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Squeezing the South: 50 Years Is Enough

Montserrat’s not going to get a toxic waste dump. At least not yet. You might well ask why this tiny Caribbean island, the Emerald Isle of the Leewards, would even consider letting a US toxic waste dumping company set up shop in the first place. Montserrat, one of the last British colonies, is just 21 kilometres long by a couple of kilometres wide. Except where the goats have played havoc with the vegetation it is a lustrous green most of the year. Tourism of a quiet and mostly unobtrusive sort is the main foreign-exchange earner. Not a good mix with toxic waste, one would have thought.

That’s exactly what most Montserratians felt when they heard that local politicians had been in intense negotiations for over a year with a US multinational named, with typical euphemistic panache, Energy Processing and Supply. Opposition quickly mounted. A local doctor wrote a scathing critique in the island paper where he drew a vivid picture of cruise ships emptying passengers among the toxic-waste drums on the docks of the island’s capital, Plymouth.1

This is a small story about a small place but it illustrates the inexorable pull and push that draws the countries of the Third World into the global economy – no matter what the costs to their people and eco-systems. The pull is obvious enough: the American Dream bounced off TV satellites into the most modest of homes in surprisingly remote corners of the Third World. The push is more complicated: a subtle combination of budget and trade deficits, and debt obligations. But together this lends a seemingly unstoppable momentum to the race to get as big a slice as possible of the illusive global economic pie.

This momentum is exactly what the Bretton Woods Conference held 50 years ago this month was all about. When the world leaders gathered in that fashionable old resort hotel deep in the hill country of New Hampshire their agenda was clear: they aimed to bury forever the nationalistic protectionism they saw as the main culprit in creating the Great Depression of the 1930s. To do this they put in place the pillars of a global economy where borders were to be as porous as possible to goods and capital from anywhere in the world. As part of the design they set up two key institutions, the International Monetary Fund (IMF) and the World Bank, to deal with problems that might lead governments to inward-looking economic policies. This was followed shortly by another organization, the General Agreementon on Tariffs and Trade (GATT), which set the rules and pressures for open economies and free trade. Together with the regional development banks these are collectively known as the IFIs, an acronym for international financial institutions.

These were not neutral economic mechanisms set up to co-ordinate the world economy: they contained a powerful bias in favour of global competition and corporate enterprise. There were warnings of problems ahead from a few discordant voices, the most prominent of which was the eminent British economist John Maynard Keynes. He advocated a balanced world trade system in which surpluses and deficits would not be allowed to accumulate and there would be strict controls on the movement of capital across borders. He held that the free movement of all goods and capital, advocated most powerfully by the US delegation, would inevitably lead to inequalities and instabilities.

Costs of globalism
From the standpoint of 1994 these warnings seem all too prescient. Today budget and trade deficits plague most countries in the world. The debt load on all governments, but particularly those of the Third World, has crippled their fiscal capacity to look after their citizens. Capital moves so freely that it is often impossible for governments to find, let alone tax. Corporations treat the world like a global chessboard bidding down wages and taxes, avoiding environmental regulation and pillaging natural resources. Their right to do this is no longer even considered controversial. They are courted by politicians of all political stripes. The stability of communities from rural Zambia to Bangladesh and even the decaying rust-belts of the US heartland or the British Midlands are casually undermined by processes that appear ‘natural’ but were in fact carefully constructed at Bretton Woods.

Abandoned factories and children who make a living on the street seem light years away from that magnificent temple to money, the IMF building on 19th Street in downtown Washington. At the IMF it isn’t easy to get past security. It seems like 5 per cent of black Washingtonians are employed to keep the other 95 per cent out of such white inner sanctums. If you are curious about the IMF you will be directed to the well-appointed Vistors’ Centre complete with art gallery just next door. There, if you are interested enough (few were the rainy December afternoon I showed up) you will be shown a video tellingly entitled One World, One Economy. It’s a choice piece of propaganda for a globalist worldview that doesn’t really seem to need propagandizing any more, becoming as it has the common sense of our age for most economists and politicians. In the video a parade of besuited, mostly white men lecture on the merits of IMF medicine for ailing economies. It has some real classics of understatement such as ‘While the Fund cannot force its members, the Fund’s suggestions are taken seriously.’ A parade of faces of colour speak gratefully about the wisdom of IMF policies in their countries.

