIVE ENFORCEMENT
APPARATUS 4HE 74/ WAS A LANDMARK DECLARED 'EORGE 3OROS
BECAUSE IT WAS THE ONLY SUPRANATIONAL BODY TO WHICH THE WORLDS
MOST POWERFUL ECONOMY THE 5NITED 3TATES WOULD SUBMIT ITSELF
)N THE 74/ IT WAS CLAIMED THE POWERFUL 5NITED 3TATES AND LOWLY
2WANDA HAD EXACTLY THE SAME NUMBER OF VOTES ONE
4RIUMPHALISM WAS THE NOTE SOUNDED DURING THE &IRST -INIS
TERIAL OF THE 74/ IN 3INGAPORE IN .OVEMBER WITH THE
74/ )NTERNATIONAL -ONETARY &UND )-& AND THE 7ORLD "ANK
ISSUING THEIR FAMOUS DECLARATION SAYING THAT THE TASK OF THE FUTURE
WAS THE CHALLENGE THAT NOW LAY IN MAKING THEIR POLICIES OF GLOBAL
TRADE lNANCE AND DEVELOPMENT @COHERENT SO AS TO LAY THE BASIS
FOR GLOBAL PROSPERITY
Ý i}L>â>Ì
/
iÊ
ÀÃÃÊvÊÌ
iÊL>ÃÌÊ*ÀiVÌ
"Y THE BEGINNING OF THE TRIUMPHALISM WAS GONE !S THE
&IFTH -INISTERIAL OF THE 74/ APPROACHES THE ORGANIZATION IS IN
GRIDLOCK ! NEW AGREEMENT ON AGRICULTURE IS NOWHERE IN SIGHT
AS THE 53! AND THE %UROPEAN 5NION STOUTLY DEFEND THEIR MULTI
BILLION
DOLLAR SUBSIDIES "RUSSELS IS ON THE VERGE OF IMPOSING SANC
TIONS ON 7ASHINGTON FOR MAINTAINING TAX BREAKS FOR EXPORTERS
THAT HAVE BEEN FOUND TO BE IN VIOLATION OF 74/ RULES WHILE
7ASHINGTON HAS THREATENED TO lLE A CASE WITH THE 74/ AGAINST
THE %5S DE FACTO MORATORIUM AGAINST GENETICALLY MODIlED FOODS
$EVELOPING COUNTRIES SOME ONCE HOPEFUL THAT THE 74/ WOULD
IN FACT BRING MORE EQUITY TO GLOBAL TRADE UNANIMOUSLY AGREE
THAT MOST OF WHAT THEY HAVE REAPED FROM 74/ MEMBERSHIP ARE
COSTS NOT BENElTS 4HEY ARE DEAD SET AGAINST OPENING THEIR MARKETS
ANY FURTHER EXCEPT UNDER COERCION AND INTIMIDATION )NSTEAD OF
HERALDING A NEW ROUND OF GLOBAL TRADE LIBERALIZATION THE #ANCUN
-INISTERIAL IS LIKELY TO ANNOUNCE A STALEMATE
4HE CONTEXT FOR UNDERSTANDING THIS STALEMATE AT THE 74/
IS THE CRISIS OF THE GLOBALIST PROJECT n THE MAIN ACHIEVEMENT OF
WHICH WAS THE ESTABLISHMENT OF THE 74/ n AND THE EMERGENCE
OF UNILATERALISM AS THE MAIN FEATURE OF 53 FOREIGN POLICY
"UT lRST SOME NOTES ON GLOBALIZATION AND THE GLOBALIST PROJECT
'LOBALIZATION IS THE ACCELERATED INTEGRATION OF CAPITAL PRODUCTION
AND MARKETS GLOBALLY A PROCESS DRIVEN BY THE LOGIC OF CORPORATE
PROlTABILITY
'LOBALIZATION HAS ACTUALLY HAD TWO PHASES THE lRST LASTING
FROM THE EARLY NINETEENTH CENTURY TILL THE OUTBREAK OF THE &IRST
7ORLD 7AR IN THE SECOND FROM THE EARLY S UNTIL TO
DAY 4HE INTERVENING PERIOD WAS MARKED BY THE DOMINANCE OF
NATIONAL CAPITALIST ECONOMIES CHARACTERIZED BY A SIGNIlCANT DEGREE
OF STATE INTERVENTION AND AN INTERNATIONAL ECONOMY WITH STRONG
CONSTRAINTS ON TRADE AND CAPITAL mOWS 4HESE DOMESTIC AND INTER
NATIONAL CONSTRAINTS ON THE MARKET WHICH WERE PRODUCED BY THE
ÀiÜÀ` Ý
DYNAMICS OF CLASS CONmICT INTERNALLY AND INTER
CAPITALIST COMPETI
TION INTERNATIONALLY WERE PORTRAYED BY THE NEOLIBERALS AS HAVING
CAUSED DISTORTIONS THAT COLLECTIVELY ACCOUNTED FOR THE STAGNATION
OF THE CAPITALIST ECONOMIES AND THE GLOBAL ECONOMY IN THE LATE
S AND EARLY S
!S IN THE lRST PHASE OF GLOBALIZATION THE SECOND PHASE WAS
MARKED BY THE COMING TO HEGEMONY OF THE IDEOLOGY OF NEO
LIBERALISM WHICH FOCUSED ON @LIBERATING THE MARKET VIA ACCELERATED
PRIVATIZATION DEREGULATION AND TRADE LIBERALIZATION 4HERE WERE
BROADLY TWO VERSIONS OF NEOLIBERAL IDEOLOGY A @HARD 4HATCHER
2EAGAN VERSION AND A @SOFT "LAIR3OROS VERSION GLOBALIZATION WITH
@SAFETY NETS "UT UNDERLYING BOTH APPROACHES WAS UNLEASHING
MARKET FORCES AND REMOVING OR ERODING CONSTRAINTS IMPOSED ON
TRANSNATIONAL lRMS BY LABOUR THE STATE AND SOCIETY
/
ÀiiÊ iÌÃÊvÊÌ
iÊ
ÀÃÃÊvÊL>â>Ì
4HERE HAVE BEEN THREE MOMENTS IN THE DEEPENING CRISIS OF THE
GLOBALIST PROJECT
4HE lRST WAS THE !SIAN lNANCIAL CRISIS OF 4HIS EVENT
WHICH LAID LOW THE PROUD @TIGERS OF %AST !SIA REVEALED THAT ONE
OF THE KEY TENETS OF THE GLOBALIZATION n THE LIBERALIZATION OF
THE CAPITAL ACCOUNT TO PROMOTE FREER mOWS OF CAPITAL ESPECIALLY
lNANCE OR SPECULATIVE CAPITAL n COULD BE PROFOUNDLY DESTABILIZING
4HE !SIAN lNANCIAL CRISIS WAS IN FACT SHOWN TO BE MERELY THE
LATEST OF AT LEAST EIGHT MAJOR lNANCIAL CRISES SINCE THE LIBERALIZATION
OF GLOBAL lNANCIAL mOWS BEGAN IN THE LATE S (OW PROFOUNDLY
DESTABILIZING CAPITAL MARKET LIBERALIZATION COULD BE WAS SHOWN
WHEN IN JUST A FEW WEEKS TIME A MILLION PEOPLE IN 4HAILAND AND
MILLION IN )NDONESIA WERE PUSHED BELOW THE POVERTY LINE
4HE !SIAN lNANCIAL CRISIS WAS THE @3TALINGRAD OF THE )-& THE
PRIME GLOBAL AGENT OF LIBERALIZED CAPITAL mOWS )TS RECORD IN THE
AMBITIOUS ENTERPRISE OF SUBJECTING SOME DEVELOPING AND
TRANSITIONAL ECONOMIES TO @STRUCTURAL ADJUSTMENT WAS REVISITED AND
FACTS THAT HAD BEEN POINTED OUT BY SUCH AGENCIES AS THE 5NITED
ÝÛ i}L>â>Ì
.ATIONS $EVELOPMENT 0ROGRAMME 5.$0 AND 5NITED .ATIONS
#ONFERENCE ON 4RADE AND $EVELOPMENT 5.#4!$ AS EARLY
AS THE LATE S NOW ASSUMED THE STATUS OF REALITIES 3TRUCTURAL
ADJUSTMENT PROGRAMMES DESIGNED TO ACCELERATE DEREGULATION TRADE
LIBERALIZATION AND PRIVATIZATION HAD ALMOST EVERYWHERE INSTITU
TIONALIZED STAGNATION WORSENED POVERTY AND INCREASED INEQUALITY
! PARADIGM IS REALLY IN CRISIS WHEN ITS BEST PRACTITIONERS DESERT
IT AS 4HOMAS +UHN POINTED OUT IN HIS CLASSIC 4HE 3TRUCTURE OF
3CIENTIlC 2EVOLUTIONS AND SOMETHING AKIN TO WHAT HAPPENED DUR
ING THE CRISIS OF THE #OPERNICAN PARADIGM IN PHYSICS OCCURRED
IN NEOCLASSICAL ECONOMICS SHORTLY AFTER THE !SIAN lNANCIAL CRISIS
WITH KEY INTELLECTUALS LEAVING THE FOLD n AMONG THEM *EFFREY 3ACHS
NOTED EARLIER FOR HIS ADVOCACY OF @FREE MARKET SHOCK TREATMENT IN
%ASTERN %UROPE IN THE EARLY S *OSEPH 3TIGLITZ FORMER CHIEF
ECONOMIST OF THE 7ORLD "ANK #OLUMBIA 0ROFESSOR *AGDISH "HAG
WATI WHO CALLED FOR GLOBAL CONTROLS ON CAPITAL mOWS AND lNANCIER
'EORGE 3OROS WHO CONDEMNED THE LACK OF CONTROLS IN THE GLOBAL
lNANCIAL SYSTEM THAT HAD ENRICHED HIM
4HE SECOND MOMENT OF THE CRISIS OF THE GLOBALIST PROJECT WAS
THE COLLAPSE OF THE 4HIRD -INISTERIAL OF THE 74/ IN 3EATTLE IN
$ECEMBER 3EATTLE WAS THE FATAL INTERSECTION OF THREE STREAMS
OF DISCONTENT AND CONmICT THAT HAD BEEN BUILDING FOR SOME TIME
s $EVELOPING COUNTRIES RESENTED THE INEQUITIES OF THE 5RUGUAY
2OUND AGREEMENTS THAT THEY FELT COMPELLED TO SIGN IN
s -ASSIVE POPULAR OPPOSITION TO THE 74/ EMERGED GLOBALLY
FROM MYRIAD SECTORS OF GLOBAL CIVIL SOCIETY INCLUDING FARMERS
lSHERFOLK LABOUR UNIONISTS AND ENVIRONMENTALISTS "Y POSING A
THREAT TO THE WELLBEING OF EACH SECTOR IN MANY OF ITS AGREEMENTS
THE 74/ MANAGED TO UNITE GLOBAL CIVIL SOCIETY AGAINST IT
s 4HERE WERE UNRESOLVED TRADE CONmICTS BETWEEN THE %5 AND
THE 53! ESPECIALLY IN AGRICULTURE WHICH HAD SIMPLY BEEN
PAPERED OVER BY THE 5RUGUAY 2OUND AGREEMENT
4HESE THREE VOLATILE ELEMENTS COMBINED TO CREATE THE EXPLO
SION IN 3EATTLE WITH THE DEVELOPING COUNTRIES REBELLING AGAINST
ÀiÜÀ` ÝÛ
.ORTHERN DIKTAT AT THE 3EATTLE #ONVENTION #ENTER PEOPLE
MASSING MILITANTLY IN THE STREETS AND DIFFERENCES PREVENTING THE
%5 AND 53! FROM ACTING IN CONCERT TO SALVAGE THE -INISTERIAL
)N A MOMENT OF LUCIDITY RIGHT AFTER THE 3EATTLE DÏBÊCLE "RITISH
3ECRETARY OF 3TATE 3TEPHEN "YERS CAPTURED THE ESSENCE OF THE CRISIS
@;4=HE 74/ WILL NOT BE ABLE TO CONTINUE IN ITS PRESENT FORM
4HERE HAS TO BE FUNDAMENTAL AND RADICAL CHANGE IN ORDER FOR IT
TO MEET THE NEEDS AND ASPIRATIONS OF ALL OF ITS MEMBERS
4HE THIRD MOMENT OF THE CRISIS WAS THE COLLAPSE OF THE STOCK
MARKET AND THE END OF THE #LINTON BOOM 4HIS WAS NOT JUST
THE BURSTING OF THE BUBBLE BUT A RUDE REASSERTION OF THE CLASSI
CAL CAPITALIST CRISIS OF OVERPRODUCTION THE MAIN MANIFESTATION OF
WHICH WAS MASSIVE OVERCAPACITY 0RIOR TO THE CRASH CORPORATE
PROlTS IN THE 53! HAD NOT GROWN SINCE 4HIS WAS RELATED
TO OVERCAPACITY IN THE INDUSTRIAL SECTOR THE MOST GLARING EXAMPLE
BEING SEEN IN THE TROUBLED TELECOMMUNICATIONS SECTOR WHERE ONLY
PER CENT OF INSTALLED CAPACITY GLOBALLY WAS BEING UTILIZED 4HE
STAGNATION OF THE REAL ECONOMY LED TO CAPITAL BEING SHIFTED TO
THE lNANCIAL SECTOR RESULTING IN THE DIZZYING RISE IN SHARE VALUES
"UT SINCE PROlTABILITY IN THE lNANCIAL SECTOR CANNOT DEVIATE TOO
FAR FROM THE PROlTABILITY OF THE REAL ECONOMY A COLLAPSE OF STOCK
VALUES WAS INEVITABLE AND THIS OCCURRED IN -ARCH LEADING
TO PROLONGED STAGNATION AND THE ONSET OF DEmATION
4HERE IS PROBABLY A BROADER STRUCTURAL REASON FOR THE LENGTH
OF THE CURRENT STAGNATION OR DEmATION AND ITS CONSTANT TEETERING
AT THE EDGE OF RECESSION 4HIS MAY BE AS A NUMBER OF ECONOMISTS
HAVE STATED THAT WE ARE AT THE TAIL END OF THE FAMOUS @+ONDRATIEFF
#YCLE !DVANCED BY THE 2USSIAN ECONOMIST .IKOLAI +ONDRA
TIEFF THIS THEORY SUGGESTS THAT THE PROGRESS OF GLOBAL CAPITALISM
IS MARKED NOT ONLY BY SHORT TERM BUSINESS CYCLES BUT ALSO BY
LONG TERM @SUPERCYCLES +ONDRATIEFF CYCLES ARE ROUGHLY lFTY TO
SIXTY YEAR LONG WAVES 4HE UPWARD CURVE OF THE +ONDRATIEFF CYCLE
IS MARKED BY THE INTENSIVE EXPLOITATION OF NEW TECHNOLOGIES
FOLLOWED BY A CREST AS TECHNOLOGICAL EXPLOITATION MATURES THEN
A DOWNWARD CURVE AS THE OLD TECHNOLOGIES PRODUCE DIMINISHING
ÝÛ i}L>â>Ì
RETURNS WHILE NEW TECHNOLOGIES ARE STILL IN AN EXPERIMENTAL STAGE
IN TERMS OF PROlTABLE EXPLOITATION AND lNALLY A TROUGH OR PRO
LONGED DEmATIONARY PERIOD
4HE TROUGH OF THE LAST WAVE WAS IN THE S AND S A
PERIOD MARKED BY THE 'REAT $EPRESSION AND THE 3ECOND 7ORLD
7AR 4HE ASCENT OF THE CURRENT WAVE BEGAN IN THE S AND THE
CREST WAS REACHED IN THE S AND S 4HE PROlTABLE EXPLOITA
TION OF THE POST
WAR ADVANCES IN THE KEY ENERGY AUTOMOBILE
PETROCHEMICAL AND MANUFACTURING INDUSTRIES ENDED WHILE THAT OF
INFORMATION TECHNOLOGY WAS STILL AT A RELATIVELY EARLY STAGE &ROM
THIS PERSPECTIVE THE @.EW %CONOMY OF THE LATE S WAS NOT A
TRANSCENDENCE OF THE BUSINESS CYCLE AS MANY ECONOMISTS BELIEVED
IT TO BE BUT THE LAST GLORIOUS PHASE OF THE CURRENT SUPERCYCLE
BEFORE THE DESCENT INTO PROLONGED DEmATION )N OTHER WORDS THE
UNIQUENESS OF THE CURRENT CONJUNCTURE LIES IN THE FACT THAT THE
DOWNWARD CURVE OF THE CURRENT SHORT
TERM CYCLE COINCIDES WITH
THE MOVE INTO DESCENT OF THE +ONDRATIEFF SUPERCYCLE 4O USE THE
WORDS OF ANOTHER FAMOUS ECONOMIST *OSEPH 3CHUMPETER THE
GLOBAL ECONOMY APPEARS TO BE HEADED FOR A PROLONGED PERIOD OF
@CREATIVE DESTRUCTION
/ iÊ iÜÊ VVÃÊvÊiÀ}iÊ7°Ê ÕÃ
4HE CRISIS OF GLOBALIZATION NEOLIBERALISM AND OVERPRODUCTION PRO
VIDES THE CONTEXT FOR UNDERSTANDING THE ECONOMIC POLICIES OF THE
"USH ADMINISTRATION NOTABLY ITS UNILATERALIST THRUST 4HE GLOBALIST
CORPORATE PROJECT EXPRESSED THE COMMON INTEREST OF THE GLOBAL
CAPITALIST ELITES IN EXPANDING THE WORLD ECONOMY AND THEIR FUNDA
MENTAL DEPENDENCE ON ONE ANOTHER (OWEVER GLOBALIZATION DID
NOT ELIMINATE COMPETITION AMONG THE NATIONAL ELITES )N FACT THE
RULING ELITES OF THE 53! AND %UROPE HAD FACTIONS THAT WERE MORE
NATIONALIST IN CHARACTER AS WELL AS MORE TIED FOR THEIR SURVIVAL AND
PROSPERITY TO THE STATE SUCH AS THE MILITARY
INDUSTRIAL COMPLEX IN
THE 53! )NDEED SINCE THE S THERE HAS BEEN A SHARP STRUGGLE
BETWEEN THE MORE GLOBALIST FACTION OF THE RULING ELITE STRESSING
ÀiÜÀ` ÝÛ
THE COMMON INTEREST OF THE GLOBAL CAPITALIST CLASS IN A GROWING
WORLD ECONOMY AND THE MORE NATIONALIST HEGEMONIST FACTION THAT
WANTED TO ENSURE THE SUPREMACY OF 53 CORPORATE INTERESTS
!S 2OBERT "RENNER HAS POINTED OUT THE POLICIES OF "ILL #LINTON
AND HIS 4REASURY 3ECRETARY 2OBERT 2UBIN PUT PRIME EMPHASIS ON
THE EXPANSION OF THE WORLD ECONOMY AS THE BASIS OF THE PROSPERITY
OF THE GLOBAL CAPITALIST CLASS &OR INSTANCE IN THE MID
S THEY
PUSHED A STRONG DOLLAR POLICY MEANT TO STIMULATE THE RECOVERY
OF THE *APANESE AND 'ERMAN ECONOMIES SO THEY COULD SERVE AS
MARKETS FOR 53 GOODS AND SERVICES 4HE EARLIER MORE NATIONALIST
2EAGAN ADMINISTRATION ON THE OTHER HAND HAD EMPLOYED A WEAK
DOLLAR POLICY TO REGAIN COMPETITIVENESS FOR THE 53 ECONOMY AT
THE EXPENSE OF THE *APANESE AND 'ERMAN ECONOMIES 7ITH THE
'EORGE 7 "USH ADMINISTRATION WE ARE BACK TO ECONOMIC POLI
CIES INCLUDING A WEAK DOLLAR POLICY THAT ARE MEANT TO REVIVE THE
53 ECONOMY AT THE EXPENSE OF THE OTHER CENTRE ECONOMIES AND
PUSH PRIMARILY THE INTERESTS OF THE 53 CORPORATE ELITE INSTEAD
OF THAT OF THE GLOBAL CAPITALIST CLASS UNDER CONDITIONS OF A GLOBAL
DOWNTURN
3EVERAL FEATURES OF THIS APPROACH ARE WORTH STRESSING
s "USHS POLITICAL ECONOMY IS VERY WARY OF A PROCESS OF GLOBAL
IZATION THAT IS NOT MANAGED BY A 53 STATE THAT ENSURES THAT
THE PROCESS DOES NOT DIFFUSE THE ECONOMIC POWER OF THE 53!
!LLOWING THE MARKET SOLELY TO DRIVE GLOBALIZATION COULD RESULT
IN KEY 53 CORPORATIONS BECOMING THE VICTIMS OF GLOBALIZATION
AND THUS COMPROMISING 53 ECONOMIC INTERESTS 4HUS DESPITE
THE FREE
MARKET RHETORIC WE HAVE A GROUP THAT IS VERY PROTEC
TIONIST WHEN IT COMES TO TRADE INVESTMENT AND THE MANAGE
MENT OF GOVERNMENT CONTRACTS )T SEEMS THAT THE MOTTO OF THE
"USHITES IS PROTECTIONISM FOR THE 53! AND FREE TRADE FOR THE
REST OF US
s 4HE "USH APPROACH INCLUDES A STRONG SCEPTICISM ABOUT MULTI
LATERALISM AS A WAY OF GLOBAL ECONOMIC GOVERNANCE SINCE WHILE
MULTILATERALISM MAY PROMOTE THE INTERESTS OF THE GLOBAL CAPITALIST
ÝÛ i}L>â>Ì
CLASS IN GENERAL IT MAY IN MANY INSTANCES CONTRADICT PARTICULAR
53 CORPORATE INTERESTS 4HE "USH COTERIES GROWING AMBIVA
LENCE TOWARDS THE 74/ STEMS FROM THE FACT THAT THE 53!
HAS LOST A NUMBER OF RULINGS THERE RULINGS THAT MAY HURT 53
CAPITAL BUT SERVE THE INTERESTS OF GLOBAL CAPITALISM AS A WHOLE
s &OR THE "USH PEOPLE STRATEGIC POWER IS THE ULTIMATE MODALITY OF
POWER %CONOMIC POWER IS A MEANS TO ACHIEVE STRATEGIC POWER
4HIS IS RELATED TO THE FACT THAT UNDER "USH THE DOMINANT FAC
TION OF THE RULING ELITE IS THE MILITARY INDUSTRIAL ESTABLISHMENT
THAT WON THE #OLD 7AR 4HE CONmICT BETWEEN GLOBALISTS AND
UNILATERALISTS OR NATIONALISTS ALONG THIS AXIS IS SHOWN IN THE AP
PROACH TOWARDS #HINA 4HE GLOBALIST APPROACH PUT THE EMPHASIS
ON ENGAGEMENT WITH #HINA SEEING ITS IMPORTANCE PRIMARILY AS
AN INVESTMENT AREA AND MARKET FOR 53 CAPITAL 4HE NATIONALISTS
ON THE OTHER HAND SEE #HINA MAINLY AS A STRATEGIC ENEMY AND
THEY WOULD RATHER CONTAIN IT THAN ASSIST ITS GROWTH
s .EEDLESS TO SAY THE "USH PARADIGM HAS NO ROOM FOR ENVIRON
MENTAL MANAGEMENT SEEING THIS TO BE A PROBLEM THAT OTHERS
HAVE TO WORRY ABOUT NOT THE 5NITED 3TATES 4HERE IS IN FACT A
STRONG CORPORATE LOBBY THAT BELIEVES THAT ENVIRONMENTAL CON
CERNS SUCH AS THAT SURROUNDING '-/S IS A %UROPEAN CONSPIRACY
TO DEPRIVE THE 53! OF ITS HIGH TECH EDGE IN GLOBAL COMPETITION
)F THESE ARE SEEN AS THE PREMISES FOR ACTION THEN THE FOLLOWING
PROMINENT ELEMENTS OF RECENT 53 ECONOMIC POLICY MAKE SENSE
s !CHIEVING CONTROL OVER -IDDLE %AST OIL 7HILE IT DID NOT EXHAUST
THE WAR AIMS OF THE ADMINISTRATION IN INVADING )RAQ IT WAS
CERTAINLY HIGH ON THE LIST 7ITH COMPETITION WITH %UROPE BE
COMING THE PRIME ASPECT OF THE TRANSATLANTIC RELATIONSHIP THIS
WAS CLEARLY AIMED PARTLY AT %UROPE "UT PERHAPS THE MORE
STRATEGIC GOAL WAS TO PRE EMPT THE REGIONS RESOURCES IN ORDER
TO CONTROL ACCESS TO THEM BY ENERGY POOR #HINA WHICH IS
SEEN AS THE 53!S STRATEGIC ENEMY
s !GGRESSIVE PROTECTIONISM IN TRADE AND INVESTMENT MATTERS 4HE 53!
HAS PILED UP ONE PROTECTIONIST ACT AFTER ANOTHER ONE OF THE
ÀiÜÀ` ÝÝ
MOST BRAZEN BEING TO HOLD UP ANY MOVEMENT AT THE 74/
NEGOTIATIONS BY DEFYING THE $OHA $ECLARATIONS UPHOLDING OF
PUBLIC HEALTH ISSUES OVER INTELLECTUAL PROPERTY CLAIMS BY LIM
ITING THE LOOSENING OF PATENT RIGHTS TO JUST THREE DISEASES IN
RESPONSE TO ITS POWERFUL PHARMACEUTICAL LOBBY 7HILE IT SEEMS
PERFECTLY WILLING TO SEE THE 74/ NEGOTIATIONS UNRAVEL 7ASH
INGTON HAS PUT MOST OF ITS EFFORTS IN SIGNING UP COUNTRIES INTO
BILATERAL OR MULTILATERAL TRADE DEALS SUCH AS THE &REE 4RADE OF
THE !MERICAS &4!! BEFORE THE %5 GETS THEM INTO SIMILAR
DEALS )NDEED THE TERM @FREE TRADE AGREEMENTS IS A MISNOMER
SINCE THESE ARE ACTUALLY PREFERENTIAL TRADE DEALS
s )NCORPORATING STRATEGIC CONSIDERATIONS INTO TRADE AGREEMENTS )N A
RECENT SPEECH 53 4RADE 2EPRESENTATIVE 2OBERT :OELLICK STATED
EXPLICITLY THAT @COUNTRIES THAT SEEK FREE
TRADE AGREEMENTS WITH
THE 5NITED 3TATES MUST PASS MUSTER ON MORE THAN TRADE AND
ECONOMIC CRITERIA IN ORDER TO BE ELIGIBLE !T A MINIMUM THESE
COUNTRIES MUST COOPERATE WITH THE 5NITED 3TATES ON ITS FOREIGN
POLICY AND NATIONAL SECURITY GOALS AS PART OF CRITERIA THAT
WILL GUIDE THE 53 SELECTION OF POTENTIAL &4! PARTNERS .EW
:EALAND PERHAPS ONE OF THE GOVERNMENTS MOST DOCTRINALLY
COMMITTED TO FREE TRADE HAS NEVERTHELESS NOT BEEN OFFERED A
FREE TRADE DEAL BECAUSE IT HAS A POLICY THAT PREVENTS NUCLEAR
SHIP VISITS WHICH THE 53! FEELS IS DIRECTED AT IT
s -ANIPULATION OF THE DOLLARS VALUE TO STICK THE COSTS OF ECONOMIC CRISIS
ON RIVALS AMONG THE CENTRE ECONOMIES AND REGAIN COMPETITIVENESS FOR
THE 53 ECONOMY ! SLOW DEPRECIATION OF THE DOLLAR VIS
Ì
VIS THE
EURO CAN BE INTERPRETED AS MARKET
BASED ADJUSTMENTS BUT THE
PER CENT FALL IN VALUE CANNOT BUT BE SEEN AS AT THE LEAST A
POLICY OF BENIGN NEGLECT 7HILE THE "USH ADMINISTRATION HAS
ISSUED DENIALS THAT THIS IS A BEGGAR
THY
NEIGHBOUR POLICY THE
53 BUSINESS PRESS HAS SEEN IT FOR WHAT IT IS AN EFFORT TO REVIVE
THE 53 ECONOMY AT THE EXPENSE OF THE %UROPEAN 5NION AND
OTHER CENTRE ECONOMIES
s !GGRESSIVE MANIPULATION OF MULTILATERAL AGENCIES TO PUSH THE INTERESTS
OF 53 CAPITAL 7HILE THIS MIGHT NOT BE TOO EASY TO ACHIEVE IN
ÝÝ i}L>â>Ì
THE 74/ OWING TO THE WEIGHT OF THE %UROPEAN 5NION IT
CAN BE MORE READILY DONE AT THE 7ORLD "ANK AND THE )-&
WHERE 53 DOMINANCE IS MORE EFFECTIVELY INSTITUTIONALIZED &OR
INSTANCE DESPITE SUPPORT FOR THE PROPOSAL FROM MANY %UROPEAN
GOVERNMENTS THE 53 4REASURY RECENTLY TORPEDOED THE )-&
MANAGEMENTS PROPOSAL FOR A 3OVEREIGN $EBT 2ESTRUCTURING
-ECHANISM 3$2- TO ENABLE DEVELOPING COUNTRIES TO RE
STRUCTURE THEIR DEBT WHILE GIVING THEM A MEASURE OF PROTECTION
FROM CREDITORS !LREADY A VERY WEAK MECHANISM THE 3$2-
WAS VETOED BY THE 53 4REASURY IN THE INTEREST OF 53 BANKS
s &INALLY AND ESPECIALLY RELEVANT TO OUR COMING DISCUSSIONS MAKING THE
OTHER CENTRE ECONOMIES AS WELL AS DEVELOPING COUNTRIES BEAR THE BURDEN
OF ADJUSTING TO THE ENVIRONMENTAL CRISIS 7HILE SOME OF THE "USH
PEOPLE DO NOT BELIEVE THERE IS AN ENVIRONMENTAL CRISIS OTHERS
KNOW THAT THE CURRENT RATE OF GLOBAL GREENHOUSE EMISSIONS IS
UNSUSTAINABLE (OWEVER THEY WANT OTHERS TO BEAR THE BRUNT OF
ADJUSTMENT SINCE THAT WOULD MEAN NOT ONLY EXEMPTING ENVIRON
MENTALLY INEFlCIENT 53 INDUSTRY FROM THE COSTS OF ADJUSTMENT
BUT HOBBLING OTHER ECONOMIES WITH EVEN GREATER COSTS THAN IF
THE 53 PARTICIPATED IN AN EQUITABLE ADJUSTMENT PROCESS THUS
GIVING THE 53 ECONOMY A STRONG EDGE IN GLOBAL COMPETITION
2AW ECONOMIC REALPOLITIK NOT FUNDAMENTALIST BLINDNESS LIES
AT THE ROOT OF 7ASHINGTONS DECISION NOT TO SIGN THE +YOTO
0ROTOCOL ON #LIMATE #HANGE
/ iÊ VVÃÊ>`Ê*ÌVÃÊvÊ"ÛiÀiÝÌiÃ
"EING HARNESSED VERY CLOSELY TO STRATEGIC ENDS ANY DISCUSSION OF
THE LIKELY OUTCOMES OF THE "USH ADMINISTRATIONS ECONOMIC POLI
CIES MUST TAKE INTO ACCOUNT BOTH THE STATE OF THE 53 ECONOMY
AND THE GLOBAL ECONOMY AND THE BROADER STRATEGIC PICTURE ! KEY
BASE FOR SUCCESSFUL IMPERIAL MANAGEMENT IS EXPANDING NATIONAL
AND GLOBAL ECONOMIES n SOMETHING PRECLUDED BY THE EXTENDED
PERIOD OF DEmATION AND STAGNATION AHEAD WHICH IS MORE LIKELY
TO SPUR INTERCAPITALIST RIVALRIES
ÀiÜÀ` ÝÝ
-OREOVER RESOURCES INCLUDE NOT ONLY ECONOMIC AND POLITICAL
RESOURCES BUT POLITICAL AND IDEOLOGICAL ONES AS WELL &OR WITHOUT
LEGITIMACY n WITHOUT WHAT 'RAMSCI CALLED @THE CONSENSUS OF THE
DOMINATED THAT A SYSTEM OF RULE IS JUST n IMPERIAL MANAGEMENT
CANNOT BE STABLE
&ACED WITH A SIMILAR PROBLEM OF SECURING THE LONG
TERM STABIL
ITY OF THEIR RULE THE ANCIENT 2OMANS CAME UP WITH THE SOLUTION
THAT CREATED WHAT WAS TILL THEN THE MOST FAR
REACHING CASE OF COL
LECTIVE MASS LOYALTY EVER ACHIEVED IT PROLONGED THE EMPIRE FOR
YEARS 4HE 2OMAN SOLUTION WAS NOT JUST OR EVEN PRINCIPALLY MILIT
ARY IN CHARACTER 4HE 2OMANS REALIZED THAT AN IMPORTANT COM
PONENT OF SUCCESSFUL IMPERIAL DOMINATION WAS CONSENSUS AMONG
THE DOMINATED CONCERNING THE @RIGHTNESS OF THE 2OMAN ORDER
!S SOCIOLOGIST -ICHAEL -ANN NOTES IN HIS CLASSIC 3OURCES OF 3OCIAL
0OWER THE @DECISIVE EDGE WAS NOT SO MUCH MILITARY AS POLITICAL
@4HE 2OMANS HE WRITES @GRADUALLY STUMBLED ON THE INVENTION
OF EXTENSIVE TERRITORIAL CITIZENSHIP 4HE EXTENSION OF 2OMAN
CITIZENSHIP TO RULING GROUPS AND NON
SLAVE PEOPLES THROUGHOUT THE
EMPIRE WAS THE POLITICAL BREAKTHROUGH THAT PRODUCED @PROBABLY THE
WIDEST EXTENT OF COLLECTIVE COMMITMENT YET MOBILIZED 0OLITICAL
CITIZENSHIP COMBINED WITH THE VISION OF THE EMPIRE PROVIDING
PEACE AND PROSPERITY FOR ALL TO CREATE THAT INTANGIBLE BUT ESSENTIAL
MORAL ELEMENT CALLED LEGITIMACY
.EEDLESS TO SAY EXTENSION OF CITIZENSHIP PLAYS NO ROLE IN THE
53 IMPERIAL ORDER )N FACT 53 CITIZENSHIP IS JEALOUSLY RESERVED FOR
A VERY TINY MINORITY OF THE WORLDS POPULATION AND ENTRY INTO 53
TERRITORY IS TIGHTLY CONTROLLED 3UBORDINATE POPULATIONS ARE NOT TO
BE INTEGRATED BUT KEPT IN CHECK EITHER BY FORCE OR THE THREAT OF
THE USE OF FORCE OR BY A SYSTEM OF GLOBAL OR REGIONAL RULES AND
INSTITUTIONS n THE 7ORLD 4RADE /RGANIZATION THE "RETTON 7OODS
SYSTEM .!4/ n THAT ARE INCREASINGLY BLATANTLY MANIPULATED TO
SERVE THE INTERESTS OF THE IMPERIAL CENTRE
4HOUGH EXTENSION OF UNIVERSAL CITIZENSHIP WAS NEVER A TOOL
IN THE !MERICAN IMPERIAL ARSENAL DURING ITS STRUGGLE WITH COM
MUNISM IN THE POST
3ECOND 7ORLD 7AR PERIOD 7ASHINGTON DID
ÝÝ i}L>â>Ì
COME UP WITH A POLITICAL FORMULA TO LEGITIMIZE ITS GLOBAL REACH
4HE TWO ELEMENTS OF THIS FORMULA WERE MULTILATERALISM AS A SYSTEM
OF GLOBAL GOVERNANCE AND LIBERAL DEMOCRACY
)N THE IMMEDIATE AFTERMATH OF THE #OLD 7AR THERE WERE IN
FACT WIDESPREAD EXPECTATIONS OF A MODERN
DAY VERSION OF 0AX
2OMANA 4HERE WAS HOPE IN LIBERAL CIRCLES THAT THE 53! WOULD
USE ITS SOLE SUPERPOWER STATUS TO UNDERGIRD A MULTILATERAL ORDER
THAT WOULD INSTITUTIONALIZE ITS HEGEMONY BUT ASSURE AN !UGUSTAN
PEACE GLOBALLY 4HIS WAS THE PATH OF ECONOMIC GLOBALIZATION AND
MULTILATERAL GOVERNANCE 4HIS WAS THE PATH ELIMINATED BY 'EORGE
7 "USHS UNILATERALISM
!S &RANCES &ITZGERALD OBSERVED IN &IRE IN THE ,AKE THE PROM
ISE OF EXTENDING LIBERAL DEMOCRACY WAS A VERY POWERFUL IDEAL
THAT ACCOMPANIED !MERICAN ARMS DURING THE #OLD 7AR 4ODAY
HOWEVER 7ASHINGTON
OR 7ESTMINSTER
TYPE LIBERAL DEMOCRACY IS
IN TROUBLE THROUGHOUT THE DEVELOPING WORLD WHERE IT HAS BEEN
REDUCED TO PROVIDING A FA ADE FOR OLIGARCHIC RULE AS IN THE 0HILIP
PINES PRE
-USHARRAF 0AKISTAN AND THROUGHOUT ,ATIN !MERICA )N
FACT LIBERAL DEMOCRACY IN !MERICA HAS BECOME BOTH LESS DEMO
CRATIC AND LESS LIBERAL #ERTAINLY FEW IN THE DEVELOPING WORLD SEE A
SYSTEM FUELLED AND CORRUPTED BY CORPORATE MONEY AS A MODEL
2ECOVERY OF THE MORAL VISION NEEDED TO CREATE CONSENSUS FOR
53 HEGEMONY WILL BE EXTREMELY DIFlCULT )NDEED THE THINKING IN
7ASHINGTON THESE DAYS IS THAT THE MOST EFFECTIVE CONSENSUS BUILDER
IS THE THREAT OF THE USE OF FORCE -OREOVER DESPITE THEIR TALK
ABOUT IMPOSING DEMOCRACY IN THE !RAB WORLD THE MAIN AIM OF
INmUENTIAL NEOCONSERVATIVE WRITERS LIKE 2OBERT +AGAN AND #HARLES
+RAUTHAMMER IS TRANSPARENT THE MANIPULATION OF LIBERAL DEMO
CRATIC MECHANISMS TO CREATE PLURALISTIC COMPETITION THAT WOULD DES
TROY !RAB UNITY "RINGING DEMOCRACY TO THE !RABS IS NOT AS MUCH
AN AFTERTHOUGHT AS A SLOGAN THAT IS UTTERED TONGUE IN CHEEK
4HE "USH PEOPLE ARE NOT INTERESTED IN CREATING A NEW 0AX
2OMANA 7HAT THEY WANT IS A 0AX !MERICANA WHERE MOST OF
THE SUBORDINATE POPULATIONS LIKE THE !RABS ARE KEPT IN CHECK BY
A HEALTHY RESPECT FOR LETHAL !MERICAN POWER WHILE THE LOYALTY
ÀiÜÀ` ÝÝ
OF OTHER GROUPS SUCH AS THE 0HILIPPINE GOVERNMENT IS PURCHASED
WITH THE PROMISE OF CASH 7ITH NO MORAL VISION TO BIND THE GLOBAL
MAJORITY TO THE IMPERIAL CENTRE THIS MODE OF IMPERIAL MANAGE
MENT CAN INSPIRE ONLY ONE THING RESISTANCE
4HE GREAT PROBLEM FOR UNILATERALISM IS OVEREXTENSION OR A MIS
MATCH BETWEEN THE GOALS OF THE 5NITED 3TATES AND THE RESOURCES
NEEDED TO ACCOMPLISH THESE GOALS /VEREXTENSION IS RELATIVE THAT
IS IT IS TO A GREAT DEGREE A FUNCTION OF RESISTANCE !N OVEREXTENDED
POWER MAY IN FACT BE IN A WORSE CONDITION EVEN WITH A SIGNIlCANT
INCREASE IN ITS MILITARY POWER IF RESISTANCE TO ITS POWER INCREASES
BY AN EVEN GREATER DEGREE !MONG THE KEY INDICATORS OF OVER
EXTENSION ARE THE FOLLOWING
s 7ASHINGTONS CONTINUING INABILITY TO CREATE A NEW POLITICAL
ORDER IN )RAQ THAT WOULD SERVE AS A SECURE FOUNDATION FOR
COLONIAL RULE
s ITS FAILURE TO CONSOLIDATE A PRO 53 REGIME IN !FGHANISTAN OUT
SIDE OF +ABUL
s THE INABILITY OF A KEY ALLY )SRAEL TO QUELL EVEN WITH 7ASHINGTONS
UNRESTRICTED SUPPORT THE 0ALESTINIAN PEOPLES UPRISING
s THE INmAMING OF !RAB AND -USLIM SENTIMENT IN THE -IDDLE
%AST 3OUTH !SIA AND 3OUTHEAST !SIA RESULTING IN MASSIVE IDEO
LOGICAL GAINS FOR )SLAMIC FUNDAMENTALISTS n WHICH WAS WHAT
/SAMA BIN ,ADEN HAD BEEN HOPING FOR IN THE lRST PLACE
s THE COLLAPSE OF THE #OLD 7AR !TLANTIC ALLIANCE AND THE EMER
GENCE OF A NEW COUNTERVAILING ALLIANCE WITH 'ERMANY AND
&RANCE AT THE CENTRE OF IT
s THE FORGING OF A POWERFUL GLOBAL CIVIL SOCIETY MOVEMENT AGAINST
53 UNILATERALISM MILITARISM AND ECONOMIC HEGEMONY THE MOST
RECENT SIGNIlCANT EXPRESSION OF WHICH IS THE GLOBAL ANTI WAR
MOVEMENT
s THE COMING TO POWER OF ANTI NEOLIBERAL ANTI 53 MOVEMENTS
IN 7ASHINGTONS OWN BACKYARD n "RAZIL 6ENEZUELA AND %CUADOR
n AS THE "USH ADMINISTRATION IS PREOCCUPIED WITH THE -IDDLE
%AST
ÝÝÛ i}L>â>Ì
s AN INCREASINGLY NEGATIVE IMPACT OF MILITARISM ON THE 53 ECO
NOMY AS MILITARY SPENDING BECOMES DEPENDENT ON DElCIT
SPENDING AND DElCIT SPENDING BECOMES MORE AND MORE DE
PENDENT ON lNANCING FROM FOREIGN SOURCES CREATING MORE
STRESSES AND STRAINS WITHIN AN ECONOMY ALREADY IN THE THROES OF
STAGNATION
)N CONCLUSION THE GLOBALIST PROJECT IS IN CRISIS 7HETHER IT CAN
MAKE A COMEBACK VIA A $EMOCRATIC OR LIBERAL 2EPUBLICAN PRESID
ENCY SHOULD NOT BE RULED OUT ESPECIALLY SINCE THERE ARE INmUENTIAL
GLOBALIST VOICES IN THE 53 BUSINESS COMMUNITY n AMONG THEM
'EORGE 3OROS n THAT ARE VOICING OPPOSITION TO THE UNILATERALIST
THRUST OF THE "USH ADMINISTRATION )N OUR VIEW HOWEVER THIS IS
UNLIKELY AND UNILATERALISM WILL REIGN FOR SOME TIME TO COME
7E HAVE IN SHORT ENTERED A HISTORICAL MAELSTROM MARKED BY
PROLONGED ECONOMIC CRISIS THE SPREAD OF GLOBAL RESISTANCE THE
REAPPEARANCE OF THE BALANCE OF POWER AMONG CENTRE STATES AND THE
RE
EMERGENCE OF ACUTE INTER
IMPERIALIST CONTRADICTIONS 7E MUST
HAVE A HEALTHY RESPECT FOR 53 POWER BUT WE MUST NOT OVERESTIMATE
IT 4HE SIGNS ARE THERE THAT THE 53! IS SERIOUSLY OVEREXTENDED AND
THAT WHAT APPEAR TO BE MANIFESTATIONS OF STRENGTH MIGHT IN FACT
SIGNAL STRATEGIC WEAKNESS
ÌiÃ
'EORGE 3OROS /N 'LOBALIZATION .EW 9ORK 0UBLIC !FFAIRS P
3EE 5NITED .ATIONS #ONFERENCE ON 4RADE AND $EVELOPMENT 4RADE
AND $EVELOPMENT 2EPORT AND "ARRY %ICHENGREEN AND $ONALD -ATHIESON
(EDGE &UND AND &INANCIAL -ARKETS /CCASIONAL 0APER 7ASHINGTON $#
)NTERNATIONAL -ONETARY &UND
#HOMTHONGDI *ACQUES
CHAI @4HE )-&S !SIAN ,EGACY IN 0RAGUE
7HY 7E .EED TO $ECOMMISSION THE )-& AND THE 7ORLD "ANK "ANGKOK &OCUS
ON THE 'LOBAL 3OUTH PP
1UOTED IN @$EADLINE 3ET FOR 74/ 2EFORMS 'UARDIAN .EWS 3ERVICE
*ANUARY
3EE 2OBERT "RENNER 4HE "OOM AND THE "UBBLE .EW 9ORK 6ERSO
PP n
ÀiÜÀ` ÝÝÛ
$AVID (ARVEY SPEECH AT #ONFERENCE ON 4RENDS IN 'LOBALIZATION
5NIVERSITY OF #ALIFORNIA AT 3ANTA "ARBARA n -AY
@:OELLICK 3AYS &4! #ANDIDATES -UST 3UPPORT 53 &OREIGN 0OLICY
)NSIDE 53 4RADE -AY 4HIS ARTICLE SUMMARIZES AN -AY SPEECH
BY :OELLICK
&OR THE SHARPENING CONmICTS BETWEEN THE 53 4REASURY $EPARTMENT
AND )-& OFlCIALS SEE .ICOLA "ULLARD @4HE 0UPPET -ASTER 3HOWS (IS (AND
&OCUS ON 4RADE !PRIL HTTPFOCUSWEBPRGPOPUPSARTICLESWINDOW
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-ICHAEL -ANN 4HE 3OURCES OF 3OCIAL 0OWER VOL #AMBRIDGE #AM
BRIDGE 5NIVERSITY 0RESS P
&RANCES &ITZGERALD &IRE IN THE ,AKE .EW 9ORK 2ANDOM (OUSE
P @4HE IDEA THAT THE MISSION OF THE 5NITED 3TATES WAS TO BUILD DEMO
CRACY AROUND THE WORLD HAD BECOME A CONVENTION OF !MERICAN POLITICS IN
THE S !MONG CERTAIN CIRCLES IT WAS MORE OR LESS ASSUMED THAT DEMOCRACY
THAT IS ELECTORAL DEMOCRACY COMBINED WITH PRIVATE OWNERSHIP AND CIVIL LIBER
TIES WAS WHAT THE 5NITED 3TATES HAD TO OFFER THE 4HIRD 7ORLD $EMOCRACY
PROVIDED NOT ONLY THE BASIS FOR !MERICAN OPPOSITION TO #OMMUNISM BUT
THE PRACTICAL METHOD TO MAKE SURE THAT OPPOSITION WORKED
3EE 'EORGE 3OROS @!MERICAS 2OLE IN THE 7ORLD SPEECH AT THE 0AUL
( .ITZE 3CHOOL OF !DVANCED )NTERNATIONAL 3TUDIES 7ASHINGTON $#
-ARCH .OTING THAT HE WAS FOR INTERVENTION IN THE "ALKANS INCLUDING
A @.!4/ INTERVENTION WITHOUT 5. AUTHORIZATION 3OROS DENOUNCED THE
WAR WITH )RAQ ON THE GROUNDS THAT IT STEMS FROM A FUNDAMENTALISM THAT IS
UNSOUND AND WREAKING HAVOC WITH THE 53!S RELATIONS WITH THE REST OF THE
WORLD 4HE ARGUMENTS HE MUSTERS ARE THOSE HEARD NOT ONLY IN LIBERAL DEMO
CRATIC CIRCLES IN 7ASHINGTON BUT ALSO IN @PRAGMATIC 2EPUBLICAN PARTY CIRCLES
AND 7ALL 3TREET
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4HIS BOOK IS ABOUT THE GENESIS AND DEVELOPMENT OF THE CURRENT
SYSTEM OF GLOBAL ECONOMIC GOVERNANCE AND ALTERNATIVES TO IT )T
FOCUSES ON INSTITUTIONS THAT GO UNDER THE RUBRIC OF MULTILATERAL
INSTITUTIONS SPECIlCALLY THE '
THE "RETTON 7OODS INSTITUTIONS
AND THE 7ORLD 4RADE /RGANIZATION 7HILE GOVERNANCE n A NICE
NEUTRAL WORD n IS OFTEN DESCRIBED AS THE FUNCTION OF THESE INSTITU
TIONS A MORE APPROPRIATE DESCRIPTION OF THEIR ROLE MIGHT BE MAIN
TENANCE OF THE HEGEMONY OF THE SYSTEM OF GLOBAL CAPITALISM AND
PROMOTION OF THE PRIMACY OF THE STATES AND ECONOMIC INTERESTS
THAT MAINLY BENElT FROM IT
!ROUND THE MID
S THIS SYSTEM OF GLOBAL ECONOMIC GOVERN
ANCE ENTERED INTO CRISIS 4HE CRISIS OF THE MULTILATERAL INSTITUTIONS
HOWEVER IS PART OF A BIGGER CRISIS OF LEGITIMACY THAT IS AFFECTING
THE SYSTEM OF GLOBAL CAPITALISM 4HE MOST OBVIOUS MANIFESTATION
OF THIS CRISIS WAS THE GROWTH OF A POWERFUL MOVEMENT THAT CON
FRONTED THE REPRESENTATIVES OF THE BIG POWERS THE BIG CORPORATIONS
AND THE MULTILATERAL ORGANIZATIONS IN CITY AFTER CITY MEETING AFTER
MEETING THE MOST HISTORIC BEING NOW KNOWN AS THE @"ATTLE OF
3EATTLE 3EPTEMBER STOPPED THE MOVEMENT IN ITS TRACKS AND
MANY OBSERVERS FROM THE ESTABLISHMENT CONlDENTLY WROTE IT OFF AS
A SIGNIlCANT GLOBAL ACTOR !S THE MASSIVE ASSEMBLIES IN "ARCELONA IN
EARLY -ARCH ON THE OCCASION OF THE %UROPEAN 5NION SUM
MIT AND IN 0ORTO !LEGRE A FEW WEEKS EARLIER AT THE 7ORLD 3OCIAL
&ORUM 73& REVEALED HOWEVER THEY WERE WRONG
)T IS THE DIFFERENT DIMENSIONS OF THIS BROADER CRISIS THAT ARE
Ó i}L>â>Ì
SKETCHED OUT IN THIS INTRODUCTION 3PECIlCALLY WE WILL LOOK AT SIX
INTERSECTING CRISES THOSE OF MULTILATERALISM THE NEOLIBERAL VISION
AND ORDER THE CORPORATION THE SYSTEM OF MILITARY HEGEMONY
LIBERAL DEMOCRACY AND THE GLOBAL PRODUCTION SYSTEM
ÀÊ/ÀÕ«
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4HE LAST DECADE OF THE TWENTIETH CENTURY BEGAN WITH THE RE
SOUNDING COLLAPSE OF THE SOCIALIST ECONOMIES OF %ASTERN %UROPE
AND A LOT OF TRIUMPHALIST TALK ABOUT THE GENESIS OF A NEW MARKET
DRIVEN GLOBAL ECONOMY THAT RENDERED BORDERS OBSOLETE AND RODE
ON THE ADVANCES OF INFORMATION TECHNOLOGY 4HE KEY AGENTS OF
THE NEW GLOBAL ECONOMY WERE THE TRANSNATIONAL CORPORATIONS
DEPICTED AS THE SUPREME INCARNATION OF MARKET FREEDOM OWING
TO THEIR SUPERIOR ABILITY TO BRING ABOUT THE MOST EFlCIENT MIX OF
LAND LABOUR CAPITAL AND TECHNOLOGY
(ALFWAY THROUGH THE DECADE THE 7ORLD 4RADE /RGANIZATION
74/ WAS BORN 0ARTISANS OF GLOBALIZATION CLAIMED IT WOULD
PROVIDE THE LEGAL AND INSTITUTIONAL SCAFFOLDING FOR THE NEW GLOBAL
ECONOMY "Y CREATING A RULES
BASED GLOBAL SYSTEM GROUNDED IN
THE PRIMORDIAL PRINCIPLE OF FREE TRADE THE 74/ WOULD SERVE
AS THE CATALYST OF AN ECONOMIC PROCESS THAT WOULD BRING ABOUT
THE GREATEST GOOD FOR THE GREATEST NUMBER )T WAS THE THIRD PILLAR
OF A HOLY TRINITY THAT WOULD HOLD UP THE NEW ECONOMIC ORDER
THE OTHER TWO BEING THE )NTERNATIONAL -ONETARY &UND )-&
WHICH PROMOTED EVER FREER GLOBAL CAPITAL mOWS AND THE 7ORLD
"ANK WHICH WOULD SUPERVISE THE TRANSFORMATION OF DEVELOPING
COUNTRIES ALONG FREE MARKET LINES AND MANAGE THEIR INTEGRATION
INTO THE GLOBAL ECONOMY
ÕÌ>ÌiÀ>ÃÊÊ Ã>ÀÀ>Þ
9ET EVEN AS THE PROPHETS OF GLOBALIZATION TALKED ABOUT THE IN
CREASING OBSOLESCENCE OF THE NATION
STATE THE MAIN BENElCIARY
OF THE NEW POST
#OLD 7AR GLOBAL ORDER WAS THE 5NITED 3TATES
ÌÀ`ÕVÌ Î
4HOUGH IT WAS SUPPOSEDLY A MECHANISM FOR FREER TRADE THE 74/S
MOST IMPORTANT AGREEMENTS PROMOTED MONOPOLY FOR 53 lRMS THE
4RADE
2ELATED )NTELLECTUAL 0ROPERTY 2IGHTS !GREEMENT 42)0S
CONSOLIDATED THE HOLD OVER HIGH
TECH INNOVATIONS BY 53 CORPORA
TIONS SUCH AS )NTEL -ICROSOFT AND -ONSANTO WHILE THE !GREEMENT
ON !GRICULTURE INSTITUTIONALIZED A SYSTEM OF MONOPOLISTIC COMPETI
TION FOR THIRD
COUNTRY MARKETS BETWEEN THE AGRIBUSINESS INTERESTS
OF THE 5NITED 3TATES AND THE %UROPEAN 5NION
7HEN THE !SIAN lNANCIAL CRISIS ENGULFED COUNTRIES THAT HAD
BEEN SEEN BY MANY IN THE BUSINESS COMMUNITY AS !MERICAS
MOST FORMIDABLE COMPETITORS 7ASHINGTON DID NOT TRY TO SAVE THE
!SIAN ECONOMIES BY PROMOTING EXPANSIONARY POLICIES )NSTEAD IT
USED THE )-& TO DISMANTLE THE STRUCTURES OF STATE
ASSISTED !SIAN
CAPITALISM THAT HAD BEEN REGARDED AS FORMIDABLE BARRIERS TO THE
ENTRY OF GOODS AND INVESTMENTS FROM 53 TRANSNATIONALS THAT HAD
BEEN CLAMOURING VOCIFEROUSLY TO GET THEIR PIECE OF THE @!SIAN
MIRACLE )T WAS LESS THEIR BELIEF IN SPREADING THE ALLEGED BENElTS
OF FREE TRADE THAN MAXIMIZING GEO
ECONOMIC AND GEO
STRATEGIC
ADVANTAGE THAT LAY BEHIND 53 SUPPORT FOR THE POLICIES OF THE )-&
7ORLD "ANK AND 74/
!CTING TO ACHIEVE ITS INTERESTS UNDER MULTILATERAL COVER WAS THE
PREFERRED 53 STRATEGY FOR MOST OF THE POST
WAR PERIOD WHETHER
IT WAS THE "RETTON 7OODS INSTITUTIONS THE 5NITED .ATIONS OR THE
'ROUP OF 3EVEN THAT PROVIDED THE FRAMEWORK FOR @HEGEMONIC
LEADERSHIP 9ET WHEN THESE INSTITUTIONS GOT IN THE WAY OF 53
INTERESTS 7ASHINGTON DID NOT HESITATE TO ACT UNILATERALLY 4HIS WAS
INCREASINGLY THE CASE IN THE S WITH REMOVAL OF THE INCENTIVES
FOR MULTILATERAL BEHAVIOUR POSED BY 3OVIET COMPETITION
4HE INSTRUMENTAL USE OF MULTILATERAL AGENCIES WAS STARK WHEN IT
CAME TO THE 5. 7HILE USING THE 5NITED .ATIONS TO PROVIDE COVER
FOR ITS POLICY OF ISOLATING )RAQ 7ASHINGTON ALSO REFUSED TO PAY ITS
DUES TO THE 5. OWING TO THE INmUENCE OF THE 2EPUBLICAN RIGHT
ANGRY AT THE WORLD BODYS NOT KOWTOWING WHOLEHEARTEDLY TO 53
POLICY /R THE 53! SIMPLY DISREGARDED THE 5. WHEN IT COULD
NOT GET A MANDATE AND PROCEEDED TO WORK ITS WILL THROUGH MORE
{ i}L>â>Ì
PLIABLE INSTITUTIONS AS IT DID WHEN IT RESORTED TO .!4/ COVER FOR
THE BOMBING OF 9UGOSLAVIA DURING THE +OSOVO CONmICT IN
4HE '
n LATER '
WITH THE ADDITION OF 2USSIA n EMERGED
IN THE S TO PROVIDE A MECHANISM FOR MORE MULTILATERALLY
SHARED DECISION
MAKING AMONG THE ADVANCED CAPITALIST COUNTRIES
ESPECIALLY IN ECONOMIC MATTERS 9ET ESPECIALLY UNDER THE ADMIN
ISTRATION OF 'EORGE 7 "USH 7ASHINGTON HAS EMBARKED ON A
UNILATERALIST COURSE THAT HAS BROUGHT IT INTO SHARP CONmICT WITH
OTHER MEMBERS ON THE BURNING ISSUES OF BANNING LAND MINES
CLIMATE CHANGE MISSILE DEFENCE AND RECONCILIATION BETWEEN THE
TWO +OREAS 7ASHINGTONS BRUSQUE JUNKING OF A PAINSTAKINGLY
NEGOTIATED AGREEMENT THE +YOTO 0ROTOCOL ON #LIMATE #HANGE
MARKED A NEW LOW IN UNILATERALIST BEHAVIOUR
4HE '
WAS AT ITS NADIR WHEN IT HELD ITS ANNUAL SUMMIT IN
'ENOA IN *ULY WITH OVER PEOPLE COMING FROM
%UROPE AND ALL OVER THE WORLD TO PROTEST AT THE FRAMEWORK OF
NEOLIBERALISM WITH A GOOD DOSE OF !MERICAN UNILATERALISM THAT
IT WAS IMPOSING ON THE GLOBE
4HE EVENTS OF 3EPTEMBER LED SOME TO EXPECT A RE
SURGENCE OF MULTILATERALISM AS THE 53! SOUGHT TO FORGE A GLOBAL
MILITARY ALLIANCE AGAINST TERRORISM #O
OPERATION BETWEEN THE
53! AND THE %UROPEAN 5NION SAVED THE &OURTH -INISTERIAL OF
THE 74/ IN .OVEMBER FROM GOING THE WAY OF THE 4HIRD
-INISTERIAL IN 3EATTLE WHICH HAD COLLAPSED IN DISARRAY 9ET THE
"USH ADMINISTRATION WAS BACK IN lNE UNILATERALIST FORM A FEW
MONTHS LATER AS IT WITHDREW FROM THE NEWLY FORMED )NTERNATIONAL
#RIMINAL #OURT AND SIGNALLED ITS DETERMINATION NOT TO RENEW THE
!NTI
"ALLISTIC
-ISSILE $EFENSE 4REATY THAT 7ASHINGTON HAD NEGOTI
ATED WITH THE 3OVIET 5NION IN
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)NCREASING RESORT TO UNILATERALISM AND THE BRAZEN MANIPULATION
OF MULTILATERAL MECHANISMS TO ACHIEVE HEGEMONY BY THE 5NITED
3TATES WAS AN IMPORTANT SOURCE OF THE CRISIS OF LEGITIMACY THAT BE
ÌÀ`ÕVÌ x
GAN TO GRIP THE GLOBAL ORDER IN THE LATE S "UT EQUALLY IMPOR
TANT AS THE EROSION OF MULTILATERALISM AS A SOURCE OF DE
LEGITIMATION
WAS THE SPREADING REALIZATION THAT THE GLOBAL NEOLIBERAL REGIME
RESTING ON FREE TRADE AND FREE MARKETS COULD NO LONGER DELIVER ON
ITS PROMISE 4HAT THE SYSTEM COULD NOT CREATE PROSPERITY FOR ALL
BUT ONLY THE ILLUSION OF IT WAS SOMETHING THAT MANY OBSERVERS HAD
KNOWN FOR SOME TIME (OWEVER THE REALITIES OF GROWING GLOBAL
POVERTY AND INEQUALITY WERE NEUTRALIZED BY THE HIGH GROWTH
RATES AND THE PROSPERITY OF A FEW ENCLAVES OF THE WORLD ECONOMY
LIKE %AST !SIA IN THE S WHICH WERE MISTAKENLY PAINTED AS
PARAGONS OF MARKET
LED DEVELOPMENT 7HEN THE !SIAN ECONOMIES
COLLAPSED IN THE LONG HOT SUMMER OF HOWEVER THE FOLLIES OF
NEOLIBERAL ECONOMICS CAME TO THE FORE !LL THE TALK ABOUT THE !SIAN
lNANCIAL CRISIS BEING CAUSED BY CRONY CAPITALISM COULD NOT OBSCURE
THE FACT THAT IT WAS THE LIBERATION OF SPECULATIVE CAPITAL FROM THE
CONSTRAINTS OF REGULATION LARGELY IN RESPONSE TO PRESSURE FROM THE
)-& THAT BROUGHT ABOUT %AST !SIAS COLLAPSE 4HE )-& ALSO CAME
UNDER SEVERE PUBLIC SCRUTINY FOR IMPOSING DRACONIAN PROGRAMMES
ON THE !SIAN ECONOMIES IN THE WAKE OF THE CRISIS n PROGRAMMES
THAT MERELY ACCELERATED ECONOMIC CONTRACTION n WHILE PUTTING
TOGETHER MULTI
BILLION
DOLLAR RESCUE PACKAGES TO SAVE NOT THE CRISIS
ECONOMIES BUT FOREIGN BANKS AND SPECULATIVE INVESTORS
4HE )-&S ROLE IN %AST !SIA TRIGGERED A RE
EXAMINATION OF
ITS ROLE IN IMPOSING STRUCTURAL ADJUSTMENT PROGRAMMES IN MUCH
OF !FRICA 3OUTH !SIA AND ,ATIN !MERICA IN THE S AND THE
FACT THAT THESE PROGRAMMES HAD AS THEY DID IN !SIA EXACERBATED
STAGNATION WIDENED INEQUALITIES AND DEEPENED POVERTY NOW BE
CAME WIDELY REALIZED
4HE !SIAN lNANCIAL CRISIS TRIGGERED THE UNRAVELLING OF THE LEGITI
MACY OF THE )-& )N THE CASE OF THE 74/ THE SITUATION WAS
EVEN MORE DRAMATIC )N THE YEARS FOLLOWING THE FOUNDING OF THE
74/ IN GROWING NUMBERS OF GOVERNMENTS COMMUNITIES
AND SOCIAL MOVEMENTS BEGAN TO REALIZE THAT IN SIGNING ON TO THE
74/ THEIR GOVERNMENTS HAD SIGNED ON TO A CHARTER FOR CORPORATE
RULE THAT CONSUMER ADVOCATE 2ALPH .ADER CALLED THE PRINCIPLE
È i}L>â>Ì
OF @TRADE àBER ALLES n OR TRADE ABOVE EQUITY JUSTICE ENVIRONMENT
AND PRACTICALLY EVERYTHING ELSE THEY HELD DEAR -ANY DEVELOPING
COUNTRY GOVERNMENTS DISCOVERED THAT IN SIGNING ON THEY HAD
SIGNED AWAY THEIR RIGHTS TO DEVELOPMENT 4HE MANY STREAMS OF
DISCONTENT AND OPPOSITION CONVERGED IN THE STREETS OF 3EATTLE AT
THE END OF .OVEMBER TO BRING DOWN THE 4HIRD -INISTERIAL
MEETING OF THE 74/ AND TRIGGER A SEVERE INSTITUTIONAL CRISIS THAT
CONTINUES TO THIS DAY
!LSO DRAGGED INTO THE LINE OF lRE WAS THE 7ORLD "ANK WHICH
AN INVESTIGATING GROUP REPORTING TO THE 53 (OUSE OF 2EPRES
ENTATIVES THE -ELTZER #OMMISSION ACCUSED IN EARLY OF
BEING IRRELEVANT TO THE TASK OF ELIMINATING POVERTY
.OT SURPRISINGLY IN THE FACE OF CRITICISM COMING FROM THE RIGHT
TO THE LEFT REFORM OF THE MULTILATERAL SYSTEM BECAME PROMINENT
IN THE RHETORIC OF THE MULTILATERAL AGENCIES AND THE ' GOVERN
MENTS THAT WERE THEIR MOST POWERFUL BACKERS $EBT FORGIVENESS A
NEW GLOBAL lNANCIAL ARCHITECTURE REFORM OF THE DECISION MAKING
STRUCTURES OF THE 74/ AND THE "RETTON 7OODS INSTITUTIONS WERE
AMONG THE HIGH PROlLE PROMISES THAT GENERATED EXPECTATIONS THAT
CHANGE WAS lNALLY ON THE WAY &IVE YEARS AFTER THE CRISIS HOWEVER
THERE HAS BEEN ZERO CHANGE IN THE POLICIES AND STRUCTURES OF THESE
INSTITUTIONS
/
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"Y THE END OF THE LAST DECADE OF THE TWENTIETH CENTURY IN SHORT
THE TRIUMPHALISM THAT MARKED THE BEGINNING OF THE DECADE HAD
EVAPORATED AND GIVEN WAY TO A DEEP CRISIS OF LEGITIMACY OF THE
MULTILATERAL ORDER !CCOMPANYING THAT CRISIS WERE SWIFTLY RISING
LEVELS OF RESENTMENT AGAINST THE PRIME ENGINE OF GLOBALIZATION
THE CORPORATION
3EVERAL FACTORS CAME TOGETHER TO FOCUS PUBLIC ATTENTION ON THE
CORPORATION IN THE S n THE MOST EGREGIOUS BEING THE PREDA
TORY PRACTICES OF -ICROSOFT THE ENVIRONMENTAL DEPREDATIONS OF
3HELL THE IRRESPONSIBILITY OF -ONSANTO AND .OVARTIS IN PROMOTING
ÌÀ`ÕVÌ Ç
GENETICALLY MODIlED ORGANISMS .IKES SYSTEMATIC EXPLOITATION OF
DIRT
CHEAP LABOUR AND -ITSUBISHI &ORD AND &IRESTONES CONCEAL
MENT FROM CONSUMERS OF SERIOUS PRODUCT DEFECTS
! SENSE OF ENVIRONMENTAL EMERGENCY WAS ALSO SPREADING BY THE
BEGINNING OF THE TWENTY
lRST CENTURY AND TO INCREASING NUMBERS
OF PEOPLE THE RAPID MELTING OF THE POLAR ICE CAPS COULD BE TRACED
TO "IG /IL AND THE AUTOMOBILE GIANTS CONTINUING PROMOTION OF
AN ENVIRONMENTALLY DESTABILIZING PETROLEUM CIVILIZATION AND MORE
GENERALLY TO THE PROCESS OF UNCONTROLLED GROWTH DRIVEN BY THE
TRANSNATIONAL CORPORATIONS 4.#S
)RONICALLY IN THE 5NITED 3TATES IT WAS DURING THE APOGEE OF
THE SO
CALLED .EW %CONOMY THAT THE DISTRUST OF THE CORPORATION
WAS AT ITS HIGHEST IN DECADES !CCORDING TO A "USINESS 7EEK SUR
VEY @ PER CENT OF !MERICANS SAY BUSINESS HAS TOO MUCH POWER
OVER THEIR LIVES !ND THE MAGAZINE WARNED @#ORPORATE !MERICA
IGNORE THESE TRENDS AT YOUR PERIL
-EMBERS OF THE GLOBAL ELITE WITH ANTENNAE SENSITIVE TO THE
RUMBLINGS UNDERNEATH TOOK SUCH WARNINGS SERIOUSLY AND THE AN
NUAL MEETING OF THE 7ORLD %CONOMIC &ORUM 7%& IN $AVOS
3WITZERLAND BECAME THE VENUE TO ELABORATE A RESPONSE THAT WOULD
GO BEYOND THE BANKRUPT STRATEGY OF DENYING THAT CORPORATE
DRIVEN
GLOBALIZATION WAS CREATING TREMENDOUS PROBLEMS TO PROMOTE A
STRATEGY THAT WOULD @BRING THE FRUITS OF GLOBALIZATION AND FREE
TRADE TO THE MANY AS "RITISH 0RIME -INISTER 4ONY "LAIR PUT IT
9ET THE TASK WAS FORMIDABLE FOR IT BECAME INCREASINGLY CLEAR THAT
IN AN UNREGULATED GLOBAL MARKET IT WAS EVEN MORE DIFlCULT TO
RECONCILE THE DEMANDS OF SOCIAL RESPONSIBILITY WITH THE DEMANDS
OF PROlTABILITY 4HE BEST THAT @GLOBALIZATION WITH A CONSCIENCE
COULD OFFER WAS AS # &RED "ERGSTEN A NOTED PRO
GLOBALIZATION
ADVOCATE ADMITTED A SYSTEM OF @TRANSITIONAL SAFETY NETS x TO HELP
THE ADJUSTMENT TO DISLOCATION AND ENABLE PEOPLE TO @TAKE ADVAN
TAGE OF THE PHENOMENON ;OF GLOBALIZATION= AND ROLL WITH IT RATHER
THAN OPPOSE IT
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À>VÃÊÊ Ì>ÀÞÊi}iÞ
#ORPORATE POWER IS ONE DIMENSION OF GLOBAL POWER "UT THERE IS
EQUALLY OF CONSEQUENCE STRATEGIC POWER AND THIS EVEN MORE THAN
CORPORATE POWER IS CONCENTRATED IN THE 5NITED 3TATES 3TRATEGIC
POWER CANNOT BE REDUCED AS IN ORTHODOX -ARXISM TO SIMPLY
BEING DETERMINED BY THE DYNAMICS OF CORPORATE CONTROL 4HE 53
STATE CANNOT BE REDUCED SIMPLY TO BEING A SERVANT OF 53 CAPITAL
4HE 0ENTAGON HAS ITS OWN DYNAMICS AND ONE CANNOT UNDERSTAND
THE 53 ROLE IN THE "ALKANS OR ITS CHANGING POSTURE TOWARDS #HINA
AS SIMPLY DETERMINED BY THE INTERESTS OF 53 CORPORATIONS )NDEED
IN !SIA IT HAS BEEN STRATEGIC EXTENSION NOT CORPORATE EXPANSION
THAT HAS BEEN THE MAINSPRING OF 53 POLICY AT LEAST UNTIL THE MID
S !ND IN THE CASE OF #HINA 53 CAPITALS DESIRE TO EXPLOIT THE
FABLED @#HINA MARKET HAS INCREASINGLY FOUND ITSELF IN OPPOSITION TO
THE 0ENTAGONS DElNITION OF #HINA AS THE %NEMY WHICH MUST BE
HEADED OFF AT THE PASS INSTEAD OF BEING ASSISTED BY WESTERN INVEST
MENT TO BECOME A FULL
BLOWN THREAT )N MANY INSTANCES INDEED
CORPORATE POWER AND STATE POWER MAY NOT BE IN SYNCH
(AVING SAID THIS IT IS NONE THE LESS A PRIMORDIAL AIM OF THE
TRANSNATIONAL 53 GARRISON STATE THAT IS ENSCONCED DEEPLY IN %AST
!SIA THE -IDDLE %AST AND %UROPE AND PROJECTS POWER TO THE REST
OF THE GLOBE TO MANAGE A GLOBAL ORDER THAT SECURES THE PRIMACY
OF 53 CORPORATIONS .EW 9ORK 4IMES COLUMNIST 4HOMAS &RIEDMAN
MAY BE WRONG ABOUT THE BENIGN IMPACT OF GLOBALIZATION BUT HE
IS DElNITELY ON TARGET WHEN HE ASSERTS THAT @4HE HIDDEN HAND OF
THE MARKET WILL NEVER WORK WITHOUT A HIDDEN lST -C$ONALDS
CANNOT mOURISH WITHOUT -C$ONNELL $OUGLAS THE DESIGNER OF THE
53 !IR &ORCE &
!ND THE HIDDEN lST THAT KEEPS THE WORLD SAFE
FOR 3ILICON 6ALLEYS TECHNOLOGIES TO mOURISH IS CALLED THE 53 !RMY
!IR &ORCE .AVY AND -ARINE #ORPS
7ITH THE GROWING ILLEGITIMACY OF CORPORATE
DRIVEN GLOBAL
IZATION AND THE GROWING DIVIDE BETWEEN A PROSPEROUS MINORITY
AND AN INCREASINGLY MARGINALIZED MAJORITY MILITARY INTERVENTION TO
MAINTAIN THE GLOBAL STATUS QUO IS BECOMING A CONSTANT FEATURE OF
INTERNATIONAL RELATIONS WHETHER THIS IS JUSTIlED IN TERMS OF lGHTING
ÌÀ`ÕVÌ
DRUGS lGHTING TERRORISM CONTAINING @ROGUE STATES @CONTAINING
#HINA OR OF OPPOSING @)SLAMIC FUNDAMENTALISM 4HESE INTER
VENTIONS ARE DEEPLY UNPOPULAR IN THE 4HIRD 7ORLD SO THAT WHEN
THE !L 1AEDA HIJACKERS mEW THEIR PLANES INTO THE 7ORLD 4RADE
#ENTER AND THE 0ENTAGON ON 3EPTEMBER MANY PEOPLE IN THE
3OUTH WERE CAUGHT BETWEEN REVULSION AT THE RESULTING MAYHEM AND
A FEELING THAT THE 53! @HAD IT COMING -OREOVER A 53 SECURITY
SYSTEM THAT HAD SEEMED INVULNERABLE NOW LOOKED VERY VULNERABLE
INDEED TO A RESENTFUL WORLD
4O MANY PEOPLE IN %UROPE AND *APAN THE ROLE OF 53 MILITARY
AS THE GUARANTOR OF THEIR SECURITY STILL PREVAILS "UT IT IS A SENTI
MENT THAT IS FAST ERODING 4HE COLLAPSE OF 3OVIET POWER CREATED
THE CONDITION FOR REASSESSMENT BY 7ASHINGTONS ALLIES OF THE ROLE OF
53 POWER $OUBTS HAVE INCREASED WITH THE 0ENTAGONS INSISTENCE
ON BUILDING A MISSILE DEFENCE SYSTEM AGAINST POTENTIAL RATHER THAN
REAL ENEMIES WHILE PREPARING THE GROUND FOR A NEW #OLD 7AR
CRUSADE AGAINST #HINA !ND RECENTLY EVEN AS MANY TRADITIONAL ALLIES
ENLISTED IN THE SO CALLED @WAR AGAINST TERROR 53 UNILATERALISM IS
UNDERMINING OLD ALLIANCES AS 7ASHINGTON PREPARES THE GROUND TO
INVADE )RAQ EVEN AGAINST THE EXPRESS WISHES OF MOST MEMBERS OF
THE %UROPEAN 5NION ,OSS OF TRUST IN 7ASHINGTON IS THE SOURCE
OF MOVES TO CREATE A %UROPEAN DEFENCE FORCE THAT WOULD OPERATE
WITH SOME INDEPENDENCE OF .!4/
! FAR mUNG SYSTEM OF BASES AND THE ABILITY TO PROJECT FORCE INTO
EVERY CORNER OF THE WORLD SUCH AS THAT POSSESSED BY 7ASHINGTON ARE
USUALLY SEEN AS INDICATORS OF TREMENDOUS STRENGTH 4HIS @STRENGTH
HOWEVER CAN TURN INTO A WEAKNESS THAT OF OVER EXTENSION OR A
GROWING GAP BETWEEN RESOURCES AND CAPABILITIES !ND AS WILL BE
SHOWN BELOW OVER EXTENSION OF 53 STRATEGIC POWER BECAME A VERY
REAL CONDITION AFTER 3EPTEMBER
/ iÊ i}iiÀ>ÌÊvÊ LiÀ>Ê iVÀ>VÞ
)T IS NOT HOWEVER CORPORATE POWER OR MILITARY POWER THAT HAS
TRADITIONALLY BEEN THE 53!S STRONGEST ASSET BUT FOLLOWING THE
£ä i}L>â>Ì
THINKING OF !NTONIO 'RAMSCI ITS IDEOLOGICAL POWER n ITS @SOFT
POWER
4HE 53! IS A ,OCKEAN DEMOCRACY n THAT IS ITS FOUNDATION IS
THE POLITICAL PHILOSOPHY OF THE LATE SEVENTEENTH CENTURY %NGLISH
THINKER *OHN ,OCKE n AND ITS ABILITY TO PROJECT ITS MISSION AS
THE EXTENSION OF SYSTEMS CENTRED ON FREE ELECTIONS TO CHOOSE
GOVERNMENTS DEVOTED TO PROMOTING LIBERAL RIGHTS AND FREEDOMS
CONTINUES TO BE A STRONG SOURCE OF ITS LEGITIMACY IN MANY PARTS
OF THE WORLD 4HE TREND AWAY FROM AUTHORITARIAN REGIMES AND
TOWARDS FORMAL DEMOCRACY IN THE 4HIRD 7ORLD HAPPENED IN SPITE
OF RATHER THAN BECAUSE OF THE 5NITED 3TATES 9ET ESPECIALLY UNDER
THE #LINTON ADMINISTRATION 7ASHINGTON WAS ABLE TO JIBE SKILFULLY
TO CATCH THE DEMOCRATIC WINDS IN THE PROCESS RECONSTRUCTING ITS
IMAGE FROM BEING A SUPPORTER OF REPRESSIVE REGIMES TO BEING AN
OPPONENT OF DICTATORSHIPS
)N THE LAST FEW YEARS HOWEVER 7ASHINGTON OR 7ESTMINSTER
STYLE DEMOCRACIES n OR AS 7ILLIAM 2OBINSON CALLS THEM @POLY
ARCHIES n WITH THEIR FOCUS ON FORMAL RIGHTS AND FORMAL ELECTIONS
AND THEIR BIAS AGAINST ECONOMIC EQUALITY ACHIEVED THROUGH SUCH
MEASURES AS ASSET AND INCOME REDISTRIBUTION HAVE DEGENERATED
INTO INCREASINGLY STAGNANT AND POLARIZED POLITICAL SYSTEMS SUCH AS
THOSE IN THE 0HILIPPINES "RAZIL AND 0AKISTAN SO THAT SOME THEORISTS
HAVE RAISED THE QUESTION AS TO WHETHER OR NOT THE SO CALLED @THIRD
WAVE OF DEMOCRATIZATION IS OVER
7HAT WAS OF GREAT SIGNIlCANCE HOWEVER WAS THE FACT THAT
DEMOCRACY WAS ALSO ENTERING INTO CRISIS IN THE OLDEST MODERN
DEMOCRACY )NTEREST GROUP INmUENCE WHICH THE 7ASHINGTON
STYLE OF ELECTORAL COMPETITION HAD INSTITUTIONALIZED REACHED MAS
SIVE PROPORTIONS )N THE S AND S INCREASING NUMBERS
OF !MERICANS BEGAN TO REALIZE THAT THEIR LIBERAL DEMOCRACY HAD
BEEN SO THOROUGHLY CORRUPTED BY CORPORATE MONEY POLITICS THAT
IT DESERVED TO BE DESIGNATED A @PLUTOCRACY )NDEED AS 7ILLIAM
0FAFF NOTED @NOTHING ON THE SCALE OF THE !MERICAN SYSTEM OF
POLITICAL EXPENDITURE AND INmUENCE EXISTS ANYWHERE #AMPAIGN
lNANCE REFORM WAS THE HOT ISSUE THAT PROPELLED THE CANDIDACY OF
ÌÀ`ÕVÌ ££
3ENATOR *OHN -C#AIN WHO MADE A STRONG RUN FOR THE 2EPUBLICAN
NOMINATION IN THE SPRING OF
#ORPORATE MONEY COMBINED WITH CONSTITUTIONAL RULES DESIGNED
TO RESTRICT MAJORITY RULE TO CREATE A SITUATION IN WHICH THE MAN
WHO LOST THE POPULAR VOTE n AND ACCORDING TO SOME THE ELECTORAL
COLLEGE VOTE AS WELL n ENDED UP AS PRESIDENT OF THE WORLDS MOST
POWERFUL LIBERAL DEMOCRACY 4HIS HAS TRIGGERED DEEP DISAFFECTION
WITH WHAT IS NOW UNIVERSALLY REGARDED AS AN OUTMODED ANCIENT
COMPLEX SYSTEM OF PROTECTING PRIVATE INTERESTS FROM PUBLIC POWER
AND RESTRAINING THE @PASSIONS OF THE MAJORITY
4HE DEEPLY CORRUPTING ROLE OF CORPORATE MONEY IN POLITI
CAL LIFE IS NOT THE ONLY BURNING ISSUE 4HERE ARE ALSO THE URBAN
CRISIS A CLASS GULF EXACERBATED BY FREE TRADE AND CAPITAL MOBILITY
SEVERE INEQUITIES OF DISTRIBUTION OF INCOME AMONG THE INDUSTRIAL
COUNTRIES A RACIAL CRISIS POSING AS A LAW
AND
ORDER PROBLEM THE
@CULTURAL CIVIL WAR BETWEEN FUNDAMENTALISTS AND LIBERALS AND THE
INCREASING POWER OF THE MILITARY
4HIS LAST PHENOMENON IS WORTH SINGLING OUT SINCE IT ILLUSTRATES
THE INCREASING INABILITY OF THE SYSTEM TO DEAL WITH THE NEW REALITIES
OF POWER 7HILE IN CLASSIC -ONTESQUIEUESQUE FASHION #ONGRESS
AND THE %XECUTIVE WERE BUSY CHECKMATING EACH OTHER ON THE
ISSUE OF FORMER 0RESIDENT #LINTONS SEXUAL MORES BOTH INSTITUTIONS
WERE UNABLE TO COPE WITH THE ACCUMULATION OF POLITICAL POWER
ON THE PART OF THE 0ENTAGON !S A CONSEQUENCE AS ONE INSIGHT
FUL COMMENTATOR POINTED OUT THE @MILITARY IS ALREADY THE MOST
POWERFUL INSTITUTION IN !MERICAN GOVERNMENT IN PRACTICE LARGELY
UNACCOUNTABLE TO THE EXECUTIVE BRANCH .OW THE ARMED FORCES ARE
SETTING THE LIMITS OF !MERICAN FOREIGN POLICYx4HE 5NITED 3TATES
IS NOT YET TH
CENTURY 0RUSSIA WHEN THE MILITARY OWNED THE STATE
BUT THE THREAT IS MORE SERIOUS THAN MOST !MERICANS REALIZE
4O A WORLD THAT HAD LONG BEEN TOLD ABOUT THE SUPERIORITY OF
THE !MERICAN WAY THE LAST DECADE HAS REVEALED THE mAWS OF A
SYSTEM DESIGNED TO ENHANCE PRIVATE CORPORATE POWER AND LIMIT
THE COUNTERVAILING POWER OF THE STATE TO PUT INlNITE OBSTACLES IN
THE WAY OF PUBLIC POWER AND THE POPULAR WILL ACHIEVING SOCIALLY
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PROGRESSIVE ENDS 4HE FOLLOWING COMMENTS OF $ANIEL ,AZARE IN HIS
INmUENTIAL BOOK 4HE &ROZEN 2EPUBLIC ARE WIDELY SHARED
'OVERNMENT IN !MERICA DOESNT WORK BECAUSE ITS NOT SUPPOSED TO
WORK )N THEIR INlNITE WISDOM THE &OUNDERS CREATED A DELIBERATELY
UNRESPONSIVE SYSTEM IN ORDER TO NARROW THE GOVERNMENTAL OPTIONS
AND FORCE US TO SEEK ALTERNATIVE ROUTES 0OLITICS WERE DANGEROUS
THEREFORE POLITICS HAD TO BE LIMITED AND CONSTRAINED "UT !MERICA
CANNOT BE EXPECT TO SURVIVE MUCH LONGER WITH A GOVERNMENT THAT
IS INEFlCIENT AND NONE TOO DEMOCRATIC IN DESIGN )T IS IMPOSSIBLE
TO FORGE AHEAD IN THE LATE TWENTIETH CENTURY USING GOVERNMENTAL
MACHINERY DATING FROM THE LATE EIGHTEENTH 5RBAN CONDITIONS CAN
ONLY WORSEN RACE RELATIONS CAN ONLY GROW MORE POISONOUS WHILE
THE MIDDLE CLASS CAN ONLY GROW ALIENATED AND EMBITTERED
4HE CRISIS OF LIBERAL DEMOCRACY IS NOT LIMITED TO THE 3OUTH
AND THE 5NITED 3TATES 4HERE IS ALSO A DEEPENING CRISIS OF DEMO
CRATIC GOVERNANCE IN %UROPE BROUGHT ON PARTLY BY THE INCREASING
CAPTIVITY OF PARTY POLITICS TO MONEY POLITICS AS THE BRIBERY SCANDAL
INVOLVING (ELMUT +OHL AND THE #HRISTIAN $EMOCRATIC 0ARTY IN
'ERMANY AND THE ASCENT OF )TALYS MOST POWERFUL CAPITALIST 3ILVIO
"ERLUSCONI TO THE APEX OF GOVERNMENT ILLUSTRATE
"UT THERE IS AS WELL ANOTHER RELATED CAUSE OF DISAFFECTION AND
THIS IS THE NON
TRANSPARENT PROCESS THAT TECHNOCRATIC ELITES ALLIED
TO CORPORATE ELITES HAVE IN THE NAME OF %UROPEAN INTEGRATION
TECHNOCRATIC RATIONALITY AND MARKET RATIONALITY ERODED THE PRIN
CIPLE OF SUBSIDIARITY BY FUNNELLING EFFECTIVE POLITICAL AND ECONOMIC
DECISION
MAKING POWER UPWARDS TO TECHNO
CORPORATE STRUCTURES
AT THE APEX OF WHICH STANDS THE %UROPEAN #OMMISSION THAT ARE
LARGELY UNACCOUNTABLE TO ELECTORATES ON THE GROUND
!S 'EORGE 2OSS POINTED OUT FROM THE ORIGINS THE PROCESS
OF BUILDING THE %UROPEAN ECONOMIC AND POLITICAL SYSTEM @WAS
CONSCIOUSLY ELITIST
&OR EVERYONE TO BENElT %UROPEAN CONSTRUCTION HAD TO PROCEED
IN THE SHADOWS OF DEMOCRATIC ACCOUNTABILITY AS ORDINARILY UNDER
STOOD !FTER THE #OMMISSION AND OTHERS HAD LITTLE CHOICE
ÌÀ`ÕVÌ £Î
BUT TO WORK WITHIN A %UROPEAN INSTITUTIONAL SYSTEM REmECTING THIS
PHILOSOPHY 4HERE WAS AN APPOINTED #OMMISSION EMPOWERED WITH
SWEEPING POWERS OF POLICY PROPOSITION 4HERE WERE SECRETIVE AND
OPAQUE COUNCILS OF MINISTERS AN IMPERIOUS %UROPEAN #OUNCIL AND
A POWERFUL %UROPEAN #OURT OF *USTICE 4HEN THERE WAS AN IMPOTENT
TALKING SHOP OF A PARLIAMENT #ONNECTIONS AMONG THESE INSTITUTIONS
AND ANY MASS %UROPEAN POLITICAL CULTURE WERE TENUOUS -OREOVER
THEY WERE ALL KNIT INTO A SYSTEM WHOSE OPERATIONS WERE PERPLEXINGLY
COMPLICATED AND LARGELY UNFATHOMABLE TO NONSPECIALISTS
)N RETROSPECT THE REVOLT OF THE $ANISH ELECTORATE AGAINST THE
-AASTRICHT 4REATY IN WAS SIMPLY THE lRST SALVO OF A POPULIST
REVOLT WHOSE MOST RECENT DRAMATIC MANIFESTATION WAS THE MAS
SIVE VOTER DISAFFECTION AGAINST TECHNOCRATIC POLITICS WIELDED IN THE
NAME OF @%UROPEAN 5NITY THAT ALLOWED THE NEO
FASCIST *EAN
-ARIE
,E 0EN TO OUST 0RIME -INISTER ,IONEL *OSPIN DURING THE lRST
ROUND OF THE &RENCH PRESIDENTIAL ELECTIONS IN !PRIL
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7HAT MAKES THE CRISIS OF LEGITIMACY OF THE KEY INSTITUTIONS OF THE
GLOBAL ECONOMIC AND POLITICAL SYSTEM SO VOLATILE FROM THE POINT
OF VIEW OF THE ELITES OF THE .ORTH IS THAT IT IS INTERSECTING WITH
A PROFOUND STRUCTURAL CRISIS OF THE GLOBAL ECONOMY
4HE '
CAME INTO EXISTENCE TO CO
ORDINATE THE MACROECO
NOMIC POLICIES OF THE RICH COUNTRIES IN ORDER TO NAVIGATE BETWEEN
THE 3CYLLA OF INmATION AND THE #HARYBDIS OF STAGNATION )N THE LAST
FEW YEARS HOWEVER EFFORTS TO SYNCHRONIZE lSCAL AND MONETARY
INITIATIVES HAVE PROVED INEFFECTIVE AND WHAT MODICUM OF CO
OPERATION WAS ACHIEVED HAS FAILED TO BRING *APAN OUT OF A DECADE
LONG RECESSION OR TO PREVENT THE ONSET OF A NEW GLOBAL RECESSION
4HE BASIC REASON FOR THIS FAILURE HAS BEEN THE RELUCTANCE OF
PUBLIC AUTHORITIES TO REGULATE THE ACTIVITY OF CAPITAL IN THE NEW
GLOBAL ECONOMY 7ITH CORPORATE
DRIVEN MARKET FORCES UNCHECKED
STRUCTURAL IMBALANCES BUILT UP 4HE BOOM OF THE EARLY AND MID
S RESULTED IN A BURST OF GLOBAL INVESTMENT ACTIVITY THAT LED TO
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TREMENDOUS OVER CAPACITY ALL AROUND 4HE INDICATORS ARE STARK
4HE 53 COMPUTER INDUSTRYS CAPACITY HAS BEEN RISING AT PER
CENT ANNUALLY FAR ABOVE PROJECTED INCREASES IN DEMAND 4HE WORLD
AUTO INDUSTRY IS NOW SELLING JUST PER CENT OF THE MILLION
CARS IT BUILDS EACH YEAR 3O MUCH INVESTMENT TOOK PLACE IN GLOBAL
TELECOMMUNICATIONS INFRASTRUCTURE THAT TRAFlC CARRIED OVER lBRE
OPTIC NETWORKS IS REPORTED TO BE ONLY PER CENT OF CAPACITY
4HERE IS SAYS ECONOMIST 'ARY 3HILLING AN @OVERSUPPLY OF NEARLY
EVERYTHING
0ROlTS APPARENTLY STOPPED GROWING IN THE 53 CORPORATE SEC
TOR AFTER LEADING lRMS TO A WAVE OF MERGERS THE MAIN
PURPOSE OF WHICH WAS THE ELIMINATION OF COMPETITION 4HE MOST
PROMINENT OF THESE WERE THE $AIMLER "ENZn#HRYSLERn-ITSUBISHI
UNION THE 2ENAULT TAKEOVER OF .ISSAN THE -OBILn%XXON MERGER
THE "0n!MOCOn!RCO DEAL AND THE BLOCKBUSTER @3TAR !LLIANCE IN
THE AIRLINE INDUSTRY
)N ADDITION TO MERGERS ANOTHER AVENUE THAT WAS TAKEN TO AVOID
THE CRISIS OF PROlTABILITY IN INDUSTRY WAS TO PUSH INVESTMENT TO
SPECULATIVE ACTIVITY NOTABLY TO THE STOCKMARKET AND THE REAL ESTATE
SECTOR LEADING TO THE SPECTACULAR BOOM AND BUST IN %AST !SIA IN
THE S !T THE TIME OF THE !SIAN CRISIS WHICH INCIDENTALLY
HAS NOT BEEN SURMOUNTED n MANY OBSERVERS POINTED OUT THAT IT
WAS THE SAME HOTHOUSE SPECULATION THAT UNDERPINNED THE 7ALL
3TREETn3ILICON 6ALLEY COMPLEX THAT DROVE THE 53 ECONOMY 7HAT
OPTIMISTS n THE MOST PROMINENT BEING 53 &EDERAL 2ESERVE "OARD
#HAIRMAN !LAN 'REENSPAN n CALLED THE @.EW %CONOMY SEEMED
FOR A TIME TO DEFY THE LAWS OF ECONOMICS WITH )NTERNET STARS SUCH
AS !MAZONCOM REGISTERING AN EXPLOSIVE AND SEEMINGLY PERMANENT
RISE IN STOCK VALUES EVEN AS THEY CONTINUED TO OPERATE AT A LOSS
"UT ALL TALK ABOUT THE EMERGENCE OF A .EW %CONOMY VANISHED
WHEN THE LAW OF GRAVITY CAUGHT UP WITH THE SPECULATIVE SECTOR
IN THE LATE S RESULTING IN THE WIPING OUT OF TRILLION IN
INVESTOR WEALTH IN 7ALL 3TREET A SUM THAT AS "USINESS 7EEK POINTED
OUT WAS HALF OF THE 53 'ROSS $OMESTIC 0RODUCT AND FOUR TIMES
THE WEALTH WIPED OUT IN THE CRASH
ÌÀ`ÕVÌ £x
!CCORDING TO 'ARY 3HILLING AND A NUMBER OF OTHER PESSIMISTS
PROBABLY THE REASON THE MACROECONOMIC IMBALANCES ARE WORKING
THEMSELVES OUT IN WHAT IS LIKELY TO BE A DEEPER THAN EXPECTED RE
CESSION IS THAT WE ARE NOW AT THE DOWNWARD CURVE OF THE SO
CALLED
@+ONDRATIEFF #YCLE 0ROPOSED BY THE 2USSIAN ECONOMIST .IKOLAI
+ONDRATIEFF THIS THEORY SUGGESTS THAT THE PROGRESS OF GLOBAL CAPITAL
ISM IS MARKED NOT ONLY BY SHORT
TERM BUSINESS CYCLES BUT BY
LONG
TERM @SUPERCYCLES +ONDRATIEFF CYCLES ARE ROUGHLY lFTY
TO
SIXTY
YEAR
LONG WAVES 4HE UPWARD CURVE OF THE +ONDRATIEFF CYCLE
IS MARKED BY THE INTENSIVE EXPLOITATION OF NEW TECHNOLOGIES
FOLLOWED BY A CREST AS TECHNOLOGICAL EXPLOITATION MATURES THEN
A DOWNWARD CURVE AS THE OLD TECHNOLOGIES PRODUCE DIMINISHING
RETURNS WHILE NEW TECHNOLOGIES ARE STILL IN AN EXPERIMENTAL STAGE
IN TERMS OF PROlTABLE EXPLOITATION lNALLY THERE IS A TROUGH OR
PROLONGED DEmATIONARY PERIOD
4HE TROUGH OF THE LAST WAVE WAS IN THE S AND S A
PERIOD MARKED BY THE 'REAT $EPRESSION AND 7ORLD 7AR )) 4HE
ASCENT OF THE CURRENT WAVE BEGAN IN THE S AND THE CREST WAS
REACHED IN THE S AND S 4HE PROlTABLE EXPLOITATION OF THE
POST
WAR ADVANCES IN THE KEY ENERGY AUTOMOBILE PETROCHEMICAL
AND MANUFACTURING INDUSTRIES ENDED WHILE THAT OF INFORMATION
TECHNOLOGY WAS STILL AT A RELATIVELY EARLY STAGE &ROM THIS PERSPECTIVE
THE @.EW %CONOMY OF THE LATE S WAS NOT A TRANSCENDENCE OF
THE BUSINESS CYCLE AS MANY ECONOMISTS BELIEVED IT TO BE BUT THE
LAST GLORIOUS PHASE OF THE CURRENT SUPERCYCLE BEFORE THE DESCENT
INTO PROLONGED DEmATION )N OTHER WORDS THE UNIQUENESS OF THE
CURRENT CONJUNCTURE LIES IN THE FACT THAT THE DOWNWARD CURVE
OF THE CURRENT SHORT
TERM CYCLE COINCIDES WITH THE MOVE INTO
DESCENT OF THE +ONDRATIEFF SUPERCYCLE
-ARXISTS SAY THAT WHAT UNDERLIES SUCH CONJUNCTURES IS THAT THE
OLD @RELATIONS OF PRODUCTION OR THE COMPLEX OF EXISTING CAPITALIST
PROPERTY RELATIONS AND INSTITUTIONS COME INTO CONmICT WITH THE
FURTHER DEVELOPMENT OF THE @FORCES OF PRODUCTION OR TECHNOLOGIES
WHICH IS POSSIBLE ONLY IF THIS PROCESS IS NO LONGER DRIVEN BY THE
SEARCH FOR PROlT
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)S THE WORLD IN FOR A BOUT WITH MORE THAN A NORMAL RECESSION
4O USE *OSEPH 3CHUMPETERS TERMS IS THE GLOBAL ECONOMY MOVING
INTO A PROLONGED PERIOD OF @CREATIVE DESTRUCTION
"Y MID
TALK ABOUT A @SHORT 53 RECESSION DISAPPEARED AS
BUSINESSES CONTINUED TO REFRAIN FROM INVESTING THE STOCK MARKET
CONTINUED ON ITS DOWNWARD PATH AND REVELATIONS OF 7ALL 3TREET
CRIME DOMINATED THE NEWS 0ROLONGED STAGNATION ALSO APPEARED
TO BE THE FATE OF %UROPE AND MUCH OF THE REST OF THE WORLD
WITH PRACTICALLY ONLY #HINA AND 3OUTH +OREA BUCKING THE TREND
0EOPLE BEGAN TO REALIZE THAT WITH THE INTEGRATION OF ECONOMIES
IN AN ERA OF RAPID GLOBALIZATION THERE ALSO CAME THE SPECTRE OF
SYNCHRONIZED DEPRESSION
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)N RETROSPECT WITH THE DEEPENING CRISIS OF LEGITIMACY OF THE PRIME
INSTITUTIONS OF THE GLOBAL SYSTEM IN THE LATTER HALF OF THE S
3EATTLE WAS A CATACLYSM WAITING TO HAPPEN THOUGH MOST OF THE
ELITES BENElTING FROM GLOBALIZATION WERE CLUELESS ABOUT THE DEPTH
OF THE RESENTMENT AND RAGE THEY HAD PROVOKED 4HE HURRICANE
OF PEOPLES PROTEST MOVED ON TO 7ASHINGTON DURING THE 7ORLD
"ANK
)-& SPRING MEETING IN !PRIL #HIANG -AI IN 4HAILAND
DURING THE !SIAN $EVELOPMENT "ANK ANNUAL MEETING IN -AY
-ELBOURNE DURING THE 7ORLD %CONOMIC &ORUM GATHERING
IN EARLY 3EPTEMBER AND 0RAGUE DURING THE 7ORLD "ANK
)-&
ANNUAL MEETING IN LATE 3EPTEMBER
7HILE A BELEAGUERED GLOBAL ELITE ASSEMBLED IN $AVOS IN LATE
*ANUARY TO PONDER THE MEANING OF THE BURGEONING @ANTI
GLOBALIZATION MOVEMENT SOME REPRESENTATIVES OF INTER
NATIONAL CIVIL SOCIETY MET IN 0ORTO !LEGRE "RAZIL TO DECLARE THAT
@ANOTHER WORLD IS POSSIBLE $AVOS OR THE 7ORLD %CONOMIC &ORUM
HAD FOUND ITS POLITICAL AND IDEOLOGICAL NEMESIS IN THE 7ORLD 3OCIAL
&ORUM #ELEBRATION OF THE POWER OF THE MOVEMENT WAS ONE
ASPECT OF 0ORTO !LEGRE THE OTHER WAS PLANNING AND GATHERING
STRENGTH FOR FUTURE ACTION 4ENS OF THOUSANDS BESIEGED THE 3UM
ÌÀ`ÕVÌ £Ç
MIT OF THE !MERICAS IN 1UEBEC #ITY IN LATE !PRIL AND THE
%UROPEAN 5NION 3UMMIT IN 'OTHENBURG IN LATE *UNE !ND DESPITE
OUTRIGHT POLICE ASSAULTS USING TEARGAS ARMED PERSONNEL CARRIERS
AND PROVOCATEURS OVER PEOPLE ISOLATED THE '
ANNUAL
MEETING IN THE ANCIENT CITY OF 'ENOA IN LATE *ULY
.OWHERE WAS THE CRISIS OF LEGITIMACY OF THE GLOBAL SYSTEM MORE
EVIDENT THAN IN 'ENOA WHERE THE LEADERS OF THE TOP .ORTHERN
ECONOMIES HAD TO ADMIT THAT MEETING IN PLACES ACCESSIBLE TO PEOPLE
HAD BECOME ALMOST IMPOSSIBLE .OT SURPRISINGLY THE DESERT KING
DOM OF 1ATAR WAS DESIGNATED THE SITE OF THE &OURTH -INISTERIAL
OF THE 74/ IN .OVEMBER WHILE A REMOTE SKI RESORT HIGH
UP IN THE #ANADIAN 2OCKIES WAS CHOSEN TO HOST THE NEXT '
MEETING IN *ULY
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4HEN CAME 3EPTEMBER AND WITH IT A MASSIVE EFFORT ON THE
PART OF THE PRO
GLOBALIZATION FORCES WHO NOW SAW THE WHOLE
THING AS A WAR TO TURN THE TIDE BY TRYING TO EXTEND THE RANGE OF
TERRORIST ACTION TO INCLUDE THE CIVIL DISOBEDIENCE TACTICS OF ANTI
CORPORATION GLOBALIZATION ACTIVISTS AND EVEN MORE IMPORTANT
BY MANIPULATING THE ANTI
TERRORIST HYSTERIA TO RAM THROUGH THE
LIBERALIZATION AGENDA AT THE &OURTH -INISTERIAL OF THE 74/ IN
$OHA 1ATAR 4HE ESTABLISHMENT MEDIA GOT INTO THE ACT AND WROTE
OFF THE MOVEMENT AS @DEAD
"UT IN POLITICS AND IN WAR FORTUNE SMILES ALL TOO BRIEmY !FTER
ALLOWING IT BRIEmY TO SAVOUR THE APPARENT SUCCESS OF ITS INVASION
OF !FGHANISTAN IN LATE HISTORY CUNNING AND INSCRUTABLE AS
USUAL SUDDENLY DEALT THE "USH ADMINISTRATION TWO MASSIVE BODY
BLOWS THE %NRON IMPLOSION AND THE !RGENTINE COLLAPSE 4HESE
TWIN DISASTERS THREATENED TO PUSH THE GLOBAL ELITE BACK TO THE
CRISIS OF LEGITIMACY THAT WAS THREATENING ITS HEGEMONY GLOBALLY
PRIOR TO 3EPTEMBER
#APITALIST CRISIS AND CORPORATE FRAUD %NRON FORCEFULLY REMINDED THE
£n i}L>â>Ì
WORLD THAT FREE MARKET RHETORIC IS A CORPORATE CON GAME .EO
LIBERALISM LOVES TO COUCH ITSELF IN THE LANGUAGE OF EFlCIENCY AND
THE ETHICS OF THE GREATEST GOOD FOR THE GREATEST NUMBER BUT IT IS
REALLY ABOUT PROMOTING CORPORATE POWER %NRON LAVISHLY EXTOLLED
THE SO
CALLED MERITS OF THE MARKET TO EXPLAIN ITS SUCCESS BUT IN
FACT ITS PATH TO BECOMING THE 53!S SEVENTH LARGEST CORPORATION
WAS PAVED NOT BY FOLLOWING THE DISCIPLINE IMPOSED BY THE MAR
KET BUT BY STRATEGICALLY DEPLOYING COLD CASH AND LOTS OF IT %NRON
LITERALLY BOUGHT ITS WAY TO THE TOP THROWING AROUND HUNDREDS
OF MILLIONS OF DOLLARS IN LESS THAN A DECADE TO CREATE WHAT ONE
BUSINESSMAN DESCRIBED TO THE .EW 9ORK 4IMES AS THE @BLACK HOLE
OF DEREGULATED ENERGY MARKETS IN WHICH ITS lNANCIAL SHENANIGANS
COULD THRIVE UNCHECKED 4O MAKE SURE GOVERNMENT WOULD LOOK
THE OTHER WAY AND ALLOW THE @MARKET TO HAVE ITS WAY %NRON WAS
GENEROUS WITH THOSE WILLING TO SERVE IT AND FEW EARNED MORE
%NRON DOLLARS THAN 'EORGE 7 "USH WHO RECEIVED SOME
FOR HIS POLITICAL CAMPAIGNS IN BOTH 4EXAS AND NATIONALLY FROM HIS
FRIEND +ENNETH ,AY %NRON #%/
4HE DEEP ENMESHING OF "USH AND A NUMBER OF HIS KEY LIEUTEN
ANTS IN %NRONS CORPORATE WEB HAS SHAKEN OFF 'EORGE 7S POST
3EPTEMBER IMAGE OF BEING PRESIDENT OF ALL !MERICANS AND
BROUGHT BACK THE REALITY OF HIS BEING THE CHIEF EXECUTIVE OFlCER
OF CORPORATE !MERICA 4HE %NRON SCANDAL PULLED !MERICANS RIGHT
BACK TO THE BITTER SOZIALEPOLITIK OF THE S WHEN AS "USH HIMSELF
PUT IT IN HIS INAUGURAL SPEECH @IT SEEMS WE SHARE A CONTINENT BUT
NOT A COUNTRY )T BROUGHT BACK THE IDEOLOGICAL CONTEXT OF THE
LANDMARK ELECTORAL CAMPAIGN OF WHEN "USHS FELLOW 2EPUB
LICAN *OHN -C#AIN MADE AN ALMOST SUCCESSFUL BID TO BECOME
THE PRESIDENTIAL STANDARD
BEARER BY FOCUSING ON ONE ISSUE THAT
THE MASSIVE CORPORATE lNANCING OF ELECTIONS THAT HAD TRANSFORMED
53 DEMOCRACY INTO A PLUTOCRACY WAS GRAVELY UNDERMINING ITS
LEGITIMACY
#ORPORATE
DRIVEN GLOBALIZATION IS A PROCESS MARKED BY MAS
SIVE CORRUPTION AND DEEPLY SUBVERSIVE OF DEMOCRACY 3HELL IN
.IGERIA WAS A GOOD CASE STUDY 3CORES OF 4.#S AND THE 7ORLD
ÌÀ`ÕVÌ £
"ANK WERE IMPLICATED WITH THE 3UHARTO POLITICAL ECONOMY IN
)NDONESIA .OW %NRON STRIPPED THE VEIL FROM WHAT 7ALL 3TREET
USED TO CALL THE @.EW %CONOMY WHICH SHOWERED REWARDS ON
SLEAZY lNANCIAL OPERATORS LIKE %NRON WHILE STICKING THE REST OF
THE WORLD WITH THE COSTS
!S ROLLED ON %NRON WAS IN FACT REVEALED TO BE MERELY
THE TIP OF THE ICEBERG )N QUICK SUCCESSION 7ALL 3TREET PILLARS SUCH
AS THE ACCOUNTING GIANT !RTHUR !NDERSEN AND INVESTMENT BANKER
-ERRILL ,YNCH OR 7ALL 3TREET DARLINGS SUCH AS 4YCO )NTERNATIONAL
2ITE !ID 'LOBAL #ROSSING -ARTHA 3TEWART ,IVING /MNIMEDIA
!DELPHIA #OMMUNICATIONS AND 7ORLDCOM WERE SHOWN TO HAVE
EITHER RIGGED THEIR ACCOUNTS TO SHOW PROlTS OR ENGAGED IN OTHER
FRAUDULENT PRACTICES
"UT %NRON AND ITS ILK WERE PRODUCTS NOT SIMPLY OF UNFETTERED
DEREGULATION BUT OF SOMETHING MORE FUNDAMENTAL THE CRISIS OF
OVERCAPACITY IN A SYSTEM OF lNANCE DRIVEN GLOBAL CAPITALISM !S
NOTED EARLIER THE CRISIS OF OVERCAPACITY LED TO A LOSS OF PROlTABILITY
BY THE LATE NINETIES TRIGGERING A WAVE OF MERGERS SEEKING TO
RESTORE PROlTABILITY VIA THE ELIMINATION OF COMPETITION OR FROM
SOME MYSTICAL PROCESS CALLED @SYNERGY )N ACTUAL FACT MANY MER
GERS ENDED UP CONSOLIDATING COSTS WITHOUT ADDING TO PROlTABILITY
AS WAS THE CASE FOR INSTANCE WITH THE MUCH BALLYHOOED !MERICA
/NLINEn4IME 7ARNER DEAL
7ITH PROlT MARGINS SLIM OR NONEXISTENT SURVIVAL INCREASINGLY
MEANT GREATER AND GREATER DEPENDENCE ON 7ALL 3TREET lNANCING
WHICH CAME INCREASINGLY UNDER THE SWAY OF HYBRID INVESTMENT
COMMERCIAL BANKERS SUCH AS *0 -ORGAN #HASE 3ALOMON "ARNEY
3MITH AND -ERRILL ,YNCH WHICH COMPETED AGGRESSIVELY TO PUT