The debt crisis of the 1980s which really gave the IMF and the World Bank (the huge hulk on the other side of 19th street) leverage over desperate Third World economies is referred to mildly: ‘A workable solution was required to avoid defaults that would severely damage debtor countries, as well as financial institutions’. The solution, structural-adjustment programs or SAPs, proved a lot more ‘workable’ for the big international banks who got their interest payments than it did for the laid-off public-sector workers of Latin America or for the African families who can no longer send their kids to school because of SAP-related ‘user-fees’. These ordinary people were the ones who had to do the ‘adjusting’. This issue contains two articles – by Ayesha Imam on Africa and Mark Fried on Latin America – who provide chapter and verse on the human and environmental costs of structural adjustment.

When the dust had settled, the ‘short-term pain’ of the SAPs had not got rid of the debt: total Third World debt actually shot up from $751 billion in 1981 to $1,355 billion in 1990. What it had done was to pry open Southern economies to the world market. The formula was deceptively simple: international competition would result in growth that would be good for everyone. And this glittering promise of the global economy remains for most policy-makers, North and South, the only game in town.

But growth has proved elusive. There has been significant economic growth in some adjusting Latin American and Asian countries and new élites have profited handsomely from the privatizing of public industries. But for every South Korean success story there are dozens of unmitigated failures such as the Ivory Coast and Venezuela where absolute destitution has sky-rocketed. A recent World Bank study, Adjustment in Africa, which makes great claims about the success of SAPs on the continent, is so full of holes that the usually restrained British agency OXFAM-UK was forced to characterize it as ‘a blend of half-truths, over-simplifications and institutional propaganda’.

But if the grand architects of Bretton Woods have through their design managed to defeat 1930s-style protectionism they have been less successful with that other scourge of the Depression, unemployment. While total world output has doubled since 1975, employment has actually declined.2 The global economy with its emphasis on reducing labour costs and on currency or property speculation does not put a high priority on providing sustainable livelihoods. An underlying assumption of the growth economy is that Northern-style overconsumption can be achieved by every society on the globe. Only recently has attention started to be paid to the ecological impact of such a design.

Those who speak for the IFIs are genuinely puzzled when the Bretton Woods institutions are blamed for such problems. They are simply messengers pointing out the obvious: dispensing the advice necessary to survive the rigours of the global economy. They point to their limited budgets, a few billion dollars and a few thousand personnel, when an estimated trillion dollars crosses borders every day in response to the slightest change in currency and interest rates. They point to their minimal influence over the industrial North and even the larger Third World governments like those of China and India.

Poor pay the piper
But the role of these institutions cannot be reduced to their budgets. They help create and maintain the rules for the global economy. They sustain its momentum and make sure that any alternative vision proves impractical and unworkable. The lack of their ‘stamp of approval’ makes it virtually certain that freethinkers like Sandinista Nicaragua will be starved of capital and subjected to rigorous external pressure. If problems occur such as the 1980s debt crisis, the IFIs guarantee that any resolution will respect the interests of Northern fund managers and banks first. The price will be paid in the shantytowns of Lima and on the family farms of Uganda. In Africa the IFIs have taken over the bulk of public debt and now directly wring payments out of enfeebled African economies. As a result both the World Bank and the IMF now take more out of the Third World in repayments (even from the poorest countries) than they provide in new finance.

Nobody talks about a debt crisis any more, but while it no longer endangers world financial institutions it is still very much a crisis for those who have to pay. Along with the opening up of Third World economies, this transfer of the debt burden from the rich to the poor has been the IFIs’ greatest triumph. Their greatest failure has been in delivering the orderly world financial system that Bretton Woods promised. Narrow technocratic thinking and cynical power politics have put short-term gain ahead of stability. Public finance the world over is in a mess. Private wealth and public squalor are the order of the day. It is written right into the World Bank’s constitution that it cannot fund projects that compete with private enterprise. The IFIs have exerted consistent pressure to minimize state involvement in economic life from Bogota to Bangkok. This despite the clear evidence that the development success stories of Asia (Taiwan, South Korea, Malaysia and Thailand) have all involved strong government intervention to order society, protect the domestic economy and promote growth.

The irony is that in many ways the IFIs show the same weaknesses they criticize in government bureaucracies. Their bloated and privileged staffs resemble more the command economies of old-style Communism than the lean mean private sector they celebrate. While they lionize risk-takers there are no risks attached to an IFI loan: a government (or rather its benighted citizens) has to pay it back no matter how wasteful or ill-considered it was in the first place. The distance between an IFI head of mission who lives in a comfortable Virginia suburb and a hard-pressed Argentinian pensioner or a mother in Benin struggling to keep her family alive is just too great. Staffers are too well insulated from the effects of their own advice.