TOGETHER DEALS 7ITH LITTLE TO SHOW IN TERMS OF AN ATTRACTIVE BOTTOM
LINE SOME lRMS TOOK THE ROUTE OF TRADING FUTURE PROMISE FOR HARD
CASH IN THE PRESENT SOMETHING THAT CREATIVE INVESTMENT MANAGERS
WERE ESPECIALLY GOOD AT IN THE HIGH TECH SECTOR )T WAS THIS SEEM
INGLY INNOVATIVE TECHNIQUE OF TRADING ON ILLUSION THAT RESULTED IN
THE STRATOSPHERIC RISE OF SHARE VALUES IN THE HIGH TECH SECTOR WHERE
THEY LOST ALL RELATION TO THE REAL STATE OF COMPANIES -ANY @START UPS
Óä i}L>â>Ì
LOST ALL CONNECTION TO PRODUCTION AND SERVED MAINLY AS MECHANISMS
TO INmATE SHARE PRICES TO ENABLE VENTURE CAPITALISTS AND MANAGERS
WITH STOCK OPTIONS TO MAKE A KILLING FROM AN EARLY SALE AFTER WHICH
THE lRM WAS LEFT TO LANGUISH AND EVENTUALLY COLLAPSE
(OWEVER TRADING ON ILLUSION COULD ONLY GET YOU SO FAR )N
THE END THERE WAS NO GETTING AROUND THE FACT THAT YOUR BALANCE
SHEET HAD TO SHOW AN EXCESS OF REVENUE OVER COSTS TO CONTINUE TO
ATTRACT INVESTORS 4HIS WAS THE SIMPLE BUT HARSH REALITY THAT LED TO
THE PROLIFERATION OF FANCY ACCOUNTING TECHNIQUES SUCH AS THAT OF
%NRON lNANCE OFlCER !NDREW &ASTOWS @PARTNERSHIPS WHICH WERE
MECHANISMS TO KEEP MAJOR COSTS AND LIABILITIES OFF THE BALANCE
SHEET AS WELL AS CRUDER METHODS SUCH AS 7ORLDCOMS MASKING OF
CURRENT COSTS AS CAPITAL EXPENDITURES
)N THE CONTEXT OF DEREGULATION AND THE BENIGN APPROACH TO THE
PRIVATE SECTOR THAT ACCOMPANIED THE REIGNING NEOLIBERAL @HANDS
OFF
BUSINESS OUTLOOK IT WAS EASY FOR SUCH PRESSURES TO ERODE
THE SO
CALLED @lREWALLS n BETWEEN MANAGEMENT AND BOARD STOCK
ANALYST AND STOCKBROKER AUDITOR AND AUDITED &ACED WITH THE
COMMON SPECTRE OF AN ECONOMY ON THE DOWNSPIN AND SLIMMER
PICKINGS FOR ALL THE WATCHDOGS AND THE WATCHED THREW OFF THE
PRETENCE OF BEING GOVERNED BY A SYSTEM OF CHECKS AND BALANCES
AND UNITED TO PROMOTE THE ILLUSION OF PROSPERITY n AND THUS
MAINTAIN THE lNANCIAL LIFELINE TO UNSUSPECTING INVESTORS n AS LONG
AS POSSIBLE
4HIS UNITED FRONT COULD NOT BE MAINTAINED FOR LONG HOWEVER
SINCE IT WAS VERY TEMPTING FOR THOSE WHO KNEW THE REAL SCORE TO
SELL BEFORE THE MASS OF INVESTORS GOT WISE TO WHAT WAS HAPPENING
)N THE END BUSINESS ACUMEN WAS REDUCED TO lGURING OUT WHEN
TO SELL TAKING THE MONEY AND RUNNING n AND AVOIDING PROSECU
TION %NRON #%/ *EFFREY 3KILLING READ THE HANDWRITING ON THE
WALL RESIGNED AND MADE OFF WITH MILLION FROM THE SALE OF
HIS STOCK OPTIONS A FEW MONTHS BEFORE THE FALL .OT SO LUCKY WAS
4YCOS $ENNIS +OZLOWSKI WHO WAS NOT CONTENT WITH RAKING OFF
MILLION AND WAS STILL TRYING TO MILK HIS CASH COW WHEN HIS
COMPANY WENT UNDER
ÌÀ`ÕVÌ Ó£
)N SUM WHILE THERE ARE VILLAINS APLENTY THE SO
CALLED ETHICAL
CRISIS OF THE CORPORATION IS LARGELY A SYMPTOM OF A MORE FUNDA
MENTAL STRUCTURAL CRISIS ROOTED IN THE DYNAMICS OF lNANCE
DRIVEN
DEREGULATED GLOBAL CAPITALISM
4HE !RGENTINE COLLAPSE 7HAT THE CORPORATE FRAUD WAS TO THE LEGIT
IMACY OF GLOBAL CAPITALISM IN THE .ORTH THE !RGENTINE DÏBÊCLE
WAS TO THE GLOBALIST PROJECT IN THE 3OUTH /WING BILLION
TO INTERNATIONAL INSTITUTIONS AND WITH ITS ECONOMY PLUNGED INTO
CHAOS !RGENTINA IS TODAY IN A TRULY PITIABLE STATE
!RGENTINA HAD BEEN THE POSTER
BOY OF GLOBALIZATION ,ATIN
STYLE )T BROUGHT DOWN ITS TRADE BARRIERS FASTER THAN MOST OTHER
COUNTRIES IN ,ATIN !MERICA )T LIBERALIZED ITS CAPITAL ACCOUNT MORE
RADICALLY !ND IN THE MOST TOUCHING GESTURE OF NEOLIBERAL FAITH
THE !RGENTINE GOVERNMENT VOLUNTARILY GAVE UP ANY MEANINGFUL
CONTROL OVER THE DOMESTIC IMPACT OF A VOLATILE GLOBAL ECONOMY
BY ADOPTING A CURRENCY BOARD THAT IS PEGGING THE PESO TO THE
DOLLAR $OLLARIZATION SOME TECHNOCRATS PROMISED WAS RIGHT AROUND
THE CORNER AND WHEN THAT HAPPENED THE LAST BUFFERS BETWEEN THE
LOCAL ECONOMY AND THE GLOBAL MARKET WOULD DISAPPEAR AND THE
NATION WOULD ENTER THE NIRVANA OF PERMANENT PROSPERITY
!LL OF THESE MEASURES WERE TAKEN EITHER AT THE URGING OF OR
WITH THE APPROVAL OF THE 53 4REASURY $EPARTMENT AND ITS SURRO
GATE THE )NTERNATIONAL -ONETARY &UND )N FACT IN THE WAKE OF
THE !SIAN lNANCIAL CRISIS WHEN CAPITAL ACCOUNT LIBERALIZATION WAS
INCREASINGLY SEEN BY MOST OBSERVERS AS THE VILLAIN OF THE PIECE
,ARRY 3UMMERS THEN 3ECRETARY OF THE 4REASURY EXTOLLED !RGEN
TINAS SELLING OFF OF ITS BANKING SECTOR AS A MODEL FOR THE DEVELOP
ING WORLD @4ODAY FULLY PER CENT OF THE BANKING SECTOR PER
CENT OF PRIVATE BANKS IN !RGENTINA ARE FOREIGN
CONTROLLED UP FROM
PER CENT IN 4HE RESULT IS A DEEPER MORE EFlCIENT MARKET
AND EXTERNAL INVESTORS WITH A GREATER STAKE IN STAYING PUT
!S THE DOLLAR ROSE IN VALUE IN THE MID
S SO DID THE PESO
MAKING !RGENTINE GOODS UNCOMPETITIVE BOTH GLOBALLY AND LOCALLY
2AISING TARIFF BARRIERS AGAINST IMPORTS mOODING IN WAS REGARDED
ÓÓ i}L>â>Ì
AS A NO NO )NSTEAD BORROWING HEAVILY TO FUND THE DANGEROUSLY
WIDENING TRADE GAP !RGENTINA SPIRALLED INTO DEBT AND THE MORE
IT BORROWED THE HIGHER THE INTEREST RATES ROSE AS CREDITORS GREW
INCREASINGLY ALARMED AT THE CONSEQUENCES OF THE UNBRIDLED MARKET
FREEDOM FROM WHICH THEY HAD INITIALLY BENElTED
#ONTRARY TO THE 3UMMERS DOCTRINE FOREIGN CONTROL OF THE BANK
ING SYSTEM WAS NO PANACEA )N FACT FOREIGN CONTROL SIMPLY FACILITATED
THE OUTmOW OF MUCH NEEDED CAPITAL BY BANKS THAT BECAME INCREAS
INGLY RELUCTANT TO LEND TO BOTH GOVERNMENT AND LOCAL BUSINESSES
7ITH NO CREDIT SMALL AND MEDIUM ENTERPRISES n AND NOT A FEW BIG
ONES n CLOSED DOWN THROWING THOUSANDS OUT OF WORK
4HE CRISIS UNFOLDED WITH FRIGHTENING SPEED IN $ECEMBER
#AP IN HAND !RGENTINA WENT TO ITS MENTOR THE )-& FOR A MULTI
BILLION DOLLAR LOAN TO MEET PAYMENTS ON THE BILLION EXTERNAL
DEBT COMING DUE )N THE GRIP OF THE OLD ORTHODOXY THE &UND
REFUSED UNLESS THE GOVERNMENT MADE MASSIVE CUTS IN PUBLIC EXPEN
DITURE AND IMPOSED A TIGHT MONEY POLICY 4HE STANDOFF CONTINUES
EVEN WHILE THE COUNTRY SPIRALS INTO CHAOS
¼«iÀ>Ê"ÛiÀÃÌÀiÌV ½
-EANWHILE ON THE MILITARY FRONT THINGS WERE NOT LOOKING SO GOOD
FOR THE WORLDS SOLE REMAINING SUPERPOWER BY THE MIDDLE OF
/VER EIGHT MONTHS AFTER THE LAUNCHING OF THE GLOBAL WAR AGAINST
TERROR IT BECAME INCREASINGLY CLEAR THAT THE 53! WAS CAUGHT IN
A RELENTLESSLY EXPANDING CONmICT FROM WHICH THERE IS NO EASY
WITHDRAWAL 4RYING TO KEEP UP THE MOMENTUM OF ITS WAR AGAINST
TERROR AFTER IT DECLARED @VICTORY IN !FGHANISTAN IN EARLY *ANUARY THE
53! SENT TROOPS TO THE 0HILIPPINES THAT SAME MONTH TO HELP HUNT
DOWN MEMBERS OF THE !BU 3AYYAF BANDIT GROUP THAT IT ALLEGED
HAD TIES WITH /SAMA BIN ,ADENS !L 1AEDA NETWORK
4HE 0HILIPPINES AN EX COLONY SEEMED TO BE A CONVENIENT
CHOICE AS A SITE FOR EXPANDING THE WAR AGAINST TERROR AS 7ASHINGTON
DEBATED FROM *ANUARY TO -ARCH A FAR MORE IMPORTANT QUES
TION WHETHER OR NOT TO TAKE OUT 3ADDAM (USSEIN "UT JUST AS THE
ÌÀ`ÕVÌ ÓÎ
FACTION FAVOURING AN INVASION OF )RAQ APPEARED TO HAVE GAINED THE
UPPER HAND THE BRUTAL )SRAELI SWEEP INTO THE 7EST "ANK THREW A
SPANNER INTO 53 WORKS WHICH HAD RESTED ON THE ASSUMPTION OF
POLITICAL SUPPORT FROM THE PRO
53! !RAB STATES
-EANWHILE MONTHS AFTER 7ASHINGTONS DESIGNATING THE 0HILIP
PINES A @SECOND FRONT SOME SIXTY TO EIGHTY !BU 3AYYAF BANDITS
CONTINUED TO ELUDE &ILIPINO TROOPS COACHED BY 53
ADVISERS ON THE SMALL ISLAND OF "ASILAN
-OREOVER THE REALITIES OF THE !FGHANISTAN CAMPAIGN THAT
lLTERED OUT AFTER THE OUSTING OF THE 4ALIBAN PUNCTURED THE TRIUM
PHALIST MOOD THAT HAD REIGNED A FEW MONTHS EARLIER 4HE IDEA THAT
!FGHANISTAN VINDICATED A NEW STRATEGY OF WARlGHTING BASED ON
THE EMPLOYMENT OF MASSIVE PRECISION
GUIDED AIRPOWER WITH LITTLE
COMMITMENT OF GROUND TROOPS IS NOW LESS PERSUASIVE 4HOUSANDS
OF CIVILIANS APPARENTLY DIED OWING TO LESS THAN PRECISE BOMBING
AND SCORES OF PEOPLE ALLIED TO THE 5NITED 3TATES WERE TARGETED AND
KILLED BY 53 FORCES ACTING ON BAD INTELLIGENCE 2ELYING ON !FGHAN
MERCENARIES TO DO THE lGHTING ON THE GROUND FOR THE 53! IS
NOW ACKNOWLEDGED BY SOME IN THE 0ENTAGON TO HAVE RESULTED IN
/SAMA BIN ,ADENS ESCAPE FROM !FGHANISTANS 4ORA "ORA MOUN
TAINS !ND WHEN 53 TROOPS DID ENGAGE IN CLOSE
QUARTERS lGHTING
WITH THE 4ALIBAN!L 1AEDA FORCES DURING @/PERATION !NACONDA
WHICH TOOK PLACE IN THE 3HAH
I
KOT AREA NEAR 0AKISTAN IN EARLY
-ARCH THEY WERE BLOODIED BY AN ENEMY THAT WAS SUPPOSED TO
BE ON THE RUN
4HOUGH BY MID
IT HAS NOT ACHIEVED ITS PRIME OBJECTIVE
OF CAPTURING BIN ,ADEN OR DISMANTLING THE !L 1AEDA NETWORK
n WHICH WAS IN CLASSIC GUERRILLA FASHION RETREATING TO ITS REAR BASE
ALONG THE BORDER AREA OF 0AKISTAN n 7ASHINGTON STILL THINKS IT HAS
THE STRATEGIC INITIATIVE )T SEEMED TO BE THE CASE HOWEVER THAT IT
HAD LAUNCHED ITSELF INTO A MULTI
FRONT WAR OF ATTRITION WHERE IT
COULD NOT CONSOLIDATE VICTORY ON ANY FRONT
4HE MOMENTUM WAS ALSO BEING LOST ON THE POLITICAL FRONT !S
THE MILITARY CAMPAIGN LESSENED IN INTENSITY IN !FGHANISTAN THE
5NITED .ATIONS WAS BROUGHT IN TO BROKER A POLITICAL SETTLEMENT
Ó{ i}L>â>Ì
THAT WOULD USHER IN REPRESENTATIVE DEMOCRACY WHILE THE %UROPEAN
5NION WAS DRAGGED IN TO POLICE THE PEACE VIA A "RITISH
LED ARMED
CONTINGENT )T BECAME CLEAR HOWEVER THAT THE CENTRALIZED AUTHORITY
THAT HAD BEEN FORGED BY THE 4ALIBAN HAS GIVEN WAY TO THE RETURN
OF WARLORD HEGEMONY IN DIFFERENT PARTS OF THE COUNTRY AND THE
ROLE OF THE SECURITY FORCE IS INCREASINGLY TO KEEP THE EX
PARTNERS
IN THE .ORTHERN !LLIANCE FROM CUTTING EACH OTHERS THROATS 7HEN
THE MUCH VAUNTED ,OYA *IRGA ELECTIONS TO PRODUCE A REPRESENTATIVE
ASSEMBLY ENDED UP AS A BATTLE FOR SPOILS AMONG WARLORDS IN EARLY
*UNE @QUAGMIRE BECOME A WORD THAT WAS MORE AND MORE
FREQUENTLY USED IN THE 53 PRESS TO DESCRIBE THE !FGHAN SITUATION
!S !FGHANISTAN SLID INTO ANARCHY 0AKISTANS STRONGMAN 'ENERAL
0ERVEZ -USHARRAF WAS DESTABILIZED AND DELEGITIMIZED BY !MERI
CAN PRESSURE TO TAKE SIDES IN THE WAR AGAINST TERROR 4HE PRESTIGE
OF )SLAMIC FUNDAMENTALISTS AMONG THE POPULATION WAS PROBABLY
GREATER BY MID
THAN BEFORE 3EPTEMBER 3AUDI
!RABIA WAS SEETHING WITH DISCONTENT AND 7ASHINGTON FACED THE
UNPLEASANT PROSPECT OF HAVING TO SERVE ULTIMATELY AS A POLICE FORCE
BETWEEN AN INCREASINGLY ISOLATED 3AUDI ELITE AND A RESTIVE YOUTHFUL
POPULATION THAT REGARDS BIN ,ADEN AS A HERO
7ASHINGTONS TILT TOWARDS )SRAEL HAS NOT HELPED IN SHORING UP
THE LEGITIMACY OF ITS !RAB ALLIES INCLUDING %GYPTS (OSNI -UBARAK
AMONG THEIR PEOPLES )SRAEL IS THE GREAT SPOILER OF THE 53 EFFORT TO
MANAGE THE -IDDLE %AST AND IT CAN GET AWAY WITH IT BECAUSE IT
CAN RELY ON ITS MASSIVE SUPPORT IN THE 53 #ONGRESS TO BLUNT PRES
SURE FROM THE 53 EXECUTIVE AS THE BRAZEN )SRAELI MOVES TO DESTROY
THE 0ALESTINIAN !UTHORITY IN DElANCE OF CALLS FROM 7ASHINGTON TO
END ITS MILITARY INCURSIONS INTO THE 7EST "ANK DEMONSTRATED 7ITH
7ASHINGTONS EMBRACE OF )SRAELS POLICY OF FORCING OUT 9ASSER !RAFAT
AS THE HEAD OF THE 0ALESTINIAN PEOPLE IN LATE *UNE THE ALLIANCE
THAT CONSERVATIVE !RAB GOVERNMENTS MAINTAINED WITH 7ASHINGTON
BECAME EXTREMELY DIFlCULT TO JUSTIFY TO THE !RAB MASSES
)NDEED THE !FGHAN lASCO AND )SRAELI INTRANSIGENCE IT CAN BE
ARGUED HAVE COMBINED TO MAKE 7ASHINGTONS STRATEGIC SITUATION
IN THE -IDDLE %AST WORSE RATHER THAN BETTER .OR HAVE THERE BEEN
ÌÀ`ÕVÌ Óx
ANY POLITICAL OR MILITARY GAINS IN 3OUTHEAST !SIA WITH )NDONESIA
MAINTAINING ITS DISTANCE FROM 7ASHINGTON AND THE 53 BUILD UP IN
THE 0HILIPPINES TURNING OUT TO BE AN OPEN ENDED COMMITMENT
LIKE 6IETNAM )NDEED POST 3EPTEMBER POLITICAL )SLAM APPEARED
TO HAVE MADE SIGNIlCANT GAINS AMONG THE -USLIM POPULATIONS OF
)NDONESIA -ALAYSIA 4HAILAND AND THE 0HILIPPINES
4HE INTRODUCTION OF 53 FORCES IN 'EORGIA AND SOME OF THE
#ENTRAL !SIAN REPUBLICS n THE SO CALLED @3TANS n MAY ON THE SUR
FACE SEEM TO BE A STRATEGIC PLUS ESPECIALLY WHEN ONE TAKES INTO
CONSIDERATION THE ENERGY RESERVES OF THE AREA 7ITH THE FAILURE
TO ACHIEVE DECISIVE MILITARY OR POLITICAL VICTORY ON ANY FRONT
HOWEVER 7ASHINGTONS #ENTRAL !SIAN DEPLOYMENTS WERE ACTUALLY
STRETCHING 53 POWER WITH LITTLE REAL STRATEGIC GAIN
.OT SURPRISINGLY THERE HAVE EMERGED IN 7ASHINGTON VOICES
THAT NOW QUESTION WHETHER THE 53! HAS THE TROOPS AND RESOURCES
TO ENGAGE IN A MULTI FRONT WAR OF ATTRITION !N INVASION OF )RAQ
EVEN IF IT DID OUST 3ADDAM (USSEIN WOULD MERELY EXACERBATE THE
DILEMMA OF OVER EXTENSION SINCE MILITARY ENGAGEMENT IN )RAQ
AS IN !FGHANISTAN OFFERED NO EASY EXIT FROM THE MASSIVE POLITICAL
MESS IT WOULD CREATE 0AUL +ENNEDY HAD A COLOURFUL PHRASE FOR
7ASHINGTONS EMERGING DILEMMA @IMPERIAL OVERSTRETCH
/NE WAS TEMPTED TO SAY IN FACT THAT THERE WAS A HISTORICAL
PARALLEL TO THE 53!S INDISCRIMINATE CREATION OF NEW FRONTS AGAINST
TERROR AND THAT WAS THE *APANESE RAMPAGE THROUGH 3OUTHEAST !SIA
AND THE 0ACIlC IN THE lRST SIX MONTHS OF ,ARGE SWATHES OF
TERRITORY WERE GAINED BUT AT THE PRICE OF OVER EXTENDING *APANESE
IMPERIAL POWER "Y CREATING SO MANY FRONTS *APAN ENDED UP
UNABLE TO CONCENTRATE ITS FORCES AND ATTENTION ON THE FEW REALLY
STRATEGIC SECTORS
LiÀ>Ê iVÀ>VÞÊ ÃiÃ
"Y MID THERE WERE NO CLEAR WINNERS SO FAR IN THE SO CALLED
WAR AGAINST TERROR "UT THERE WERE CLEAR LOSERS 4HE 4ALIBAN WAS ONE
4HE OTHER BIG LOSER WAS LIBERAL DEMOCRACY IN THE 5NITED 3TATES
ÓÈ i}L>â>Ì
WHOSE REPRESENTATIVENESS AS NOTED EARLIER WAS ALREADY WIDELY
DOUBTED PRIOR TO 3EPTEMBER .OT EVEN THE #OLD 7AR WAS
PRESENTED IN SUCH TOTALISTIC TERMS AS THE @7AR AGAINST 4ERROR ,AWS
AND EXECUTIVE ORDERS RESTRICTING THE RIGHTS TO PRIVACY AND FREE
MOVEMENT HAVE BEEN PASSED WITH A SPEED AND IN A MANNER THAT
WOULD HAVE TURNED *OE -C#ARTHY GREEN WITH ENVY 4HE 5NITED
3TATES WAS SCARCELY THREE MONTHS INTO THE WAR WHEN LEGISLATION
HAD ALREADY BEEN PASSED AND EXECUTIVE ORDERS SIGNED THAT ESTAB
LISHED SECRET MILITARY TRIBUNALS TO TRY NON 53 CITIZENS IMPOSED
GUILT BY ASSOCIATION ON IMMIGRANTS LAUNCHED A MASSIVE EFFORT TO
TRACK DOWN YOUNG -USLIM MEN AUTHORIZED THE ATTORNEY
GENERAL TO LOCK UP ALIENS INDElNITELY ON MERE SUSPICION EXPANDED
THE USE OF WIRETAPS AND SECRET SEARCHES ALLOWED THE USE OF SECRET
EVIDENCE IN IMMIGRATION PROCEEDINGS THAT ALIENS CANNOT CONFRONT
OR REBUT GAVE THE *USTICE $EPARTMENT THE AUTHORITY TO OVERRULE
IMMIGRATION JUDGES DESTROYED THE SECRECY OF THE CLIENTnLAWYER
RELATIONSHIP BY ALLOWING THE GOVERNMENT TO LISTEN IN AND INSTI
TUTIONALIZED RACIAL AND ETHNIC PROlLING
!MERICANS HAVE OFTEN PRIDED THEMSELVES ON HAVING A POLITICAL
SYSTEM WHOSE ROLE IS TO MAXIMIZE AND PROTECT INDIVIDUAL LIBERTY
ALONG THE LINES PROPOUNDED BY *OHN ,OCKE AND 4HOMAS *EFFER
SON 4HAT ,OCKEAN *EFFERSONIAN TRADITION WAS SEVERELY ERODED IN
THE MONTHS FOLLOWING 3EPTEMBER AS THE RULING 2EPUBLICANS
LAUNCHED A DRIVE TO STAMPEDE THE !MERICAN PEOPLE INTO GRANTING
GOVERNMENT VAST NEW POWERS OVER THE INDIVIDUAL IN THE NAME OF
GUARANTEEING ORDER AND SECURITY )NSTEAD OF MOVING TO THE FUTURE
!MERICAS LIMITED DEMOCRACY WAS REGRESSING IN ITS INSPIRATION
FROM THE LATE SEVENTEENTH CENTURY ,OCKE TO THE EARLY SIXTEENTH
CENTURY (OBBES WHOSE MASTERWORK ,EVIATHAN HELD THAT CITIZENS
OWE UNCONDITIONAL LOYALTY TO A STATE THAT GUARANTEES THE SECURITY
OF THEIR LIFE AND LIMB
4HE EXTENT TO WHICH EFFORTS TO CURTAIL TRADITIONAL FORMAL LIBER
TIES WERE THREATENED WAS ILLUSTRATED DURING A MEMORABLE 3ENATE
HEARING WHEN !TTORNEY 'ENERAL *OHN !SHCROFT SAID THAT CRITICS OF
THE "USH ADMINISTRATIONS SECURITY MEASURES WERE FEAR MONGERS
ÌÀ`ÕVÌ ÓÇ
@WHO SCARE PEACE
LOVING PEOPLE WITH PHANTOMS OF LOST LIBERTY
;AND= AID TERRORISTS 4HE FACT THAT LIBERAL $EMOCRAT SENATORS
AGAINST WHOM THESE REMARKS WERE DIRECTED DARED NOT RESPOND
SHOWS HOW SKILFULLY THE CONSERVATIVES HAD USED THE ANTI
TERRORIST
STRUGGLE TO WIN WHAT THEY REGARDED TO BE THE REAL WAR AT HOME
WHICH IS THE WAR AGAINST LIBERALS AND PROGRESSIVES )T IS ONLY RE
CENTLY THAT THE OPPOSITION $EMOCRATS HAVE MOVED TO SPEAK AGAINST
CURTAILMENT OF CIVIL LIBERTIES AND RATHER TIMIDLY AT THAT
!LREADY IN CRISIS BEFORE 3EPTEMBER !MERICAN LIBERAL DEMO
CRACY HAS BEEN PLUNGED INTO A DEEPER CRISIS OF CREDIBILITY BY
THE POST
3EPTEMBER MOVES OF THE RULING 2EPUBLICAN RIGHT
4HOUGH MANY LIBERALS AND PROGRESSIVES ARE STILL STRAIT
JACKETED BY
THE POPULARITY OF THE ANTI
TERRORIST CAMPAIGN IT IS LIKELY THAT AS
IT BECOMES EVIDENT THAT THE MAIN INTENT OF THIS CAMPAIGN IS TO
MANAGE DOMESTIC DISSENT AND DRIVE A DOMESTIC COUNTER
REVOLUTION
THE @CULTURAL CIVIL WAR BETWEEN LIBERALS AND CONSERVATIVES WILL
BECOME LESS AND LESS CIVIL
*ÀÌÊi}ÀiÊ>`ÊÌ iÊÕÌÕÀi
)N SUM IN A LITTLE OVER A DECADE GLOBAL CAPITALISM HAS PASSED FROM
TRIUMPH TO CRISIS 3EPTEMBER IN RETROSPECT WAS A SLIGHT REVERSAL
OF THIS PROLONGED CRISIS BUT THE WIDENING CRACKS IN THE SYSTEM
OF GLOBAL CAPITALISM n INCLUDING THE LIBERAL DEMOCRATIC POLITICAL
REGIMES AND !MERICAN MILITARY HEGEMONY THAT ACT AS ITS PROTEC
TIVE CANOPY n CANNOT BE PAPERED OVER FOR LONG !T THIS POINT
THE CRISIS IS PRINCIPALLY A CRISIS OF LEGITIMACY #RISES OF LEGITIMACY
HOWEVER ARE A NECESSARY PRELUDE TO CHANGE SINCE WHEN LEGITIMACY
OR CONSENSUS GOES IT MAY ONLY BE A MATTER OF TIME BEFORE THE
STRUCTURES THEMSELVES UNRAVEL
9ET THE CRISIS OF THE SYSTEM OF GLOBAL CAPITALISM DOES NOT NECES
SARILY RESULT IN ITS REPLACEMENT BY A MORE BENIGN ALTERNATIVE (ERE
IT IS IMPORTANT TO RETAIN A HISTORICAL PERSPECTIVE $URING THE lRST
PHASE OF GLOBALIZATION AN ERA THAT SPANNED THE NINETEENTH CEN
TURY AND ENDED IN THE REACTION TO CAPITALISMS INEXORABLE
Ón i}L>â>Ì
COMMODIlCATION OF THE NATURAL AND SOCIAL WORLD WAS A SEARCH
FOR COMMUNITY FOR A NEW BASIS OF SOCIAL SOLIDARITY BEYOND THE
MARKET )N RETROSPECT SOCIALISM COMMUNISM SOCIAL DEMOCRACY
AND NATIONAL LIBERATION MOVEMENTS CAN ALL BE SEEN AS EXPRESSIONS
OF THIS COUNTERVAILING THRUST &ASCISM WHICH +ARL 0OLANYI DElNED
AS @THE REFORM OF THE MARKET ECONOMY ACHIEVED AT THE PRICE OF
THE EXTIRPATION OF DEMOCRATIC INSTITUTIONS WAS ALSO PART OF THIS
COUNTERVAILING DRIVE ONE THAT HIJACKED THE SEARCH FOR COMMUNITY
IN THE SERVICE OF REACTION COUNTERREVOLUTION AND RACISM
&ASCISM NEARLY TRIUMPHED IN THE S AND EARLY S "UT
WITH ITS DEFEAT DURING 7ORLD 7AR )) IT WAS THE STRUGGLE BETWEEN
TWO RESPONSES TO UNBRIDLED FREE MARKET CAPITALISM +EYNESIAN
CAPITALISM AND STATE SOCIALISM THAT DOMINATED THE GREATER PART
OF THE SECOND HALF OF THE TWENTIETH CENTURY 4HE +EYNESIAN ECO
NOMIC PARADIGM WAS ACTUALLY A COMPROMISE AMONG CONTENDING
CLASSES THAT PLACED LIMITS ON THE OPERATION OF THE MARKET )TS
WIDESPREAD ADOPTION BY ELITES IN BOTH THE .ORTH AND THE 3OUTH
n WHERE IT TOOK THE FORM OF THE @DEVELOPMENTAL STATE n WAS
EXPLAINED BY THE NEED TO CREATE A STABLE SOCIAL BASE TO CONTAIN
GLOBAL SOCIAL REVOLUTION
3IMILARLY THE SECOND PHASE OF GLOBALIZATION WHICH BEGAN WITH
THE DISMANTLING OF THE +EYNESIAN STATE IN THE S AND REACHED
ITS APOGEE IN THE MID S HAS PROVOKED DIVERSE EXPRESSIONS
OF A SEARCH FOR COMMUNITY NOT ALL OF THEM PROGRESSIVE /NE OF
THEM IS RADICAL )SLAMISM WHICH SAW 53 CORPORATE AND MILITARY
HEGEMONY AS THE APOGEE OF THE LONG RUNNING 7ESTERN EFFORT TO
ERODE THE INTEGRITY OF )SLAMIC SOCIETIES REAFlRMED THE UNITY OF THE
)SLAMIC RELIGION PEOPLE AND STATE AND DECLARED A JIHAD AGAINST THE
5NITED 3TATES ,IKE FASCISM IN THE S ITS POPULAR IMPACT IS NOT
UNIMPRESSIVE WHATEVER ONES ETHICAL JUDGMENT OF RADICAL )SLAMISM
IT CANNOT BE DENIED THAT BY THE END OF THE TWENTIETH CENTURY IT
HAD SUCCEEDED IN RALLYING THE LOYALTY OF LARGE NUMBERS OF YOUNG
PEOPLE THROUGHOUT THE )SLAMIC WORLD SO MUCH SO THAT CONSERVA
TIVE RULING ELITES SUCH AS THOSE IN 0AKISTAN AND 3AUDI !RABIA HAD
TO BORROW ITS LANGUAGE IN ORDER TO SURVIVE
ÌÀ`ÕVÌ Ó
/N THE PROGRESSIVE SIDE OF THE SPECTRUM DIVERSE RESPONSES
GLOBALLY ARE COMING TOGETHER UNDER THE CANOPY OF THE @0ORTO
!LEGRE PROCESS 4HE SITE OF THE 7ORLD 3OCIAL &ORUM 73& IN
AND AGAIN IN 0ORTO !LEGRE A MEDIUM SIZED CITY IN "RAZIL HAS
BECOME THE BYWORD FOR THE SPIRIT OF THE BURGEONING MOVEMENT
AGAINST CORPORATE DRIVEN GLOBALIZATION 'ALVANIZED BY THE SLOGAN
@!NOTHER WORLD IS POSSIBLE SOME PEOPLE mOCKED TO THIS
COASTAL CITY FROM *ANUARY TO &EBRUARY 4HIS lGURE WAS
NEARLY lVE TIMES THE NUMBER OF THOSE WHO ATTENDED IN
&ISHERFOLK FROM )NDIA FARMERS FROM %AST !FRICA TRADE UNIONISTS
FROM 4HAILAND INDIGENOUS PEOPLE FROM #ENTRAL !MERICA WERE
AMONG THOSE WHO MADE THEIR WAY TO 0ORTO !LEGRE "RAZILIANS OF
COURSE PREDOMINATED IN TERMS OF NUMBERS BUT QUITE A NUMBER OF
!RGENTINES CROSSED THE 2IVER 0LATE TO SHARE THEIR FEELINGS ABOUT THE
TRAGEDY IN THEIR COUNTRY 4HERE WAS ALSO A SIZEABLE CONTINGENT FROM
THE .ORTH WITH )TALY ALONE CONTRIBUTING OVER DELEGATES
)N SYMBOLIC TERMS WHILE 3EATTLE WAS THE SITE OF THE lRST MAJOR
VICTORY OF THE STRUGGLE AGAINST CORPORATE DRIVEN GLOBALIZATION
0ORTO !LEGRE REPRESENTS THE TRANSFER TO THE 3OUTH OF THE CENTRE
OF GRAVITY OF WHAT IS NOW A SURGING GLOBAL MOVEMENT
.OW AN ANNUAL AFFAIR ONE MIGHT SAY THAT 0ORTO !LEGRE PER
FORMS THREE FUNCTIONS FOR THIS MOVEMENT
&IRST IT REPRESENTS A SPACE n BOTH PHYSICAL AND TEMPORAL n FOR
THIS DIVERSE GLOBAL MOVEMENT TO MEET TO NETWORK AND QUITE
SIMPLY TO FEEL AND AFlRM ITSELF
3ECOND IT IS A RETREAT DURING WHICH THE MOVEMENT GATHERS
ITS ENERGIES AND CHARTS THE DIRECTIONS OF ITS CONTINUING DRIVE TO
CONFRONT AND ROLL BACK THE PROCESSES INSTITUTIONS AND STRUCTURES OF
GLOBAL CAPITALISM &OR ONE CANNOT LET UP ON THE ENTERPRISE DECON
STRUCTING THE REIGNING STRUCTURES .AOMI +LEIN AUTHOR OF .O ,OGO
PUT IT SIMPLY BUT POWERFULLY WHEN SHE SAID THAT THE NEED OF THE
MOMENT WAS @LESS CIVIL SOCIETY AND MORE CIVIL DISOBEDIENCE
4HIRD 0ORTO !LEGRE PROVIDES A SITE AND A SPACE FOR THE MOVE
MENT TO PAINT ELABORATE AND DEBATE THE VISION VALUES AND IN
STITUTIONS OF AN ALTERNATIVE WORLD ORDER 4HE CENTREPIECE OF THE
Îä i}L>â>Ì
GATHERING WERE TWENTY
SIX PLENARY SESSIONS OVER FOUR DAYS
STRUCTURED AROUND FOUR THEMES @THE PRODUCTION OF WEALTH AND
SOCIAL REPRODUCTION @ACCESS TO WEALTH AND SUSTAINABLE DEVELOP
MENT @CIVIL SOCIETY AND THE PUBLIC ARENA AND @POLITICAL POWER AND
ETHICS IN THE NEW SOCIETY !ROUND THIS CORE UNFOLDED SCORES OF
SEMINARS A PEOPLES TRIBUNAL ON DEBT A CONVENTION OF PROGRESSIVE
PARLIAMENTARIANS AND ABOUT WORKSHOPS
0ORTO !LEGRE OF COURSE WAS ONE MOMENT OF A LARGER PROCESS OF
CHARTING ALTERNATIVES )T WAS A MACROCOSM OF SO MANY SMALLER BUT
EQUALLY SIGNIlCANT ENTERPRISES GOING ON THROUGHOUT THE WORLD BY
MILLIONS WHO HAVE TOLD THE REFORMISTS CYNICS AND @REALISTS TO MOVE
ASIDE BECAUSE INDEED ANOTHER WORLD IS POSSIBLE !ND NECESSARY !T
THE BEGINNING OF THE TWENTIETH CENTURY 2OSA ,UXEMBURG MADE
HER FAMOUS COMMENT ABOUT THE POSSIBILITY THAT THE FUTURE MIGHT
BELONG TO @BARBARISM "ARBARISM IN THE FORM OF FASCISM NEARLY
TRIUMPHED SIX DECADES AGO 4ODAY CORPORATE
DRIVEN GLOBALIZATION
IS CREATING MUCH OF THE SAME INSTABILITY RESENTMENT AND CRISIS THAT
SERVES AS THE BREEDING GROUND OF FASCIST FANATICAL AND AUTHORITARIAN
POPULIST FORCES 'LOBALIZATION HAS NOT ONLY LOST ITS PROMISE BUT IT IS
EMBITTERING MANY 4HE FORCES REPRESENTING GENUINE SOLIDARITY AND
COMMUNITY HAVE NO CHOICE BUT TO STEP IN QUICKLY AND CONVINCE
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URGENT IN RECENT YEARS !LARM WAS REGISTERED DURING THE !SIAN
lNANCIAL CRISIS IN WHEN THE LACK OF REGULATIONS OVER GLOBAL
lNANCIAL mOWS PREVENTED THE MASSIVE OUTmOW OF SPECULATIVE
CAPITAL FROM %AST AND 3OUTHEAST !SIA CAUSING THE COLLAPSE OF
THESE BOOM ECONOMIES AND GREAT SUFFERING TO THEIR PEOPLES 4HE
ROLE OF THE )NTERNATIONAL -ONETARY &UND )-& IN MAKING THESE
ECONOMIES VULNERABLE TO VOLATILE CAPITAL mOWS WAS SEVERELY CRITI
CIZED AS WAS ITS PART IN WORSENING THE CRISIS OF THESE ECONOMIES
WITH CONTRACTIONARY STABILIZATION PROGRAMMES IN THE AFTERMATH OF
THE SPECULATIVE HAEMORRHAGE
&OLLOWING ON THE HEELS OF THE CRISIS OF THE )-& WAS THE COL
LAPSE OF THE 3EATTLE MINISTERIAL OF THE 7ORLD 4RADE /RGANIZATION
74/ IN $ECEMBER WHICH WAS CAUSED BY MASSIVE GLOBAL
DISAFFECTION WITH ITS POLICIES OF INDISCRIMINATE TRADE LIBERALIZATION
AND WITH ITS NON
TRANSPARENT SYSTEM OF DECISION
MAKING 4HEN IN
&EBRUARY THE )NTERNATIONAL &INANCIAL )NSTITUTION !DVISORY
#OMMISSION APPOINTED BY THE 53 #ONGRESS BETTER KNOWN AS THE
-ELTZER #OMMISSION ISSUED ITS REPORT ACCUSING THE 7ORLD "ANK
OF BEING IRRELEVANT TO THE PROBLEM OF SOLVING GLOBAL POVERTY AND
THE )-& OF BEING PART OF THE PROBLEM RATHER THAN THE SOLUTION
TO GLOBAL lNANCIAL GOVERNANCE
7HO COULD HAVE FORESEEN THIS SEVERE CRISIS OF LEGITIMACY IN
THE MIDDLE OF THE DECADE WHEN WHAT WAS ACKNOWLEDGED AS THE
PINNACLE OF THE GLOBAL MULTILATERAL SYSTEM THE 74/ WAS BORN
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4HE FUTURE WAS BRIGHT AND THE CHALLENGE WAS @COHERENCE IN THE
MULTILATERAL SYSTEM THAT IS THE SYNCHRONIZATION OF THE POLICIES
OF THE 7ORLD "ANK )-& AND 74/ TO ACHIEVE THE SWIFTEST POS
SIBLE TRANSITION TO A TRULY GLOBAL ECONOMY BASED ON FREE TRADE
AND lNANCIAL mOWS 4HE GRAND VISION WAS LAID OUT IN THE 74/S
FAMOUS @#OHERENCE $ECLARATION
4HE INTERLINKAGES BETWEEN THE DIFFERENT ASPECTS OF ECONOMIC POL
ICY REQUIRE THAT THE INTERNATIONAL INSTITUTIONS WITH RESPONSIBILITIES
IN EACH OF THESE AREAS FOLLOW CONSISTENT AND MUTUALLY SUPPORTIVE
POLICIES 4HE 7ORLD 4RADE /RGANIZATION SHOULD THEREFORE PURSUE
AND DEVELOP COOPERATION WITH THE INTERNATIONAL ORGANIZATIONS
RESPONSIBLE FOR MONETARY AND lNANCIAL MATTERS WHILE RESPECTING
THE MANDATE THE CONlDENTIALITY REQUIREMENTS AND THE NECESSARY
AUTONOMY IN DECISION
MAKING PROCEDURES OF EACH INSTITUTION x
-INISTERS FURTHER INVITE THE $IRECTOR 'ENERAL OF THE 74/ TO RE
VIEW WITH THE -ANAGING $IRECTOR OF THE )NTERNATIONAL -ONETARY
&UND AND THE 0RESIDENT OF THE 7ORLD "ANK THE IMPLICATIONS OF
THE 74/S RESPONSIBILITIES FOR ITS COOPERATION WITH THE "RETTON
7OODS INSTITUTIONS AS WELL AS THE FORMS SUCH COOPERATION MIGHT
TAKE WITH A VIEW TO ACHIEVING GREATER COHERENCE IN GLOBAL ECO
NOMIC POLICYMAKING
"Y THE YEAR COHERENCE WAS ON THE BACKBURNER AND THE ISSUE
BEFORE THE THREE INSTITUTIONS WAS THEIR UNRAVELLING LEGITIMACY AND
THEIR ULTIMATE SURVIVAL
4HE CURRENT SYSTEM OF GLOBAL ECONOMIC GOVERNANCE STEMS FROM
THE INTERSECTION OF THE TWO KEY DYNAMICS OF THE POST
7ORLD 7AR
)) INTERNATIONAL ECONOMY THE COMPETITIVE RELATIONS AMONG THE
DOMINANT CAPITALIST ECONOMIES AND THE EFFORTS OF THE COUNTRIES OF
THE 4HIRD 7ORLD TO DEVELOP AND PUSH FOR A REDISTRIBUTION OF GLOBAL
ECONOMIC POWER 4HIS ANALYSIS WILL FOCUS ON THE LATTER
4HE PLACE TO BEGIN THIS ANALYSIS IS THE PERIOD OF DE
COLONIZATION
IN THE S AND S 4HE EMERGENCE OF SCORES OF NEWLY IN
DEPENDENT STATES TOOK PLACE IN THE POLITICALLY CHARGED ATMOSPHERE
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7EST IN THEIR POLITICAL ALLIANCES 4HIRD 7ORLD COUNTRIES GRAVITATED
TOWARDS AN ECONOMIC AGENDA THAT HAD TWO UNDERLYING THRUSTS
RAPID DEVELOPMENT AND A GLOBAL REDISTRIBUTION OF WEALTH
7HILE THE MORE RADICAL EXPRESSION OF THIS AGENDA IN THE SHAPE
OF THE ,ENINIST THEORY OF IMPERIALISM DREW MUCH ATTENTION AND
NEEDLESS TO SAY CONDEMNATION IN SOME QUARTERS IT WAS THE MORE
MODERATE VERSION THAT WAS MOST INmUENTIAL IN DRAWING OTHERWISE
POLITICALLY DIVERSE 4HIRD 7ORLD GOVERNMENTS INTO A COMMON FRONT
4HIS WAS THE VISION ANALYSIS AND PROGRAMME OF ACTION FORGED BY
2AUL 0REBISCH AN !RGENTINE ECONOMIST WHO FROM HIS BASE AT THE
5NITED %CONOMIC #OMMISSION FOR ,ATIN !MERICA #%0!, WON
A GLOBAL FOLLOWING WITH HIS NUMEROUS WRITINGS
$EVELOPED IN THE LATE S AND EARLY S 0REBISCHS THEORY
CENTRED ON THE WORSENING TERMS OF TRADE BETWEEN INDUSTRIALIZED
AND NON
INDUSTRIALIZED COUNTRIES AN EQUATION WHICH POSITED THAT
MORE OF THE 3OUTHS RAW MATERIALS AND AGRICULTURAL PRODUCTS WERE
NEEDED TO PURCHASE FEWER OF THE .ORTHS MANUFACTURED PRODUCTS
-OREOVER THE TRADING RELATIONSHIP WAS LIKELY TO GET WORSE SINCE
.ORTHERN PRODUCERS WERE DEVELOPING SUBSTITUTES FOR RAW MATERIALS
FROM THE 3OUTH AND .ORTHERN CONSUMERS WOULD SPEND A DE
CREASING PROPORTION OF THEIR INCOME ON AGRICULTURAL PRODUCTS
FROM THE 3OUTH
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OF @BLOODLESS BUT INEXORABLE EXPLOITATION AS ONE WRITER DESCRIBED
IT SERVED AS THE INSPIRATION FOR 4HIRD 7ORLD ORGANIZATIONS FOR
MATIONS AND PROGRAMMES THAT SPRANG UP IN THE S AND S
4HESE INCLUDED THE .ON
!LIGNED -OVEMENT 'ROUP OF
/RGANIZATION OF 0ETROLEUM %XPORTING #OUNTRIES /0%# AND
THE .EW )NTERNATIONAL %CONOMIC /RDER .)%/ )T WAS ALSO
CENTRAL TO THE ESTABLISHMENT OF THE 5. #ONFERENCE ON 4RADE AND
$EVELOPMENT 5.#4!$ IN WHICH BECAME OVER THE NEXT
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DECADE THE PRINCIPAL VEHICLE USED BY THE 4HIRD 7ORLD COUNTRIES
IN THEIR EFFORT TO RESTRUCTURE THE WORLD ECONOMY
7ITH 0REBISCH AS ITS lRST SECRETARY GENERAL 5.#4!$ AD
VANCED A GLOBAL REFORM STRATEGY WITH THREE MAIN PRONGS 4HE
lRST WAS COMMODITY PRICE STABILIZATION THROUGH THE NEGOTIATION
OF PRICE mOORS BELOW WHICH COMMODITY PRICES WOULD NOT BE
ALLOWED TO FALL 4HE SECOND WAS A SCHEME OF PREFERENTIAL TARIFFS
OR ALLOWING 4HIRD 7ORLD EXPORTS OF MANUFACTURES IN THE NAME
OF DEVELOPMENT TO ENTER &IRST 7ORLD MARKETS AT LOWER TARIFF RATES
THAN THOSE APPLIED TO EXPORTS FROM OTHER INDUSTRIALIZED COUNTRIES
4HE THIRD WAS AN EXPANSION AND ACCELERATION OF FOREIGN ASSISTANCE
WHICH IN 5.#4!$S VIEW WAS NOT CHARITY BUT @COMPENSATION A
REBATE TO THE 4HIRD 7ORLD FOR THE YEARS OF DECLINING COMMODITY
PURCHASING POWER 5.#4!$ ALSO SOUGHT TO GAIN LEGITIMACY
FOR THE 3OUTHERN COUNTRIES USE OF PROTECTIONIST TRADE POLICY AS A
MECHANISM FOR INDUSTRIALIZATION AND DEMANDED ACCELERATED TRANSFER
OF TECHNOLOGY TO THE 3OUTH
4O A GREATER OR LESSER DEGREE THE STRUCTURALIST CRITIQUE CAME TO
BE REmECTED IN THE APPROACHES OF OTHER KEY ECONOMIC AGENCIES OF
THE 5NITED .ATIONS SECRETARIAT SUCH AS THE %CONOMIC AND 3OCIAL
#OUNCIL %#/3/# AND THE 5NITED .ATIONS $EVELOPMENT 0RO
GRAM 5.$0 AND BECAME THE DOMINANT VIEWPOINT AMONG THE
MAJORITY AT THE 'ENERAL !SSEMBLY
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4HE RESPONSE OF THE LEADING COUNTRIES OF THE .ORTH TO THE CHAL
LENGE OF ECONOMIC DE
COLONIZATION POSED BY THE EMERGING COUN
TRIES WAS CONDITIONED BY SEVERAL DEVELOPMENTS -OST IMPORTANT OF
THESE WAS THE #OLD 7AR 4HE PRIORITY OF THE POLITICAL ENTERPRISE OF
CONTAINING THE 3OVIET 5NION AND COMMUNISM PUSHED THE .ORTH
PARTICULARLY THE 53 GOVERNMENT TO A LESS HARD
LINE STANCE WHEN
IT CAME TO THE QUESTION OF WHETHER THE ECONOMIC STRUCTURES OF
ITS CLIENT COUNTRIES CONFORMED TO FREE MARKET PRINCIPLES 7HILE
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THE 53! UPHELD PRIVATE ENTERPRISE AND DEMANDED ACCESS FOR
ITS CORPORATIONS IT WAS MORE TOLERANT WHEN IT CAME TO PROTEC
TIONISM INVESTMENT CONTROLS AND A STRONG ROLE FOR GOVERNMENT
IN MANAGING THE ECONOMY )T ALSO VEERED AWAY FROM A CLASSIC
EXPLOITATIVE STANCE TO PROMOTE AT LEAST THE IMAGE OF SUPPORTING
LIMITED GLOBAL REDISTRIBUTION OF WEALTH THIS BEING ACCOMPLISHED
MAINLY THROUGH FOREIGN AID !S THE EMERGING COUNTRIES GRAVITATED
TOWARDS THE 5. SYSTEM THE LEADING GOVERNMENTS INCREASINGLY
RELIED ON THE )NTERNATIONAL -ONETARY &UND )-& AND THE )NTER
NATIONAL "ANK FOR 2ECONSTRUCTION AND $EVELOPMENT )"2$ TO
PUSH THEIR AGENDA
4HE "RETTON 7OODS INSTITUTIONS FOUNDED IN BEGAN WITH
MISSIONS QUITE DISTINCT FROM THEIR LATTER DAY INVOLVEMENT WITH
.ORTHn3OUTH RELATIONS 4HE )-& WAS CONCEIVED BY *OHN -AYNARD
+EYNES AND (ARRY $EXTER 7HITE THE TWO PILLARS OF THE "RETTON
7OODS MEETING AS THE GUARDIAN OF GLOBAL LIQUIDITY A FUNCTION
THAT IT WAS SUPPOSED TO FULlL BY MONITORING MEMBER COUNTRIES
MAINTENANCE OF STABLE EXCHANGE RATES AND PROVIDING FACILITIES ON
WHICH THEY COULD PERIODICALLY DRAW TO OVERCOME CYCLICAL BALANCE
OF PAYMENTS DIFlCULTIES /N THE OTHER HAND THE )"2$ WAS AS ITS
NAME IMPLIED SET UP TO ASSIST IN THE RECONSTRUCTION OF THE WAR
TORN ECONOMIES PARTICULARLY THOSE OF 7ESTERN %UROPE BY LENDING
TO THEM AT MANAGEABLE RATES OF INTEREST
"Y THE EARLY S HOWEVER 53 0RESIDENT 2ICHARD .IXONS
TAKING THE DOLLAR OFF THE GOLD STANDARD HAD INAUGURATED A NEW ERA
OF mOATING EXCHANGE RATES THAT MADE THE )-&S ORIGINAL MISSION
SUPERmUOUS )NSTEAD THE &UND WAS DEEPLY INVOLVED IN STABILIZING
4HIRD 7ORLD ECONOMIES WITH BALANCE OF PAYMENTS DIFlCULTIES !S
FOR THE 7ORLD "ANK IT HAD EVOLVED INTO THE PRIME MULTILATERAL
DEVELOPMENT AGENCY FOR AID AND DEVELOPMENT
)N THE CASE OF THE 7ORLD "ANK A TURNING POINT OF SORTS WAS THE
DEBATE TRIGGERED BY THE REPORT OF A GROUP OF EXPERTS ENTITLED
@-EASURES FOR THE %CONOMIC $EVELOPMENT OF 5NDER $EVELOPED
#OUNTRIES WHICH PROPOSED MAKING GRANT AID AVAILABLE TO 4HIRD
7ORLD COUNTRIES 5SING THIS AS A SPRINGBOARD 4HIRD 7ORLD
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COUNTRIES AT THE 'ENERAL !SSEMBLY TRIED TO PUSH THROUGH RESOLU
TIONS THAT WOULD ESTABLISH THE 3PECIAL 5. &UND FOR %CONOMIC
$EVELOPMENT 35.&%$ WHICH WOULD BE CONTROLLED NOT BY THE
.ORTH BUT BY THE 5. AND WHOSE CRITERION FOR PROVIDING LOANS
WOULD NOT BE NARROW BANKING RULES BUT DEVELOPMENT NEED
4HE .ORTH LED BY THE 5NITED 3TATES STRENUOUSLY RESISTED THESE
EFFORTS RESORTING AT lRST TO DELAY AND DIVERSION SUCH AS PROPOSING
THE CREATION OF A MILLION FUND TO BE USED TO lNANCE AN
INVESTMENT SURVEY THAT THE )"2$ OR SOME OTHER 7ESTERN AGENCY
WOULD UNDERTAKE "UT WHEN DIVERSION AND DELAY FAILED TO DERAIL
THE 3OUTHS DRIVE TO SET UP 35.&%$ THE .ORTH CAME OUT WITH
AN ALTERNATIVE AN INSTITUTION FOR MAKING SOFT LOANS FOR DEVELOPMENT
FROM CAPITAL SUBSCRIBED BY THE .ORTH BUT ONE CONTROLLED BY THE
.ORTH RATHER THAN THE 4HIRD 7ORLD MAJORITY AT THE 5NITED .ATIONS
4HUS CAME INTO BEING THE )NTERNATIONAL $EVELOPMENT !SSOCIATION
)$! WHICH WAS ATTACHED TO THE 7ORLD "ANK AS THE LATTERS SOFT
LOAN WINDOW !S ONE ANALYST OF THIS PERIOD HAS POINTED OUT
-UCH OF THE IMPETUS FOR )$! CAME FROM THE "ANK ITSELF IN
CREASINGLY WORRIED OVER 3OUTHERN DEMANDS FOR A COMPETING 5.
FUND %UGENE 2 "LACK THE BANKS SHREWD PRESIDENT SAID BLUNTLY
THAT @THE )NTERNATIONAL $EVELOPMENT !SSOCIATION WAS REALLY AN
IDEA TO OFFSET THE URGE FOR 3UNFED "LACK LIKE ANY OTHER BANKER
HAD LITTLE USE FOR SOFT LOANS "UT IF ANYBODY WOULD MAKE THEM
HE REASONED IT HAD BETTER BE THE "ANK )F NEW BUSINESS WAS TO
BE DONE "LACK WANTED TO DO IT
4HE )$! WAS PART OF A COMPROMISE PACKAGE THAT EFFECTIVELY
KILLED THE IDEA OF A 5.
CONTROLLED DEVELOPMENT FUND 4HE OTHER
PART OF THE PACKAGE WAS THE ESTABLISHMENT OF THE 5. 3PECIAL
&UND LATER RENAMED THE 5. $EVELOPMENT 0ROGRAMME 5.$0
WHICH SERVED AS THE CHANNEL OF MUCH SMALLER QUANTITIES OF MAINLY
TECHNICAL AID TO 4HIRD 7ORLD COUNTRIES
4HE )$!n5.$0 COMPROMISE DERAILED THE DEMAND FOR A 5.
CONTROLLED AGENCY BUT IT DID NOT STOP THE ESCALATION OF 4HIRD 7ORLD
DEMANDS FOR A REDISTRIBUTION OF GLOBAL ECONOMIC POWER 4HIS
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PROCESS RESULTED IN THE ESTABLISHMENT OF 5.#4!$ IN AND
ATTAINED DRAMATIC RESULTS WITH THE /RGANIZATION OF 0ETROLEUM %X
PORTING #OUNTRIES /0%# ABILITY TO SEIZE CONTROL OF OIL PRICING
IN THE EARLY AND MID
S CULMINATING WITH THE ADOPTION BY THE
5. 'ENERAL !SSEMBLY 3PECIAL 3ESSION OF OF THE @NEW INTER
NATIONAL ECONOMIC ORDER PROGRAMME 4HE THRUST OF THESE MOVES
WAS CLEARLY REFORMIST RATHER THAN REVOLUTIONARY EXPRESSING DEMANDS
OF 4HIRD 7ORLD ELITES RATHER THAN 4HIRD 7ORLD MASSES .EVERTHELESS
THEIR PROMINENCE IN THE CONTEXT OF SUCCESSFUL STRUGGLES WAGED
BY REVOLUTIONARY MOVEMENTS IN 6IETNAM AND OTHER 4HIRD 7ORLD
COUNTRIES LENT A NOTE OF URGENCY TO 7ASHINGTONS SEARCH FOR AN
EFFECTIVE COUNTER
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7ASHINGTONS RESPONSE 2OBERT -C.AMARA WHO WAS APPOINTED IN
AS THE 7ORLD "ANKS PRESIDENT AFTER HIS TROUBLED STINT AT THE
53 $EFENSE $EPARTMENT BECAME THE POINT MAN IN THE EXPANDED
LIBERAL APPROACH 4HE -C.AMARA APPROACH HAD SEVERAL ELEMENTS
&IRST WAS A MASSIVE ESCALATION IN THE 7ORLD "ANKS RESOURCES WITH
-C.AMARA RAISING 7ORLD "ANK LENDING FROM AN AVERAGE OF
BILLION A YEAR WHEN HE TOOK OFlCE IN TO BILLION IN
AND BILLION BY THE TIME HE LEFT OFlCE IN 3ECOND WAS
A GLOBAL PROGRAMME AIMED AT ENDING POVERTY VIA A PROGRAMME
THAT SOUGHT TO SIDESTEP THE DIFlCULT PROBLEMS ASSOCIATED WITH
SOCIAL REFORM BY FOCUSING AID ON IMPROVING THE @PRODUCTIVITY OF
THE POOR 4HIRD WAS AN EFFORT TO SPLIT THE 3OUTH BY PICKING A
FEW COUNTRIES AS @COUNTRIES OF CONCENTRATION TO WHICH THE mOW
OF BANK ASSISTANCE WOULD BE HIGHER THAN AVERAGE FOR COUNTRIES OF
SIMILAR SIZE AND INCOME
4HE RISE OF /0%# HOWEVER MADE 7ORLD "ANK AID AND FOREIGN
AID LESS CRITICAL TO MANY OF THE LEADING COUNTRIES IN 5.#4!$
AND THE 'ROUP OF IN THE MID
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BANKS WERE ONLY TOO HAPPY TO MAKE AVAILABLE IN THEIR EFFORT TO
TURN A PROlT ON THE BILLIONS OF DOLLARS OF DEPOSITS MADE TO THEM
BY THE /0%# COUNTRIES
)NSTEAD OF AID 5.#4!$ FOCUSED ON CHANGING THE RULES OF
INTERNATIONAL TRADE AND IN THIS ENTERPRISE IT REGISTERED SOME SUC
CESS $URING THE FOURTH CONFERENCE OF 5.#4!$ 5.#4!$ )6
IN .AIROBI IN AGREEMENT WAS REACHED WITHOUT DISSENT FROM
THE DEVELOPED COUNTRIES ON THE )NTEGRATED 0ROGRAMME FOR #OM
MODITIES )0# 4HE )0# STIPULATED THAT AGREEMENTS FOR EIGHT
EEN SPECIlED COMMODITIES WOULD BE NEGOTIATED OR RENEGOTIATED
WITH THE PRINCIPAL AIM OF AVOIDING EXCESSIVE PRICE mUCTUATIONS
AND STABILIZING COMMODITY PRICES AT LEVELS REMUNERATIVE TO THE
PRODUCERS AND EQUITABLE TO CONSUMERS )T WAS ALSO AGREED THAT
A COMMON FUND WOULD BE SET UP TO REGULATE PRICES WHEN THEY
EITHER FELL BELOW OR CLIMBED TOO FAR ABOVE THE NEGOTIATED PRICE
TARGETS
5.#4!$ AND 'ROUP OF PRESSURE WAS ALSO CENTRAL TO THE
)-&S ESTABLISHING A NEW WINDOW THE #OMPENSATORY &INANCING
&ACILITY #&& TO ASSIST 4HIRD 7ORLD COUNTRIES IN MANAGING FOREIGN
EXCHANGE CRISES CREATED BY SHARP FALLS IN THE PRICES OF THE PRIMARY
COMMODITIES THEY EXPORTED !NOTHER 5.#4!$ ACHIEVEMENT
WAS GETTING THE INDUSTRIALIZED COUNTRIES TO ACCEPT THE PRINCIPLE
OF PREFERENTIAL TARIFFS FOR DEVELOPING COUNTRIES 3OME TWENTY
SIX
DEVELOPED COUNTRIES WERE INVOLVED IN SIXTEEN SEPARATE @GENERAL
SYSTEM OF PREFERENCE SCHEMES BY THE EARLY S
4HESE CONCESSIONS WERE OF COURSE LIMITED )N THE CASE OF
COMMODITY PRICE STABILIZATION IT SOON BECAME APPARENT THAT THE
RICH COUNTRIES HAD REPLACED A STRATEGY OF CONFRONTATION WITH AN
EVASIVE STRATEGY OF FRUSTRATING CONCRETE AGREEMENTS ! DECADE AFTER
5.#4!$ )6 ONLY ONE NEW COMMODITY STABILIZATION AGREEMENT
FOR NATURAL RUBBER HAD BEEN NEGOTIATED AN EXISTING AGREEMENT
ON COCOA WAS NOT OPERATIVE AND AGREEMENTS ON TIN AND SUGAR
HAD COLLAPSED
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ESTABLISHMENT 3UCH CONCESSIONS WITHIN THE 5. SYSTEM WERE SEEN
IN THE CONTEXT OF OTHER DEVELOPMENTS IN .ORTHn3OUTH RELATIONS
4HESE APPEARED TO SHOW THAT THE STRATEGY OF LIBERAL CONTAINMENT
SPEARHEADED BY THE "ANK IN THE AREA OF ECONOMIC RELATIONS HAD
NOT PRODUCED WHAT IT PROMISED TO DELIVER SECURITY FOR 7ESTERN
INTERESTS IN THE 3OUTH THROUGH THE CO
OPTATION OF 4HIRD 7ORLD
ELITES
7HILE PROFESSING ANTI
COMMUNISM GOVERNING ELITES THROUGHOUT
THE 4HIRD 7ORLD WHICH WERE THE BACKBONE OF THE 5.#4!$
SYSTEM GAVE IN TO POPULAR PRESSURE ABETTED BY LOCAL INDUSTRIAL
INTERESTS TO TIGHTEN UP ON FOREIGN INVESTMENT .OWHERE DID
THIS TREND SPARK MORE APPREHENSION AMONG !MERICAN BUSINESS
PEOPLE THAN IN TWO COUNTRIES CONSIDERED ENORMOUSLY STRATEGIC
BY 53 MULTINATIONAL lRMS )N "RAZIL WHERE FOREIGN
OWNED lRMS
ACCOUNTED FOR HALF OF TOTAL MANUFACTURING SALES THE MILITARY
TECHNOCRAT REGIME INVOKED NATIONAL SECURITY CONSIDERATIONS AND
MOVED IN THE LATE S TO RESERVE THE STRATEGIC INFORMATION SEC
TOR TO LOCAL INDUSTRIES PROVOKING BITTER DENUNCIATION FROM )"-
AND OTHER 53 COMPUTER lRMS )N -EXICO WHERE FOREIGN lRMS
ACCOUNTED FOR NEARLY PER CENT OF MANUFACTURING OUTPUT
LEGAL ACTIONS AND THREATS OF PULLING INVESTMENTS BY THE POWERFUL
53 DRUG INDUSTRY FOLLOWED THE GOVERNMENTS PROGRAMME FOR THE
PHARMACEUTICAL INDUSTRY 4HE INDUSTRY PROPOSED NO
PATENT POLI
CIES PROMOTION OF GENERIC MEDICINES LOCAL DEVELOPMENT OF RAW
MATERIALS PRICE CONTROLS DISCRIMINATORY INCENTIVES FOR LOCAL lRMS
AND CONTROLS ON FOREIGN INVESTMENT
$ISTURBING THOUGH THESE CONCESSIONS AND ACTIONS WERE THEY
COULD NOT COMPARE IN THEIR IMPACT WITH /0%#S SECOND @OIL SHOCK
IN $ESPITE THE FACT THAT 7ESTERN OIL COMPANIES WERE PASSING
ON THE OIL PRICE INCREASES TO CONSUMERS IN ORDER TO PRESERVE THEIR
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ENORMOUS PROlT MARGINS TO MANY !MERICANS /0%# BECAME THE
SYMBOL OF THE 3OUTH AN IRRESPONSIBLE GANG THAT WAS BENT ON USING
ITS NEAR MONOPOLY OVER A KEY RESOURCE IN ORDER TO BRING THE 7EST
TO ITS KNEES !LTHOUGH /0%# WAS NOT DOMINATED BY COMMUNISTS
OR RADICAL NATIONALISTS LIKE ,IBYAS +HADAFY BUT BY 53 ALLIES SUCH
AS 3AUDI !RABIA +UWAIT AND 6ENEZUELA ITS @OIL WEAPON EVOKED
MORE APPREHENSION THAN THE NUCLEAR ARMS OF THE 3OVIET 5NION
4HE OIL CARTEL WAS FEARED AS THE PRECURSOR OF A UNIlED 3OUTHERN
BLOC CONTROLLING MOST STRATEGIC COMMODITIES AND RIGHT
WING PRO
PAGANDISTS POINTED TO THE !LGIERS $ECLARATION OF THE .ON
!LIGNED
-OVEMENT IN IN THEIR EFFORTS TO FAN FEAR AND LOATHING IN
THE .ORTH @4HE HEADS OF STATE OR GOVERNMENT RECOMMEND THE
ESTABLISHMENT OF EFFECTIVE SOLIDARITY ORGANIZATIONS FOR THE DEFENSE
OF THE RAW MATERIALS PRODUCING COUNTRIES SUCH AS THE /RGANIZATION
OF 0ETROLEUM %XPORTING #OUNTRIES x TO RECOVER NATURAL RESOURCES
AND ENSURE INCREASINGLY SUBSTANTIAL EXPORT EARNINGS
4HE 5NITED .ATIONS SYSTEM WAS A CENTRAL FEATURE OF THE
DEMONOLOGY OF THE 3OUTH THAT RIGHT
WING CIRCLES ARTICULATED IN
THE LATE S AND EARLY S )N THEIR VIEW THE 5. HAD BECOME
THE MAIN VEHICLE FOR THE 3OUTHS STRATEGY TO BRING ABOUT THE .EW
)NTERNATIONAL %CONOMIC /RDER .)%/ !S THE RIGHT
WING THINK
TANK (ERITAGE &OUNDATION SAW IT THE GOVERNMENTS OF THE 3OUTH
DEVOTED @ENORMOUS TIME AND RESOURCES TO SPREADING THE .)%/
IDEOLOGY THROUGHOUT THE 5. SYSTEM AND BEYOND 6IRTUALLY NO
5. AGENCIES AND BUREAUS HAVE BEEN SPARED 4HE 3OUTHS EFFORT
TO REDISTRIBUTE GLOBAL ECONOMIC POWER VIA 5. MECHANISMS WAS
VIEWED AS A CONCERTED ONE PRIVATE BUSINESS DATA mOWS ARE UNDER
ATTACK INTERNATIONALLY AND BY INDIVIDUAL 4HIRD 7ORLD COUNTRIES
PROPOSALS FOR STRICT CONTROLS OF THE INTERNATIONAL PHARMACEUTI
CAL TRADE ARE PENDING BEFORE MORE THAN ONE 5. BODY OTHER
INTERNATIONAL AGENCIES ARE DRAFTING RESTRICTIVE CODES OF CONDUCT
FOR MULTINATIONAL CORPORATIONS AND 5.%3#/ HAS PROPOSED INTER
NATIONAL RESTRAINTS ON THE PRESS
%SPECIALLY THREATENING TO THE &OUNDATION WAS THE EFFORT BY
THE 4HIRD 7ORLD TO @REDISTRIBUTE NATURAL RESOURCES BY BRINGING
{Ó i}L>â>Ì
THE SEABED SPACE AND !NTARCTICA UNDER THEIR CONTROL THROUGH THE
,AW OF THE 3EA 4REATY THE !GREEMENT 'OVERNING !CTIVITIES OF
3TATES ON THE -OON AND /THER #ELESTIAL "ODIES CALLED THE -OON
4REATY AND AN ONGOING 5. STUDY AND DEBATE OVER !NTARCTICA
-ALAYSIAN 0RIME -INISTER -AHATHIR "IN -OHAMAD THE PRINCIPAL
ARCHITECT OF THE EFFORT TO GET THE 5. TO CLAIM !NTARCTICA TOLD
THE 'ENERAL !SSEMBLY @ALL THE UNCLAIMED WEALTH OF THIS EARTH IS
THE @COMMON HERITAGE OF MANKIND AND THEREFORE SUBJECT TO THE
POLITICAL CONTROL OF THE 4HIRD 7ORLD
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3TRUCTURAL ADJUSTMENT 7HEN THE 2EAGAN ADMINISTRATION CAME TO
POWER IN IT WAS RIDING ON WHAT IT CONSIDERED A MANDATE
NOT ONLY TO ROLL BACK COMMUNISM BUT ALSO TO DISCIPLINE THE
4HIRD 7ORLD 7HAT UNFOLDED OVER THE NEXT FOUR YEARS WAS A
TWO PRONGED STRATEGY AIMED AT DISMANTLING THE SYSTEM OF @STATE
ASSISTED CAPITALISM THAT WAS SEEN AS THE DOMESTIC BASE FOR 3OUTHERN
NATIONAL CAPITALIST ELITES AND DRASTICALLY WEAKENING THE 5NITED
.ATIONS SYSTEM AS A FORUM AND INSTRUMENT FOR THE 3OUTHS ECO
NOMIC AGENDA
4HE OPPORTUNITY CAME NONE TOO SOON IN THE FORM OF THE
GLOBAL DEBT CRISIS THAT ERUPTED IN THE SUMMER OF WHICH
DRASTICALLY WEAKENED THE CAPABILITIES OF 3OUTHERN GOVERNMENTS
IN DEALING WITH .ORTHERN STATES AND CORPORATIONS AND .ORTHERN
DOMINATED MULTILATERAL AGENCIES 4HE INSTRUMENTS CHOSEN FOR ROLL
ING BACK THE 3OUTH WERE THE 7ORLD "ANK AND THE )-& 4HIS WAS
AN INTERESTING TRANSFORMATION FOR THE 7ORLD "ANK WHICH HAD PRE
VIOUSLY BEEN VILIlED BY THE 7ALL 3TREET *OURNAL AND THE RIGHT WING
AS ONE OF THE VILLAINS BEHIND THE WEAKENING OF THE .ORTHS GLOBAL
POSITION BY @PROMOTING SOCIALISM IN THE 4HIRD 7ORLD VIA ITS LOANS
TO 3OUTHERN GOVERNMENTS "UT THE LIBERAL -C.AMARA WHO WAS
NOW FAULTED BY THE RIGHT WING FOR LOSING IN 6IETNAM AND FAILING
TO CONTAIN THE 3OUTHERN CHALLENGE WAS REPLACED BY A MORE PLIABLE
SUCCESSOR AND IDEOLOGICAL RIGHT WINGERS SEEKING THE CLOSURE OF THE
>À}>â}ÊÌ iÊ-ÕÌ {Î
"ANK WERE RESTRAINED BY PRAGMATIC CONSERVATIVES WHO WISHED TO
USE THE "ANK INSTEAD AS A DISCIPLINARY MECHANISM
@3TRUCTURAL ADJUSTMENT REFERRED TO A NEW LENDING APPROACH
THAT HAD BEEN FORMULATED DURING -C.AMARAS LAST YEARS AT THE
"ANK 5NLIKE THE TRADITIONAL 7ORLD "ANK PROJECT LOAN A STRUCTURAL
ADJUSTMENT LOAN WAS INTENDED TO PUSH A PROGRAMME OF @REFORM
THAT WOULD CUT ACROSS THE WHOLE ECONOMY OR A WHOLE SECTOR OF
THE ECONOMY )N THE MID
S )-&
AND 7ORLD "ANK
IMPOSED
STRUCTURAL ADJUSTMENT BECAME THE VEHICLE FOR A PROGRAMME OF FREE
MARKET LIBERALIZATION THAT WAS APPLIED ACROSS THE BOARD TO 4HIRD
7ORLD ECONOMIES SUFFERING MAJOR DEBT PROBLEMS !LMOST INVARIABLY
STRUCTURAL ADJUSTMENT PROGRAMMES HAD THE FOLLOWING ELEMENTS
s 2ADICALLY REDUCING GOVERNMENT SPENDING OSTENSIBLY TO CON
TROL INmATION AND REDUCE THE DEMAND FOR CAPITAL INmOWS FROM
ABROAD A MEASURE THAT IN PRACTICE TRANSLATED INTO CUTTING SPEND
ING ON HEALTH EDUCATION AND WELFARE
s ,IBERALIZING IMPORTS AND REMOVING RESTRICTIONS ON FOREIGN IN
VESTMENT OSTENSIBLY TO MAKE LOCAL INDUSTRY MORE EFlCIENT BY
EXPOSING THEM TO FOREIGN COMPETITION
s 0RIVATIZING STATE ENTERPRISES AND EMBARKING ON RADICAL DEREGULA
TION IN ORDER TO PROMOTE MORE EFlCIENT ALLOCATION AND USE OF
PRODUCTIVE RESOURCES BY RELYING ON MARKET MECHANISMS INSTEAD
GOVERNMENT DECREE
s $EVALUING THE CURRENCY IN ORDER TO MAKE EXPORTS MORE COM
PETITIVE THUS RESULTING IN MORE DOLLARS TO SERVICE THE FOREIGN
DEBT
s #UTTING OR CONSTRAINING WAGES AND ELIMINATING OR WEAKENING
MECHANISMS PROTECTING LABOUR SUCH AS THE MINIMUM WAGE TO
REMOVE WHAT WERE SEEN AS ARTIlCIAL BARRIERS TO THE MOBILITY
OF LOCAL AND FOREIGN CAPITAL
"Y THE LATE S WITH OVER SEVENTY 4HIRD 7ORLD COUNTRIES
SUBMITTING TO )-& AND 7ORLD "ANK PROGRAMMES STABILIZATION
STRUCTURAL ADJUSTMENT AND SHOCK THERAPY MANAGED FROM DISTANT
7ASHINGTON BECAME THE COMMON CONDITION OF THE 3OUTH 7HILE
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STRUCTURAL ADJUSTMENT WAS JUSTIlED AS NECESSARY TO CREATE THE CON
DITIONS THAT WOULD ENABLE 4HIRD 7ORLD COUNTRIES TO REPAY THEIR
DEBTS TO .ORTHERN BANKS THERE WAS A MORE STRATEGIC OBJECTIVE TO
DISMANTLE THE SYSTEM OF STATE
ASSISTED CAPITALISM THAT SERVED AS THE
DOMESTIC BASE FOR THE NATIONAL CAPITALIST ELITES )N A SURVEY
OF STRUCTURAL ADJUSTMENT PROGRAMMES 3!0S CARRIED OUT BY THE
5. #OMMISSION FOR !FRICA CONCLUDED THAT THE ESSENCE OF 3!0S
WAS THE @REDUCTIONREMOVAL OF DIRECT STATE INTERVENTION IN THE
PRODUCTIVE AND REDISTRIBUTIVE SECTORS OF THE ECONOMY
!S FOR ,ATIN !MERICA ONE ANALYST NOTED THAT THE 53! TOOK
ADVANTAGE OF @THIS PERIOD OF lNANCIAL STRAIN TO INSIST THAT DEBTOR
COUNTRIES REMOVE THE GOVERNMENT FROM THE ECONOMY AS THE PRICE
OF GETTING CREDIT 3IMILARLY A RETROSPECTIVE LOOK AT THE DECADE OF
ADJUSTMENT IN A BOOK PUBLISHED BY THE )NTER
!MERICAN $EVELOP
MENT "ANK IN IDENTIlED THE REMOVAL OF THE STATE FROM ECO
NOMIC ACTIVITY AS THE CENTREPIECE OF THE IDEOLOGICAL PERSPECTIVE
THAT GUIDED THE STRUCTURAL REFORMS OF THE S
"Y THE END OF THE TWELVE
YEAR
LONG 2EAGANn"USH ERA IN
THE 3OUTH HAD BEEN TRANSFORMED FROM !RGENTINA TO 'HANA STATE
PARTICIPATION IN THE ECONOMY HAD BEEN DRASTICALLY CURTAILED GOV
ERNMENT ENTERPRISES WERE PASSING INTO PRIVATE HANDS IN THE NAME
OF EFlCIENCY PROTECTIONIST BARRIERS TO .ORTHERN IMPORTS WERE
BEING RADICALLY REDUCED AND THROUGH EXPORT
lRST POLICIES THE
INTERNAL ECONOMY WAS MORE TIGHTLY INTEGRATED INTO THE .ORTHERN
DOMINATED CAPITALIST WORLD MARKETS
4AMING THE 4IGERS 4HERE WAS ONE AREA OF THE 3OUTH RELATIVELY
UNTOUCHED BY THE lRST PHASE OF THE .ORTHERN ECONOMIC COUN
TER
REVOLUTION %AST AND 3OUTHEAST !SIA (ERE PRACTICALLY ALL THE
ECONOMIC SYSTEMS DISPLAYED THE SAME FEATURES OF STATE
ASSISTED
CAPITALISM FOUND ELSEWHERE IN THE 3OUTH AN ACTIVIST GOVERNMENT
INTERVENING IN KEY AREAS OF THE ECONOMY A FOCUS ON INDUSTRIAL
IZATION IN ORDER TO ESCAPE THE FATE OF BEING SIMPLY AGRICULTURAL OR
RAW MATERIAL PRODUCERS PROTECTION OF THE DOMESTIC MARKET FROM
FOREIGN COMPETITION AND TIGHT CONTROLS ON FOREIGN INVESTMENT
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7HERE THE KEY %AST AND 3OUTHEAST !SIAN ECONOMIES APPEARED
TO DIFFER FROM OTHER ECONOMIES IN THE 3OUTH WAS MAINLY IN THE
PRESENCE OF A FAIRLY STRONG STATE THAT WAS ABLE TO DISCIPLINE LOCAL
ELITES THE GREATER INTERNALIZATION OF A DEVELOPMENTALIST DIRECTION
BY THE STATE ELITE AND THE PURSUIT OF AGGRESSIVE MERCANTILIST POLICIES
AIMED AT GAINING MARKETS IN &IRST 7ORLD COUNTRIES PARTICULARLY
THE 5NITED 3TATES
4HE FRONT LINE STATUS IN !SIA OF MANY OF THESE SO CALLED @NEWLY
INDUSTRIALIZING COUNTRIES .)#S DURING THE #OLD 7AR ENSURED
THAT 7ASHINGTON WOULD TURN A BLIND EYE TO MANY OF THEIR DEVI
ATIONS FROM THE FREE MARKET IDEAL "UT AS THE #OLD 7AR WOUND
DOWN FROM THE MID S THE 53! BEGAN TO REDElNE ITS ECO
NOMIC POLICY TOWARDS %AST !SIA AS THE CREATION OF A @LEVEL PLAYING
lELD FOR ITS CORPORATIONS VIA LIBERALIZATION DEREGULATION AND MORE
EXTENSIVE PRIVATIZATION OF !SIAN ECONOMIES
)T WAS A GOAL THAT 7ASHINGTON PURSUED BY VARIOUS MEANS IN
THE LATE S AND EARLY S *APANESE CAPITAL HOWEVER WAS RE
LOCATING MANY OF ITS INDUSTRIAL OPERATIONS TO %AST AND 3OUTHEAST
!SIA TO OFFSET THE LOSS OF COMPETITIVENESS IN *APAN CAUSED BY THE
RAPID APPRECIATION OF THE YEN TRIGGERED BY THE 0LAZA !CCORD IN
!CCESS TO THIS CAPITAL ALLOWED COUNTRIES SUCH AS 3OUTH +OREA
4HAILAND AND )NDONESIA TO IGNORE THE REQUIREMENTS OF FORMAL
STRUCTURAL ADJUSTMENT PROGRAMMES THAT WERE FOISTED ON THEM BY
THE 7ORLD "ANK AND THE )-& IN THE EARLY S WHEN THEY WERE
TEMPORARILY DESTABILIZED BY THE DEBT CRISIS
)N ITS EFFORT TO DISCIPLINE THE .)#S THE 53! RESORTED TO BOTH
MULTILATERAL AND UNILATERAL MECHANISMS 7HILE 2EPUBLICAN ADMINIS
TRATIONS OF 2EAGAN AND "USH 3ENIOR PREFERRED THE UNILATERALIST
APPROACH THE #LINTON ADMINISTRATION AT LEAST IN THE BEGINNING
APPEARED TO FAVOUR A MULTILATERALIST SOLUTION SUCH AS PUSHING THE
!SIA 0ACIlC #OOPERATION !0%# AS THE FRAMEWORK FOR DISCIP
LINING THE !SIAN ECONOMIES
! BRIEF LOOK AT THE DYNAMICS OF !0%# IS WORTHWHILE FOR THE
RISE AND FALL OF THIS BODY ILLUSTRATES THE LIMITS OF 53 POWER IN THE
PRE lNANCIAL CRISIS PERIOD
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*APAN HAD INITIALLY PROPOSED THE FORMATION OF !0%# AS A CON
SULTATIVE BODY ALONG THE LINES OF THE /RGANISATION FOR %CONOMIC
#O
OPERATION AND $EVELOPMENT /%#$ )N THE EARLY S
HOWEVER !USTRALIA AND THE 53! SOUGHT TO MOVE !0%# FROM
BEING A LOOSE GROUPING TO BECOMING A FREE TRADE AREA IN WHICH
COUNTRIES WOULD COMMIT THEMSELVES TO PURSUE MANDATED NATIONAL
PLANS FOR COMPREHENSIVE LIBERALIZATION WITH SPECIlED TIME LINES
THAT WOULD END WITH REGIONAL FREE TRADE 7ASHINGTONS IDEA WAS
TO MAKE !0%# THE EQUIVALENT OF A TRANS
0ACIlC .!&4! .ORTH
!MERICAN &REE 4RADE !GREEMENT
4HE HIGH POINTS OF THIS EFFORT WERE THE 3EATTLE 3UMMIT IN
WHEN THE 53! TOOK THE LEADERSHIP FOR AN !0%# FREE TRADE
AREA FROM !USTRALIA AND THE "OGOR )NDONESIA 3UMMIT IN
WHEN THE DATE WAS SET AS THE TIME THAT THE REGION WOULD
ACHIEVE FREE TRADE DElNED AS A CONDITION WHERE ALL TARIFFS WOULD
BE BROUGHT DOWN TO TO PER CENT
4HE !SIAN RESPONSE TO THIS INITIATIVE WAS TO AGREE RHETORICALLY
TO THE GOAL OF REGIONAL FREE TRADE BUT TO STYMIE IT IN PRACTICE BY
SAYING THAT LIBERALIZATION SHOULD BE VOLUNTARY AND THAT ITS PACE
SHOULD BE ADJUSTED TO THE PARTICULAR SITUATION OF EACH COUNTRY
4HE UNDERLYING DYNAMICS OF THE STRUGGLE WITHIN !0%# WERE
PERHAPS BEST CAPTURED BY AN !USTRALIAN ECONOMIC JOURNALIST
+ENNETH $AVIDSON
4HE UNSTATED !NGLO
3AXON ASSUMPTION BEHIND !0%# IS THAT IF
THE !NGLO
3AXON COUNTRIES CAN PERSUADE !SIAN COUNTRIES TO PLAY
THE ECONOMIC DEVELOPMENT GAME ACCORDING TO !NGLO
3AXON RULES
THE GAME WILL BE TRANSFORMED INTO A NEOCLASSICAL LAISSEZ FAIRE
POSITIVE
SUM GAME IN WHICH THE PLAYERS WILL BE TRANSMUTED FROM
COUNTRIES OR TRIBES INTO lRMS AND INDIVIDUALS
-ANAGED CAPITALISM OF THE !SIAN VARIETY HE CONTINUED WAS
PROVING HOWEVER @MORE RESISTANT TO CULTURAL AND POLITICAL CON
VERGENCE IMPOSED BY GLOBALIZING FORCES AND THE !USTRALIAN
!MERICAN GOAL AT !0%# WAS @TO TRY TO GET THE !SIAN WINNERS OF
THE ECONOMIC GAME TO DENY THE CULTURAL BASIS OF THEIR SUCCESS IN
>À}>â}ÊÌ
iÊ-ÕÌ
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ORDER TO CREATE THE CONDITIONS WHEREBY THE LOSERS CAN BECOME
WINNERS
!T THE /SAKA 3UMMIT IN UNDER THE LEADERSHIP OF THE
HOST *APAN THE !SIAN BLOC MANAGED TO TORPEDO THE 53
PLAN BY EXTRACTING A lNAL DECLARATION THAT LIBERALIZATION WOULD BE
VOLUNTARY !FTER /SAKA THE 53! ABANDONED ITS EFFORT TO MAKE
!0%# LIKE .!&4! AND THE #LINTON ADMINISTRATION WAS LEFT WITH
UNILATERALISM IN TRADE AND lNANCIAL DIPLOMACY AS THE PRINCIPAL
WEAPON TO DEPLOY AGAINST THE !SIAN .)#S
5NILATERALISM WAS AGGRESSIVELY PURSUED SOMETIMES TO THE POINT
OF DE FACTO TRADE WAR 7ASHINGTONS MOOD WAS APTLY CAPTURED BY A
SENIOR 53 OFlCIAL WHO TOLD A CAPITAL MARKETS CONFERENCE IN 3AN
&RANCISCO THAT @!LTHOUGH THE .)#S MAY BE REGARDED AS TIGERS
BECAUSE THEY ARE STRONG FEROCIOUS TRADERS THE ANALOGY HAS A DARKER
SIDE 4IGERS LIVE IN THE JUNGLE AND BY THE LAW OF THE JUNGLE 4HEY
ARE A SHRINKING POPULATION
7ITH SOME ASSISTANCE FROM THE )-& AND THE 7ORLD "ANK
UNILATERAL PRESSURE SUCCEEDED IN GETTING KEY !SIAN COUNTRIES TO
LIBERALIZE THEIR CAPITAL ACCOUNTS AND TO MOVE TO GREATER LIBERAL
IZATION OF THEIR lNANCIAL SECTORS "UT WHEN IT CAME TO TRADE LIB
ERALIZATION THE RESULTS WERE MEAGRE EXCEPT PERHAPS IN THE CASE OF
+OREA WHOSE TRADE SURPLUS WITH THE 53! HAD BEEN TURNED INTO A
TRADE DElCIT BY THE EARLY S (OWEVER EVEN THIS DEVELOPMENT
DID NOT CHANGE THE 53 TRADE REPRESENTATIVES ASSESSMENT OF +OREA
AS @ONE OF THE TOUGHEST PLACES IN THE WORLD TO DO BUSINESS !S
FOR THE 3OUTHEAST !SIAN COUNTRIES 7ASHINGTONS ASSESSMENT WAS
THAT WHILE THEY MIGHT HAVE LIBERALIZED THEIR CAPITAL ACCOUNTS AND
lNANCIAL SECTORS THEY REMAINED HIGHLY PROTECTED WHEN IT CAME
TO TRADE AND WERE DANGEROUSLY mIRTING WITH @TRADE
DISTORTING EX
ERCISES IN INDUSTRIAL POLICY SUCH AS -ALAYSIAS NATIONAL CAR PROJECT
THE 0ROTON 3AGA OR )NDONESIAS DRIVE TO SET UP A PASSENGER AIRCRAFT
INDUSTRY
4HE INDISCRIMINATE lNANCIAL LIBERALIZATION DEMANDED BY 7ASH
INGTON AND THE "RETTON 7OODS INSTITUTIONS COUPLED WITH THE HIGH
INTEREST RATE AND lXED CURRENCY REGIME FAVOURED BY LOCAL lNANCIAL
{n i}L>â>Ì
AUTHORITIES BROUGHT MASSIVE AMOUNTS OF FOREIGN CAPITAL INTO THE
REGION "UT IT ALSO SERVED AS THE WIDE HIGHWAY THROUGH WHICH
BILLION EXITED IN IN A MASSIVE STAMPEDE IN RESPONSE TO
DISLOCATIONS CAUSED BY OVER INVESTMENT AND UNRESTRICTED CAPITAL
INmOWS SUCH AS THE COLLAPSE OF THE REAL ESTATE MARKET AND WIDEN
ING CURRENT ACCOUNT DElCITS
! GOLDEN OPPORTUNITY TO PUSH THE 53 AGENDA OPENED UP WITH
THE lNANCIAL CRISIS AND 7ASHINGTON DID NOT HESITATE TO EXPLOIT
IT TO THE HILT ADVANCING ITS INTERESTS BEHIND THE BANNER OF FREE
MARKET REFORM #HALMERS *OHNSON HAS ASSERTED THAT A GOOD CASE
CAN BE MADE THAT 7ASHINGTONS OPPORTUNISTIC BEHAVIOUR DURING
THE !SIAN lNANCIAL CRISIS REmECTED THE FACT THAT @HAVING DEFEATED
THE FASCISTS AND THE COMMUNISTS THE 5NITED 3TATES NOW SOUGHT TO
DEFEAT ITS LAST REMAINING RIVALS FOR GLOBAL DOMINANCE THE NATIONS
OF %AST !SIA THAT HAD USED THE CONDITIONS OF THE #OLD 7AR TO
ENRICH THEMSELVES ! CLOSE LOOK AT THE STABILIZATION PROGRAMMES
IMPOSED BY THE )-& ON THE KEY COUNTRIES OF )NDONESIA 4HAILAND
AND )NDONESIA INDEED REVEALS THAT THE ROLLBACK OF PROTECTIONISM
AND ACTIVIST STATE INTERVENTION WERE STRATEGICALLY INCORPORATED INTO
THEM 4HESE PROGRAMMES WENT BEYOND MERE STABILIZATION AND
SHORT TERM ADJUSTMENT LEADING CREDENCE TO CLAIMS THAT IN THE
CRITICAL YEARS OF AND THE 53! WAS INTERESTED NOT IN
THE ECONOMIC RECOVERY OF THE !SIAN TIGERS BUT IN THEIR RESUB
ORDINATION
)N 4HAILAND LOCAL AUTHORITIES AGREED TO REMOVE ALL LIMITATIONS
ON FOREIGN OWNERSHIP OF 4HAI lNANCIAL lRMS ACCELERATE THE PRIVAT
IZATION OF STATE ENTERPRISES AND REVISE BANKRUPTCY LAWS ALONG LINES
DEMANDED BY THE COUNTRYS FOREIGN CREDITORS !S THE 53 TRADE
REPRESENTATIVE TOLD #ONGRESS THE 4HAI GOVERNMENTS @COMMITMENTS
TO RESTRUCTURE PUBLIC ENTERPRISES AND ACCELERATE PRIVATIZATION OF
CERTAIN KEY SECTORS n INCLUDING ENERGY TRANSPORTATION UTILITIES
AND COMMUNICATIONS n WHICH WILL ENHANCE MARKET DRIVEN COM
PETITION AND DEREGULATION n ;ARE EXPECTED= TO CREATE NEW BUSINESS
OPPORTUNITIES FOR 53 lRMS
)N )NDONESIA THE 53 TRADE REPRESENTATIVE EMPHASIZED THAT
>À}>â}ÊÌ iÊ-ÕÌ {
THE )-&S CONDITIONS FOR GRANTING A MASSIVE STABILIZATION PACKAGE
ADDRESSED PRACTICES THAT HAVE LONG BEEN THE SUBJECT OF THIS ;#LIN
TON= !DMINISTRATIONS BILATERAL TRADE POLICY x -OST NOTABLE IN
THIS RESPECT IS THE COMMITMENT BY )NDONESIA TO ELIMINATE THE TAX
TARIFF AND CREDIT PRIVILEGES PROVIDED TO THE NATIONAL CAR PROJECT
!DDITIONALLY THE )-& PROGRAM SEEKS BROAD REFORM OF )NDONESIAN
TRADE AND INVESTMENT POLICY LIKE THE AIRCRAFT PROJECT MONOPOLIES
AND DOMESTIC TRADE RESTRICTIVE PRACTICES THAT STImE COMPETITION BY
LIMITING ACCESS FOR FOREIGN GOODS AND SERVICES
4HE NATIONAL CAR PROJECT AND THE PLAN TO SET UP A PASSENGER JET
AIRCRAFT INDUSTRY WERE EFFORTS AT INDUSTRIAL POLICY THAT HAD ELICITED
THE STRONG DISAPPROVAL OF $ETROIT AND "OEING RESPECTIVELY
)N THE CASE OF +OREA THE 53 4REASURY AND THE )-& DID NOT
CONCEAL THEIR CLOSE WORKING RELATIONSHIP WITH THE &UND CLEARLY IN
A SUBORDINATE POSITION .OT SURPRISINGLY THE CONCESSIONS MADE BY
THE +OREANS n INCLUDING RAISING THE LIMIT ON FOREIGN OWNERSHIP
OF CORPORATE STOCKS TO PER CENT PERMITTING THE ESTABLISHMENT
OF FOREIGN lNANCIAL INSTITUTIONS FULL LIBERALIZATION OF THE lNANCIAL
AND CAPITAL MARKET ABOLITION OF THE CAR CLASSIlCATION SYSTEM AND
AGREEMENT TO END GOVERNMENT
DIRECTED LENDING FOR INDUSTRIAL
POLICY GOALS n HAD A ONE
TO
ONE CORRESPONDENCE WITH 53 BI
LATERAL POLICY TOWARDS +OREA BEFORE THE CRISIS !S THE 53 TRADE
REPRESENTATIVE CANDIDLY TOLD 53 CONGRESSMEN
0OLICY DRIVEN RATHER THAN MARKET DRIVEN ECONOMIC ACTIVITY MEANT
THAT 53 INDUSTRY ENCOUNTERED MANY SPECIlC STRUCTURAL BARRIERS
TO TRADE INVESTMENT AND COMPETITION IN +OREA &OR EXAMPLE
+OREA MAINTAINED RESTRICTIONS ON FOREIGN OWNERSHIP AND OPERA
TIONS AND HAD A LIST OF MARKET ACCESS IMPEDIMENTS x 4HE +OREA
STABILIZATION PACKAGE NEGOTIATED WITH THE )-& IN $ECEMBER
SHOULD HELP OPEN AND EXPAND COMPETITION IN +OREA BY CREATING
A MORE MARKET DRIVEN ECONOMY x ;)=F IT CONTINUES ON THE PATH
TO REFORM THERE WILL BE IMPORTANT BENElTS NOT ONLY FOR +OREA
BUT ALSO THE 5NITED 3TATES
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3UMMING UP 7ASHINGTONS STRATEGIC GOAL *EFF 'ARTEN UNDER
SECRETARY OF COMMERCE DURING 0RESIDENT "ILL #LINTONS lRST TERM
SAID @-OST OF THESE COUNTRIES ARE GOING THROUGH A DARK AND DEEP
TUNNEL x "UT ON THE OTHER END THERE IS GOING TO BE A SIGNIlCANTLY
DIFFERENT !SIA IN WHICH !MERICAN lRMS HAVE ACHIEVED A MUCH
DEEPER MARKET PENETRATION MUCH GREATER ACCESS
"Y TRANSNATIONALS AND 53 lNANCIAL lRMS WERE BUYING UP
!SIAN ASSETS FROM 3EOUL TO "ANGKOK AT lRE SALE PRICES
$ISMANTLING THE 5. DEVELOPMENT SYSTEM 4 HIS ASSAULT ON THE .)#S
VIA THE )-& STABILIZATION PROGRAMMES AND ON THE BROADER 3OUTH
VIA "RETTON 7OODS
IMPOSED STRUCTURAL ADJUSTMENT WAS ACCOM
PANIED BY A MAJOR EFFORT TO EMASCULATE THE 5NITED .ATIONS AS A
VEHICLE FOR THE 3OUTHERN AGENDA 7IELDING THE POWER OF THE PURSE
THE 5NITED 3TATES WHOSE CONTRIBUTION FUNDS SOME n PER CENT
OF THE 5. BUDGET MOVED TO SILENCE .)%/ RHETORIC IN ALL THE
KEY 5. INSTITUTIONS DEALING WITH THE .ORTHn3OUTH DIVIDE THE
%CONOMIC AND 3OCIAL #OUNCIL %#/3/# THE 5. $EVELOPMENT
0ROGRAM AND THE 'ENERAL !SSEMBLY 53 PRESSURE RESULTED AS WELL
IN THE EFFECTIVE DISMANTLING OF THE 5. #ENTER ON 4RANSNATIONAL
#ORPORATIONS 4.#S WHOSE HIGH
QUALITY WORK IN TRACKING THE
ACTIVITIES OF THE 4.#S IN THE 3OUTH HAD EARNED THE IRE OF THE
4.#S !LSO ABOLISHED WAS THE POST OF DIRECTOR GENERAL FOR INTER
NATIONAL ECONOMIC CO
OPERATION AND DEVELOPMENT WHICH @HAD
BEEN ONE OF THE FEW CONCRETE OUTCOMES AND CERTAINLY THE MOST
NOTEWORTHY OF THE EFFORTS OF THE DEVELOPING COUNTRIES DURING THE
.)%/ NEGOTIATIONS TO SECURE A STRONGER 5. PRESENCE IN SUPPORT
OF INTERNATIONAL ECONOMIC COOPERATION AND DEVELOPMENT
"UT THE FOCUS OF THE .ORTHERN COUNTER
OFFENSIVE WAS THE
DEFANGING IF NOT DISMANTLING OF 5.#4!$ !FTER GIVING IN TO
THE 3OUTH DURING THE 5.#4!$ )6 NEGOTIATIONS IN .AIROBI IN
BY AGREEING TO THE CREATION OF THE COMMODITY STABILIZATION
SCHEME KNOWN AS THE )NTEGRATED 0ROGRAM FOR #OMMODITIES THE
.ORTH DURING 5.#4!$ 6 IN "ELGRADE REFUSED THE 3OUTHS
PROGRAMME OF DEBT CANCELLATION AND OTHER MEASURES INTENDED
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TO REVIVE 4HIRD 7ORLD ECONOMIES AND THUS CONTRIBUTE TO GLOBAL
RECOVERY AT A TIME OF WORLDWIDE RECESSION 4HE .ORTHERN OFFEN
SIVE ESCALATED DURING 5.#4!$ 6))) HELD IN #ARTAGENA IN
!T THIS WATERSHED MEETING THE .ORTH SUCCESSFULLY OPPOSED ALL
LINKAGES OF 5.#4!$ DISCUSSIONS WITH THE 5RUGUAY 2OUND
NEGOTIATIONS OF THE '!44 AND MANAGED TO ERODE 5.#4!$S
NEGOTIATION FUNCTIONS THUS CALLING ITS EXISTENCE INTO QUESTION
5.#4!$S MAIN FUNCTION WOULD HENCEFORTH BE LIMITED TO
@ANALYSIS CONSENSUS BUILDING ON SOME TRADE RELATED ISSUES AND
TECHNICAL ASSISTANCE
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5.#4!$ CONTINUES TO SURVIVE BUT THE TRUTH OF THE MATTER IS
THAT IT HAS BEEN RENDERED IMPOTENT BY THE 74/ WHICH CAME
INTO BEING FOLLOWING THE SIGNING OF THE -ARRAKESH !CCORD IN
!PRIL WHICH PUT IN FORCE THE AGREEMENTS CONCLUDED DUR
ING THE EIGHT
YEAR 5RUGUAY 2OUND OF THE 'ENERAL !GREEMENT
ON 4ARIFFS AND 4RADE '!44 4HE 74/ WAS FORTY
SIX YEARS LATE
IN COMING INTO BEING ALTHOUGH IT HAD INITIALLY BEEN REGARDED BY
LIBERAL INTERNATIONALISTS IN THE 53! AND "RITAIN AS THE THIRD PILLAR
OF THE "RETTON 7OODS SYSTEM DOING FOR TRADE WHAT THE )-& DID
FOR lNANCE AND THE 7ORLD "ANK FOR ECONOMIC RECONSTRUCTION !
GLOBAL TRADING ORGANIZATION HAD INITIALLY BEEN SCHEDULED TO COME
INTO EXISTENCE AS THE )NTERNATIONAL 4RADE /RGANIZATION )4/ IN
BUT THE THREAT OF NON
RATIlCATION BY UNILATERALIST FORCES IN
THE 53 3ENATE LED TO ITS BEING SHELVED IN FAVOUR OF THE MUCH
WEAKER '!44 BY THE DEFENSIVE 4RUMAN ADMINISTRATION
"Y THE MID
S TRADE RIVALRIES WITH %UROPE AND *APAN RISING
IMPORT PENETRATION OF THE 53 MARKET BY 4HIRD 7ORLD COUNTRIES
FRUSTRATION AT THE INABILITY OF 53 GOODS TO ENTER 3OUTHERN MARKETS
AND THE RISE OF NEW COMPETITORS IN THE SHAPE OF THE %AST !SIAN
.)#S MADE THE 53 THE LEADING ADVOCATE OF A MUCH
EXPANDED
'!44 WITH REAL COERCIVE TEETH #ENTRAL TO THE FOUNDING OF THE
xÓ i}L>â>Ì
74/ WERE THE TWIN DRIVES OF MANAGING THE TRADE RIVALRY AMONG
THE LEADING INDUSTRIAL COUNTRIES WHILE CONTAINING THE THREAT POSED
BY THE 3OUTH TO THE PREVAILING GLOBAL ECONOMIC STRUCTURE
)N THIS SENSE THE 74/ MUST BE SEEN AS A CONTINUATION OR
EXTENSION OF THE SAME .ORTHERN REACTION THAT DROVE STRUCTURAL
ADJUSTMENT 7HILE ITS EMERGENCE CONSOLIDATED THE STRUCTURAL HEGE
MONY OF THE .ORTH AS A WHOLE IT SERVED THE INTERESTS OF THE
WORLDS PRIME ECONOMIC POWER IN PARTICULAR 4HIS BECOMES CLEAR
ONCE WE EXAMINE THE CIRCUMSTANCES THAT SURROUNDED ITS CREATION
7ORLD TRADE DID NOT NEED THE 74/ TO EXPAND SEVENTEEN
FOLD
BETWEEN AND FROM BILLION TO BILLION
4HIS EXPANSION TOOK PLACE UNDER THE mEXIBLE 'ENERAL !GREE
MENT ON 4RADE AND 4ARIFFS '!44 TRADE REGIME 4HE FOUNDING
OF THE 74/ IN DID NOT RESPOND TO A COLLAPSE OR CRISIS OF
WORLD TRADE SUCH AS HAPPENED IN THE S )T WAS NOT NECESSARY
FOR GLOBAL PEACE SINCE NO WORLD WAR OR TRADE
RELATED WAR HAD
TAKEN PLACE DURING THAT PERIOD )N THE SEVEN MAJOR INTERSTATE WARS
THAT TOOK PLACE IN THAT PERIOD n THE +OREAN 7AR OF n
THE 6IETNAM 7AR OF n THE 3UEZ #RISIS OF THE
!RAB
)SRAELI 7AR THE !RABn)SRAELI 7AR THE &ALKLANDS
7AR AND THE 'ULF 7AR OF n TRADE CONmICT DID NOT lGURE
EVEN REMOTELY AS A CAUSE
'!44 WAS IN FACT FUNCTIONING REASONABLY WELL AS A FRAMEWORK
FOR LIBERALIZING WORLD TRADE )TS DISPUTE SETTLEMENT SYSTEM WAS
mEXIBLE AND ITS RECOGNITION OF THE @SPECIAL AND DIFFERENTIAL STATUS
OF DEVELOPING COUNTRIES PROVIDED THE SPACE IN A GLOBAL ECONOMY
FOR 4HIRD 7ORLD COUNTRIES TO USE TRADE POLICY FOR DEVELOPMENT
AND INDUSTRIALIZATION
7HY WAS THE 74/ ESTABLISHED FOLLOWING THE 5RUGUAY 2OUND
OF n /F THE MAJOR TRADING POWERS *APAN WAS VERY AMBI
VALENT CONCERNED AS IT WAS TO PROTECT ITS AGRICULTURE AS WELL AS
ITS PARTICULAR SYSTEM OF INDUSTRIAL PRODUCTION THAT THROUGH FOR
MAL AND INFORMAL MECHANISMS GAVE ITS LOCAL PRODUCERS PRIMARY
RIGHT TO EXPLOIT THE DOMESTIC MARKET 4HE %UROPEAN 5NION %5
WELL ON THE WAY TO BECOMING A SELF
SUFlCIENT TRADING BLOC WAS
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LIKEWISE AMBIVALENT KNOWING THAT ITS HIGHLY SUBSIDIZED SYSTEM
IN AGRICULTURE WOULD COME UNDER ATTACK 4HOUGH DEMANDING
GREATER ACCESS TO THEIR MANUFACTURED AND AGRICULTURAL PRODUCTS IN
THE .ORTHERN ECONOMIES THE DEVELOPING COUNTRIES DID NOT SEE
THIS AS BEING ACCOMPLISHED THROUGH A COMPREHENSIVE AGREEMENT
ENFORCED BY A POWERFUL TRADE BUREAUCRACY BUT THROUGH DISCRETE
NEGOTIATIONS AND AGREEMENTS IN THE MODEL OF THE INTEGRATED PRO
GRAMME FOR COMMODITIES )0#S AND COMMODITY STABILIZATION
FUND AGREED UPON UNDER THE AEGIS OF THE 5. #ONFERENCE ON
4RADE AND $EVELOPMENT 5.#4!$ IN THE LATE S
4HE FOUNDING OF THE 74/ PRIMARILY SERVED THE INTERESTS OF
THE 5NITED 3TATES *UST AS IT WAS THE 53! WHICH BLOCKED THE
FOUNDING OF THE )NTERNATIONAL 4RADE /RGANIZATION )4/ IN
WHEN IT FELT THAT THIS WOULD NOT SERVE ITS POSITION OF OVERWHELM
ING ECONOMIC DOMINANCE IN THE POST WAR WORLD SO IT WAS THAT
THE 53! BECAME THE DOMINANT LOBBYIST FOR THE COMPREHENSIVE
5RUGUAY 2OUND AND THE FOUNDING OF THE 74/ IN THE LATE S
AND EARLY S WHEN IT FELT THAT MORE COMPETITIVE GLOBAL CON
DITIONS HAD CREATED A SITUATION WHERE ITS CORPORATE INTERESTS NOW
DEMANDED AN OPPOSITE STANCE
*UST AS IT WAS THE 5NITED 3TATES THREAT IN THE S TO LEAVE
'!44 IF IT WAS NOT ALLOWED TO MAINTAIN PROTECTIVE MECHANISMS
FOR MILK AND OTHER AGRICULTURAL PRODUCTS THAT LED TO AGRICULTURAL
TRADES EXEMPTION FROM '!44 RULES IT WAS 53 PRESSURE THAT
BROUGHT AGRICULTURE INTO THE '!44n74/ SYSTEM IN !ND
THE REASON FOR 7ASHINGTONS CHANGE OF MIND WAS ARTICULATED QUITE
CANDIDLY BY THEN 53 AGRICULTURE SECRETARY *OHN "LOCK AT THE START
OF THE 5RUGUAY 2OUND NEGOTIATIONS IN @;4HE= IDEA THAT
DEVELOPING COUNTRIES SHOULD FEED THEMSELVES IS AN ANACHRONISM
FROM A BYGONE ERA 4HEY COULD BETTER ENSURE THEIR FOOD SECURITY
BY RELYING ON 53 AGRICULTURAL PRODUCTS WHICH ARE AVAILABLE IN
MOST CASES AT MUCH LOWER COST 7ASHINGTON OF COURSE DID NOT
JUST HAVE DEVELOPING COUNTRY MARKETS IN MIND BUT ALSO *APAN
3OUTH +OREA AND THE %5
)T WAS THE 53! THAT MAINLY PUSHED TO BRING SERVICES UNDER THE
x{ i}L>â>Ì
74/ COVERAGE WITH ITS ASSESSMENT THAT IN THE NEW BURGEONING
AREA OF INTERNATIONAL SERVICES AND PARTICULARLY IN lNANCIAL SERVICES
ITS CORPORATIONS HAD A LEAD THAT NEEDED TO BE PRESERVED )T WAS
ALSO THE 53! THAT PUSHED TO EXPAND 74/ JURISDICTION TO THE
SO
CALLED @TRADE
RELATED INVESTMENT MEASURES 42)-S AND @TRADE
RELATED INTELLECTUAL PROPERTY RIGHTS 42)0S 4HE lRST SOUGHT TO
ELIMINATE BARRIERS TO THE SYSTEM OF INTERNAL CROSS
BORDER TRADE
OF PRODUCT COMPONENTS AMONG 4.# TRANSNATIONAL CORPORATION
SUBSIDIARIES THAT HAD BEEN IMPOSED BY DEVELOPING COUNTRIES IN
ORDER TO DEVELOP THEIR INDUSTRIES THE SECOND TO CONSOLIDATE THE 53
ADVANTAGE IN THE CUTTING
EDGE KNOWLEDGE
INTENSIVE INDUSTRIES
)T WAS THE 53! THAT FORCED THE CREATION OF THE 74/S FORMID
ABLE DISPUTE
RESOLUTION AND ENFORCEMENT MECHANISM AFTER BEING
FRUSTRATED WITH WHAT 53 TRADE OFlCIALS CONSIDERED WEAK '!44
EFFORTS TO ENFORCE RULINGS FAVOURABLE TO THE 53 !S 7ASHINGTONS
ACADEMIC POINT MAN ON TRADE # &RED "ERGSTEN HEAD OF THE )N
STITUTE OF )NTERNATIONAL %CONOMICS TOLD THE 53 3ENATE THE STRONG
74/ DISPUTE SETTLEMENT MECHANISM SERVES !MERICAN INTERESTS
BECAUSE @WE CAN NOW USE THE FULL WEIGHT OF THE INTERNATIONAL
MACHINERY TO GO AFTER THOSE TRADE BARRIERS REDUCE THEM GET
THEM ELIMINATED
)N SUM IT HAS BEEN 7ASHINGTONS CHANGING PERCEPTION OF THE
NEEDS OF ITS ECONOMIC INTEREST GROUPS THAT HAS SHAPED AND RE
SHAPED THE INTERNATIONAL TRADING REGIME )T WAS NOT GLOBAL NECES
SITY THAT GAVE BIRTH TO THE 74/ IN )T WAS THE 5NITED 3TATES
ASSESSMENT THAT THE INTERESTS OF ITS CORPORATIONS WERE NO LONGER
SERVED BY A LOOSE AND mEXIBLE '!44 BUT NEEDED AN ALL
POWERFUL
AND WIDE
RANGING 74/ &ROM THE FREE MARKET PARADIGM THAT
UNDERPINS IT TO THE RULES AND REGULATIONS SET FORTH IN THE DIFFERENT
AGREEMENTS THAT MAKE UP THE 5RUGUAY 2OUND TO ITS SYSTEM OF
DECISION
MAKING AND ACCOUNTABILITY THE 74/ WAS REGARDED EVEN
BY MANY %UROPEANS AND *APANESE AS A BLUEPRINT FOR THE GLOBAL
HEGEMONY OF CORPORATE !MERICA )T SOUGHT TO INSTITUTIONALIZE THE
ACCUMULATED ADVANTAGES OF 53 CORPORATIONS
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4HE "RETTON 7OODS INSTITUTIONS AND THE '!44n74/ PROVIDED
A COMPREHENSIVE STRUCTURE OF MULTILATERAL CONTROL OVER THE GLOBAL
ECONOMY BY THE RICH COUNTRIES LED BY THE 5NITED 3TATES "UT THE
CREATION OF @CONSENSUS AMONG THE DOMINANT POWERS WAS A FUNC
TION THAT WAS NOT PERFORMED ADEQUATELY BY THE THREE INSTITUTIONS
WHERE THE HIGHEST NATIONAL REPRESENTATIVES WERE PEOPLE MUCH
BELOW MINISTERIAL RANK IN THEIR RESPECTIVE NATIONAL BUREAUCRACIES
)T WAS THE NEED FOR A CENTRAL INSTITUTION TO PROVIDE BROAD STRATEGIC
AND POLICY AGREEMENT AMONG THEM THAT CAUSED THE INSTITUTION
KNOWN AS THE 'ROUP OF 3EVEN '
TO COME INTO BEING 3TARTED
DURING A RATHER SMALL SUMMIT OF THE WORLDS LEADING INDUSTRIAL
ECONOMIES IN 2AMBOUILLET &RANCE IN THE '
n NOW THE
'
WITH THE INCLUSION OF POST
3OVIET 2USSIA n HAS EVOLVED INTO
WHAT ONE REPORT CALLED @THE NEAREST THE WORLD COMES TO HAVING
AN APEX BODY CONCERNED WITH THE GLOBAL ECONOMY
4HE ANNUAL SUMMIT WAS THE HIGH POINT OF THE '
PROCESS AND
OVER THE YEARS THE EVENT BECAME A HIGHLY ELABORATE AFFAIR ATTENDED
BY GOVERNMENT DELEGATIONS THAT NUMBERED IN THE THOUSANDS
7HILE THE SUMMIT OF HEADS OF STATE DREW THE MOST MEDIA ATTENTION
PERHAPS EQUALLY CRITICAL IN TERMS OF WORKING OUT JOINT STRATEGIES
WAS THE MEETING OF lNANCE MINISTERS THAT TOOK PLACE A FEW DAYS
BEFORE THE SUMMIT !PART FROM THESE TWO SESSIONS THERE WAS @QUIET
BUREAUCRATIC COORDINATION THROUGHOUT THE YEAR
)N ITS lRST FEW YEARS THE '
EVOLVED MAINLY AS A FORUM FOR
DISCUSSING AND LOOSELY CO
ORDINATING THE MACROECONOMIC POLICIES
OF THE RICH COUNTRIES IN ORDER TO NAVIGATE A DIRECTION OF STABLE
GROWTH THAT WOULD AVOID THE 3CYLLA OF HIGH INmATION ON THE ONE
SIDE AND THE #HARYBDIS OF DEEP RECESSION ON THE OTHER )T WAS
CREDITED WITH A NUMBER OF SUCCESSES IN THE PURSUIT OF THIS GOAL
INCLUDING PREVENTING THE STOCK EXCHANGE CRASH FROM TRIGGER
ING GLOBAL DEmATION BY CO
ORDINATING THE MONETARY POLICIES OF
THE ADVANCED COUNTRIES
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%VEN IN ITS HEYDAY HOWEVER THE ' WAS CRITICIZED AS HAVING
LITTLE TO OFFER THE DEVELOPING WORLD !S ONE ANALYST PUT IT
THE ISSUES THAT THE ' NORMALLY CONSIDERS FALL WITHIN A NARROW
RANGE OF MACROECONOMIC MANAGEMENT PARTICULARLY IN THE MONET
ARY AND lNANCIAL lELDS )T NEITHER CONSIDERS NOR TAKES A FAR REACHING
DECISIONS ON SOME OF THE MOST URGENT PROBLEMS CONFRONTING THE
GLOBAL COMMUNITY FOR EXAMPLE POPULATION GROWTH ENVIRONMENTAL
DEGRADATION DRUG TRAFlCKING mOW OF REFUGEES FOOD SECURITY CHILD
SURVIVAL WOMENS EMPOWERMENT HUMAN DEVELOPMENT
)T WAS HOWEVER THE BLATANT EXCLUSIVENESS AND NON REPRES
ENTATIVENESS OF THE ' THAT DREW THE SHARPEST CRITICISM EVEN
FROM LIBERAL QUARTERS !S THE #OMMISSION ON 'LOBAL 'OVERNANCE
PUT IT THE '
REPRESENTS ONLY PER CENT OF THE WORLDS POPULATION "Y EX
CLUDING #HINA AND )NDIA IT CAN NO LONGER EVEN CLAIM TO REPRESENT
THE WORLDS MAJOR ECONOMIES 4HE DEVELOPMENT ISSUES THAT CON
CERN MOST OF HUMANITY HAVE LOW PRIORITY ON ITS AGENDA ,OOKING
DECADES AHEAD IT WILL BECOME MORE AND MORE ANACHRONISTIC THAT
NON /%#$ ECONOMIES THAT ACCOUNT FOR A LARGE AND GROWING SLICE
OF THE WORLD ECONOMY ARE NOT REPRESENTED IN THE MAIN BODY WITH
AN OVERVIEW OF INTERNATIONAL ECONOMIC ISSUES
ÌiÃ
7ORLD 4RADE /RGANIZATION 4HE 2ESULTS OF THE 5RUGUAY 2OUND OF -ULTI
LATERAL 4RADE .EGOTIATIONS 4HE ,EGAL 4EXTS 'ENEVA 74/ P
3EE AMONG OTHER WORKS 4OWARDS A .EW 4RADE 0OLICY FOR $EVELOPMENT
.EW 9ORK 5.#4!$
"ERNARD .OSSITER 4HE 'LOBAL 3TRUGGLE FOR -ORE .EW 9ORK (ARPER AND
2OW PP n
)BID P
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-ARTINS 0RESS P
.OSSITER P
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!DAMS P
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-ICHAEL #UTAJAR ED 5.#4!$ AND THE .ORTHn3OUTH $IALOGUE .EW 9ORK
0ERGAMON 0RESS P 5NITED .ATIONS 7ORLD %CONOMIC 3URVEY .EW
9ORK 5NITED .ATIONS P
+ARIN ,ISSAKERS "ANKS "ORROWERS AND THE %STABLISHMENT .EW 9ORK
"ASIC "OOKS P
%DUARDO 7HITE @4HE 1UESTION OF &OREIGN )NVESTMENTS AND THE %CO
NOMIC #RISIS OF ,ATIN !MERICA IN 2ICHARD &EINBERG AND 2ICARDO &FRENCH
$AVIS EDS $EVELOPMENT AND %XTERNAL $EBT IN ,ATIN !MERICA "ASES FOR A .EW
#ONSENSUS .OTRE $AME ). 5NIVERSITY OF .OTRE $AME 0RESS PP
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,ISSAKERS P
7HITE P
1UOTED IN .OSSITER P
$OUG "ANDOW @4HE 53 2OLE IN 0ROMOTING 4HIRD 7ORLD $EVELOP
MENT IN (ERITAGE &OUNDATION 53 !ID TO THE $EVELOPING 7ORLD ! &REE -ARKET
!GENDA 7ASHINGTON $# (ERITAGE &OUNDATION P XXII
)BID P XXIV
)BID PP XXIIInXXIV
#ITED IN 3EAMUS #LEARY @4OWARD A .EW !DJUSTMENT IN !FRICA IN
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P
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!SIA 4HE !GE .OVEMBER P
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#ONFERENCE 3AN &RANCISCO .OVEMBER
4ESTIMONY OF !MBASSADOR #HARLENE "ARSHEFSKY 53 4RADE 2EPRESENTA
TIVE BEFORE THE (OUSE 7AYS AND -EANS 4RADE 3UBCOMMITTEE 53 #ONGRESS
&EBRUARY
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!DAMS @4HE 5.S .EGLECTED "RIEF P
3OUTH #OMMISSION 4HE #HALLENGE TO THE 3OUTH .EW 9ORK /XFORD
5NIVERSITY 0RESS P
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FOR 7HOM IN #HILDERS ED #HALLENGES TO THE 5. P
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&IGURES FROM 7ORLD 4RADE /RGANIZATION !NNUAL 2EPORT )NTER
NATIONAL 4RADE 3TATISTICS 'ENEVA 74/ P
1UOTED IN @#AKES AND #AVIAR 4HE $UNKEL $RAFT AND 4HIRD 7ORLD
!GRICULTURE %COLOGIST 6OL .O .OVEMBERn$ECEMBER P
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MONY BEFORE 53 3ENATE 7ASHINGTON $# /CTOBER
#OMMISSION ON 'LOBAL 'OVERNANCE /UR 'LOBAL .EIGHBORHOOD /XFORD
/XFORD 5NIVERSITY 0RESS P
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)F THE DEVELOPING COUNTRIES HAVE BEEN DISADVANTAGED BY THE
POLICIES OF THE "RETTON 7OODS INSTITUTIONS AND THE 7ORLD 4RADE
/RGANIZATION A GREAT PART OF THE REASON IS THAT THEY HAVE BEEN
MARGINALIZED IN THE FORMAL DECISION MAKING SYSTEMS OF THESE IN
STITUTIONS !N ANALYSIS OF GLOBAL ECONOMIC GOVERNANCE WOULD NOT
BE COMPLETE WITHOUT A DISCUSSION OF THESE STRUCTURES IF ONLY TO
SHOW WHAT GLOBAL ECONOMIC GOVERNANCE SHOULD NOT BE LIKE
/ iÊ7À`Ê >
! 53 4REASURY $EPARTMENT REPORT IN THE EARLY S CAPTURED
THE DOMINANCE EXERCISED BY THE 5NITED 3TATES IN THE 7ORLD "ANK
IN PARTICULAR
4HE 5NITED 3TATES WAS INSTRUMENTAL IN SHAPING THE STRUCTURE
AND MISSION OF THE 7ORLD "ANK ALONG 7ESTERN MARKET ORIENTED
LINES x 7E WERE ALSO RESPONSIBLE x FOR THE EMERGENCE OF A COR
PORATE ENTITY WITH A WEIGHTED VOTING RUN BY A BOARD OF DIRECTORS
HEADED BY A HIGH CALIBER !MERICAN DOMINATED MANAGEMENT AND
WELL QUALIlED PROFESSIONAL STAFF !S A CHARTER MEMBER AND MAJOR
SHAREHOLDER IN THE 7ORLD "ANK THE 5NITED 3TATES SECURED THE SOLE
RIGHT TO A PERMANENT SEAT ON THE "ANKS "OARD OF $IRECTORS
&ORMAL DECISION MAKING POWER IS BASED ON THE SIZE OF CAPITAL
SUBSCRIPTIONS 7HILE SIGNIlCANTLY BELOW THE PER CENT SHARE OF
VOTING POWER THAT IT HAD AT THE TIME THE "ANK BEGAN OPERATIONS
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IN THE PER CENT IT CURRENTLY POSSESSES IS ABOVE THE
CRITICAL PER CENT IT NEEDS TO RETAIN A VETO OVER MAJOR LENDING
DECISIONS 4HE 53! HAS JEALOUSLY GUARDED ITS PRE
EMINENT SHARE
HOLDER ROLE !LTHOUGH *APAN HAS BEEN PRESSING FOR A LARGER SHARE
THE 53! HAS BEEN ABLE TO LIMIT ITS CAPITAL SHARE AND VOTING POWER
TO PER CENT
&ORMAL POWER IS SUPPLEMENTED BY INFORMAL MECHANISMS "Y
@TRADITION THE "ANKS PRESIDENT IS ALWAYS AN !MERICAN CITIZEN
APPOINTED BY THE 53 GOVERNMENT AND THE "ANKS LOCATION IN
7ASHINGTON $# GIVES THE 53 4REASURY $EPARTMENT EASY ACCESS
TO IT AND HELPS ENSURE THAT 53 CITIZENS ACCOUNT FOR ONE
QUARTER
OF SENIOR MANAGEMENT AND THE HIGHER
LEVEL PROFESSIONAL STAFF
&ORMAL AND INFORMAL MECHANISMS ENSURE A SITUATION WHERE
@;O=THER SIGNIlCANT ACTORS n MANAGEMENT MAJOR DONORS AND MAJOR
RECIPIENTS n HAVE RECOGNIZED THE 5NITED 3TATES AS A MAJOR VOICE
IN THE ;MULTILATERAL DEVELOPMENT= BANKS 4HEY KNOW FROM PAST
EXPERIENCE THAT WE ARE CAPABLE AND WILLING TO PURSUE IMPORTANT
POLICY OBJECTIVES IN THE BANKS BY EXERCISING THE lNANCIAL AND
POLITICAL LEVERAGE AT OUR DISPOSAL )N A STUDY OF FOURTEEN OF @THE
MOST SIGNIlCANT ISSUES THAT SPARKED DEBATE AT THE "ANK n RANGING
FROM BLOCKING OBSERVER STATUS FOR THE 0ALESTINE ,IBERATION /RGAN
IZATION 0,/ TO HALTING "ANK AID TO 6IETNAM AND !FGHANISTAN
n THE 5NITED 3TATES WAS ABLE TO IMPOSE ITS VIEW AS "ANK POLICY
IN TWELVE CASES
4HE 7ORLD "ANK HAS BEEN AN IMPORTANT ARM OF 53 GLOBAL
POLICY IN THE VIEW OF THE 4REASURY $EPARTMENT )NDEED @.EITHER
BILATERAL ASSISTANCE NOR PRIVATE SECTOR mOWS IF AVAILABLE ARE AS
EFFECTIVE IN INmUENCING ,$# ;LESS DEVELOPED COUNTRIES= AS THE
-$"S ;MULTILATERAL DEVELOPMENT BANKS= !S A #ONGRESSIONAL
2ESEARCH 3ERVICE ANALYSIS PUT IT THE ADVANTAGE OF THE 7ORLD "ANK
AND MULTILATERAL DEVELOPMENT BANKS FROM A 53 POINT OF VIEW WAS
THAT THEY @PERFORM THE DIFlCULT TASK OF REQUIRING PERFORMANCE
STANDARDS OF THEIR BORROWERS A TASK WHICH THE 5NITED 3TATES AND
OTHER LENDERS MAY BE RELUCTANT TO IMPOSE ON A BILATERAL BASIS
! CASE IN POINT WAS CITED BY FORMER $EPUTY 4REASURY 3ECRETARY
-`iÃÌi««}Ê iVÀ>VÞ È£
0ETER -C0HERSON WHO OBSERVED WITH RESPECT TO THE 0HILIPPINES
@7E HAVE NOT BEEN PARTICULARLY SUCCESSFUL OURSELVES IN WINNING
POLICY REFORMS FROM THE 0HILIPPINES "ECAUSE IT IS SOMETHING OF
A DISINTERESTED PARTY HOWEVER THE 7ORLD "ANK HAS BEEN ENOR
MOUSLY SUCCESSFUL IN NEGOTIATING IMPORTANT POLICY CHANGES WHICH
WE STRONGLY SUPPORT
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!S IN THE CASE WITH THE 7ORLD "ANK THE DEVELOPED ECONOMIES
DOMINATE THE )NTERNATIONAL -ONETARY &UND )-& WITH THE lVE
LARGEST ECONOMIES HAVING PER CENT OF THE TOTAL VOTES IN
THE "OARD OF 'OVERNORS THE 53! BEING PRE
EMINENT WITH
PER CENT 3INCE OTHER RICH COUNTRIES HAVE PER CENT OF THE
VOTES THE DEVELOPED COUNTRIES AS A GROUP HAVE THE VOTING POWER
TO BLOCK ALL DECISIONS REQUIRING MAJORITIES )N RESPONSE TO PRES
SURE FROM DEVELOPING COUNTRIES DEMAND TO HAVE A LARGER SAY IN
DECISION
MAKING THE DEVELOPED COUNTRIES PUSHED THROUGH THE
3ECOND !MENDMENT TO THE !RTICLES OF !GREEMENT 4HIS DETAILED
lFTY
THREE DIFFERENT DECISIONS REQUIRING SUPERMAJORITIES OF TO
PER CENT TO BE PASSED WHICH MEANT THAT SUBGROUPS OF @THE
DEVELOPED HAVE THE ABILITY TO BLOCK DECISIONS REQUIRING TO
PER CENT MAJORITIES
4HE SPECIAL WEIGHT OF THE 53! IN PARTICULAR HAS BEEN CAREFULLY
PROTECTED THROUGH THE CREATION OF NEW RULES n A PROCESS DETAILED
IN AN IMPORTANT ARTICLE BY 2ICHARD ,EAVER AND ,EONARD 3EABROOKE
"Y THE EARLY S THE 53!S VOTING POWER HAD DECLINED FROM
PER CENT AND WAS FAST APPROACHING THE PER CENT THRESHOLD
PROTECTING @SPECIAL DECISIONS *APAN AND OTHER COUNTRIES WERE
HOWEVER SEEKING A CHANGE IN VOTING POWER TO REmECT THEIR GREATER
WEIGHT IN THE WORLD ECONOMY 4HIS WAS HOWEVER SOMETHING THAT
@7ASHINGTON WOULD NOT TOLERATE
)T STONEWALLED A REVIEW OF THE &UNDS QUOTAS DRAWING OUT THE
PROCESS "UT IN THE END A DEAL WAS STRUCK WITH THE *APANESE AND
ÈÓ i}L>â>Ì
THE %UROPEANS 4HE VOTING POWER OF THE 53 WAS INDEED REDUCED
TO PER CENT BUT THE SUPERMAJORITY REQUIREMENT FOR @SPECIAL DE
CISIONS WAS RACHETED UP TO PER CENT 4HIS EXTRAORDINARY DOUBLE
MOVEMENT PROVIDED THE PRECEDENT FOR A SIMILAR DEAL INSIDE THE
7ORLD "ANK A DECADE LATER SO SETTING ONE OF THE MAJOR PARAMETERS
OF THE DISTRIBUTION OF POLITICAL POWER GOVERNING THE &UND THROUGH
THE PERIOD OF THE ,ATIN AND !SIAN DEBT CRISIS
$EMOCRACY IS ALSO ILL SERVED BY THE FACT THAT THE &UND IS
EXTREMELY NON
TRANSPARENT SINCE DESPITE THE FACT THAT MEMBERS
HAVE VOTING RIGHTS A FORMAL VOTE EITHER IN THE "OARD OF %XECU
TIVE $IRECTORS OR IN THE "OARD OF 'OVERNORS IS @A RELATIVELY RARE
OCCURRENCE 4HE 53 EXECUTIVE DIRECTOR FOR THE GREATER PART
OF THE #LINTON ADMINISTRATION FOR INSTANCE REVEALED THAT THE EX
ECUTIVE BOARD ACTUALLY HAD VOTES ON APPROXIMATELY A DOZEN OUT
OF DECISIONS DURING HER TENURE )NSTEAD MOST DECISIONS ARE
MADE INSTEAD BY A FORM OF CONSENSUS
(OWEVER AS .GAIRE 7OOD HAS NOTED CONSENSUS AS PRACTISED BY
THE &UND HAS NON
DEMOCRATIC IMPLICATIONS /NE IS THAT IT MERELY
SERVES TO COVER UP THE UNEQUAL POWER RELATIONS THAT WOULD REVEAL
THEMSELVES WERE A FORMAL VOTE TAKEN SINCE @FORMAL POWERS HAVE AN
UNDERLYING FORCE OF WHICH ALL PARTICIPANTS IN MEETINGS ARE AWARE
!NOTHER IS THAT @STATES AND .'/S THAT ARE NOT PRESENT DURING THE
PROCEEDINGS lND IT VERY HARD TO lGURE OUT WHAT ACTUALLY TRANSPIRED
THUS UNDERMINING TRANSPARENCY AND ACCOUNTABILITY
!LTHOUGH THE &UND IS BY TRADITION HEADED BY A %UROPEAN IT IS
EXTRAORDINARILY SUBMISSIVE TOWARDS THE 53 4REASURY $EPARTMENT
$URING THE &UND BAIL
OUTS OF -EXICO IN n AND 3OUTHEAST
!SIAN COUNTRIES IN )-& -ANAGING $IRECTOR -ICHEL #AM
DESSUS WAS WIDELY REGARDED AS BEING MICROMANAGED BY 3ECRETARY
OF THE 4REASURY 2OBERT 2UBIN AND HIS KEY AIDE ,ARRY 3UMMERS
PROVOKING THE .EW 9ORK 4IMES TO CALL THE &UND @A PROXY FOR THE
5NITED 3TATES
4HE &UNDS SPECIAL FUNCTIONS FOR 7ASHINGTON WERE WHAT LED THE
LATTER TO VETO THE CREATION OF THE !SIAN -ONETARY &UND !-&
-`iÃÌi««}Ê iVÀ>VÞ ÈÎ
PROPOSED BY *APAN DURING THE )-&n7ORLD "ANK MEETING IN (ONG
+ONG IN 3EPTEMBER !S ANALYST %RIC !LTBACH CLAIMS 7ASH
INGTONS VEHEMENT RESPONSE STEMMED FROM THE FACT THAT INCREASING
CONGRESSIONAL CONSTRAINTS ON THE PRESIDENTS POWER TO COMMIT 53
BILATERAL FUNDS TO INTERNATIONAL INITIATIVES MADE THE 53! @MORE
DEPENDENT ON ITS POWER IN THE )-& TO EXERCISE INmUENCE ON
lNANCIAL MATTERS IN !SIA )N THIS CONTEXT AN !SIAN MONETARY FUND
IN WHICH *APAN WAS A MAJOR PLAYER WOULD BE A BLOW TO THE 53
ROLE IN THE REGION
/ iÊ7À`Ê/À>`iÊ"À}>â>ÌÊ
/NE OF THE KEY REASONS FOR THE COLLAPSE OF THE 7ORLD 4RADE
/RGANIZATION -INISTERIAL IN 3EATTLE IN $ECEMBER WAS THE
ABSENCE OF TRANSPARENT DECISION
MAKING 3TORIES ABOUNDED OF MIN
ISTERS FROM DEVELOPING COUNTRIES COMPLAINING OF BEING LOST AT THE
3EATTLE #ONVENTION #ENTER LOOKING FOR A @'REEN 2OOM WHERE
KEY DECISIONS WOULD BE MADE NOT KNOWING THAT THE 'REEN 2OOM
REFERRED NOT TO A REAL ROOM AT THE CONVENTION CENTRE BUT TO AN
EXCLUSIVE PROCESS OF DECISION
MAKING
$URING THE 74/ RATIlCATION PROCESS IN PARTISANS OF THE
NEW TRADE ORGANIZATION PORTRAYED IT AS A ONE
COUNTRY
ONE
VOTE
ORGANIZATION WHERE THE 5NITED 3TATES WOULD ACTUALLY HAVE THE
SAME VOTE AS 2WANDA )N TRUTH THE 74/ IS NOT GOVERNED DEMO
CRATICALLY VIA A ONE
COUNTRY
ONE
VOTE SYSTEM LIKE 5. 'ENERAL
!SSEMBLY OR THROUGH A SYSTEM OF WEIGHTED VOTING LIKE THE 7ORLD
"ANK OR THE )-& 7HILE ACCORDING TO ITS CONSTITUTION IT IS A ONE
COUNTRY
ONE
VOTE SYSTEM @CONSENSUS IS THE PROCESS THAT REIGNS IN
THE 7ORLD 4RADE /RGANIZATION ONE THAT IT TOOK OVER FROM THE OLD
'!44 WHERE THE LAST TIME A VOTE WAS TAKEN WAS IN
#ONSENSUS IN PRACTICE IS A PROCESS WHEREBY THE BIG TRADING
COUNTRIES IMPOSE THEIR CONSENSUS ON THE LESS POWERFUL COUNTRIES
!S # &RED "ERGSTEN A PROMINENT PARTISAN OF GLOBALIZATION WHO
HEADS THE )NSTITUTE OF )NTERNATIONAL %CONOMICS PUT IT DURING 53
3ENATE HEARINGS ON THE RATIlCATION OF THE '!44n74/ !GREE
È{ i}L>â>Ì
MENT IN THE 74/ @DOES NOT WORK BY VOTING )T WORKS BY
A CONSENSUS ARRANGEMENT WHICH TO TELL THE TRUTH IS MANAGED BY
FOUR n THE 1UADS THE 5NITED 3TATES *APAN %UROPEAN 5NION AND
#ANADA x 4HOSE COUNTRIES HAVE TO AGREE IF ANY MAJOR STEPS ARE
GOING TO BE MADE "UT NO VOTES
4HOUGH THE -INISTERIAL AND THE 'ENERAL #OUNCIL ARE THEORETIC
ALLY THE HIGHEST DECISION
MAKING BODIES OF THE 74/ DECISIONS
ARE ARRIVED AT NOT IN FORMAL PLENARIES BUT IN NON
TRANSPARENT
BACK
ROOM SESSIONS KNOWN AS THE @'REEN 2OOM AFTER THE COLOUR
OF THE $IRECTOR 'ENERALS ROOM AT THE 74/ HEADQUARTERS IN
'ENEVA 7ITH SURPRISING FRANKNESS AT A PRESS CONFERENCE IN 3EATTLE
SHORTLY AFTER THE MINISTERIAL COLLAPSE THE 53 4RADE 2EPRESENTATIVE
#HARLENE "ARSHEFSKY DESCRIBED THE DYNAMICS AND CONSEQUENCES
OF THE 'REEN 2OOM
4HE PROCESS INCLUDING EVEN AT 3INGAPORE AS RECENTLY AS THREE YEARS
AGO WAS A RATHER EXCLUSIONARY ONE !LL THE MEETINGS WERE HELD
BETWEEN AND KEY COUNTRIESx!ND THIS MEANT COUNTRIES
WERE NEVER IN THE ROOMx;4=HIS LED TO EXTRAORDINARILY BAD
FEELING THAT THEY WERE LEFT OUT OF THE PROCESS AND THAT THE RESULTS
EVEN AT 3INGAPORE HAD BEEN DICTATED TO THEM BY THE TO
COUNTRIES WHO WERE IN THE ROOM
"ARSHEFSKY ADMITTED THAT @THE 74/ HAS OUTGROWN THE PROC
ESSES APPROPRIATE TO AN EARLIER TIME !N INCREASING AND NECESSARY
VIEW GENERALLY SHARED AMONG THE MEMBERS WAS THAT WE NEEDED
A PROCESS WHICH HAD A GREATER DEGREE OF INTERNAL TRANSPARENCY AND
INCLUSION TO ACCOMMODATE A LARGER AND MORE DIVERSE MEMBERSHIP
4HIS WAS BACKED UP BY 5+ 3ECRETARY OF 3TATE 3TEPHEN "YERS WHO
STATED THAT THE @74/ WILL NOT BE ABLE TO CONTINUE IN ITS PRESENT
FORM 4HERE HAS TO BE FUNDAMENTAL AND RADICAL CHANGE IN ORDER FOR
IT TO MEET THE NEEDS AND ASPIRATIONS OF ALL OF ITS MEMBERS
!CCEPTED PREVIOUSLY AS UNAVOIDABLE BY MANY GOVERNMENTS
AND PEOPLES IN THE 3OUTH THE DECISION
MAKING STRUCTURES OF THE
MULTILATERAL AGENCIES WERE DEVOID OF DEMOCRATIC LEGITIMACY BY THE
END OF THE TWENTIETH CENTURY 4HIS WAS NOT SUSTAINABLE
-`iÃÌi««}Ê iVÀ>VÞ Èx
ÌiÃ
53 4REAURY $EPARTMENT !SSESSMENT OF 53 0ARTICIPATION IN THE -ULTI
LATERAL $EVELOPMENT "ANKS IN THE S 7ASHINGTON $# 53 4REASURY $EPART
MENT CHAPTER P
2ICHARD &EINBERG @!N /PEN ,ETTER TO THE 7ORLD "ANKS .EW 0RESID
ENT IN 2ICHARD &EINBERG ET AL EDS "ETWEEN 4WO 7ORLDS 4HE 7ORLD "ANKS
.EXT $ECADE .EW "RUNSWICK .* 4RANSACTION "OOKS P
53 4REASURY $EPARTMENT #HAPTER P
)BID #HAPTER
)BID #HAPTER P
#ONGRESSIONAL 2ESEARCH 3ERVICE 4HE 5NITED 3TATES AND THE -ULTILATERAL
$EVELOPMENT "ANKS 7ASHINGTON $# 53 'OVERNMENT 0RINTING /FlCE
P
1UOTED IN 7ALDEN "ELLO @4HE 2OLE OF THE 7ORLD "ANK IN 53 &OREIGN
0OLICY #OVERT !CTION )NFORMATION 1UARTERLY .O &ALL P
*OSEPH 'OLD CITED IN -ARK :ACHER @2EDESIGNING THE )NTERNATIONAL
&INANCIAL !RCHITECTURE 6OTING 0OWER AND 0OWER 3HARING IN THE )-& PAPER
DELIVERED AT THE #ONFERENCE ON THE )NTERNATIONAL &INANCIAL !RCHITECTURE
#ENTER FOR 'LOBAL 3TUDIES 5NIVERSITY OF 6ICTORIA "RITISH #OLUMBIA !UGUST
n
2ICHARD ,EAVER AND ,EONARD 3EABROOKE @#AN THE )-& BE 2EFORMED
IN 7ALDEN "ELLO ET AL EDS 'LOBAL &INANCE ,ONDON :ED "OOKS
P
:AMORA QUOTED IN :ACHER P
.GAIRE 7OOD QUOTED IN :ACHER P
)BID P
#ITED IN @ 1UESTIONS ON THE )-& -ULTINATIONAL -ONITOR !PRIL
P
%RIC !LTBACH @4HE !SIAN -ONETARY &UND 0ROPOSAL ! #ASE 3TUDY OF
*APANESE 2EGIONAL ,EADERSHIP *APANESE %CONOMIC )NSTITUTE 2EPORT .O !
PP n
4ESTIMONY BEFORE THE 53 3ENATE #OMMITTEE ON #OMMERCE 3CIENCE
AND 4ECHNOLOGY 7ASHINGTON $# /CTOBER
0RESS BRIElNG 3EATTLE 7ASHINGTON $ECEMBER
1UOTED IN @$EADLINE 3ET FOR 74/ 2EFORMS 'UARDIAN .EWS 3ERVICE
*ANUARY
"1,
/
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7ITH THE FOUNDING OF THE 74/ NEOLIBERALISM OR AS IT WAS MORE
GRANDIOSELY STYLED THE @7ASHINGTON #ONSENSUS SEEM TO HAVE
CARRIED ALL BEFORE IT BY THE MID S !S ONE OF ITS KEY PARTISANS
LATER REMARKED IN A NOSTALGIC VEIN @THE 7ASHINGTON #ONSENSUS
SEEMED TO GAIN NEAR UNIVERSAL APPROVAL AND PROVIDED A GUIDING
IDEOLOGY AND UNDERLYING INTELLECTUAL CONSENSUS FOR THE WORLD
ECONOMY WHICH WAS QUITE NEW IN MODERN HISTORY ,ESS THAN
lVE YEARS LATER THE #ONSENSUS WAS IN TATTERS AND THE KEY INSTITU
TIONS OF GLOBAL GOVERNANCE THAT UNDERPINNED IT WERE EXPERIENCING
A SEVERE CRISIS OF LEGITIMACY
/ iÊ ½ÃÊ-Ì>}À>`
)F ANY EVENT MAY BE SAID TO HAVE CONTRIBUTED TO UNDERMINING THE
&UND IT WAS THE !SIAN lNANCIAL CRISIS WHOSE LEGACY OF COLLAPSED
lNANCIAL SYSTEMS BANKRUPT CORPORATIONS AND RISING POVERTY AND
INEQUALITY CONTINUE TO PLAGUE THE REGION /NE CAN SAY THAT THE
!SIAN lNANCIAL CRISIS WAS THE 3TALINGRAD OF THE )-& "EARING IN
MIND THE LIMITS OF METAPHOR THE )-& DURING THE !SIAN lNANCIAL
CRISIS ACTED LIKE THE 'ERMAN 3IXTH !RMY MAKING ONE WRONG MOVE
AFTER ANOTHER ON THE WAY TO DISASTER
)T WAS THE )-& THAT HELPED TRIGGER THE MASSIVE mOW OF VOLATILE
SPECULATIVE CAPITAL INTO THE REGION BY PRESSING THE !SIAN GOVERN
MENTS FOR CAPITAL ACCOUNT LIBERALIZATION PRIOR TO THE CRISIS EGGED
ON ITSELF BY THE 53 4REASURY $EPARTMENT )T WAS THE )-& THAT
CONlDENTLY MOVED IN AFTER THE PANICKY mIGHT OF SPECULATIVE CAPITAL
BEGAN WITH A TIGHT lSCAL AND MONETARY FORMULA THAT BY DRASTICALLY
/
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ÀÃÃÊvÊ i}Ì>VÞ ÈÇ
REDUCING GOVERNMENTS CAPACITY TO ACT AS COUNTER
FORCE TO THE
DOWNTURN IN PRIVATE SECTOR ACTIVITY CONVERTED THE lNANCIAL CRISIS
INTO AN ECONOMIC COLLAPSE
)T WAS THE )-& THAT ASSEMBLED THE HIGH
PROlLE MULTI
BILLION
DOLLAR RESCUE PACKAGES THAT WERE MEANT TO RESCUE FOREIGN CREDITORS
EVEN AS LOCAL BANKS lNANCE COMPANIES AND CORPORATIONS WERE
TOLD TO BITE THE BULLET BY ACCEPTING BANKRUPTCY )T WAS THE )-&
THAT IMPOSED ON THE FALLEN ECONOMIES A PROGRAMME OF RADICAL
DEREGULATION AND lNANCIAL AND TRADE LIBERALIZATION THAT WAS ESSEN
TIALLY 7ASHINGTONS PRE
CRISIS AGENDA THE TIGERS HAD BEEN ABLE TO
FRUSTRATE DURING THEIR DAYS OF PROSPERITY !ND IT WAS THE )-& THAT
AT THE URGING OF THE 53 4REASURY $EPARTMENT KILLED THE PROPOSAL
FOR AN !SIAN -ONETARY &UND !-& WHICH WOULD HAVE POOLED
TOGETHER THE RESERVES FROM THE MORE lNANCIALLY SOUND ECONOMIES
TO SERVE AS A FUND FROM WHICH THOSE SUBJECTED TO SPECULATIVE
ATTACK COULD DRAW TO SHORE UP THEIR CURRENCIES
!S THE STRICKEN ECONOMIES REGISTERED NEGATIVE GROWTH RATES AND
RECORD UNEMPLOYMENT RATES IN AND OVER MILLION PEOPLE IN
4HAILAND AND MILLION IN )NDONESIA FELL BELOW THE POVERTY LINE
THE )-& NOT SURPRISINGLY JOINED CORRUPT GOVERNMENTS BANKS AND
'EORGE 3OROS AS THE VILLAINS OF THE PIECE IN THE VIEW OF MILLIONS
OF NEWLY IMPOVERISHED +OREANS 4HAIS AND )NDONESIANS
"UT EQUALLY AS SIGNIlCANT FOR ITS FUTURE AS AN INSTITUTION WAS
THE FACT THAT THE )-&S ACTIONS BROUGHT THE LONG
SIMMERING CON
mICT OVER THE ROLE OF THE &UND WITHIN THE 53 ELITE TO A BOIL 4HE
!MERICAN RIGHT DENOUNCED THE &UND FOR PROMOTING MORAL HAZARD
WITH SOME PERSONALITIES SUCH AS FORMER 53 4REASURY 3ECRETARY
'EORGE 3HULTZ CALLING FOR ITS ABOLITION WHILE ORTHODOX LIBERALS
SUCH AS *EFFREY 3ACHS AND *AGDISH "HAGWATI ATTACKED THE &UND FOR
BEING A THREAT TO GLOBAL MACROECONOMIC STABILITY AND PROSPERITY
,ATE IN A CONSERVATIVEnLIBERAL ALLIANCE IN THE 53 #ONGRESS
CAME WITHIN A HAIRS BREATH OF DENYING THE )-& A BILLION
INCREASE IN THE 53 QUOTA 4HE QUOTA INCREASE WAS SALVAGED WITH
ARM
TWISTING ON THE PART OF THE #LINTON ADMINISTRATION BUT IT
WAS CLEAR THAT THE LONG
TIME INTERNATIONALIST CONSENSUS WITHIN
Èn i}L>â>Ì
THE 53 ELITE THAT HAD PROPPED UP THE &UND FOR OVER lVE DECADES
WAS UNRAVELLING
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4HE &UNDS PERFORMANCE DURING THE !SIAN lNANCIAL CRISIS LED TO
A WIDESPREAD REAPPRAISAL OF THE &UNDS ROLE IN THE 4HIRD 7ORLD IN
THE S AND EARLY S WHEN STRUCTURAL ADJUSTMENT PROGRAMMES
WERE IMPOSED OVER NINETY DEVELOPING AND TRANSITION ECONOMIES
*UDGED BY THE EXTREMELY NARROW CRITERION OF PROMOTING
GROWTH STRUCTURAL ADJUSTMENT PROGRAMMES WERE A FAILURE WITH A
NUMBER OF STUDIES SHOWING THAT ADJUSTMENT HAD BROUGHT ABOUT
A NEGATIVE EFFECT ON GROWTH !FTER OVER lFTEEN YEARS IT WAS HARD
TO POINT TO MORE THAN A HANDFUL AS HAVING BROUGHT ABOUT STABLE
GROWTH AMONG THEM THE VERY QUESTIONABLE CASE OF 0INOCHETS
#HILE 7HAT STRUCTURAL ADJUSTMENT HAD DONE INSTEAD WAS TO INSTI
TUTIONALIZE STAGNATION IN !FRICA ,ATIN !MERICA AND OTHER PARTS OF
THE 4HIRD 7ORLD ! STUDY BY THE #ENTER FOR %CONOMIC AND 0OLICY
2ESEARCH SHOWS THAT PER CENT OF COUNTRIES FOR WHICH DATA
ARE AVAILABLE SAW THEIR PER CAPITA RATE OF GROWTH FALL SIGNIlCANTLY
FROM THE PERIOD n TO THE PERIOD n THE STRUCTURAL
ADJUSTMENT PERIOD )N ,ATIN !MERICA INCOME EXPANDED BY PER
CENT DURING THE S AND S WHEN THE REGIONS ECONOMIES
WERE RELATIVELY CLOSED BUT GREW BY ONLY PER CENT IN THE PAST
TWO DECADES !VERAGE INCOMES IN SUB
3AHARAN !FRICA AND THE OLD
%ASTERN BLOC HAVE ACTUALLY CONTRACTED
"ROADENING THE CRITERIA OF SUCCESS TO INCLUDE REDUCTION OF
INEQUALITY AND BRINGING DOWN POVERTY THE RESULTS WERE UNQUES
TIONABLE n STRUCTURAL ADJUSTMENT WAS A BLIGHT ON THE 4HIRD 7ORLD
! STUDY BY -ATTIAS ,UNDBERG AND ,YN 3QUIRE OF THE 7ORLD "ANK
SUMMED IT UP THUS @THE POOR ARE FAR MORE VULNERABLE TO SHIFTS IN
RELATIVE INTERNATIONAL PRICES AND THIS VULNERABILITY IS MAGNIlED BY
THE COUNTRYS OPENNESS TO TRADE x ;!=T LEAST IN THE SHORT TERM
GLOBALIZATION APPEARS TO INCREASE BOTH POVERTY AND INEQUALITY
4HE NUMBER OF PEOPLE GLOBALLY LIVING IN POVERTY n THAT IS ON LESS
/
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ÀÃÃÊvÊ i}Ì>VÞ È
THAN A DOLLAR A DAY n INCREASED FROM BILLION IN TO
BILLION IN AND WAS EXPECTED TO REACH BILLION BY
!CCORDING TO A RECENT 7ORLD "ANK STUDY THE ABSOLUTE NUMBER
OF PEOPLE LIVING IN POVERTY ROSE IN THE S IN %ASTERN %UROPE
3OUTH !SIA ,ATIN !MERICA AND THE #ARIBBEAN AND SUB
3AHARAN
!FRICA n ALL AREAS THAT CAME UNDER THE SWAY OF STRUCTURAL ADJUST
MENT PROGRAMMES
!S A CONSEQUENCE OF GREATER PUBLIC SCRUTINY FOLLOWING ITS DIS
ASTROUS POLICIES IN %AST !SIA THE &UND COULD NO LONGER PRETEND
THAT ADJUSTMENT HAD NOT BEEN A MASSIVE FAILURE IN !FRICA ,ATIN
!MERICA AND 3OUTH !SIA $URING THE 7ORLD "ANKn)-& MEETINGS
IN 3EPTEMBER THE &UND CONCEDED FAILURE BY RENAMING THE
EXTENDED STRUCTURAL ADJUSTMENT FACILITY %3!& THE @POVERTY REDUC
TION AND GROWTH FACILITY AND PROMISED TO LEARN FROM THE 7ORLD
"ANK IN MAKING THE ELIMINATION OF POVERTY THE @CENTREPIECE OF
ITS PROGRAMMES "UT THIS WAS TOO LITTLE TOO LATE AND TOO INCRED
IBLE 3UPPORT FOR THE )-& IN 7ASHINGTON WAS DOWN TO THE 53
4REASURY BY THE END OF THE #LINTON ADMINISTRATION
iÌâiÀÊ>`ÊÌ iÊ7À`Ê >
3INCE ASSUMING OFlCE IN !USTRALIAN TURNED !MERICAN *IM
7OLFENSOHN BY OPENING UP CHANNELS OF COMMUNICATION WITH THE
NON GOVERNMENTAL ORGANIZATIONS .'/S AND WITH THE HELP OF
A WELL OILED PUBLIC RELATIONS MACHINE TRIED TO RECAST THE "ANKS
IMAGE AS AN INSTITUTION THAT WAS NOT ONLY MOVING AWAY FROM
STRUCTURAL ADJUSTMENT BUT WAS ALSO MAKING POVERTY ELIMINATION
ITS CENTRAL MISSION PROMOTING GOOD GOVERNANCE AND SUPPORTING
ENVIRONMENTALLY SENSITIVE LENDING 4HE BEST DEFENCE IN SHORT WAS
TO EXPAND THE AGENCYS AGENDA
4HE REPORT OF THE -ELTZER #OMMISSION FOUND ITS MARK IN &EB
RUARY %XHAUSTIVELY EXAMINING DOCUMENTS AND INTERVIEWING
ALL KINDS OF EXPERTS THE #OMMISSION CAME UP WITH A NUMBER OF
DEVASTATING lNDINGS THAT BEAR BEING POINTED OUT PER CENT OF
THE "ANKS NON GRANT LENDING IS CONCENTRATED IN ELEVEN COUNTRIES
Çä i}L>â>Ì
WITH OTHER MEMBER COUNTRIES LEFT TO SCRAMBLE FOR THE REMAIN
ING PER CENT PER CENT OF THE "ANKS RESOURCES ARE DEVOTED
NOT TO THE POOREST DEVELOPING COUNTRIES BUT TO THE BETTER
OFF
ONES THAT HAVE POSITIVE CREDIT RATINGS AND ACCORDING TO THE #OM
MISSION CAN THEREFORE RAISE THEIR FUNDS IN INTERNATIONAL CAPITAL
MARKETS THE FAILURE RATE OF BANK PROJECTS IS n PER CENT IN THE
POOREST COUNTRIES AND n PER CENT IN ALL DEVELOPING COUNTRIES
)N SHORT THE 7ORLD "ANK WAS IRRELEVANT TO THE ACHIEVEMENT OF
ITS AVOWED MISSION OF GLOBAL POVERTY ALLEVIATION
!ND WHAT TO DO WITH THE "ANK 4HE #OMMISSION URGED THAT
MOST OF THE "ANKS LENDING ACTIVITIES BE DEVOLVED TO THE REGIONAL
DEVELOPING BANKS )T DOES NOT TAKE MUCH FOR READERS OF THE REPORT
TO REALIZE THAT AS ONE OF THE #OMMISSIONS MEMBERS REVEALED IT
@ESSENTIALLY WANTS TO ABOLISH THE )NTERNATIONAL -ONETARY &UND AND
THE 7ORLD BANK A GOAL THAT HAD @SIGNIlCANT POCKETS OF SUPPORT
x IN OUR #ONGRESS
-UCH TO THE CHAGRIN OF 7OLFENSOHN FEW PEOPLE CAME TO
THE DEFENCE OF THE "ANK )NSTEAD THE REALITIES OF THE "ANKS EX
PANDED MISSION WERE EXPOSED IN THE MONTHS LEADING UP TO THE
7ORLD "ANKn)-& MEETING IN 0RAGUE IN 3EPTEMBER 4HE
CLAIM THAT THE "ANK WAS CONCERNED ABOUT @GOOD GOVERNANCE WAS
CONTRADICTED BY THE EXPOSURE OF ITS PROFOUND INVOLVEMENT WITH
THE 3UHARTO REGIME IN )NDONESIA TO WHICH IT FUNNELLED OVER
BILLION IN THIRTY YEARS !CCORDING TO SEVERAL REPORTS INCLUDING A
7ORLD "ANK INTERNAL REPORT THAT CAME OUT IN THE "ANK
TOLERATED CORRUPTION ACCORDED FALSE STATUS TO FALSE GOVERNMENT
STATISTICS LEGITIMIZED THE DICTATORSHIP BY PASSING IT OFF AS A MODEL
FOR OTHER COUNTRIES AND WAS COMPLACENT ABOUT THE STATE OF HUMAN
RIGHTS AND THE MONOPOLISTIC CONTROL OF THE ECONOMY 4HAT THIS
CLOSE EMBRACE OF THE 3UHARTO REGIME CONTINUED WELL INTO THE
7OLFENSOHN ERA WAS PARTICULARLY DAMNING
4HE IMAGE OF A NEW ENVIRONMENTALLY SENSITIVE "ANK UNDER
7OLFENSOHN ALSO EVAPORATED IN THE AVALANCHE OF CRITICISM THAT
CAME AFTER THE -ELTZER 2EPORT 4HE "ANK WAS A STAUNCH BACKER
OF THE CONTROVERSIAL #HADn#AMEROON PIPELINE WHICH WOULD
/
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SERIOUSLY DAMAGE ECOLOGICALLY SENSITIVE AREAS SUCH AS #AMEROONS
!TLANTIC ,ITTORAL &OREST "ANK MANAGEMENT WAS CAUGHT VIOLATING
ITS OWN RULES ON ENVIRONMENT AND RESETTLEMENT WHEN IT TRIED
TO PUSH THROUGH THE #HINA 7ESTERN 0OVERTY 0ROJECT THAT WOULD
HAVE TRANSFORMED AN ARID ECOSYSTEM SUPPORTING MINORITY 4IBETAN
AND -ONGOLIAN SHEEPHERDERS INTO LAND FOR SETTLED AGRICULTURE FOR
PEOPLE FROM OTHER PARTS OF #HINA
! LOOK AT THE BANKS LOAN PORTFOLIO REVEALED THE REALITY BEHIND
THE RHETORIC LOANS FOR THE ENVIRONMENT AS A PERCENTAGE OF THE
"ANKS TOTAL LOAN PORTFOLIO DECLINED FROM PER CENT IN lSCAL YEAR
TO PER CENT IN FUNDS ALLOCATED TO ENVIRONMENTAL
PROJECTS DECLINED BY PER CENT BETWEEN AND AND
MORE THAN HALF OF ALL LENDING BY THE 7ORLD "ANKS PRIVATE SECTOR
DIVISIONS IN WAS FOR ENVIRONMENTALLY HARMFUL PROJECTS LIKE
DAMS ROADS AND POWER 3O MARGINALIZED WAS THE "ANKS ENVIRON
MENTAL STAFF WITHIN THE BUREAUCRACY THAT (ERMAN $ALY THE DIS
TINGUISHED ECOLOGICAL ECONOMIST LEFT THE "ANK STAFF BECAUSE HE
FELT THAT HE AND OTHER IN HOUSE ENVIRONMENTALISTS WERE HAVING NO
IMPACT AT ALL ON AGENCY POLICY
#ONFRONTED WITH A LIST OF THOROUGHLY DOCUMENTED CHARGES
FROM CIVIL SOCIETY GROUPS DURING THE NOW FAMOUS 0RAGUE #ASTLE
DEBATE SPONSORED BY #ZECH 0RESIDENT 6ACLAV (AVEL DURING THE
TUMULTUOUS )-&n7ORLD "ANK MEETING ON 3EPTEMBER
7OLFENSOHN WAS REDUCED TO GIVING THE MEMORABLE ANSWER @) AND
MY COLLEAGUES FEEL GOOD ABOUT GOING TO WORK EVERYDAY )T WAS
AN ANSWER THAT UNDERLINED THE DEPTH OF THE "RETTON 7OODS SYSTEM
CRISIS OF LEGITIMACY AND WAS MATCHED ONLY BY )-& MANAGING
DIRECTOR (ORST +OEHLERS FAMOUS LINE AT THAT SAME EVENT @) ALSO
HAVE A HEART BUT ) HAVE TO USE MY HEAD IN MAKING DECISIONS
/ iÊ7/"ÊÊÌ iÊ,>`ÊÌÊ-i>ÌÌi
)N THE MID S THE 74/ WAS SOLD TO THE GLOBAL PUBLIC AS THE
LINCHPIN OF A MULTILATERAL SYSTEM OF ECONOMIC GOVERNANCE THAT
WOULD PROVIDE THE NECESSARY RULES TO FACILITATE THE GROWTH OF
ÇÓ i}L>â>Ì
GLOBAL TRADE AND THE SPREAD OF ITS BENElCIAL EFFECTS .EARLY lVE
YEARS LATER THE IMPLICATIONS AND CONSEQUENCES OF THE FOUNDING
OF THE 74/ HAD BECOME AS CLEAR TO LARGE NUMBERS OF PEOPLE
AS A ROBBERY CARRIED OUT IN BROAD DAYLIGHT 7HAT WERE SOME OF
THESE REALIZATIONS
s "Y AGREEING TO ELIMINATE IMPORT QUOTAS AND SIGNING THE !GREE
MENT ON 4RADE 2ELATED )NVESTMENT -EASURES 42)-S WHICH
DECLARED SUCH MECHANISMS AS LOCAL
CONTENT POLICIES AND TRADE
BALANCING REQUIREMENTS ILLEGAL DEVELOPING COUNTRIES DISCOVERED
THAT THEY HAD SIGNED AWAY THEIR RIGHT TO USE TRADE POLICY AS A
MEANS OF INDUSTRIALIZATION
s "Y SIGNING THE !GREEMENT ON 4RADE
2ELATED )NTELLECTUAL 0RO
PERTY 2IGHTS 42)0S COUNTRIES REALIZED THAT THEY HAD GIVEN
HIGH
TECH TRANSNATIONALS SUCH AS -ICROSOFT AND )NTEL THE RIGHT TO
MONOPOLIZE INNOVATION IN THE KNOWLEDGE
INTENSIVE INDUSTRIES
AND PROVIDED BIOTECHNOLOGY lRMS SUCH AS .OVARTIS AND -ON
SANTO THE GO
SIGNAL TO PRIVATIZE THE FRUITS OF AEONS OF CREATIVE
INTERACTION BETWEEN HUMAN COMMUNITIES AND NATURE SUCH AS
SEEDS PLANTS AND ANIMAL LIFE
s "Y SIGNING THE !GREEMENT ON !GRICULTURE !/! DEVELOPING
COUNTRIES DISCOVERED THAT THEY HAD AGREED TO OPEN UP THEIR
MARKETS WHILE ALLOWING THE BIG AGRICULTURAL SUPERPOWERS TO
CONSOLIDATE THEIR SYSTEM OF SUBSIDIZED AGRICULTURAL PRODUCTION
THAT WAS LEADING TO THE MASSIVE DUMPING OF SURPLUSES ON THOSE
VERY MARKETS A PROCESS THAT WAS IN TURN DESTROYING SMALLHOLDER
BASED AGRICULTURE 4HE lGURES SPOKE FOR THEMSELVES THE LEVEL
OF OVERALL SUBSIDIZATION OF AGRICULTURE IN THE /RGANISATION FOR
%CONOMIC #O
OPERATION AND $EVELOPMENT /%#$ COUNTRIES
ROSE FROM BILLION IN WHEN THE 74/ WAS BORN TO
BILLION IN TO BILLION IN )NSTEAD OF THE
BEGINNING OF A .EW $EAL THE !/! IN THE WORDS OF A FORMER
0HILIPPINE SECRETARY OF TRADE @HAS PERPETUATED THE UNEVENNESS
OF A PLAYING lELD WHICH THE MULTILATERAL TRADING SYSTEM HAS
BEEN TRYING TO CORRECT -OREOVER THIS HAS PLACED THE BURDEN
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OF ADJUSTMENT ON DEVELOPING COUNTRIES RELATIVE TO COUNTRIES
WHO CAN AFFORD TO MAINTAIN HIGH LEVELS OF DOMESTIC SUPPORT
AND EXPORT SUBSIDIES
)N CONTRAST TO THE LOOSE '!44 FRAMEWORK WHICH HAD ALLOWED
SOME SPACE FOR DEVELOPMENT INITIATIVES THE COMPREHENSIVE AND
TIGHTENED 5RUGUAY 2OUND WAS FUNDAMENTALLY ANTI
DEVELOPMENT
IN ITS THRUST 4HIS WAS EVIDENT IN THE '!44n74/ !GREEMENTS
WATERING DOWN OF THE PRINCIPLE OF @3PECIAL AND $IFFERENTIAL
4REATMENT 3$4 FOR DEVELOPING COUNTRIES ! CENTRAL PILLAR OF
5.#4!$ n AN ORGANIZATION DISEMPOWERED BY THE ESTABLISHMENT
OF THE 74/ n THE 3$4 PRINCIPLE HELD THAT BECAUSE OF THE CRITI
CAL NEXUS BETWEEN TRADE AND DEVELOPMENT DEVELOPING COUNTRIES
SHOULD NOT BE SUBJECTED TO THE SAME EXPECTATIONS RULES AND REGU
LATIONS THAT GOVERN TRADE AMONG THE DEVELOPED COUNTRIES /WING
TO HISTORICAL AND STRUCTURAL CONSIDERATIONS DEVELOPING COUNTRIES
NEEDED SPECIAL CONSIDERATION AND SPECIAL ASSISTANCE IN LEVELLING
THE PLAYING lELD FOR THEM TO BE ABLE TO PARTICIPATE EQUITABLY IN
WORLD TRADE 4HIS WOULD INCLUDE BOTH THE USE OF PROTECTIVE TARIFFS
FOR DEVELOPMENT PURPOSES AND PREFERENTIAL ACCESS OF DEVELOPING
COUNTRY EXPORTS TO DEVELOPED COUNTRY MARKETS
7HILE '!44 WAS NOT CENTRALLY CONCERNED WITH DEVELOPMENT IT
DID RECOGNIZE THE @SPECIAL AND DIFFERENTIAL STATUS OF THE DEVELOPING
COUNTRIES 0ERHAPS THE STRONGEST STATEMENT OF THIS WAS IN THE 4OKYO
2OUND $ECLARATION IN WHICH RECOGNIZED @THE IMPORTANCE OF
THE APPLICATION OF DIFFERENTIAL MEASURES IN DEVELOPING COUNTRIES IN
WAYS WHICH WILL PROVIDE SPECIAL AND MORE FAVORABLE TREATMENT FOR
THEM IN AREAS OF NEGOTIATION WHERE THIS IS FEASIBLE
$IFFERENT SECTIONS OF THE EVOLVING '!44 CODE ALLOWED DEVELOP
ING COUNTRIES TO RENEGOTIATE TARIFF BINDINGS IN ORDER TO PROMOTE
THE ESTABLISHMENT OF CERTAIN INDUSTRIES TO USE TARIFFS FOR ECONOMIC
DEVELOPMENT AND lSCAL PURPOSES TO USE QUANTITATIVE RESTRICTIONS
TO PROMOTE INFANT INDUSTRIES AND CONCEDED THE PRINCIPLE OF NON
RECIPROCITY BY DEVELOPING COUNTRIES IN TRADE NEGOTIATION 4HE
FRAMEWORK AGREEMENT KNOWN AS THE ENABLING CLAUSE ALSO
Ç{ i}L>â>Ì
PROVIDED A PERMANENT LEGAL BASIS FOR GENERAL SYSTEM OF PREFER
ENCES '30 SCHEMES THAT WOULD PROVIDE PREFERENTIAL ACCESS TO
DEVELOPING COUNTRY EXPORTS
! SIGNIlCANT SHIFT OCCURRED IN THE 5RUGUAY 2OUND '30
SCHEMES WERE NOT BOUND MEANING TARIFFS COULD BE RAISED AGAINST
DEVELOPING COUNTRIES UNTIL THEY EQUALLED THE BOUND RATES APPLIED
TO IMPORTS FOR ALL SOURCES $URING THE NEGOTIATIONS THE THREAT TO
REMOVE '30 WAS USED AS @A FORM OF BILATERAL PRESSURE ON DEVELOP
ING COUNTRIES 3PECIAL AND DIFFERENTIAL TREATMENT 3$4 WAS
TURNED FROM A FOCUS ON A SPECIAL RIGHT TO PROTECT AND SPECIAL
RIGHTS OF MARKET ACCESS TO @ONE OF RESPONDING TO SPECIAL ADJUST
MENT DIFlCULTIES IN DEVELOPING COUNTRIES STEMMING FROM THE
IMPLEMENTATION OF 74/ DECISIONS -EASURES MEANT TO ADDRESS
THE STRUCTURAL INEQUALITY OF THE TRADING SYSTEM GAVE WAY TO MEAS
URES SUCH AS A LOWER RATE OF TARIFF REDUCTION OR A LONGER TIME
FRAME FOR IMPLEMENTING DECISIONS WHICH REGARDED THE PROBLEM OF
DEVELOPING COUNTRIES AS SIMPLY THAT OF CATCHING UP IN AN ESSENTI
ALLY EVEN PLAYING lELD
3$4 WAS SIGNIlCANTLY WATERED DOWN IN THE 74/ AND THIS WAS
NOT SURPRISING IN VIEW OF THE NEOLIBERAL AGENDA THAT UNDERPINS THE
74/ PHILOSOPHY WHICH DIFFERS FROM THE +EYNESIAN ASSUMPTIONS
OF '!44 THAT THERE ARE NO SPECIAL RIGHTS NO SPECIAL PROTECTIONS
NEEDED FOR DEVELOPMENT 4HE ONLY ROUTE TO DEVELOPMENT IS ONE
THAT INVOLVES RADICAL TRADE AND INVESTMENT LIBERALIZATION
!LSO LEADING TO THE DEVELOPING COUNTRIES DISILLUSIONMENT WITH
THE '!44n74/ WAS THE FATE OF THE MEASURES APPROVED DURING
THE 5RUGUAY 2OUND THAT WERE SUPPOSED TO RESPOND TO THE SPECIAL
CONDITIONS OF DEVELOPING COUNTRIES 4HERE WERE TWO KEY AGREE
MENTS WHICH PROMOTERS OF THE 74/ CLAIMED WERE SPECIlCALLY
DESIGNED TO MEET THE NEEDS OF THE 3OUTH THE SPECIAL MINISTERIAL
AGREEMENT APPROVED IN -ARRAKESH IN !PRIL WHICH DECREED
THAT SPECIAL COMPENSATORY MEASURES WOULD BE TAKEN TO COUNTER
ACT THE NEGATIVE EFFECTS OF TRADE LIBERALIZATION ON THE NET FOOD
IMPORTING DEVELOPING COUNTRIES AND THE !GREEMENT ON 4EXTILES
AND #LOTHING WHICH MANDATED THAT THE SYSTEM OF QUOTAS ON
/ iÊ
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DEVELOPING COUNTRY EXPORTS OF TEXTILES AND GARMENTS TO THE .ORTH
WOULD BE DISMANTLED OVER TEN YEARS
4HE SPECIAL MINISTERIAL DECISION TAKEN AT -ARRAKESH TO PROVIDE
ASSISTANCE TO @NET FOOD IMPORTING COUNTRIES TO OFFSET THE REDUCTION
OF SUBSIDIES THAT WOULD MAKE FOOD IMPORTS MORE EXPENSIVE FOR
THE @NET FOOD IMPORTING COUNTRIES HAS NEVER BEEN IMPLEMENTED
!LTHOUGH WORLD CRUDE OIL PRICES MORE THAN DOUBLED IN n
THE 7ORLD "ANK AND THE )-& SCOTCHED ANY IDEA OF OFFSETTING AID
BY ARGUING THAT @THE PRICE INCREASE WAS NOT DUE TO THE AGREEMENT
ON AGRICULTURE AND BESIDES THERE WAS NEVER ANY AGREEMENT ANYWAY
ON WHO WOULD BE RESPONSIBLE FOR PROVIDING THE ASSISTANCE
4HE !GREEMENT ON 4EXTILES AND #LOTHING COMMITTED THE DE
VELOPED COUNTRIES TO BRING UNDER 74/ DISCIPLINE ALL TEXTILE AND
GARMENT IMPORTS OVER FOUR STAGES ENDING ON *ANUARY
! KEY FEATURE WAS SUPPOSED TO BE THE LIFTING OF QUOTAS ON IM
PORTS RESTRICTED UNDER THE -ULTI
&IBRE !GREEMENT -&! AND
SIMILAR SCHEMES WHICH HAD BEEN USED TO CONTAIN PENETRATION OF
DEVELOPED COUNTRY MARKETS BY CHEAP CLOTHING AND TEXTILE IMPORTS
FROM THE 4HIRD 7ORLD (OWEVER DEVELOPED COUNTRIES RETAINED
THE RIGHT TO CHOOSE WHICH PRODUCT LINES TO LIBERALIZE AND WHEN
SO THAT THEY lRST BROUGHT MAINLY UNRESTRICTED PRODUCTS INTO THE
74/ DISCIPLINE AND POSTPONED DEALING WITH RESTRICTED PRODUCTS
UNTIL MUCH LATER 4HUS IN THE lRST PHASE ALL RESTRICTED PRODUCTS
CONTINUED TO BE UNDER QUOTA AS ONLY ITEMS WHERE IMPORTS WERE
NOT CONSIDERED THREATENING n SUCH AS FELT HATS OR YARN OF CARDED
lNE ANIMAL HAIR n WERE INCLUDED IN THE DEVELOPED COUNTRIES
NOTIlCATIONS )NDEED THE NOTIlCATIONS FOR THE COVERAGE OF PROD
UCTS FOR LIBERALIZATION ON *ANUARY SHOWED THAT @EVEN AT THE
SECOND STAGE OF IMPLEMENTATION ONLY A VERY SMALL PROPORTION OF
RESTRICTED PRODUCTS WOULD SEE THEIR QUOTAS LIFTED
'IVEN THIS TREND *OHN 7HALLEY NOTES THAT @THE BELIEF IS NOW
WIDELY HELD IN THE DEVELOPING WORLD THAT IN WHILE THE
-&! MAY DISAPPEAR IT MAY WELL BE REPLACED BY A SERIES OF OTHER
TRADE INSTRUMENTS POSSIBLY SUBSTANTIAL INCREASES IN ANTI
DUMPING
DUTIES 3EATTLE WAS A CATACLYSM WAITING TO HAPPEN
ÇÈ i}L>â>Ì
ÌiÃ
# &RED "ERGSTEN @4HE "ACKLASH !GAINST 'LOBALIZATION SPEECH DE
LIVERED AT THE -EETING OF THE 4RILATERAL #OMMISSION 4OKYO !PRIL
DOWNLOADED FROM )NTERNET
@'LOBAL #APITALISM #AN )T BE -ADE TO 7ORK "ETTER "USINESS 7EEK
.OVEMBER PP n
)BID
1UOTED IN 7ALDEN "ELLO @7ASHINGTONS 0OLITICAL 4RANSITION 4HREATENS
"RETTON 7OODS 4WINS IN 7ALDEN "ELLO 4HE &UTURE IN THE "ALANCE /AKLAND
#! &OOD &IRST P
)NTERNATIONAL &INANCIAL )NSTITUTIONS !DVISORY #OMMISSION 2EPORT
7ASHINGTON $# 53 #ONGRESS
# &RED "ERGSTEN @4HE "ACKLASH x
4HE FOLLOWING FACTS AND STATISTICS WERE DRAWN FROM VARIOUS SOURCES
AND BROUGHT TOGETHER IN 7ALDEN "ELLO @(ARD !NSWERS 0LEASE -R 7OLFEN
SOHN AND -R +OHLER SPEECH DELIVERED AT THE 0RAGUE #ASTLE $EBATE 0RAGUE
3EPTEMBER
3TATEMENT AT THE 0RAGUE #ASTLE $EBATE 3EPTEMBER
)BID
#ESAR "AUTISTA SPEECH AT THE 3ECOND -INISTERIAL OF THE 7ORLD 4RADE
/RGANIZATION 'ENEVA -AY n
1UOTED IN *OHN 7HALLEY @3PECIAL AND $IFFERENTIAL 4REATMENT IN THE
-ILLENNIUM 2OUND #3'2 7ORKING 0APER .O -AY P
)BID P
)BID P
)BID P
)BID P
@-ORE 0OWER TO THE 7ORLD 4RADE /RGANIZATION 0ANOS "RIElNG .OV
EMBER P
3OUTH #ENTER 4HE -ULTILATERAL 4RADE !GENDA AND THE 3OUTH 'ENEVA
3OUTH #ENTER P
*OHN 7HALLEY @"UILDING 0OOR #OUNTRIES 4RADING #APACITY #3'2
7ORKING 0APER 3ERIES 7ARWICK #3'2 -ARCH
6
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7ITH THE ONSET OF THE !SIAN lNANCIAL CRISIS THE ROLE OF THE ' IN
CO
ORDINATING THE RESPONSE TO THE NEED CHANGE IN THE INSTITUTIONS
OF GLOBAL ECONOMIC GOVERNANCE BECAME ESPECIALLY ACUTE 4HIS WAS
PARTICULARLY CLEAR IN RELATION TO THE !SIAN lNANCIAL CRISIS
,ivÀ}ÊÌ iÊL>Ê>V>ÊÀV ÌiVÌÕÀi
#ALLS FOR A NEW GLOBAL lNANCIAL ARCHITECTURE TO REDUCE THE VOLATILITY
OF THE TRILLIONS OF DOLLARS SHOOTING AROUND THE WORLD IN PURSUIT OF
NARROW BUT SIGNIlCANT INTEREST RATE DIFFERENTIALS CAME FROM MANY
QUARTERS IN THE WAKE OF THE CRISIS %VENTUALLY THE 53! EVOLVED
THE POSITION THAT THE CURRENT ARCHITECTURE WAS BASICALLY SOUND
THERE WAS NO NEED FOR MAJOR REFORMS AND WHAT WAS NEEDED WAS
SIMPLY @IMPROVING THE WIRING OF THE SYSTEM 4HOUGH THERE WERE
SOME DIFFERENCES ON SOME DETAILS THIS POSITION WAS SHARED BY THE
OTHER MEMBERS OF THE '
4HIS APPROACH ASSIGNED PRIMACY TO @REFORMING THE lNANCIAL
SECTORS OF THE CRISIS ECONOMIES THROUGH INCREASED TRANSPARENCY
TOUGHER BANKRUPTCY LAWS TO ELIMINATE MORAL HAZARD PRUDENTIAL
REGULATION USING THE @CORE PRINCIPLES DRAFTED BY THE "ASLE COM
MITTEE ON BANKING SUPERVISION AND GREATER INmOW OF FOREIGN
CAPITAL NOT ONLY TO RECAPITALIZE SHATTERED BANKS BUT ALSO TO
@STABILIZE THE LOCAL lNANCIAL SYSTEM BY MAKING FOREIGN INTERESTS
INTEGRAL TO IT
7HEN IT CAME TO THE SUPPLY
SIDE ACTORS IN THE .ORTH THIS
Çn i}L>â>Ì
PERSPECTIVE WOULD LEAVE THEM TO COMPLY VOLUNTARILY WITH THE
"ASLE PRINCIPLES !LTHOUGH GOVERNMENT INTERVENTION MIGHT BE
NEEDED PERIODICALLY TO CATCH FREE FALLING CASINO PLAYERS WHOSE
COLLAPSE MIGHT BRING DOWN THE WHOLE GLOBAL lNANCIAL STRUCTURE
AS WAS THE CASE IN LATE WHEN A CONSORTIUM OF .EW 9ORK
BANKS n LED BY THE 2ESERVE "ANK OF .EW 9ORK n ORGANIZED A
RESCUE OF THE HEDGE FUND ,ONG 4ERM #APITAL -ANAGEMENT AFTER
THE LATTER WAS UNRAVELLED BY 2USSIAS lNANCIAL CRISIS 4HE FURTHEST
THE ' HAS GONE IN TERMS OF DEALING WITH THE CONTROVERSIAL
HEDGE FUND QUESTION WAS TO ISSUE A DECLARATION IN /CTOBER
COMMENTING ON THE NEED TO EXAMINE @THE IMPLICATIONS ARISING
FROM THE OPERATIONS OF LEVERAGED INTERNATIONAL lNANCIAL ORGAN
IZATIONS INCLUDING HEDGE FUNDS AND OFFSHORE INSTITUTIONS AND
@TO ENCOURAGE OFFSHORE CENTERS TO COMPLY WITH INTERNATIONALLY
AGREED STANDARDS
4OBIN TAXES OR SIMILAR CONTROLS DESIGNED TO SLOW DOWN CAPITAL
mOWS WERE A NO NO )NSTEAD EVEN MORE LIBERALIZATION WAS SEEN AS
THE ANSWER TO GLOBAL lNANCIAL INSTABILITY 53 4REASURY 3ECRETARY
,ARRY 3UMMERS REVEALED THE LOGIC BEHIND THIS APPROACH IN HIS
COMMENTS ON !RGENTINA IN @4ODAY FULLY PER CENT OF
THE BANKING SECTOR PER CENT OF PRIVATE BANKS IN !RGENTINA
ARE FOREIGN CONTROLLED UP FROM PER CENT IN 4HE RESULT
IS A DEEPER MORE EFlCIENT MARKET AND EXTERNAL INVESTORS WITH A
GREATER STAKE IN STAYING PUT 4O PUT IT IN THE CURIOUS ALGEBRA OF
THE 53 4REASURY lNANCIAL LIBERALIZATION EQUALS DOMESTIC lNANCIAL
STABILITY EQUALS THE GLOBAL INTEREST
7HEN IT CAME TO )-& REFORM NO SUBSTANTIAL REFORMS WERE
OFFERED IN THE AREA OF POLICY 4O ALL INTENTS AND PURPOSES AN UN
REFORMED )-& CONTINUED TO BE AT THE CENTRE OF THE @lRElGHTING
SYSTEM )NDEED THE ' SUPPORTED THE EXPANSION OF THE POWERS
OF THE )-& /N THE ONE HAND IT GAVE THE &UND THE AUTHORITY
TO PUSH PRIVATE CREDITORS TO CARRY SOME OF THE COSTS OF A RESCUE
PROGRAMME THAT IS TO @BAIL THEM IN INSTEAD OF BAILING THEM OUT
4HIS WAS A MODEST RESPONSE TO CLAMOUR ON BOTH THE RIGHT AND
THE LEFT THAT BECAUSE THE &UND HAD BEEN USED IN THE PAST TO BAIL
/ iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ Ç
OUT PRIVATE CREDITORS THEY WERE MERELY ENCOURAGED TO ENGAGE IN
MORE IRRESPONSIBLE LENDING IN THE FUTURE
/N THE OTHER HAND THE '
AUTHORIZED THE CREATION OF A @CON
TINGENCY CREDIT LINE THAT WOULD BE MADE AVAILABLE TO COUNTRIES
THAT ARE ABOUT TO BE SUBJECTED TO SPECULATIVE ATTACK !CCESS TO
THESE FUNDS WOULD BE DEPENDENT ON A COUNTRYS TRACK RECORD IN
TERMS OF OBSERVING GOOD MACROECONOMIC FUNDAMENTALS AS TRADI
TIONALLY STIPULATED BY THE &UND
4HE ONLY PROBLEM WITH THE LATTER PROPOSAL WAS THAT NO ONE
WANTED TO AVAIL THEMSELVES OF THE PRE
CRISIS CREDIT LINE RIGHTLY
WORRIED THAT SPECULATIVE INVESTORS WOULD TAKE THIS AS A SIGN OF
CRISIS AND MOVE TO TAKE THEIR CAPITAL OUT OF THE COUNTRY THUS
ACCELERATING THE CRISIS THAT THE PRE
CRISIS CREDIT LINE WAS SUPPOSED
TO AVERT IN THE lRST PLACE
!NOTHER INNOVATION THAT WAS TRUMPETED BY THE '
IN THE
AREA OF GLOBAL lNANCIAL MANAGEMENT WAS THE CREATION OF A @&INAN
CIAL 3TABILITY &ORUM !S ORIGINALLY PROPOSED THIS BODY HAD NO
REPRESENTATION FROM THE LESS DEVELOPED ECONOMIES 7HEN THIS
GENERATED CRITICISM THE '
ISSUED AN INVITATION TO 3INGAPORE
AND (ONG +ONG TO JOIN THE BODY 4HE DEVELOPING COUNTRIES
WERE STILL NOT SATISlED HOWEVER LEADING THE '
TO CREATE THE
'
WITH MORE REPRESENTATION FROM THE 3OUTH !S !NDY +NIGHT
NOTES HOWEVER EVEN THIS EXPANDED '
HAS NO REPRESENTATION
FROM THE POOREST DEVELOPING COUNTRIES -OREOVER @4HE '
ALSO LACKS ANY MECHANISM FOR REPORTING OR FOR ACCOUNTABILITY
TO THE BROADER INTERNATIONAL COMMUNITY ITS ORIGINS IN THE '
REDUCE ITS LEGITIMACY ITS MEMBERSHIP IS NOT FULLY REPRESENTATIVE
ITS MANDATE IS NARROW ITS PROCEDURES ARE NOT INCLUSIVE ENOUGH TO
ALLOW FOR PARTICIPATION BY NON
GOVERNMENTAL ORGANIZATIONS AND
ITS OPERATIONS ARE NOT ALL THAT TRANSPARENT EITHER
"UT PROBABLY THE BIGGEST INDICATOR OF THE BANKRUPTCY OF THE
'
IN THE AREA OF lNANCIAL ARCHITECTURE REFORM HAS BEEN ITS IN
ABILITY TO COME UP WITH A VIABLE MECHANISM TO DEAL WITH CASES
OF NATIONAL BANKRUPTCY %VER SINCE THE 4HIRD 7ORLD DEBT CRISIS IN
THE EARLY S SUGGESTIONS WOULD BE MADE PERIODICALLY THAT AN
nä i}L>â>Ì
INTERNATIONAL BANKRUPTCY MECHANISM NEEDED TO BE ESTABLISHED
SOMETHING THAT WOULD BE THE EQUIVALENT OF THE 53 #HAPTER
AT THE INTERNATIONAL LEVEL WHERE THE ENTITIES THAT COULD lLE FOR
BANKRUPTCY AND REORGANIZATION WOULD NOT BE COUNTRIES 4HE !SIAN
lNANCIAL CRISIS AND THE SUBSEQUENT CRISES IN 2USSIA AND "RAZIL IN
REVIVED INTEREST IN SUCH A MECHANISM )T WAS HOWEVER THE
COLLAPSE OF THE !RGENTINE ECONOMY IN THE lRST QUARTER OF
UNDER A HEAVY DEBT LOAD THAT UNDERLINED THE URGENCY OF ESTAB
LISHING ONE
7HEN ON !PRIL !NN +RUEGER THE !MERICAN CITIZEN
WHO IS CURRENTLY DEPUTY DIRECTOR OF THE )-& VOICED HER SUPPORT
FOR @A SINGLE INTERNATIONAL JUDICIAL ENTITY TO OVERSEE AND ARBITRATE
DEBT RESTRUCTURING THE IDEA SEEMED TO HAVE lNALLY GAINED MOMEN
TUM 4HE VERY NEXT DAY HOWEVER *OHN 4AYLOR THE INTERNATIONAL
UNDERSECRETARY OF THE 53 4REASURY DISAGREED SAYING THAT THE @MOST
PRACTICAL AND BROADLY ACCEPTABLE REFORM WOULD BE TO HAVE SOVER
EIGN BORROWERS AND THEIR CREDITORS PUT A PACKAGE OF NEW CLAUSES IN
THE DEBT CONTRACTS )N OTHER WORDS SPECIFY SOME CONDITIONS FOR
REPAYMENT IN THE EVENT OF A DEBT CRISIS BUT LET THE MATTER REMAIN
A CONCERN BETWEEN THE SOVEREIGN BORROWER AND ITS CREDITORS n IN
SHORT THE STATUS QUO WHERE THE CREDITORS TEND TO UNITE AND HAVE
TREMENDOUS ADVANTAGE OVER THE DEBTOR )N THE FACE OF OPPOSITION
FROM HER OWN GOVERNMENT +RUEGER RETREATED AND !RGENTINA WAS
LEFT TO TWIST IN THE WIND n THOUGH ANY RELIEF AN )-& CONNECTED
BANKRUPTCY COURT MIGHT HAVE OFFERED WOULD PROBABLY HAVE BEEN
SCANT IN THE lRST PLACE
ÀÊ-ÌÀÕVÌÕÀ>Ê`ÕÃÌiÌÊÌÊ*ÛiÀÌÞÊ,i`ÕV̶
7ITH THE DISASTER OF STRUCTURAL ADJUSTMENT BECOMING MORE EVIDENT
IN DEVELOPING COUNTRIES THE '
COMMITTED ITSELF TO ACHIEVE WITH
THE LEADERSHIP OF THE 7ORLD "ANK A SIGNIlCANT REDUCTION IN THE
DEBT SERVICING OF THE FORTY
ONE HIGHLY INDEBTED POOR COUNTRIES
()0# 4HIS COMMITMENT WAS MOST LOUDLY PROCLAIMED AT THE '
MEETING IN #OLOGNE IN *ULY 9ET AT THE /KINAWA 3UMMIT
/
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THE FOLLOWING YEAR DEBT REDUCTION FOR THE POOR COUNTRIES DID NOT
lGURE IN THE AGENDA AND DURING THE 'ENOA 3UMMIT IN *ULY IT
RECEIVED ONLY PERFUNCTORY MENTION IN THE lNAL COMMUNIQUÏ 4HIS
WAS NOT SURPRISING BECAUSE THE ACTUAL DEBT REDUCTION ACHIEVED BY
THE PROGRAMME SINCE IT BEGAN IN WAS ONLY BILLION n OR A
REDUCTION OF THEIR DEBT SERVICING BY ONLY PER CENT IN FOUR AND A
HALF YEARS !NOTHER ESTIMATE BY THE "RITISH .'/ #HRISTIAN !ID
IS THAT ONLY PER CENT OF THE TOTAL DEBT OF THE WORLDS POOREST
COUNTRIES WOULD BE TACKLED BY THE ()0# INITIATIVE !ND THE 7ORLD
"ANK ITSELF ADMITTED THAT THE HALF OF THE COUNTRIES COVERED BY
()0# PROGRAMME WOULD STILL HAVE UNSUSTAINABLE DEBT LOADS AT THE
END OF THEIR PROGRAMME !CCORDING TO THE *UBILEE 53! ANALYSIS
THE PROGRAMME WAS FAILING MISERABLY BECAUSE IT WAS TOO LONG
THERE WAS TOO LITTLE DEBT RELIEF COUNTRIES WERE FORCED TO COMMIT
TO UNREASONABLE CONDITIONS AND COUNTRIES DEBT RELIEF WAS TIED TO
THEIR LIVING UP TO RESTRICTIVE )-& CONDITIONALITIES
!T THE 7ORLD "ANKn)-& MEETING IN THE AUTUMN OF THE
EXTENDED STRUCTURAL ADJUSTMENT FACILITY %3!& WAS RENAMED THE
POVERTY REDUCTION AND GROWTH FACILITY !LONG WITH THIS CHANGE WAS
SUPPOSED TO COME A BASIC CHANGE IN APPROACH !S 53 4REASURY
3ECRETARY ,ARRY 3UMMERS PUT IT THE NEW APPROACH WOULD CONSIST
OF @MOVING AWAY FROM AN )-&
CENTERED PROCESS THAT HAS TOO OFTEN
FOCUSED ON NARROW MACROECONOMIC OBJECTIVES AT THE EXPENSE OF
BROADER HUMAN DEVELOPMENT 4HE NEW PROCESS WOULD BE @A NEW
MORE INCLUSIVE PROCESS THAT WOULD INVOLVE MULTIPLE INTERNATIONAL
ORGANIZATIONS AND GIVE NATIONAL POLICY MAKERS AND CIVIL SOCIETY
GROUPS A MORE CENTRAL ROLE
"UT THE NEW APPROACH ON CLOSER INSPECTION WAS SUSPICIOUSLY
LIKE THE OLD ONE 3UMMERS STATED THAT THE NEW )-& MUST HAVE AS
ONE OF ITS PRIORITIES @STRONG SUPPORT FOR MARKET OPENING AND TRADE
LIBERALIZATION 4RADE LIBERALIZATION HE CONTINUED
IS OFTEN A KEY COMPONENT OF )-& ARRANGEMENTS )N THE COURSE
OF NEGOTIATIONS THE )-& HAS SOUGHT CONTINUED COMPLIANCE WITH
EXISTING TRADE OBLIGATIONS AND FURTHER COMMITMENTS TO MARKET
nÓ i}L>â>Ì
OPENING MEASURES AS PART OF A STRATEGY OF SPURRING GROWTH &OR
EXAMPLE !S PART OF ITS )-& PROGRAM )NDONESIA HAS ABOLISHED
IMPORT MONOPOLIES FOR SOYBEANS AND WHEAT AGREED TO PHASE OUT
ALL NON
TARIFF BARRIERS AFFECTING IMPORTS DISSOLVED ALL CARTELS FOR
PLYWOOD CEMENT AND PAPER REMOVED RESTRICTIONS ON FOREIGN IN
VESTMENTS IN THE WHOLESALE AND RESALE TRADES AND ALLOWED FOREIGN
BANKS TO BUY DOMESTIC ONES :AMBIAS PROGRAM WITH THE
)-& COMMITS THE GOVERNMENT TO REDUCING THE WEIGHTED AVERAGE
TARIFF ON FOREIGN GOODS TO TEN PER CENT AND TO CUTTING THE MAXI
MUM TARIFF FROM TO PER CENT IN )N *ULY THE IMPORT
BAN ON WHEAT mOUR WAS ELIMINATED
)N OTHER WORDS BENEATH THE RHETORIC OF ANTI
POVERTY AND HUMAN
DEVELOPMENT THE SAME NEOLIBERAL ECONOMIC MODEL PREVAILED
!S FOR THE 0230 PROCESS n THE PREPARATION OF POVERTY REDUC
TION STRATEGY PAPERS BETWEEN &UND "ANK AND LOCAL GOVERNMENT
OFlCIALS n THIS TURNED OUT TO BE NOTHING MORE THAN AN EFFORT TO
ADD A VENEER OF PUBLIC PARTICIPATION AND ANTI
POVERTY RHETORIC TO
THE SAME TECHNOCRATIC PROCESS AND MODEL EMPHASIZING LIBERALIZA
TION AND DEREGULATION 2ECENT REPORTS COMING IN FROM COUNTRIES
WHERE THE 0230 PROCESS HAS BEGUN
SHOW THAT LITTLE HAS CHANGED IN THE )-&
7ORLD "ANKS APPROACH
TO PROGRAMMING EITHER IN CONTENT OR IN PROCESS %XPERIENCES FROM
"OLIVIA .ICARAGUA 4ANZANIA :AMBIA AND -OZAMBIQUE INDICATE
THAT 0230 PROCESSES CONTINUE TO BE BASED ON EXISTING STRUCTURAL
ADJUSTMENT FRAMEWORKS AND MACROECONOMIC INDICATORS WITH LITTLE
MORE THAN LIP SERVICE TO GENUINE PUBLIC PARTICIPATION IN POVERTY
ANALYSES AND POLICY FORMULATION
-OREOVER PARTICIPATION HAS INVOLVED
LITTLE MORE THAN CONSULTATIONS WITH A FEW PROMINENT AND LIBERAL
#3/S RATHER THAN BROAD
BASED SUBSTANTIVE PUBLIC DIALOGUE ABOUT
THE CAUSES OF INCIDENCE OF POVERTY ,OCAL VERNACULAR FORMS OF
CIVIL SOCIETY ORGANIZATION SUCH AS LABOUR UNIONS PEASANT ORGAN
IZATIONS SOCIAL MOVEMENTS WOMENS GROUPS AND INDIGENOUS
/
iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ nÎ
PEOPLES ORGANIZATIONS HAVE NOT BEEN INVITED INTO THE PROCESS AND
THE LITTLE PUBLIC DISCUSSION THAT HAS TAKEN PLACE HAS BEEN LIMITED
TO WELL RESOURCED NATIONAL AND INTERNATIONAL NON
GOVERNMENTAL
ORGANIZATIONS
! DETAILED LOOK AT THE 0230S FOR THREE COUNTRIES n 6IETNAM
,AOS AND #AMBODIA n BY &OCUS ON THE 'LOBAL 3OUTH ANALYSTS
*OY #HAVEZ -ALALUAN AND 3HALMALI 'UTTAL REINFORCES THE ABOVE
OBSERVATIONS "ENEATH THE THICK RHETORIC OF POVERTY ALLEVIATION
THE SO
CALLED CONSULTATIVE PROCESS REVEALS THE SAME ONE
SIZE
lTS
ALL POLICY MATRIX EMPHASIZING RAPID GROWTH THE DEREGULATION OF
MONETARY POLICY THE TEARING DOWN OF THE STATE SECTOR IN FAVOUR OF
PRIVATE ENTERPRISES DEREGULATION MORE LIBERAL FOREIGN INVESTMENT
LAWS TRADE LIBERALIZATION EXPORT
ORIENTED GROWTH AND COMMERCIAL
IZATION OF LAND AND RESOURCE RIGHTS
@4HE 0230 IS UPHELD BY THE 7ORLD "ANK AND THE )-& AS A
COMPREHENSIVE APPROACH NOTE THE AUTHORS @4HAT IT CERTAINLY IS
THEY CONCLUDE @BUT NOT FOR POVERTY REDUCTION 4HE 0230 IS A
COMPREHENSIVE PROGRAM FOR STRUCTURAL ADJUSTMENT IN THE NAME
OF THE POOR
4HE MORE THINGS CHANGE THE MORE THEY REMAIN THE SAME
n THIS APHORISM HAS BEEN NEVER MORE TRUE THAN IN THE CASE OF
THE 7ORLD "ANK 4HAT THE DRIVE FOR REFORM AT THE "ANK HAD
BEEN STYMIED WAS REVEALED DRAMATICALLY BY THE EASING OUT OF TWO
HIGHLY REGARDED ECONOMISTS *OSEPH 3TIGLITZ THE CHIEF ECONOMIST
OWING TO PRESSURE FROM 53 4REASURY 3ECRETARY ,ARRY 3UMMERS
HIS ORTHODOX PREDECESSOR AND 2AVI +ANBUR HEAD OF THE 7ORLD
$EVELOPMENT 4ASK &ORCE OWING TO PRESSURE FROM THE "ANKS
ENTRENCHED POLICY ANALYSTS
`iVÀ>ÌVÊ`iVÃ>}Ê>vwÀi`
7HEN IT COMES TO THE ISSUE OF DEMOCRATIZING THE )-& AND THE
7ORLD "ANK THERE IS NO LONGER ANY TALK ABOUT DOING AWAY WITH
THE FEUDAL PRACTICES OF ALWAYS HAVING AN !MERICAN HEAD THE "ANK
n{ i}L>â>Ì
AND A %UROPEAN TO LEAD THE &UND )N TERMS OF GIVING MORE VOTING
POWER TO DEVELOPING COUNTRIES MANY PROPOSALS HAVE BEEN MADE
OVER THE LAST THREE YEARS 0ERHAPS THE MOST PROMINENT OF THESE HAS
BEEN ASSOCIATED WITH *OSEPH 3TIGLITZ THE FORMER CHIEF ECONOMIST
3TIGLITZS NOT UNREASONABLE PROPOSAL IS THAT @PENDING A REEXAMINA
TION OF THE ALLOCATION OF VOTING THE DIRECT VOICE OF THE BORROWING
COUNTRIES IN THE EXECUTIVE BOARDS OF THE )&)S BE INCREASED EG BY
ESTABLISHING TWO ADDITIONAL SEATS WITH HALF VOTES OR REPACKAGING
CONSTITUENCIES
3UCH PROPOSALS HAVE NOT EVEN REACHED lRST BASE AND THE REASON
IS AS -ARK :ACHER NOTES THAT
IT IS VERY UNLIKELY THAT THE MAJOR DONOR STATES NAMELY THE 7ESTERN
INDUSTRIALIZED COUNTRIES ARE GOING TO SACRIlCE THEIR VETO POWER
AND PER CENT OF TOTAL VOTES DEPENDING ON THE ISSUE
OVER THE AMOUNT OF MONEY THAT THEY CONTRIBUTE OR THE POLICIES
CONCERNING LOANS AND GRANTS TO RECIPIENT COUNTRIES 4HEY MAY
BE WILLING TO MAKE SOME MODEST CHANGES IN THE DISTRIBUTION OF
VOTES AND THE MAJORITIES THAT ARE REQUIRED FOR PARTICULAR TYPES OF
DECISIONS BUT THEY ARE NOT GOING TO SACRIlCE THEIR ABILITY TO BLOCK
DECISIONS THAT CONCERN CONTRIBUTIONS TO THE )-& AND THE )-&S
DISPERSEMENTS ;SIC= OF THESE FUNDS
iVÃ>}Ê>ÌÊÌ
iÊ7/"\ÊvÀÊ-i>ÌÌiÊÊ
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>
!S FOR THE 7ORLD 4RADE /RGANIZATION INSTEAD OF SEEKING TO CHANGE
THE BLATANTLY UNREPRESENTATIVE DECISION
MAKING PROCESSES AFTER THE
3EATTLE lASCO 74/ OFlCIALS HAVE BEEN BUSY DEFENDING THEM
4HE 'REEN 2OOM PROCESS WAS FOR INSTANCE DEFENDED THUS BY A
KEY ADVISER TO $IRECTOR
'ENERAL -IKE -OORE @/NE OF THE MYTHS
ABOUT 3EATTLE IS THAT THERE WERE NO !FRICANS AND HARDLY ANY DE
VELOPING COUNTRIES IN THE 'REEN 2OOM )N FACT THERE WERE SIX
!FRICANS AND A MAJORITY FROM DEVELOPING COUNTRIES -OREOVER
ANY DEAL REACHED IN THE 'REEN 2OOM MUST STILL BE APPROVED
/
iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ nx
BY ALL 74/ MEMBERS -IKE -OORE HIMSELF TOLD DEVELOPING
COUNTRY DELEGATES AT THE 5.#4!$ 8 MEETING IN "ANGKOK IN
&EBRUARY THAT THE #ONSENSUS'REEN 2OOM SYSTEM WAS
@NON NEGOTIABLE
4HE LACK OF MOVEMENT TOWARDS A MORE TRANSPARENT AND DEMO
CRATIC DECISION MAKING PROCESS WAS MORE THAN EVIDENT IN THE
LEAD UP TO AND IN THE PROCEEDINGS OF THE &OURTH -INISTERIAL IN
$OHA 1ATAR IN .OVEMBER
4HE PROPOSED DRAFT DECLARATION FOR THE -INISTERIAL MEETING
WAS A PRODUCT OF THE SORT OF NON TRANSPARENT TACTICS TO WHICH THE
BIG TRADING POWERS RESORTED )N THE LEAD UP TO $OHA MOST OF THE
DEVELOPING COUNTRIES WERE PRETTY MUCH UNITED AROUND THE POSI
TION THAT THE -INISTERIAL WOULD HAVE TO FOCUS ON IMPLEMENTATION
ISSUES AND ON REVIEWS OF KEY 74/ AGREEMENTS NOT ON LAUNCHING
A NEW ROUND OF TRADE LIBERALIZATION
"UT WHEN THE DRAFT DECLARATION CAME OUT A FEW WEEKS BEFORE
$OHA THE EMPHASIS WAS NOT ON DEALING WITH IMPLEMENTATION
ISSUES BUT ON AN ALLEGED CONSENSUS ON OPENING UP NEGOTIATIONS ON
THE ISSUES OF COMPETITION INVESTMENT POLICY GOVERNMENT PROCURE
MENT AND TRADE FACILITATION THAT WERE THE PRIORITIES OF THE MINORITY
OF RICH AND POWERFUL TRADING COUNTRIES @$ESPITE CLEARLY STATED
POSITIONS THAT THE DEVELOPING COUNTRIES ARE UNWILLING TO GO INTO
A NEW ROUND UNTIL PAST IMPLEMENTATION AND DECISION MAKING ARE
ADDRESSED NOTED !ILEEN +WA WHO FOLLOWED THE PROCESS CLOSELY
@THE DRAFT DECLARATION FAVORABLY POSITIONED THE LAUNCHING OF A
COMPREHENSIVE NEW ROUND WITH AN OPEN AGENDA
4HE DRAFT AUTHORED BY THE CHAIR OF THE 'ENERAL #OUNCIL WAS
A PRODUCT OF CONSULTATIONS WITH ALL 74/ MEMBERS )N ACTUAL
FACT THE KEY CONSULTATIONS WERE CONDUCTED AMONG AN INNER CIRCLE
OF BETWEEN TWENTY AND TWENTY lVE PARTICIPANTS n THE SO CALLED
'REEN 2OOM PROCESS WHICH EFFECTIVELY EXCLUDES MOST OF THE
MEMBERS OF THE 74/ )N THE LEAD UP TO 1ATAR THIS EXCLUSIVE
PROCESS HELD TWO @MINI -INISTERIALS ONE IN -EXICO AT THE END
OF !UGUST AND ANOTHER IN 3INGAPORE ON /CTOBER n (OW
ONE GOT INVITED TO THESE MEETINGS WAS VERY MURKY !ILEEN +WA
nÈ i}L>â>Ì
CITES THE CASE OF ONE AMBASSADOR FROM A TRANSITION ECONOMY WHO
WAS PROMISED AN INVITATION TO A 'REEN 2OOM MEETING BY THE
74/ 3ECRETARIAT BUT NEVER GOT ONE 4HEN THERE WAS THE CASE
OF AN !FRICAN AMBASSADOR WHO WANTED TO ATTEND THE 3INGAPORE
MINI
-INISTERIAL WHEN HE APPROACHED THE 74/ SECRETARIAT FOR
AN INVITATION HE WAS TOLD THAT THEY WERE NOT HOSTING THE MEETING
7HEN HE TRIED THE 3INGAPORE MISSION IN 'ENEVA THE RESPONSE
WAS THAT THEY WERE SIMPLY CO
ORDINATING THE MEETING AND WERE
NOT IN A POSITION TO SEND OUT INVITATIONS
4HE $OHA -INISTERIAL FROM .OVEMBER TO TOOK PLACE
AMID CONDITIONS THAT WERE ALREADY UNFAVOURABLE FROM THE POINT OF
VIEW OF DEVELOPING COUNTRY INTERESTS 4HE 3EPTEMBER EVENTS
PROVIDED A HEAVEN
SENT OPPORTUNITY FOR 53 4RADE 2EPRESENTATIVE
2OBERT :OELLICK AND %UROPEAN 5NION 4RADE #OMMISSIONER 0AS
CAL ,AMY TO STEP UP THE PRESSURE ON THE DEVELOPING COUNTRIES
TO AGREE TO THE LAUNCHING OF A NEW TRADE ROUND INVOKING THE
RATIONALE THAT IT WAS NECESSARY TO COUNTER A GLOBAL DOWNTURN THAT
HAD BEEN WORSENED BY THE TERRORIST ACTIONS 4HE LOCATION WAS
ALSO UNFAVOURABLE 1ATAR BEING A MONARCHY WHERE DISSENT COULD
BE EASILY CONTROLLED 4HE 74/ 3ECRETARIATS AUTHORITY OVER WHO
WOULD BE GRANTED VISAS TO ENTER 1ATAR FOR THE -INISTERIAL ALLOWED
IT RADICALLY TO LIMIT THE NUMBER OF LEGITIMATE .'/S THAT COULD BE
PRESENT TO ABOUT SIXTY THUS PREVENTING THAT EXPLOSIVE INTERACTION
OF DEVELOPING COUNTRY RESENTMENT AND MASSIVE STREET PROTEST THAT
TOOK PLACE IN 3EATTLE
3TILL THESE FACTORS WOULD NOT HAVE BEEN SUFlCIENT TO BRING
ABOUT AN UNFAVOURABLE OUTCOME 4ACTICS MATTERED AND HERE THE
DEVELOPING COUNTRIES WERE CLEARLY OUTMANOEUVRED IN $OHA
!MONG THESE TACTICS THE FOLLOWING MUST BE HIGHLIGHTED
s 0USHING THE HIGHLY UNBALANCED DRAFT DECLARATION AND PRESENTING
IT TO THE -INISTERIAL AS A @CLEAN TEXT ON WHICH THERE ALLEGEDLY
WAS CONSENSUS THUS RESTRICTING THE ARENA OF SUBSTANTIVE DISCUS
SION AND MAKING IT DIFlCULT FOR DEVELOPING COUNTRIES TO REGISTER
FUNDAMENTAL OBJECTIONS WITHOUT SEEMING @OBSTRUCTIONIST
/
iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ nÇ
s 0ITTING OFlCIALS FROM THE CAPITALS AGAINST THEIR NEGOTIATORS BASED
IN 'ENEVA WITH THE LATTER BEING CHARACTERIZED AS @RECALCITRANT
OR @NARROW
s %MPLOYING DIRECT THREATS AS THE 5NITED 3TATES DID WHEN IT
WARNED (AITI AND THE $OMINICAN 2EPUBLIC TO CEASE OPPOSITION
TO ITS POSITION ON GOVERNMENT PROCUREMENT OR RISK CANCELLATION
OF THEIR PREFERENTIAL TRADE ARRANGEMENTS
s "UYING OFF COUNTRIES WITH GOODIES AS THE %UROPEAN 5NION DID
WHEN IN RETURN FOR THEIR AGREEING TO THE lNAL DECLARATION IT
ASSURED COUNTRIES IN THE !#0 !FRICA
#ARIBBEAN
0ACIlC GROUP
THAT THE 74/ WOULD RESPECT THE SO
CALLED @!#0 7AIVER THAT
WOULD ALLOW THEM TO EXPORT THEIR AGRICULTURAL COMMODITIES
TO %UROPE AT PREFERENTIAL TERMS RELATIVE TO OTHER DEVELOPING
COUNTRIES 0AKISTAN A STALWART AMONG DEVELOPING COUNTRIES IN
'ENEVA WAS NOTABLY QUIET AT $OHA !PPARENTLY THIS HAD SOME
THING TO DO WITH THE 53!S GRANTING 0AKISTAN A MASSIVE AID
PACKAGE OF GRANTS LOANS AND DEBT REDUCTION OWING TO ITS SPECIAL
STATUS IN THE 53 WAR AGAINST TERRORISM .IGERIA HAD TAKEN THE
STEP OF ISSUING AN OFlCIAL COMMUNIQUÏ DENOUNCING THE DRAFT
DECLARATION BEFORE $OHA BUT CAME OUT LOUDLY SUPPORTING IT
ON .OVEMBER n A mIP
mOP THAT IS DIFlCULT TO SEPARATE FROM
THE 53!S COMING UP WITH THE PROMISE OF A BIG ECONOMIC
AND MILITARY AID PACKAGE IN THE INTERIM
s 2EINSTITUTING THE INFAMOUS @'REEN 2OOM ON .OVEMBER
AND WHEN SOME TWENTY HAND
PICKED COUNTRIES WERE ISO
LATED FROM THE REST AND @DELEGATED BY THE 74/ SECRETARIAT
AND THE BIG POWERS TO COME UP WITH THE lNAL DECLARATION
4HESE COUNTRIES WERE NOT PICKED BY A DEMOCRATIC PROCESS AND
EFFORTS BY SOME DEVELOPING COUNTRY REPRESENTATIVES TO INSERT
THEMSELVES INTO THIS SELECT GROUP WERE REBUFFED SOME GENTLY
OTHERS QUITE EXPLICITLY AS WAS THE CASE WITH A DELEGATE FROM
5GANDA
s &INALLY PRESSURING THE DEVELOPING COUNTRIES BY TELLING THEM THAT
THEY WOULD BEAR THE ONUS FOR CAUSING THE COLLAPSE OF ANOTHER
-INISTERIAL THE COLLAPSE OF THE 74/ AND THE DEEPENING OF
nn i}L>â>Ì
THE GLOBAL RECESSION THAT WOULD ALLEGEDLY BE THE CONSEQUENCE
OF THESE TWO EVENTS
$OHA WAS A LOW POINT IN THE '!44n74/S HISTORY OF BACK
ROOM INTIMIDATION THREATS BRIBERY AND NON
TRANSPARENCY 4HERE
ARE NO RECORDS OF THE ACTUAL DECISION
MAKING PROCESS IN $OHA
BECAUSE THE FORMAL SESSIONS OF THE -INISTERIAL n WHICH IS WHERE
DECISION
MAKING IS MADE IN A DEMOCRATIC SYSTEM n WERE AS IN
3EATTLE RESERVED FOR SPEECHES AND THE REAL DECISIONS TOOK PLACE
IN INFORMAL GROUPINGS WHOSE MEETING PLACES KEPT SHIFTING AND
WERE NOT KNOWN TO ALL 4HERE BEING NO RECORDS THERE IS LITTLE
ACCOUNTABILITY AND THE PRINCIPALS IN ANY DEALS CAN DENY THAT THEY
ENGAGED IN QUESTIONABLE BEHAVIOUR
4HIS NON
TRANSPARENT PROCESS RESULTED IN PRACTICALLY SIDELINING
THE DEVELOPING COUNTRIES DEMAND THAT THE 74/ FOCUS ON IMPLE
MENTATION ISSUES AND PLACING ON CENTRE STAGE THE TOP AGENDA OF
THE BIG TRADING POWERS THE EVENTUAL LAUNCHING OF A NEW SET OF
TRADE NEGOTIATIONS THAT WOULD BRING UNDER 74/ JURISDICTION THE
NON
TRADE AREAS OF INVESTMENT COMPETITION POLICY GOVERNMENT
PROCUREMENT AND TRADE FACILITATION # &RED "ERGSTEN THE FREE
TRADE PARTISAN ONCE COMPARED THE 74/ AND TRADE LIBERALIZATION
TO A BICYCLE IT STAYS UPRIGHT ONLY BY MOVING FORWARD $OHA SET
THE 74/ UPRIGHT ONCE MORE BUT IT IS STILL WOBBLY AND THIS IS
BECAUSE A GREAT DEAL OF RESENTMENT LINGERS AMONG DEVELOPING
COUNTRIES FROM THE WHOLE NON
TRANSPARENT PROCESS OF BAMBOO
ZLING THEM INTO ACCEPTING A DECLARATION RUNNING COUNTER TO THEIR
INTERESTS 4HE 74/S CRISIS OF LEGITIMACY IS NOT OVER AND THE
NON
TRANSPARENCY AND LACK OF DEMOCRACY SO EVIDENT IN $OHA
MAY YET DEEPEN IT
ÌiÃ
1UOTED IN 5NITED .ATIONS 4OWARD A .EW &INANCIAL !RCHITECTURE ! 2E
PORT OF THE 4ASK &ORCE OF THE %XECUTIVE #OMMITTEE ON %CONOMIC AND 3OCIAL !FFAIRS
OF THE 5NITED .ATIONS .EW 9ORK 5.#4!$
/
iÊ6VÃÃÌÕ`iÃÊvÊ,ivÀ n
1UOTED IN 7ALDEN "ELLO @0OWER 4IMIDITY AND )RRESPONSIBILITY IN
'LOBAL &INANCE IN 4HE &UTURE IN THE "ALANCE P
7 !NDY +NIGHT @-ULTILEVEL %CONOMIC 'OVERNANCE THROUGH 3UB
SIDIARITY 2EMODELLING THE 'LOBAL &INANCIAL !RCHITECTURE PAPER PREPARED
FOR THE #ONFERENCE ON THE )NTERNATIONAL &INANCIAL !RCHITECTURE #ENTER FOR
'LOBAL 3TUDIES 5NIVERSITY OF 6ICTORIA !UGUST n
)BID
1UOTED IN .ICOLA "ULLARD @4HE 0UPPET -ASTER 3HOWS (IS (AND
&OCUS ON 4RADE .O !PRIL PP n
)BID
4HESE ESTIMATES COME FROM %RIC 4OUSSAINT OF #!$4)-
#ITED IN @()0# 4HE /FlCIAL $EBT 2ELIEF 0ROGRAM *UBILEE
53! &ACT 3HEET *UNE
#ITED IN 3OREN !MBROSE AND -ARA 6ANDERSLICE @' $EBT 2ELIEF 0LAN
-ORE 'RIEF THAN 2ELIEF 3POTLIGHT *UBILEE 53 .ETWORK *UNE
)BID
/P
ED PIECE IN 7ASHINGTON 0OST REPRODUCED IN 4ODAY .OVEMBER
)BID
53 4REASURY 3ECRETARY ,ARRY 3UMMERS TESTIMONY BEFORE THE 53
3ENATE #OMMITTEE ON &OREIGN 2ELATIONS 7ASHINGTON $# .OVEMBER
)BID
3HALMALI 'UTTAL @4HE %ND OF )MAGINATION 4HE 7ORLD "ANK THE )NTER
NATIONAL -ONETARY &UND AND 0OVERTY 2EDUCTION "ANGKOK &OCUS ON THE
'LOBAL 3OUTH 3EPTEMBER
)BID
*ENINA *OY #HAVEZ -ALALUAN AND 3HALMALI 'UTTAL @3TRUCTURAL !DJUST
MENT IN THE .AME OF THE 0OOR 4HE 0230 %XPERIENCE IN THE ,AO 0$2
#AMBODIA AND 6IETNAM "ANGKOK &OCUS ON THE 'LOBAL 3OUTH *ANUARY
P
0ROPOSAL PRESENTED AT THE #ONFERENCE ON )NTERNATIONAL &INANCIAL !RCHI
TECTURE 5NIVERSITY OF "RITISH #OLUMBIA AT 6ICTORIA !UGUST n
-ARK :ACHER IBID
0HILIP ,EGRAIN @3HOULD THE 74/ BE !BOLOISHED %COLOGIST 6OL
.O $ECEMBER *ANUARY P
3TATEMENT AT 5.#4!$ 8 "ANGKOK &EBRUARY
ä i}L>â>Ì
!ILEEN +WA @#RISIS IN 74/ 4ALKS &OCUS ON 4RADE .O /CTOBER
)BID
4HE FOLLOWING ACCOUNT IS BASED ON DISCUSSIONS AMONG PARTICIPANTS
MANY OF WHOM ATTENDED THE $OHA -INISTERIAL AT THE CONSULTATION HELD IN
"RUSSELS OF THE @/UR 7ORLD IS NOT FOR 3ALE #OALITION ON $ECEMBER n
-8
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,ivÀ\ÊÊ
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!SIDE FROM REFORM PROPOSALS FOR THE 74/ AND "RETTON 7OODS
INSTITUTIONS AMONG THE KEY IDEAS ADVANCED IN THE LAST FEW YEARS
HAS BEEN THE CREATION OF AN %CONOMIC 3ECURITY #OUNCIL %3#
A SUGGESTION ASSOCIATED WITH THE #OMMISSION ON 'LOBAL 'OVERN
ANCE !CCORDING TO THE #OMMISSION THE %3# WOULD HAVE THE
SAME STATUS IN THE 5. HIERARCHY AS THE 3ECURITY #OUNCIL BUT BE
INDEPENDENT OF IT
4HE %3# WOULD BE A SORT OF INTERNATIONAL ECONOMIC DIREC
TORATE n AN @APEX BODY THAT WOULD SERVE AS THE @FOCAL POINT FOR
GLOBAL ECONOMIC GOVERNANCE ! KEY FUNCTION OF THIS BODY
WOULD BE TO BRIDGE THE GAP BETWEEN THE VARIOUS INTERNATIONAL
ECONOMIC INSITTUTIONS 4HIS DOES NOT MEAN THERE HAS TO BE CEN
TRALLY COORDINATED DIRECTION OF ALL THE WORLDS INSTITUTIONS OF ECO
NOMIC GOVERNANCE UNDER ONE UMBRELLA 4HAT WOULD BE NEITHER
FEASIBLE NOT DESIRABLE 7HAT IS REQUIRED IS AGREEMENT ON GOALS
ROLES AND MANDATES x
!T A PRACTICAL LEVEL THE %3# AND ITS STAFF WOULD EXPECT TO
WORK CLOSELY WITH STAFF FROM THE "RETTON 7OODS INSTITUTIONS AND
THE '!4474/ BREAKING DOWN THE INSTITUTIONAL ISOLATION THAT
CURRENTLY EXISTS AS WELL AS WITH BODIES SUCH AS THE )NTERNATIONAL
,ABOUR /RGANIZATION ),/ TO UNDERLINE THE SOCIAL DIMENSIONS
OF ITS FUNCTIONS
%STABLISHMENT OF THE %3# WOULD BE ACCOMPANIED BY A @RATIONAL
Ó i}L>â>Ì
IZATION OF "RETTON 7OODS AND 5. INSTITUTIONS WITH THE #OMMIS
SION RECOMMENDING CLOSING DOWN 5.#4!$ AND 5.)$/ AND
SUGGESTING THAT WERE IT TO COME INTO BEING @GOVERNMENTS MAY
WANT TO CONSIDER WHETHER IT IS NECESSARY TO CONTINUE THE WORK
OF THE $EVELOPMENT AND )NTERIM #OMMITTEES
%VER SINCE IT WAS mOATED IN THE %3# HAS NOT GAINED
MUCH SUPPORT FROM EITHER DEVELOPED OR DEVELOPING COUNTRIES !
NEW SUPERBODY WITH SIGNIlCANT DEVELOPING COUNTRY MEMBERSHIP
TO WHICH THE "RETTON 7OODS INSTITUTIONS AND THE 74/ WOULD
@REPORT WAS NOT BOUND TO EXCITE THE DEVELOPED COUNTRIES !T
THE SAME TIME THE PROPOSAL THAT @THE WORLDS LARGEST ECONOMIES
WOULD BE REPRESENTED AS OF RIGHT WHILE OTHERS WOULD NOT BE IN
A TWENTY
THREE
MEMBER BODY DID NOT APPEAL TO THE DEVELOPING
COUNTRIES
-OREOVER DEVELOPING COUNTRIES WERE NOT HAPPY WITH THE
RECOMMENDATION TO ABOLISH 5.#4!$ AND MOVE ITS FUNCTIONS
TO THE 74/ SINCE 5.#4!$ HAD BEEN AFTER ALL ONE OF THE FEW
AGENCIES IN THE 5. SYSTEM THAT HAD CONSISTENTLY CHAMPIONED THE
INTERESTS OF THE 4HIRD 7ORLD %QUALLY IMPORTANT WAS THE SENSE THAT
BECAUSE OF INEVITABLE DOMINANCE BY THE DEVELOPED COUNTRIES THE
%3# SUPERBODY WOULD SIMPLY TRANSLATE INTO A CENTRALIZATION OF
RICH COUNTRY CONTROL OVER THE GLOBAL ECONOMY ESPECIALLY SINCE THE
%3# WOULD NEED TO WORK CLOSE WITH THE RICH
COUNTRY
DOMINATED
74/ AND "RETTON 7OODS INSTITUTIONS
/
iÊ iÌâiÀÊ
ÃÃÊ*À«Ã>
!S NOTED EARLIER THE REPORT OF THE )NTERNATIONAL &INANCIAL )NSTITU
TION !DVISORY #OMMISSION BETTER KNOWN AS THE @-ELTZER 2EPORT
AFTER ITS CHAIRMAN !LAN -ELTZER LAUNCHED A DEVASTATING ATTACK ON
THE PERFORMANCE OF THE 7ORLD "ANK AND THE )-& THAT SERVED AS
A STRIKING CONlRMATION FROM THE MAINSTREAM OF WHAT A WHOLE
GENERATION OF PROGRESSIVE CRITICS HAD BEEN SAYING FOR THE LAST
TWENTY
lVE YEARS !MONG THE MOST IMPORTANT CONCLUSIONS OF
THE REPORT WERE THE FOLLOWING
*À«Ã>ÃÊvÀÊL>ÊÛiÀ>ViÊ,ivÀ Î
s INSTEAD OF PROMOTING ECONOMIC GROWTH THE )-& INSTITUTION
ALIZES ECONOMIC STAGNATION
s THE 7ORLD "ANK IS IRRELEVANT RATHER THAN CENTRAL TO THE GOAL OF
ELIMINATING GLOBAL POVERTY
s BOTH INSTITUTIONS ARE TO A GREAT EXTENT DRIVEN BY THE INTERESTS
OF KEY POLITICAL AND ECONOMIC INSTITUTIONS IN THE '
COUNTRIES
n PARTICULARLY THE 53 GOVERNMENT AND 53 lNANCIAL INTERESTS
s THE DYNAMICS OF BOTH INSTITUTIONS DERIVE NOT SO MUCH FROM
THE EXTERNAL DEMANDS OF POVERTY ALLEVIATION OR PROMOTING
GROWTH AS FROM THE INTERNAL IMPERATIVE OF BUREAUCRATIC EMPIRE
BUILDING
7HILE DIPLOMATIC IN ITS LANGUAGE WHEN DISCUSSING THE )-& THE
REPORT lNDS LITTLE OF VALUE IN THE INSTITUTION )T SHOWS THAT THE
&UNDS FORAY INTO MACROECONOMIC REFORM VIA STRUCTURAL ADJUST
MENT INSTITUTIONALIZED ECONOMIC STAGNATION POVERTY AND INEQUAL
ITY IN !FRICA AND ,ATIN !MERICA IS THE S AND S
)T CONlRMS THAT THE &UNDS ORIGINAL OBJECTIVE OF ENSURING A
STABLE GLOBAL lNANCIAL ORDER WAS DERAILED BY ITS PRESCRIPTION OF IN
DISCRIMINATE CAPITAL ACCOUNT LIBERALIZATION FOR THE COUNTRIES OF %AST
!SIA ITS HABIT OF ASSEMBLING lNANCIAL RESCUE PACKAGES THAT SIMPLY
ENCOURAGED @MORAL HAZARD OF IRRESPONSIBLE LENDING AND SPECULATIVE
INVESTMENT AND ITS PRESCRIBING TIGHT lSCAL AND MONETARY POLICIES
THAT MERELY WORSENED THE SITUATION IN THE COUNTRIES HIT BY THE
!SIAN lNANCIAL CRISIS INSTEAD OF REVERSING IT
4HE REPORT RECOMMENDS SHUTTING DOWN &UND PROGRAMMES SUCH
AS THE EXTENDED STRUCTURAL ADJUSTMENT PROGRAMME NOW RENAMED
THE @0OVERTY 2EDUCTION 3TRATEGY 0ROGRAM AND DOWNSIZING THE
)-& )NEXPLICABLY HOWEVER IN VIEW OF ITS UNSPARING CRITICISM IT
RECOMMENDS THAT THE )-& SHOULD CONTINUE IN AND CONSOLIDATE
ITS ROLE OF BEING A @QUASI
LENDER OF LAST RESORT TO COUNTRIES SUFFER
ING A LIQUIDITY CRISIS "Y THE #OMMISSIONS OWN ACCOUNT THIS IS A
TASK THAT THE &UND HAS HANDLED BADLY IN THE PAST -OREOVER THE
#OMMISSIONS RECOMMENDING OF STRICT CONDITIONS UNDER WHICH
IT MAY EXTEND CREDIT CONTRADICTS ITS OWN CRITICISM OF @THE USE OF
{ i}L>â>Ì
)-& RESOURCES AND CONDITIONALITY TO CONTROL THE ECONOMIES OF
DEVELOPING NATIONS
0ARTICULARLY OBJECTIONABLE IS THE #OMMISSIONS PROPOSAL THAT
THE &UND PROVIDE LIQUIDITY ASSISTANCE ONLY TO THOSE COUNTRIES
THAT @PERMIT FREEDOM OF ENTRY AND OPERATION TO FOREIGN lNANCIAL
INSTITUTIONS ON THE GROUNDS THAT THESE ENTITIES WOULD AMONG OTHER
THINGS @STABILIZE AND DEVELOP THE LOCAL lNANCIAL SYSTEM 4HIS IS
PROBLEMATIC FOR TWO REASONS &IRST FOREIGN lNANCIAL INSTITUTIONS
SUCH AS HEDGE FUNDS WHICH HAVE TAKEN FULL ADVANTAGE OF @FREE
ENTRY AND OPERATION HAVE HELPED PRECIPITATE ONE lNANCIAL CRISIS
AFTER ANOTHER 3ECOND FORCING COUNTRIES TO ADOPT 7ESTERN STYLE
FREE MARKET NORMS GOVERNING THE OWNERSHIP OF FOREIGN lNANCIAL
SUBSIDIARIES AND THEIR LOCAL OPERATIONS VIOLATES THE lRST CORE PRIN
CIPLE THAT THE #OMMISSION ENDORSES FOR )-& REFORM n THAT IS @THE
DESIRE TO ENSURE THAT DEMOCRATIC PROCESSES AND SOVEREIGN AUTHORITY
ARE RESPECTED IN BOTH BORROWING AND LENDING COUNTRIES
4HIS CONTRADICTION BETWEEN THE LOGIC OF THE ANALYSIS AND THE
PRESCRIPTION IS A REMINDER THAT THE #OMMISSION WAS AFTER ALL
A 53 GOVERNMENT APPOINTED BODY MANY OF WHOSE MEMBERS
CAME FROM THE BANKING SECTOR CONSERVATIVE THINK TANKS AND ESTAB
LISHMENT UNIVERSITIES WHO ARE VERY WARY ABOUT PLACING SIGNIlCANT
RESTRICTIONS ON THE FREE mOW OF lNANCE CAPITAL GLOBALLY EVEN WHEN
THE EVIDENCE THEY ARE STARING AT UNDERLINES THE DESTRUCTIVENESS OF
UNCHECKED CAPITAL MOBILITY
7HEN IT DEALS WITH THE 7ORLD "ANK THE #OMMISSION DRAWS
A PICTURE OF A MASSIVE INSTITUTION THAT IS DRIVEN TO LEND MORE
BY INSTITITUTIONAL IMPERATIVES THAN ACTUAL NEED IN THE RECIPI
ENT COUNTRIES THAT IS BURDENED BY HIGH FAILURE RATES BOTH IN ITS
PROJECT LENDING AND ITS PROGRAMME STRUCTURAL ADJUSTMENT LEND
ING THAT HAS POOR MONITORING CAPABILITIES OF THE SUSTAINABILITY OF
ITS PROJECTS THAT COMPETES RATHER THAN SUPPLEMENTS THE REGIONAL
DEVELOPMENT BANKS
4HE #OMMISSION PROPOSES THE TRANSFORMATION OF THE 7ORLD
"ANK INTO A 7ORLD $EVELOPMENT !UTHORITY THAT WOULD GIVE ONLY
GRANT AID AND TECHNICAL ASSISTANCE )T WOULD ALSO HAVE THE "ANK
*À«Ã>ÃÊvÀÊL>ÊÛiÀ>ViÊ,ivÀ x
DEVOLVE ITS LOAN PROGRAMMES TO THE REGIONAL DEVELOPMENT BANKS
4O TAKE THE SECOND PROPOSAL lRST EVOLUTION AND DECENTRAL
IZATION ARE lNE PRINCIPLES BUT THEY ARE NO SOLUTION IF THE REGIONAL
INSTITUTION HAS THE SAME STRUCTURE OPERATING STYLE AND PARADIGM OF
DEVELOPMENT AS THE 7ORLD "ANK 4HIS IS CERTAINLY THE CASE WITH
THE !SIAN $EVELOPMENT "ANK WHICH HAS HAD THE SAME RECORD
OF HIGH PROJECT FAILURE RATES THE SAME LACK OF ACCOUNTABILITY AND
THE SAME MACROECONOMIC APPROACH AS THE 7ORLD "ANK 4HE
OTHER COMPONENTS OF THE MULTILATERAL AID SYSTEM MUST IN SHORT
ALSO BE RESTRUCTURED SINCE THEY ARE SATELLITES ORBITING AROUND THE
7ORLD "ANK
!S FOR THE PROPOSAL TO TURN THE "ANK INTO A CENTRALIZED CON
CESSIONAL AID AGENCY THIS IS NO SOLUTION AT ALL SINCE THE PROBLEM
LIES NOT IN THE FUNCTION OF THE "ANK BUT IN ITS STRUCTURE APPROACH
AND IDEOLOGY )T IS HARD NOT TO IMAGINE IT BRINGING TO THE MAN
AGEMENT OF CONCESSIONAL AID THE SAME PROBLEMS IT HAS HAD IN
THE ADMINISTRATION OF LOANS -OREOVER THE 7ORLD $EVELOPMENT
!UTHORITY WOULD NOT ELIMINATE THE POWER IMBALANCE THAT IS ONE
OF THE KEY PROBLEMS WITH THE 7ORLD "ANK AND THE "RETTON 7OODS
SYSTEM CONTROL BY THE RICH COUNTRIES OF THE DECISION
MAKING AND
MANAGEMENT OF AID
4HE -ELTZER #OMMISSION PROPOSALS WHILE mAWED ARE NOT
TO BE UNDERESTIMATED FOR THEY CARRY WEIGHT WITH THE "USH ))
ADMINISTRATOR PARTICULARLY WITH THE INmUENTIAL 4REASURY 3ECRETARY
0AULO /.EILL
/ iʼ >VÌÌ i ÀiÌÌ7`Ã-ÞÃÌi½Ê-V
4HE -ELTZER #OMMISSION 2EPORT COMES FROM THE RIGHT OF THE
NEOCLASSICAL ORTHODOXY #OMING FROM THE LEFT OR MORE APPRO
PRIATELY CENTRE
LEFT ARE THE PROPOSALS MADE BY A NUMBER OF ECO
NOMISTS AND POLICY ANALYSTS THAT FOR LACK OF A BETTER NAME WE
MIGHT CALL THE @"ACK
TO
THE
"RETTON
7OODS
3YSTEM 3CHOOL
! KEY REFORM ADVANCED BY THIS SCHOOL IN THE AREA OF INTER
NATIONAL lNANCE WOULD BE PLACING TOUGHER CONTROLS ON CAPITAL
È i}L>â>Ì
mOWS AT THE GLOBAL LEVEL IN THE FORM OF THE 4OBIN TAX OR VARIANTS
OF IT 4HE 4OBIN TAX IS A TRANSACTIONS TAX ON CAPITAL INmOWS AND
OUTmOWS AT ALL KEY POINTS OF THE WORLD ECONOMY THAT WOULD @THROW
SAND IN THE WHEELS OF GLOBAL CAPITAL MOVEMENTS #ONTROLS AT THE
INTERNATIONAL LEVEL MAY BE SUPPLEMENTED BY NATIONAL LEVEL CONTROLS
ON CAPITAL INmOWS OR OUTmOWS ! MODEL OF SUCH A MEASURE WAS
THE #HILEAN MEASURE THAT REQUIRED PORTFOLIO INVESTORS TO DEPOSIT
UP TO PER CENT OF THEIR INVESTMENT IN AN INTEREST
FREE ACCOUNT
AT THE #ENTRAL "ANK FOR A YEAR WHICH WAS SAID TO BE SUCCESFUL IN
DISCOURAGING MASSIVE PORTFOLIO INVESTMENT INmOWS !MONG SOME
WRITERS THERE IS AN ILL
CONCEALED ADMIRATION FOR -ALAYSIAN 0RIME
-INISTER -OHAMAD -AHATHIRS TOUGH SET OF MEASURES RESTRICT
ING CAPITAL OUTmOWS WHICH WERE IMPOSED IN !MONG THESE
MEASURES WERE THE lXING OF THE EXCHANGE RATE THE WITHDRAWAL OF
THE LOCAL CURRENCY FROM INTERNATIONAL CIRCULATION AND A ONE
YEAR
LOCK
IN PERIOD FOR CAPITAL ALREADY IN THE COUNTRY
)N ADDITION TO CONTROLS AT THE NATIONAL AND INTERNATIONAL LEVELS
PROPONENTS OF THIS VIEW ALSO SEE REGIONAL CONTROLS AS DESIRABLE
AND FEASIBLE 4HE !SIAN -ONETARY &UND !-& IS REGARDED AS AN
ATTRACTIVE WORKABLE PROPOSAL THAT MUST BE REVIVED 4HE !-& WAS
PROPOSED BY *APAN AT THE HEIGHT OF THE !SIAN lNANCIAL CRISIS TO
SERVE AS A POOL FOR THE FOREIGN EXCHANGE RESERVES OF THE RESERVE
RICH !SIAN COUNTRIES THAT WOULD REPEL SPECULATIVE ATTACKS ON !SIAN
CURRENCIES .OT SURPRISINGLY 7ASHINGTON VETOED IT
4HE THRUST OF THESE INTERNATIONAL NATIONAL AND REGIONAL CONTROLS
IS PARTLY TO PREVENT DESTABILIZING WAVES OF CAPITAL ENTRY AND EXIT
AND PARTLY TO MOVE INVESTMENT INmOW FROM SHORT
TERM PORTFOLIO
INVESTMENT AND SHORT
TERM LOANS TO LONG
TERM DIRECT INVESTMENT
AND LONG
TERM LOANS &OR SOME CAPITAL CONTROLS ARE NOT SIMPLY
STABILIZING MEASURES BUT ARE STRATEGIC TOOLS LIKE TARIFFS AND QUOTAS
THAT MAY JUSTIlABLY BE EMPLOYED TO INmUENCE A COUNTRYS DEGREE
AND MODE OF INTEGRATION INTO THE GLOBAL ECONOMY )N OTHER WORDS
CAPITAL AND TRADE CONTROLS ARE LEGITIMATE INSTRUMENTS OF TRADE AND
INDUSTRIAL POLICY AIMED AT NATIONAL INDUSTRIAL DEVELOPMENT
7HEN IT COMES TO THE 7ORLD "ANK )-& AND 74/ THE THRUST
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OF THIS SCHOOL IS TO REFORM THESE INSTITUTIONS ALONG THE LINES OF
GREATER ACCOUNTABILITY GREATER TRANSPARENCY A GREATER ROLE IN
DECISION
MAKING BY DEVELOPING COUNTRY GOVERNMENTS AND LESS
DOCTRINAL PUSH FOR FREE TRADE AND CAPITAL ACCOUNT LIBERALIZATION
5NLIKE THE '
ADVOCATES OF THIS PERSPECTIVE SEE THE FUNCTION
OF THE &UND NOT AS THAT OF SERVING PRINCIPALLY AS A DISCIPLINARY
TOOL FOR OVERSPENDING GOVERNMENTS BUT AS THAT OF INFUSING GREATER
LIQUIDITY INTO ECONOMIES IN CRISIS WITHOUT THE RESTRICTIVE CON
DITIONS THAT NOW ACCOMPANY THE LENDING ACTIVITIES OF THE )-&
3OME ANALYSTS RECOMMEND THE ESTABLISHMENT OF A 7ORLD &INANCIAL
!UTHORITY 7&! 4HE 7&!S MAIN TASK IN ONE FORMULATION
WOULD BE TO DEVELOP AND IMPOSE REGULATIONS ON GLOBAL CAPITAL
mOWS AND SERVE AS @A FORUM WITHIN WHICH THE RULES OF INTER
NATIONAL lNANCIAL COOPERATION ARE DEVELOPED AND IMPLEMENTED x
BY EFFECTIVE COORDINATION OF THE ACTIVITIES OF NATIONAL MONETARY
AUTHORITIES
!LSO SUGGESTED IS THE ESTABLISHMENT OF A @'LOBAL "ANKRUPTCY
3YSTEM x WHICH WOULD OVERSEE AND IMPLEMENT BANKRUPTCIES WITH
CROSS BOUNDARY CLAIMS THAT WOULD @APPROACH BANKRUPTCY WITH A
BALANCED PERSPECTIVE OF THE INTERESTS OF CREDITORS AND BORROWERS
WITH THE RECOGNITION THAT x SPECIAL PROCEDURES NEED TO BE DEVISED
WHEN THERE ARE SYSTEMIC BANKRUPTCIES WHERE THE MACROECONOMIC
COSTS OF DELAY IN REORGANIZATION CAN BE QUITE LARGE 5NLIKE THE
PROPOSAL OF )-& $EPUTY $IRECTOR !NN +RUEGER HOWEVER THIS
MECHANISM WOULD BE OUTSIDE THE )-&
7HILE THERE ARE NEW INSTITUTIONS PROPOSED THIS SCHOOL NEVER
THELESS STILL SEES THE &UND 7ORLD "ANK AND 74/ CONTINUE AS
CENTRAL INSTITUTIONS OF A WORLD REGULATORY REGIME $ESPITE HIS SEAR
ING CRITIQUE OF THE )-& 3TIGLITZ FOR INSTANCE WRITES THAT @RATHER
THAN CREATING NEW INSTITUTIONS IT WOULD BE BETTER TO STRENGTHEN
EXISTING INTERNATIONAL INSTITUTIONS 4HEY MUST HOWEVER BE MADE
MORE ACCOUNTABLE AND TRANSPARENT AND THEY MUST BE PREVENTED
FROM IMPOSING ONE COMMON MODEL OF TRADE AND INVESTMENT ON
ALL COUNTRIES )NSTEAD OF IMPRISONING COUNTRIES IN A ONE
SHOE
lTS
ALL MODEL THEY MUST PROVIDE A FRAMEWORK FOR MORE DISCRIMINATE
n i}L>â>Ì
GLOBAL INTEGRATION THAT WOULD ALLOW GREATER TRADE AND INVESTMENT
mOWS BUT ALSO ALLOW SOME SPACE FOR NATIONAL DIFFERENCES IN THE
ORGANIZATION OF GLOBAL CAPITALISM
/NE VISION OF A REFORMED SYSTEM OF MULTILATERAL GOVERNANCE
IS SKETCHED OUT BY !NN &LORINI SENIOR ANALYST AT THE #ARNEGIE
%NDOWMENT FOR )NTERNATIONAL 0EACE )MAGINING HERSELF LOOKING
BACK FROM HER VANTAGE POINT IN THE YEAR SHE SKETCHES OUT
WHAT WOULD BE FOR HER A DESIRABLE OUTCOME
4HE TWO
DECADE EXPERIMENT WITH EVER
MORE
INTRUSIVE CONDITION
ALITY ATTACHED TO LOANS FROM THE INTERNATIONAL lNANCIAL INSTITUTIONS
HAS BEEN WIDELY ACKNOWLEDGED A FAILURE SINCE THE CONDITIONS
GENERATED GREAT BITTERNESS AND DID LITTLE GOOD 4HE 7ORLD "ANK
NOW MAKES FEW LOANS GIVING MOST OF ITS HELP IN THE FORM OF
GRANTS AND TECHNICAL ASSISTANCE 4HE )-& STILL SERVES AS LENDER OF
LAST RESORT FOR THE INTERNATIONAL SYSTEM BUT ITS CONDITIONS ARE NOW
BROAD OUTCOME REQUIREMENTS EG HOLDING INTERNATIONAL RESERVES
ABOVE A CERTAIN LEVEL WITHOUT PRESCRIBING HOW COUNTRIES SHOULD
ACHIEVE THOSE OUTCOMES 0ARTS OF THE NEGOTIATIONS BETWEEN THE
)-& AND COUNTRY OFlCIALS ARE STILL OFTEN CONlDENTIAL BUT THEY
ARE NO LONGER ENTIRELY SECRET TALKS BETWEEN )-& STAFF AND lNANCE
MINISTRY OFlCIALS 4HE 74/ DISPUTE RESOLUTION MECHANISM HAS
EVOLVED SUBSTANTIALLY TO INCORPORATE A MUCH WIDER RANGE OF PER
SPECTIVES ON WHETHER A GIVEN MEASURE IS TRULY A PROTECTIONIST
BARRIER OR A LEGITIMATE MEASURE SERVING A NON
TRADE
RELATED END
4HE PUSH TO DO AWAY WITH ALL NATIONAL REGULATIONS THAT MIGHT
IMPEDE TRADE OR FOREIGN INVESTMENT HAS GIVEN WAY TO A MORE BAL
ANCED ASSESSMENT THAT ALLOWS EQUAL STANDING TO OTHER GOALS
!S FORMULATED BY $ANI 2ODRIK AN INmUENTIAL PROFESSOR OF PO
LITICAL ECONOMY AT (ARVARD THE IDEAL MULTILATERAL SYSTEM APPEARS
TO BE A THROWBACK TO THE ORIGINAL "RETTON 7OODS SYSTEM DEVISED
BY +EYNES THAT REIGNED FROM TO THE MID
S WHERE @RULES
LEFT ENOUGH SPACE FOR NATIONAL DEVELOPMENT EFFORTS TO PROCEED
ALONG SUCCESSFUL BUT DIVERGENT PATHS )N OTHER WORDS A @REGIME
OF PEACEFUL COEXISTENCE AMONG NATIONAL CAPITALISMS
*À«Ã>ÃÊvÀÊL>ÊÛiÀ>ViÊ,ivÀ
.OT SURPRISINGLY THIS @GLOBAL +EYNESIAN PERSPECTIVE HAS RES
ONATED WELL WITH ECONOMISTS AND TECHNOCRATS FROM DEVELOPING
COUNTRIES THE DEVASTATED !SIAN ECONOMIES AND THE 5. SYSTEM
WHICH IS WELL KNOWN AS A REFUGE FOR +EYNESIANS WHO mED THE NEO
LIBERAL COUNTER REVOLUTION AT THE 7ORLD "ANK AND UNIVERSITIES
3OME OF THE INSTITUTIONAL INNOVATIONS PROPOSED BY THIS SCHOOL
SUCH AS A MULTI TIERED SYSTEM OF LOCAL NATIONAL AND REGIONAL CAPITAL
CONTROLS ARE DElNITELY WORTH CONSIDERING -OREOVER ITS ADVOCACY
FOR GREATER GLOBAL SPACE FOR THE UNFOLDING OF DISTINCT NATIONAL
STRATEGIES FOR DEVELOPMENT IS CERTAINLY A STEP IN THE RIGHT DIRECTION
(OWEVER THE "ACK TO THE "RETTON 7OODS 3YSTEM 3CHOOL FAILS
SATISFACTORILY TO ADDRESS THE CENTRAL QUESTIONS #AN THE 7ORLD "ANK
74/ AND )-& REALLY BE TRANSFORMED SO AS TO ALLOW SUCH DIVERSITY
TO mOURISH !RE THESE INSTITUTIONS STILL THE APPROPRIATE INSTITUTIONS
OF A SYSTEM OF GLOBAL ECONOMIC GOVERNANCE FOR AN INTERNATIONAL
ECONOMY BUILT ON DIFFERENT PRINCIPLES FROM THOSE THAT NOW SERVE
AS THEIR MAIN IDEOLOGICAL PILLARS !ND GRANTED THAT THE PRE
GLOBAL SYSTEM HAD MORE SPACE FOR DIFFERENT PATHS TO DEVELOPMENT
THAN THE POST SYSTEM DO WE REALLY WANT TO RETURN TO IT
iÀ}iÊ-ÀýÃÊÌiÀ>ÌÛiÊ-ÞÃÌi
3OME OF THE PROPOSALS OF THE "ACK TO THE "RETTON 7OODS 3YSTEM
3CHOOL PEOPLE ARE ECHOED BY 'EORGE 3OROS THE lNANCIER WHO
HAS RECENTLY ACHIEVED RENOWN FOR HIS CRITIQUE OF THE GLOBAL lNAN
CIAL SYSTEM ESPECIALLY FOR HIS MERCILESS ANALYSIS OF THE PARADIGM
OF @MARKET FUNDAMENTALISM THAT UNDERGIRDS IT (IS MOST RECENT
BOOK /N 'LOBALIZATION IS A THOUGHTFUL CRITIQUE OF THE CURRENT
SYSTEM OF GLOBAL ECONOMIC GOVERNANCE AND PRESENTS AN AMBITIOUS
COMPREHENSIVE BLUEPRINT FOR REFORM OF THE 74/ THE )-& AND
THE INTERNATIONAL AID SYSTEM
0ERHAPS 3OROS STANDS MOST lRMLY WHEN HE DEALS WITH THE 74/
5NLIKE MANY OTHER PROPONENTS OF GLOBAL GOVERNANCE REFORM
SUCH AS THE )NTERNATIONAL #ONFEDERATION OF &REE 4RADE 5NIONS
)#&45 3OROS DOES NOT PROPOSE ATTACHING AMENDMENTS SUCH AS
£ää i}L>â>Ì
LABOUR OR SOCIAL CLAUSES TO THE 74/ CHARTER 4HIS IS NOT HOWEVER
FOR THE REASONS GIVEN BY MANY 74/ CRITICS WHO SAY THAT THIS
WOULD SIMPLY GIVE MORE POWER TO AN ALREADY EXTREMELY POWER
FUL ORGANIZATION SINCE THE 74/ WOULD BE GIVEN THE MANDATE
TO BE THE ULTIMATE JUDGE IN TRADE AND LABOUR ISSUES 3OROS SUP
PORTS THE 74/ MISSION OF PROMOTING @RULES
BASED LIBERALIZATION
OF INTERNATIONAL TRADE AND BELIEVES THAT THE 74/ @ACCOMPLISHES
THAT MISSION BRILLIANTLY 3OROSS REASON IS THAT THIS WOULD OVER
LOAD THE 74/ WITH A TASK THAT IT IS NOT EQUIPPED TO DO WHILE
HAMPERING IT IN FULlLLING ITS MAIN ROLE OF GLOBAL TRADE LIBERALIZA
TION /THER INSTITUTIONS SHOULD EITHER BE STRENGTHENED OR CREATED
TO PROMOTE WHAT 3OROS CALLS @GLOBAL PUBLIC GOODS SUCH AS LABOUR
RIGHTS THE ENVIRONMENT CONSUMER SAFETY AND PUBLIC HEALTH 4HE
)NTERNATIONAL ,ABOUR /RGANIZATION ),/ FOR INSTANCE MUST BE
STRENGTHENED VIS
Ì
VIS THE 74/ AND THE PLACE TO START IS BY FORCING
GOVERNMENTS TO RATIFY ),/ CONVENTIONS #IVIL SOCIETY HE ARGUES
SHOULD BE PRESSURING THE 53 GOVERNMENT FOR INSTANCE WHICH HAS
RATIlED ONLY THIRTEEN OF ),/ CONVENTIONS AND ONLY TWO OF
EIGHT @CORE LABOR STANDARDS
4HIS PROMISING APPROACH OF URGING THE CREATION OF OR STRENGTH
ENING COUNTERVAILING INSTITUTIONS DEVOTED TO PUBLIC GOODS IS
NEVERTHELESS UNDERMINED BY HIS FAILURE TO FOLLOW THROUGH ON THE
POLITICAL CONSEQUENCES OF HIS ANALYSIS )NEXPLICABLY HE DOES NOT
PROPOSE COERCIVE POWER FOR SUCH COUNTERVAILING INSTITUTIONS BUT
WOULD LIMIT THEM TO ELICITING @VOLUNTARY COMPLIANCE )N FACT
THE PROBLEM LIES NOT IN THE LACK OF COUNTERVAILING INSTITUTIONS
n THERE ARE SCORES OF MULTILATERAL ENVIRONMENTAL AGREEMENTS AND
ORGANIZATIONS IT LIES IN THEIR LACK OF COERCIVE POWER )N CONTRAST
THE 74/ ENJOYS FORMAL COERCIVE POWER WHILE THE )-& AND
7ORLD "ANK POSSESS INFORMAL COERCIVE POWER OWING TO THEIR
CONTROL OVER MASSIVE lNANCIAL RESOURCES
7HEN IT COMES TO THE 7ORLD "ANK 3OROSS REFORM PROPOSALS
ARE ON EVEN MORE TENUOUS GROUNDS (E ARGUES THAT THE PROPOSAL
OF THE -ELTZER #OMMISSION TO CONVERT THE 7ORLD "ANK INTO A
7ORLD $EVELOPMENT !UTHORITY SPECIALIZING IN GRANTS TO THE POOR
*À«Ã>ÃÊvÀÊL>ÊÛiÀ>ViÊ,ivÀ £ä£
EST COUNTRIES IS NOT ACCEPTABLE BECAUSE @SO
CALLED MIDDLE INCOME
COUNTRIES LIKE "RAZIL AND EVEN #HILE HAVE VERY UNEVEN INCOME
DISTRIBUTIONS AND GREAT SOCIAL NEEDS (E ALSO ARGUES FOR GIVING
*AMES 7OLFENSOHN A CHANCE TO IMPLEMENT REFORMS SUCH AS THE
#OMPREHENSIVE $EVELOPMENT &RAMEWORK @#$& OR THE @0OVERTY
2EDUCTION 3TRATEGY 0APERS ,ENDING OPERATIONS MUST BE REFORMED
THERE SHOULD BE MORE CONSULTATIONS WITH CIVIL SOCIETY LOANS TO
REPRESSIVE AND CORRUPT REGIMES SHOULD BE STOPPED DIRECTORS SHOULD
BE MADE MORE INDEPENDENT OF THE GOVERNMENTS THEY REPRESENT
AND STEPS MUST BE TAKEN TO PREVENT THE STAFF FROM DOMINATING THE
AGENCY SUCH AS PUTTING A LIMIT OF lVE YEARS ON EMPLOYMENT
4HE PROBLEM HERE IS THAT MANY OF THESE REFORMS HAVE BEEN
TOSSED ABOUT FOR THIRTY YEARS EVER SINCE THE TENURE OF 2OBERT
-C.AMARA YET THINGS HAVE NOT IMPROVED !S 3OROS HIMSELF HAS
ADMITTED ON OTHER OCCASIONS THE "ANKS PERFORMANCE HAS SIMPLY
GOT WORSE AND THE BUREAUCRACY HAS BECOME MORE IMMOVABLE
!S NOTED EARLIER THE #$& FRAMEWORK AND THE 0230 HAVE NOT
MEANT A BREAK WITH THE OLD MACROECONOMIC PARADIGM GUIDING
BOTH 7ORLD "ANK AND )-& STRUCTURAL ADJUSTMENT PROGRAMMES
WHICH STRESSED NARROWLY DElNED ECONOMIC EFlCIENCY GREATER
MARKET ORIENTATION AND lSCAL AND MONETARY STABILITY #ONSULTA
TIONS WITH CIVIL SOCIETY GROUPS HAVE IN FACT TAKEN PLACE UNDER
7OLFENSOHN BUT THIS HAS AMOUNTED TO NO MORE THAN A PUBLIC
RELATIONS EXERCISE THE MAIN LEGACY OF WHICH HAS BEEN GREATER
SUSPICION OF THE "ANK BY MANY GRASSROOTS .'/S THAT FELT THE
"ANK WAS ISOLATING THEM AS @UNREASONABLE .'/S AND DEALING
ONLY WITH @REASONABLE ONES
!S FOR GIVING 7OLFENSOHN A CHANCE THIS IS A HIGHLY PERSONAL
CALCULUS WHICH IS NOT LIKELY TO SOUND CREDIBLE TO PRO
REFORM
ELEMENTS WHO HAVE BEEN WAITING FOR NEARLY A DECADE SINCE 7OLFEN
SOHNS APPOINTMENT AS 7ORLD "ANK HEAD FOR SOME IMPROVEMENTS
TO TAKE PLACE #RITICS POINT OUT THAT THE 7OLFENSOHN REGIME IS
IN MANY WAYS A REPLAY OF THE ERA OF 2OBERT -C.AMARA WITH
THE SAME @ANTI
POVERTY RHETORIC AND STRATEGY AND WITH THE SAME
MEAGRE RESULTS IN TERMS OF EFFECTIVE AID PROGRAMMES
£äÓ i}L>â>Ì
)N THE END 3OROS ADMITS THAT KEEPING THE 7ORLD "ANK AmOAT
IS ONLY A TEMPORARY MEASURE DESIGNED TO WARD OFF THE ATTACK OF
THE RIGHT ON MULTILATERAL AID THUS BUYING TIME TO PUT A BETTER AID
MECHANISM IN PLACE 4HAT MECHANISM WOULD BE THE ISSUANCE OF
SPECIAL DRAWING RIGHTS 3$2S VIA THE )-& AND THE RICH COUNTRIES
DONATION OF THEIR SHARE TO A DEVELOPMENT FUND 4HIS WOULD MEAN
TREATING THE 3$2 NOT JUST AS A RESERVE CURRENCY BUT AS A REAL ASSET TO
BE USED FOR DEVELOPMENT PURPOSES 3HOULD THE RICH COUNTRIES AGREE
TO TREAT 3$2S AS REAL ASSETS AND TO DONATE THEIR SHARE OF THE NEW
3$2S CREATED TO AID 3OROS SAYS THERE WOULD IMMEDIATELY BE AVAIL
ABLE SOME BILLION UNDER A SPECIAL 3$2 ISSUE ALREADY APPROVED
BY THE )-& BUT AWAITING RATIlCATION BY THE 53 #ONGRESS
5NDER THE PROPOSAL AN @INTERNATIONAL BOARD OPERATING UNDER THE
AEGIS OF THE )-& BUT INDEPENDENT OF IT WOULD BE SET UP TO DECIDE
WHICH PROJECTS OR PROGRAMMES WOULD BE ELIGIBLE FOR FUNDING 4HE
BOARD WOULD ACTUALLY HAVE NO AUTHORITY OVER THE SPENDING OF FUNDS
BUT @WOULD MERELY PREPARE A MENU FROM WHICH THE DONORS WOULD
BE FREE TO CHOOSE CREATING A MARKET
LIKE INTERPLAY BETWEEN DONORS
AND PROGRAMS SUPPLY AND DEMAND
#REATING MONEY TO PAY FOR AID SEEMS LIKE THE PERFECT SOLU
TION "UT THE BASIC PROBLEM IS THAT IT PUTS TOO MUCH EMPHASIS
ON THE VOLUME OF AID AS THE KEY TO DEVELOPMENT RATHER THAN THE
CONDITIONS AND IMPLEMENTATION OF AID 3OROS CITES FAVOURABLY THE
5NITED .ATIONS REPORT AUTHORED BY FORMER -EXICAN 0RESIDENT
%RNESTO :EDILLO THAT CALLS FOR AN INCREASE OF BILLION IN AID
3OROS HAS FALLEN VICTIM TO THE SAME MYTH THAT ALSO ENSNARED 2OB
ERT -C.AMARA THAT POVERTY CAN BE SOLVED BY THROWING MONEY
AT IT 4HE PARADIGM WITHIN WHICH AID PROGRAMMES OPERATE IS A
FAR GREATER DETERMINANT OF SUCCESS AND THIS IS ABSENT FROM 3OROSS
PROPOSAL EXCEPT FOR MENTION ABOUT A GREATER ROLE OF CIVIL SOCIETY
ORGANIZATIONS IN AID DELIVERY
4HE 3OROS PROPOSAL MOREOVER DOES NOT SOLVE ONE OF THE KEY
PROBLEMS WITH THE "RETTON 7OODS SYSTEM WHICH IS THE STRANGLE
HOLD ON DECISION
MAKING BY THE RICH COUNTRIES 4HE DONORS OF
3$2S n MEANING THE /%#$ COUNTRIES n WOULD STILL BE THE ONES
*À«Ã>ÃÊvÀÊL>ÊÛiÀ>ViÊ,ivÀ £äÎ
TO DECIDE WHICH PROGRAMMES OR PROJECTS ARE WORTH SUPPORTING
!S IN THE CASE OF THE 7ORLD $EVELOPMENT !UTHORITY PROPOSED BY
THE -ELTZER #OMMISSION THE MASSIVE POWER IMBALANCE THAT IS AT
THE HEART OF THE "RETTON 7OODS SYSTEM OF MULTILATERAL AID REMAINS
)NDEED WITH NO DEVELOPING COUNTRY REPRESENTATION ASSURED EITHER
ON THE PROPOSED BOARD OR AMONG THE FUNDERS CONSORTIUM THE
OUTCOMES COULD BE WORSE UNDER THIS @MARKET LIKE SYSTEM THAN
UNDER THE PRESENT SYSTEM
7HEN IT COMES TO THE )-& 3OROSS CRITIQUE OF THE INSTITUTION
FOLLOWS THE NOW FAMILIAR LINES THE &UND PUSHED THE CAPITAL MARKETS
OF THE !SIAN ECONOMIES BEFORE THEY WERE PREPARED FOR IT THUS
CREATING THE CONDITIONS FOR THE !SIAN lNANCIAL CRISIS AND WHEN
THE CRISIS DID HIT THE &UND PROMOTED PRO CYCLICAL POLICIES SUCH
AS TIGHT BUDGETS AND HIGH INTEREST RATES THAT WORSENED THE CRISIS
3OROS SAYS THAT HE PARTLY AGREES WITH THE CONSERVATIVE CRITIQUE
THAT THE )-&S PAST INTERVENTIONS CREATED @MORAL HAZARD BUT HE
SAYS THAT THIS WAS TO A GREAT DEGREE INEVITABLE TO ATTRACT PRIVATE
CAPITAL TO THE DEVELOPING WORLD SINCE WITHOUT SOME EXTRA MARKET
INCENTIVES CAPITAL WOULD NOT HAVE mOWED THERE
3OROSS DEFENCE OF THE &UND AS NECESSARY TO ATTRACT CAPITAL TO THE
DEVELOPING WORLD SUFFERS ON TWO COUNTS &IRST GIVEN THE CONDI
TIONS OF LIMITED PROlTABILITY IN THE METROPOLITAN ECONOMIES IN THE
EARLY S FOREIGN CAPITAL HAD NO CHOICE BUT TO MIGRATE TO AREAS
THAT WERE REGARDED AS OFFERING BETTER OPPORTUNITIES PROlT WISE IN
OTHER WORDS IT IS LIKELY THAT THEY WOULD HAVE DONE THIS WHETHER
THESE COUNTRIES HAD )-& PROGRAMMES OR NOT 4HE EXAMPLE OF
-ALAYSIA 3INGAPORE (ONG +ONG #HINA AND 4AIWAN n ALL OF
WHICH EITHER HAD NO )-& PROGRAMMES OR HAD INCONSEQUENTIAL
ONES n UNDERLINES THIS
3ECOND THE SORT OF CAPITAL THAT WAS ENCOURAGED TO ENTER DE
VELOPING COUNTRY CAPITAL MARKETS BY THE POSSIBILITY OF AN )-&
RESCUE IN THE EVENT THINGS SOURED WAS SPECULATIVE CAPITAL WHICH
WAS MAINLY INTERESTED IN HIGH RATE OF RETURN QUICK TURNAROUND
INVESTMENTS SUCH AS THE STOCKMARKET OR REAL ESTATE 4HIS IS NOT THE
KIND OF CAPITAL THAT CONTRIBUTES TO DEVELOPMENT 4HE DYNAMICS OF
£ä{ i}L>â>Ì
FOREIGN DIRECT INVESTMENT WHICH INVOLVES A STRATEGIC COMMITMENT
TO THE ECONOMY IS NOT DETERMINED BY )-& GUARANTEES
4HE IMPORTANCE HE ATTACHES TO THE &UND AS A MECHANISM OF
GETTING CAPITAL TO mOW TO THE DEVELOPING WORLD IS WHAT MAKES
3OROS SUPPORT STRENGTHENING THE )-& DESPITE WHAT HE ACKNOW
LEDGES AS ITS POOR RECORD IN THE DEVELOPING WORLD 3OME REFORMS
THAT 3OROS SEEKS ARE VIABLE @"AILING IN LENDERS INSTEAD OF BAILING
THEM OUT n THAT IS HAVING THEM PARTICIPATE WITH lNANCING A
RESCUE PROGRAMME AND AGREEING TO TAKE LOSSES IN THE PROCESS n IS
ONE %STABLISHING AN INTERNATIONAL BANKRUPTCY MECHANISM THAT
WOULD PROTECT THE DEBTOR AND ALLOW AN ORDERLY PROCESS OF BOTH
ECONOMIC RECOVERY FOR THE DEBTOR AND ASSET RECOVERY FOR THE
CREDITOR IS ANOTHER THOUGH 3OROS AGAIN SUBVERTS HIS OWN PROPOSAL
BY TYING THIS INITIATIVE TO THE )-&
(OWEVER ESTABLISHING A CONTINGENCY CREDIT LINE ##, THAT
COUNTRIES WITH @GOOD POLICIES CAN TAP INTO BEFORE A CRISIS BEGINS
IS UNSOUND FOR TWO REASONS WHICH HAVE ALREADY BEEN POINTED OUT
BY OTHER CRITICS AND OF WHICH 3OROS IS AWARE lRST FEW COUNTRIES
WOULD DARE TAKE ADVANTAGE OF ##,S FOR FEAR OF ALARMING INVESTORS
THAT A CRISIS IS IMPENDING AND THUS CREATE CONDITIONS FOR A STAMPEDE
SECOND THE )-&S ABILITY TO DISTINGUISH GOOD FROM BAD POLICIES
4HUS WE ARE BACK TO THE FUNDAMENTAL PROBLEM 4HE &UND IS
SADDLED WITH A PARADIGM THAT PUTS A PREMIUM ON MACROECONOMIC
STABILITY LEGAL AND POLITICAL CONDITIONS THAT PROMOTE THE INTERESTS
OF FOREIGN CAPITAL AND THE UNRESTRICTED FUNCTIONING OF THE MARKET
4HIS PARADIGM COUPLED WITH THE 5NITED 3TATES 4REASURYS PRO
PENSITY TO USE THE )-& TO USE THE &UND TO ADVANCE 53 ECONOMIC
AND CORPORATE INTERESTS IS AT THE HEART OF THE &UNDS SUCCESSION OF
FAILURES IN THE DEVELOPING WORLD 'IVING THE &UND MORE POWER
LIKE OFFERING ##,S AND MANAGING AN INTERNATIONAL BANKRUPT
REGIME IS TANTAMOUNT TO REWARDING FAILURE ,IKE THE -ELTZER #OM
MISSION 3OROS BEGINS BY CRITICIZING THE &UND FOR WRONG POLICIES
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- 6
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4HE CRISIS THAT IS WRENCHING THE CURRENT SYSTEM OF GLOBAL ECO
NOMIC GOVERNANCE IS A SYSTEMIC ONE )T IS NOT ONE THAT CAN BE
ADDRESSED BY MERE ADJUSTMENTS WITHIN THE SYSTEM FOR THESE WOULD
BE MERELY MARGINAL IN THEIR IMPACT OR THEY MIGHT MERELY POST
PONE A BIGGER CRISIS 4O BORROW THE INSIGHTS OF 4HOMAS +UHNS
CLASSIC 3TRUCTURE OF 3CIENTIlC 2EVOLUTIONS WHEN A PARADIGM IS IN CRISIS
THERE ARE TWO RESPONSES /NE IS THAT FOLLOWED BY THE ADHERENTS OF
THE OLD 0TOLEMAIC PARADIGM WHICH WAS TO MAKE MORE AND MORE
COMPLICATED ADJUSTMENTS TO THEIR SYSTEM OF EXPLANATION UNTIL IT
BECAME TOO COMPLEX AND VIRTUALLY USELESS IN PROMOTING SCIENTIlC
ADVANCE 4HIS IS THE APPROACH TAKEN BY MOST OF THE PROPOSALS FOR
REFORM DISCUSSED ABOVE
4HE OTHER PATH WAS THAT TAKEN BY THE PARTISANS OF THE NEW
#OPERNICAN SYSTEM WHICH WAS TO BREAK AWAY COMPLETELY FROM
THE OLD PARADIGM AND WORK WITHIN THE PARAMETERS OF THE COM
PETING PARADIGM WHICH COULD NOT ONLY ACCOMMODATE DISSONANT
DATA IN A FAR MORE SIMPLE FASHION BUT ALSO POINT TO NEW EXCITING
PROBLEMS 4HIS IS THE DIRECTION PROPOSED IN THIS BOOK
)N CONTRAST TO SCIENCE HOWEVER BREAKING WITH THE PAST IS A
FAR MORE COMPLICATED AFFAIR WHEN IT COMES TO GLOBAL ECONOMIC
GOVERNANCE )N SOCIAL CHANGE NEW SYSTEMS CANNOT REALLY BE EFFECT
IVELY CONSTRUCTED WITHOUT WEAKENING THE HOLD OF OLD SYSTEMS
WHICH DO NOT TAKE FUNDAMENTAL CHALLENGES TO THEIR HEGEMONY
LIGHTLY ! CRISIS OF LEGITIMACY IS CRITICAL IN WEAKENING CURRENT
STRUCTURES BUT IT IS NOT ENOUGH ! VISION OF A NEW WORLD MAY
BE ENTRANCING BUT IT WILL REMAIN A VISION WITHOUT A HARD STRATEGY
£än i}L>â>Ì
FOR REALIZING IT AND PART OF THAT STRATEGY IS THE DELIBERATE DIS
MANTLING OF THE OLD
4HUS A STRATEGY OF DECONSTRUCTION MUST NECESSARILY PROCEED ALONG
SIDE ONE OF RECONSTRUCTION
iVÃÌÀÕVÌÊ
4HE BIG ANTI CORPORATE GLOBALIZATION DEMONSTRATIONS OF THE LAST
FEW YEARS HAVE BEEN RIGHT IN BRINGING UP THE STRATEGIC DEMAND
OF DISMANTLING THE 74/ AND THE "RETTON 7OODS INSTITUTIONS
!DVANCING THIS DEMAND AND GETTING MORE AND MORE PEOPLE BE
HIND IT HAS BEEN CENTRAL IN CREATING THE CRISIS OF LEGITIMACY OF
THESE INSTITUTIONS
4ACTICALLY HOWEVER IT WOULD BE IMPORTANT TO TRY TO BRING
COALITIONS TOGETHER ON MORE BROADLY ACCEPTABLE GOALS THE ACHIEVE
MENT OF WHICH CAN NEVERTHELESS HAVE A BIG IMPACT IN TERMS OF
DRASTICALLY REDUCING THE POWER OF THESE INSTITUTIONS OR EFFECTIVELY
NEUTERING THEM )N THE CASE OF THE )-& FOR INSTANCE A DEMAND
THAT HAS POTENTIAL TO UNITE A BROAD FRONT OF PEOPLE IS THAT OF CON
VERTING IT INTO A RESEARCH AGENCY WITH NO POLICY POWERS BUT ONE
TASKED WITH THE JOB OF MONITORING GLOBAL CAPITAL AND EXCHANGE
RATE MOVEMENTS n IN OTHER WORDS TURNING IT INTO AN ADVISORY
AND RESEARCH INSTITUTION ALONG THE LINES OF THE /RGANISATION FOR
%CONOMIC #O OPERATION AND $EVELOPMENT /%#$
)N THE CASE OF THE 7ORLD "ANK UNITING WITH THE DEMAND TO
END ITS LOAN MAKING CAPACITY AND DEVOLVING ITS GRANT ACTIVITIES
TO APPROPRIATE REGIONAL INSTITUTIONS MARKED BY PARTICIPATORY PRO
CESSES WHICH WOULD ELIMINATE THE !SIAN $EVELOPMENT AND OTHER
EXISTING REGIONAL DEVELOPMENT BANKS AS ALTERNATIVES COULD SERVE
AS A POINT OF UNITY FOR DIVERSE POLITICAL FORCES AND BE A MAJOR
STEP TO EFFECTIVELY DISEMPOWERING IT 4HESE INITIATIVES COULD BE
CO ORDINATED WITH CAMPAIGNS TO BOYCOTT 7ORLD "ANK BONDS DENY
NEW APPROPRIATIONS FOR THE )NTERNATIONAL $EVELOPMENT !SSOCI
ATION )$! AND OPPOSE CALLS FOR QUOTA INCREASES FOR THE )-&
5NLIKE THE 3OROS APPROACH THE THRUST OF THIS MULTI DIMENSIONAL
/ iÊÌiÀ>ÌÛi £ä
EFFORT WOULD BE NOT ONE OF REFORMING BUT DRASTICALLY SHRINKING
THE POWER AND JURISDICTION OF THE "RETTON 7OODS INSTITUTIONS
'IVEN ITS CENTRALITY AND UNIQUE CHARACTERISTICS AS A GLOBAL IN
STITUTION HOWEVER IT IS THE 74/ THAT MUST BE THE MAIN TARGET OF
THE DECONSTRUCTION ENTERPRISE )T IS ESPECIALLY CRITICAL IN THE PERIOD
LEADING UP THE &IFTH -INISTERIAL -EETING OF THIS MOST POWERFUL
OF THE MULTILATERAL AGENCIES OF GLOBAL GOVERNANCE
4HE STRATEGY OF THE DECONSTRUCTION ENTERPRISE MUST RESPOND TO
THE NEEDS OF THE MOMENT IN THE STRUGGLE AGAINST CORPORATE
DRIVEN
GLOBALIZATION 4HIS CAN BE DERIVED ONLY BY IDENTIFYING THE STRATEGIC
OBJECTIVE ACCURATELY ASSESSING THE GLOBAL CONTEXT OR CONJUNCTURE
AND ELABORATING AN EFFECTIVE STRATEGY AND TACTICAL REPERTOIRE THAT
RESPONDS TO THE PARTICULARITIES OF THE CONJUNCTURE
&OR THE MOVEMENT AGAINST CORPORATE
DRIVEN GLOBALIZATION IT
SEEMS FAIRLY CLEAR THAT THE STRATEGIC GOAL MUST BE HALTING OR REVER
SING 74/
MANDATED LIBERALIZATION IN TRADE AND TRADE
RELATED
AREAS 4HE CONTEXT OR @CONJUNCTURE IS CHARACTERIZED BY A FRAGILE
VICTORY ON THE PART OF THE FREE TRADE GLOBALIZERS AT THE &OURTH
-INISTERIAL AT $OHA WHERE THEY BLUDGEONED DEVELOPING COUNTRIES
INTO AGREEING TO A LIMITED ROUND OF TRADE TALKS FOR MORE LIBERALIZA
TION ON AGRICULTURE SERVICES AND INDUSTRIAL TARIFFS 4HE CONJUNCTURE
IS MARKED BY THE GLOBALIZERS EFFORT TO BUILD MOMENTUM SO AS
TO HAVE THE &IFTH -INISTERIAL IN -EXICO LAUNCH NEGOTIATIONS FOR
LIBERALIZATION IN THE SO
CALLED TRADE
RELATED AREAS OF INVESTMENT
COMPETITION POLICY GOVERNMENT PROCUREMENT AND TRADE FACILITA
TION 4HEIR AIM IS TO HAVE THE &IFTH -INISTERIAL EXPAND THE LIMITED SET
OF NEGOTIATIONS THEY EXTRACTED AT $OHA INTO A COMPREHENSIVE ROUND OF
NEGOTIATIONS THAT WOULD RIVAL THE 5RUGUAY 2OUND
4HIS EXPANSION OF THE FREE TRADE MANDATE AND THE EXPANSION
OF THE POWER AND JURISDICTION OF THE 74/ WHICH IS NOW THE
MOST POWERFUL MULTILATERAL INSTRUMENT OF THE GLOBAL CORPORATIONS
IS A MORTAL THREAT TO DEVELOPMENT SOCIAL JUSTICE AND EQUITY AND
THE ENVIRONMENT !ND IT IS THE GOAL THAT WE MUST THWART AT ALL
COSTS FOR WE MIGHT AS WELL KISS GOODBYE TO SUSTAINABLE DEVELOP
MENT SOCIAL JUSTICE EQUITY AND THE ENVIRONMENT IF THE BIG TRADING
££ä i}L>â>Ì
POWERS AND THEIR CORPORATE ELITES HAVE THEIR WAY AND LAUNCH
ANOTHER GLOBAL ROUND FOR LIBERALIZATION DURING THE 74/S &IFTH
-INISTERIAL !SSEMBLY IN -EXICO IN
'IVEN THE STRATEGIC GOAL OF STOPPING AND REVERSING TRADE LIBERAL
IZATION THE CAMPAIGN OBJECTIVE ON WHICH THE MOVEMENT AGAINST
CORPORATE
DRIVEN GLOBALIZATION MUST FOCUS ITS EFFORTS AND ENERGIES
IS SIMPLE AND STARK DERAILING THE DRIVE FOR FREE TRADE AT THE &IFTH
-INISTERIAL WHICH WILL SERVE AS THE KEY GLOBAL MECHANISM FOR
ADVANCING FREE TRADE
!S NOTED EARLIER THE FREE TRADE PARTISAN # &RED "ERGSTEN HEAD
OF THE )NSTITUTE OF )NTERNATIONAL %CONOMICS ))% HAS COMPARED
FREE TRADE AND THE 74/ TO A BICYCLE THEY COLLAPSE IF THEY DO NOT
MOVE FORWARD 7HICH IS WHY 3EATTLE WAS SUCH A MORTAL THREAT TO
THE 74/ AND WHY THE GLOBALIZERS WERE SO DETERMINED TO EXTRACT
A MANDATE FOR LIBERALIZATION AT $OHA (AD THEY FAILED AT $OHA THE
LIKELY PROSPECT WAS NOT SIMPLY A STALEMATE BUT A RETREAT FROM FREE
TRADE &OR THE MOVEMENT AGAINST CORPORATE
DRIVEN GLOBALIZATION
DERAILING THE &IFTH -INISTERIAL OR PREVENTING AGREEMENT ON THE
LAUNCHING OF A NEW COMPREHENSIVE ROUND WOULD MEAN NOT ONLY
lGHTING THE 74/ AND FREE TRADE TO A STANDSTILL )T WOULD MEAN
CREATING MOMENTUM FOR A ROLLBACK OF FREE TRADE AND A REDUCTION
OF THE POWER OF THE 74/ 4HIS IS WELL UNDERSTOOD BY AMONG
OTHERS 4HE %CONOMIST WHICH WARNED ITS CORPORATE READERS THAT
@GLOBALIZATION IS REVERSIBLE
)F DERAILING THE DRIVE FOR FREE TRADE AT THE TH -INISTERIAL IS
INDEED THE GOAL THEN THE MAIN TACTICAL FOCUS OF THE STRATEGY
BECOMES CLEAR CONSENSUS DECISION
MAKING IS THE !CHILLES HEEL OF THE
74/ AND IT IS THE EMERGENCE OF CONSENSUS THAT WE MUST PREVENT AT ALL
COSTS FROM EMERGING
"EFORE THE &IFTH -INISTERIAL THE ANTI
CORPORATE GLOBALIZATION
MOVEMENT MUST FOCUS ITS ENERGY ON ENSURING THAT COUNTRIES DO NOT
COME INTO AGREEMENT IN ANY OF THE AREAS NOW BEING NEGOTIATED OR
ABOUT TO BE NEGOTIATED THAT IS AGRICULTURE SERVICES AND INDUSTRIAL
TARIFFS AND AT THE -INISTERIAL ITSELF PREVENTING ANY CONSENSUS FROM
EMERGING ON NEGOTIATING THE NEW ISSUES OF GOVERNMENT PROCURE
/
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MENT COMPETITION POLICY INVESTMENT AND TRADE FACILITATION 4HE
AIM MUST BE AS IN 3EATTLE TO HAVE THE DELEGATES GO TO THE -IN
ISTERIAL WITH A @HEAVILY BRACKETED DECLARATION n THAT IS ONE WHERE
THERE IS NO CONSENSUS ON THE KEY ISSUES n AND AT THE -INISTERIAL
ITSELF TO PREVENT CONSENSUS VIA LAST MINUTE HORSE TRADING !S IN
3EATTLE THE END GOAL MUST BE TO HAVE THE -INISTERIAL END IN DISAGREEMENT
AND LACK OF CONSENSUS
)F THE GOAL IS UNHINGING THE GAME PLAN FOR GREATER FREE TRADE
AT THE &IFTH -INISTERIAL THEN THE ANTI CORPORATE GLOBALIZATION
MOVEMENT HAS ITS WORK CUT OUT FOR IT 7E MUST UNFOLD A MULTI
PRONGED STRATEGY WHOSE COMPONENTS MUST INCLUDE
s UNRAVELLING THE ALLIANCE BETWEEN 53 4RADE 2EPRESENTATIVE 2OB
ERT :OELLICK AND %5 4RADE #OMMISSIONER 0ASCAL ,AMY BY
EXACERBATING THE 53n%5 CONmICT ON %UROPES AGRICULTURAL SUB
SIDIES THE "USH ADMINISTRATIONS FAILURE TO OBTAIN UNRESTRICTED
FAST TRACK AUTHORITY TO NEGOTIATE FROM THE 53!S 3ENATE 7ASH
INGTONS IMPOSITION OF PROTECTIVE TARIFFS ON STEEL AND ITS RESUR
GENT TRADE UNILATERALISM AND THE 53 EXPORT OF HORMONE TREATED
BEEF AND GENETICALLY MODIlED ORGANISMS '-/S
s INTENSIFYING OUR EFFORTS TO ASSIST DEVELOPING COUNTRY DELEGATIONS
IN 'ENEVA TO MASTER THE 74/ PROCESS AND FORMULATE EFFECTIVE
STRATEGIES TO BLOCK THE EMERGENCE OF CONSENSUS ON THE AREAS
PRIORITIZED BY THE TRADING POWERS AND REASSERT THE PRIORITY OF
IMPLEMENTATION ISSUES
s WORKING WITH NATIONAL MOVEMENTS SUCH AS PEASANT MOVEMENTS
FOR FOOD SOVEREIGNTY IN THE 3OUTH AND CITIZENS MOVEMENTS IN
THE .ORTH TO BUILD MASSIVE PRESSURE ON THEIR GOVERNMENTS NOT
TO AGREE TO FURTHER LIBERALIZATION IN AGRICULTURE SERVICES AND
OTHER AREAS BEING NEGOTIATED
s SKILFULLY CO ORDINATING GLOBAL PROTESTS MASS STREET ACTION AT THE
SITE OF THE MINISTERIAL AND LOBBY WORK IN 'ENEVA TO CREATE
A GLOBAL CRITICAL MASS WITH MOMENTUM IN THE LEAD UP TO THE
MINISTERIAL
4HE TASK IS IMMENSE AND WE HAVE SO LITTLE TIME "UT WE HAVE
££Ó i}L>â>Ì
NO CHOICE 4HE TRADING POWERS AND THE 74/ LEARNED FROM 3EATTLE
AND THEY BROUGHT THE BICYCLE OF THE 74/ BACK ON ITS WHEELS IN
$OHA ,IKEWISE WE MUST LEARN FROM $OHA SO THAT WE CAN WRESTLE
THE BICYCLE BACK TO THE GROUND IN -EXICO !ND AMONG THE KEY
LESSONS WE NEED TO ABSORB IS THAT OUR COALITION MUST HAVE A CO
ORDINATED STRATEGY THAT BRINGS OUR WORK ON MANY DIFFERENT FRONTS
LEVELS AND DIMENSIONS TO BEAR ON ONE GOAL UNHINGING THE DRIVE
FOR FREE TRADE AT THE &IFTH -INISTERIAL
i}L>â}ÊÊ>Ê*ÕÀ>ÃÌÊ7À`
(AND IN HAND WITH THE DECONSTRUCTION CAMPAIGN MUST UNFOLD THE
RECONSTRUCTION PROCESS OR THE ENTERPRISE TO SET UP AN ALTERNATIVE
SYSTEM OF GLOBAL GOVERNANCE
4HERE IS A CRYING NEED FOR AN ALTERNATIVE SYSTEM OF GLOBAL
GOVERNANCE 4HE IDEA IS mOATING AROUND THAT THINKING ABOUT AN
ALTERNATIVE SYSTEM OF GLOBAL GOVERNANCE IS A TASK THAT FOR THE MOST
PART IS STILL IN A PRIMEVAL STATE )N FACT MANY OR MOST OF THE BASIC
OR BROAD PRINCIPLES FOR AN ALTERNATIVE ORDER HAVE ALREADY BEEN
ARTICULATED AND IT IS REALLY A QUESTION OF SPECIFYING THESE BROAD PRINCIPLES
TO CONCRETE SOCIETIES IN WAYS THAT RESPECT THE DIVERSITY OF SOCIETIES
7ORK ON ALTERNATIVES HAS BEEN A COLLECTIVE PAST AND PRESENT
EFFORT ONE TO WHICH MANY IN THE .ORTH AND 3OUTH HAVE CONTRI
BUTED 4HE KEY POINTS OF THIS COLLECTIVE EFFORT MIGHT BE SYNTHE
SIZED AS A DOUBLE MOVEMENT OF @DEGLOBALIZATION OF THE NATIONAL
ECONOMY AND THE CONSTRUCTION OF A @PLURALIST SYSTEM OF GLOBAL
ECONOMIC GOVERNANCE
4HE CONTEXT FOR THE DISCUSSION OF DEGLOBALIZATION IS THE IN
CREASING EVIDENCE NOT ONLY OF THE POVERTY INEQUALITY AND STAGNA
TION THAT HAVE ACCOMPANIED THE SPREAD OF GLOBALIZED SYSTEMS OF
PRODUCTION BUT ALSO OF THEIR UNSUSTAINABILITY AND FRAGILITY 4HE
)NTERNATIONAL &ORUM ON 'LOBALIZATION )&' POINTS OUT FOR IN
STANCE THAT
THE AVERAGE PLATE OF FOOD EATEN IN WESTERN INDUSTRIAL FOOD
IMPORT
/
iÊÌiÀ>ÌÛi ££Î
ING NATIONS IS LIKELY TO HAVE TRAVELLED MILES FROM SOURCE TO
PLATE %ACH ONE OF THOSE MILES CONTRIBUTES TO THE ENVIRONMENTAL
AND SOCIAL CRISES OF OUR TIMES 3HORTENING THE DISTANCE BETWEEN
PRODUCER AND CONSUMER HAS TO BE ONE OF THE CRUCIAL REFORM GOALS
OF ANY TRANSITION AWAY FROM INDUSTRIAL AGRICULTURE
/R AS "ARRY ,YNN HAS ASSERTED SO MUCH INDUSTRIAL PRODUCTION
HAS BEEN OUTSOURCED TO A FEW AREAS SUCH AS 4AIWAN THAT HAD THE
EARTHQUAKE OF 3EPTEMBER EXPERIENCED BY THAT ISLAND
BEEN @A FEW TENTHS OF A POINT STRONGER OR CENTERED A FEW MILES
CLOSER TO THE VITAL (SINCHU INDUSTRIAL PARK GREAT SWATHS OF THE
WORLD ECONOMY COULD HAVE BEEN PARALYZED FOR MONTHS
7HAT IS DEGLOBALIZATION 7HILE THE FOLLOWING PROPOSAL IS DE
RIVED PRINCIPALLY FROM THE EXPERIENCE OF SOCIETIES IN THE 3OUTH IT
HAS RELEVANCE AS WELL TO THE ECONOMIES OF THE .ORTH
$EGLOBALIZATION IS NOT ABOUT WITHDRAWING FROM THE INTER
NATIONAL ECONOMY )T IS ABOUT REORIENTING ECONOMIES FROM THE
EMPHASIS ON PRODUCTION FOR EXPORT TO PRODUCTION FOR THE LOCAL
MARKET
s DRAWING MOST OF A COUNTRYS lNANCIAL RESOURCES FOR DEVELOP
MENT FROM WITHIN RATHER THAN BECOMING DEPENDENT ON FOREIGN
INVESTMENT AND FOREIGN lNANCIAL MARKETS
s CARRYING OUT THE LONG
POSTPONED MEASURES OF INCOME REDISTRI
BUTION AND LAND REDISTRIBUTION TO CREATE A VIBRANT INTERNAL
MARKET THAT WOULD BE THE ANCHOR OF THE ECONOMY AND CREATE
THE lNANCIAL RESOURCES FOR INVESTMENT
s DE
EMPHASIZING GROWTH AND MAXIMIZING EQUITY IN ORDER RAD
ICALLY TO REDUCE ENVIRONMENTAL DISEQUILIBRIUM
s NOT LEAVING STRATEGIC ECONOMIC DECISIONS TO THE MARKET BUT
MAKING THEM SUBJECT TO DEMOCRATIC CHOICE
s SUBJECTING THE PRIVATE SECTOR AND THE STATE TO CONSTANT MONITOR
ING BY CIVIL SOCIETY
s CREATING A NEW PRODUCTION AND EXCHANGE COMPLEX THAT IN
CLUDES COMMUNITY CO
OPERATIVES PRIVATE ENTERPRISES AND STATE
ENTERPRISES AND EXCLUDES 4.#S
££{ i}L>â>Ì
s ENSHRINING THE PRINCIPLE OF SUBSIDIARITY IN ECONOMIC LIFE BY
ENCOURAGING PRODUCTION OF GOODS TO TAKE PLACE AT THE COM
MUNITY AND NATIONAL LEVEL IF IT CAN BE DONE AT REASONABLE COST
IN ORDER TO PRESERVE COMMUNITY
4HIS IS MOREOVER ABOUT AN APPROACH THAT CONSCIOUSLY SUB
ORDINATES THE LOGIC OF THE MARKET THE PURSUIT OF COST EFlCIENCY TO
THE VALUES OF SECURITY EQUITY AND SOCIAL SOLIDARITY 4HIS IS TO USE
THE LANGUAGE OF THE GREAT SOCIAL DEMOCRATIC SCHOLAR +ARL 0OLANYI
ABOUT RE EMBEDDING THE ECONOMY IN SOCIETY RATHER THAN HAVING
SOCIETY DRIVEN BY THE ECONOMY
4RUE EFlCIENCY IN THE NARROW TERMS OF CONSTANT REDUCTION OF
UNIT COSTS MAY WELL SUFFER BUT WHAT WILL BE GAINED n OR PERHAPS
THE MOST APPROPRIATE TERM IS REGAINED n ARE THE CONDITIONS FOR
THE DEVELOPMENT OF INTEGRITY SOLIDARITY COMMUNITY GREATER AND
MORE DEMOCRACY AND SUSTAINABILITY
)T IS THESE PRINCIPLES THAT TODAY DRIVE MANY BOLD ENTERPRISES THAT
HAVE ACHIEVED SOME SUCCESS MAINLY AT A LOCAL COMMUNITY LEVEL
!S +EVIN $ANAHER OF 'LOBAL %XCHANGE HAS POINTED OUT THE LIST
INCLUDES FAIR TRADE ARRANGEMENTS BETWEEN 3OUTHERN FARMERS AND
.ORTHERN CONSUMERS IN COFFEE AND OTHER COMMODITIES MICRO
CREDIT SCHEMES SUCH AS THE 'RAMEEN "ANK COMMUNITY CURRENCY
SYSTEMS DELINKING EXCHANGE FROM GLOBAL AND NATIONAL MONETARY
SYSTEMS AND LINKING IT TO LOCAL PRODUCTION AND CONSUMPTION
PARTICIPATORY BUDGETING AS IN 0ORTO !LEGRE AND SUSTAINABLE ECO
COMMUNITIES SUCH AS 'AVIOTAS IN #OLOMBIA
4HE REIGNING GOD HOWEVER IS A JEALOUS ONE THAT WILL NOT TAKE
LIGHTLY CHALLENGES TO ITS HEGEMONY %VEN THE SMALLEST EXPERIMENT
MUST EITHER BE SMASHED OR EMASCULATED AS THE IMPERIOUS "ANK
OF 4HAILAND DID WHEN IT TOLD SEVERAL VILLAGES IN THE +UD #HUM
DISTRICT IN 4HAILANDS .ORTHEAST REGION TO ABANDON THEIR LOCAL
CURRENCY SYSTEM 0EACEFUL CO EXISTENCE BETWEEN DIFFERENT SYSTEMS
IS UNFORTUNATELY ULTIMATELY NOT AN OPTION
4HUS DEGLOBALIZATION OR THE RE EMPOWERMENT OF THE LOCAL AND NATIONAL
HOWEVER CAN ONLY SUCCEED IF IT TAKES PLACE WITHIN AN ALTERNATIVE SYSTEM OF
/ iÊÌiÀ>ÌÛi ££x
GLOBAL ECONOMIC GOVERNANCE 4HE EMERGENCE OF SUCH A SYSTEM IS OF
COURSE DEPENDENT ON GREATLY REDUCING THE POWER OF THE 7ESTERN
CORPORATIONS THAT ARE THE MAIN DRIVERS OF GLOBALIZATION AND THE
POLITICAL AND MILITARY HEGEMONY OF THE STATES n PARTICULARLY THE
5NITED 3TATES n THAT PROTECT THEM "UT EVEN AS WE DEVISE STRATE
GIES TO ERODE THE POWER OF THE CORPORATIONS AND THE DOMINANT
STATES WE NEED TO ENVISION AND ALREADY LAY THE GROUNDWORK FOR
AN ALTERNATIVE SYSTEM OF GLOBAL ECONOMIC GOVERNANCE
7HAT ARE THE CONTOURS OF SUCH A WORLD ECONOMIC ORDER 4HE
ANSWER TO THIS IS SUGGESTED BY OUR CRITIQUE OF THE "RETTON 7OODS
CUM
74/ SYSTEM AS A MONOLITHIC SYSTEM OF UNIVERSAL RULES
IMPOSED BY HIGHLY CENTRALIZED INSTITUTIONS TO FURTHER THE INTERESTS
OF CORPORATIONS n AND IN PARTICULAR 53 CORPORATIONS 4O TRY TO
SUPPLANT THIS WITH ANOTHER CENTRALIZED GLOBAL SYSTEM OF RULES AND
INSTITUTIONS ALTHOUGH THESE MAY BE PREMISED ON DIFFERENT PRIN
CIPLES IS LIKELY TO REPRODUCE THE SAME *URASSIC TRAP THAT ENSNARED
ORGANIZATIONS AS DIFFERENT AS )"- THE )-& AND THE 3OVIET STATE AND
THIS IS THE INABILITY TO TOLERATE AND PROlT FROM DIVERSITY )NCIDENTALLY
THE IDEA THAT THE NEED FOR ONE CENTRAL SET OF GLOBAL RULES IS UNQUES
TIONABLE AND THAT THE CHALLENGE IS TO REPLACE THE NEOLIBERAL RULES
WITH SOCIAL DEMOCRATIC ONES IS A REMNANT OF A TECHNO
OPTIMIST
VARIANT OF -ARXISM THAT INFUSES BOTH THE 3OCIAL $EMOCRATIC AND
,ENINIST VISIONS OF THE WORLD PRODUCING WHAT )NDIAN AUTHOR
!RUNDHATI 2OY CALLS THE PREDILECTION FOR @GIGANTISM
4ODAYS NEED IS NOT ANOTHER CENTRALIZED GLOBAL INSTITUTION BUT
THE DECONCENTRATION AND DECENTRALIZATION OF INSTITUTIONAL POWER
AND THE CREATION OF A PLURALISTIC SYSTEM OF INSTITUTIONS AND ORGANIZA
TIONS INTERACTING WITH ONE ANOTHER GUIDED BY BROAD AND mEXIBLE
AGREEMENTS AND UNDERSTANDINGS
4HIS IS NOT SOMETHING COMPLETELY NEW &OR IT WAS UNDER SUCH
A MORE PLURALISTIC SYSTEM OF GLOBAL ECONOMIC GOVERNANCE WHERE
HEGEMONIC POWER WAS STILL FAR FROM INSTITUTIONALIZED IN A SET OF
ALL
ENCOMPASSING AND POWERFUL MULTILATERAL ORGANIZATIONS AND IN
STITUTIONS THAT A NUMBER OF ,ATIN !MERICAN AND !SIAN COUNTRIES
WERE ABLE TO ACHIEVE A MODICUM OF INDUSTRIAL DEVELOPMENT IN THE
££È i}L>â>Ì
PERIOD FROM TO )T WAS UNDER SUCH A PLURALISTIC SYSTEM
UNDER A 'ENERAL !GREEMENT ON 4ARIFFS AND 4RADE '!44 THAT
WAS LIMITED IN ITS POWER mEXIBLE AND MORE SYMPATHETIC TO THE
SPECIAL STATUS OF DEVELOPING COUNTRIES THAT THE %AST AND 3OUTH
EAST !SIAN COUNTRIES WERE ABLE TO BECOME NEWLY INDUSTRIALIZING
COUNTRIES THROUGH ACTIVIST STATE TRADE AND INDUSTRIAL POLICIES THAT
DEPARTED SIGNIlCANTLY FROM THE FREE MARKET BIASES ENSHRINED IN
THE 74/
/F COURSE ECONOMIC RELATIONS AMONG COUNTRIES PRIOR TO THE
ATTEMPT TO INSTITUTIONALIZE ONE GLOBAL FREE MARKET SYSTEM BEGIN
NING IN THE EARLY S WERE NOT IDEAL NOR WERE THE 4HIRD 7ORLD
ECONOMIES THAT RESULTED IDEAL 4HEY FAILED TO ADDRESS A NUMBER
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