The IFIs’ single-minded insistence on an export-driven growth formula also shows the weakness of centralized economic decision-making. Whether we are talking about huge transnational corporations, over-ambitious state planning or the global economic management ambitions of the IFIs, wasteful diseconomies of scale are inevitable. The IFIs’ loan portfolio is a prime example. It leans towards big loans for big projects such as dams or port facilities that will ‘aid international competitiveness’. It is a lot easier to manage one big loan than a lot of little ones. Unfortunately experiences like those of the Grameen Bank in Bangladesh and its support for micro-enterprises shows that it is many small loans that work best in spreading economic benefits.

The research and on-the-ground experience which shows this is conveniently ignored. Small loans usually don’t build up a country’s capacity to earn foreign exchange and therefore don’t help pay off debt. But more exports don’t necessarily help either. Producing more of a cash crop tends simultaneously to lower its price on the world market. This has cancelled out any significant gains for five of Africa’s main exports.3

Killing the alternatives
The message echoing down the decades from those heady days in New Hampshire is always the same: ‘there is no choice’. GATT has set the rules for the global economy and the IFIs must enforce them. The slash-and-burn economic policies adopted both South and North are the only way forward. Economies have to compete on the world market no matter what the human costs. There is simply no alternative.

This is of course the big lie. State socialism has collapsed, but that was never the only and certainly not the best alternative to global capitalism. There is a rich vein of alternative economic initiatives and ideas: co-operatives, self-managed enterprises, various mixes of private and public sector, eco-development, ideas for a diversified regional and community-based economics, innovations in planning the economies of cities, fresh approaches to taxation, and blueprints for converting military production to basic needs. In each of these alternatives the people affected would have more power over decisions and the health of the environment would weigh heavier in economic calculations.

Small may be both beautiful and possible but the decisions taken at Bretton Woods make it unlikely. After all why waste time and resources trying to do things differently when you can earn good foreign exchange from toxic waste dumps, exporting weapons, depleting your natural resources and letting transnationals exploit your workers?

There is another less discussed cost of a global economy directed by those who control international capital. Gradually democracy itself is slipping through our fingers. Today it hardly matters if a finance minister comes from the Left or the Right if their main concern when preparing a budget is how the IMF and the money markets are going to react. Voters may support anti-SAP politicians as they have in Venezuela, Argentina and Brazil, but those who buy and sell government bonds and hold the national debt will see to it that SAPs get implemented anyway. But people and politics have proved a lot less malleable than economics to the IFIs’ designs for global management. In Eastern Europe structural adjustment has produced results inconceivable a couple of years ago: the political rehabilitation of the Left. In Hungary, Lithuania and Poland the Socialists have become the most popular political party.

A much more disturbing by-product of adjustment has been the stoking of anti-immigrant feeling and lifeboat ethics across the industrial world. The economic dislocations accompanying the IMF-encouraged market reforms in Russia and eastern Germany have helped set in motion a vicious nationalism based on race and violence; the fascist Right have been revived in both Rome and Berlin. These are just the kind of political developments Bretton Woods was intended to forestall.

It is in the Third World, however, that the breaking of glass and the explosion of tear-gas canisters have formed a recurrent soundtrack of protest. Enraged citizens from Cairo to Caracas are taking their insecurities about the global economy to the streets. At its worst this has led to authoritarian politics (the dictatorship of Alberto Fujimori in Peru) or political pathologies such as Islamic fundamentalism that reject not only the superficialities of Western materialism but most recognizable forms of democracy as well.

More promising is the emergence of ‘internationalism from below’ as networks of activists from North and South come together to expose the impact on livelihoods and environment behind the globalist cant. Organizations have sprung up on every continent and in any country that allows them the political space to operate. So far the main activity of these networks has been to challenge the priorities of the export-driven growth model of development. They have been in the forefront of opposing the structural-adjustment policies of the IFIs. It is this ‘internationalism from below’ which has put the reconsideration of the decisions and institutions of Bretton Woods on the agenda. For them 50 years is enough!

To have real effect, however, this citizens’ movement needs to move beyond opposition to proposition. Grassroots organizations the world over are seeking an economics driven by community need rather than export opportunities. Strategies will vary, but the emerging common thread is the rejection of the grand designs and globalist illusions of Bretton Woods as undemocratic and anti-ecological. Bretton Woods stands as a cement block in the path of rethinking what a peaceful and sustainable world might look like. The words of singer Jackson Browne could be directly addressed to the eminent group pictured below: ‘Boys, boys, this world is not your toy. This world is long on hunger. This world is short on joy.’

1. The Montserrat Reporter, 14/1/94
2. Mahbub Ul Haq, Bretton Woods Institutions: The Vision and the Reality, North – South Roundtable, Bretton Woods, New Hampshire.
3. Salim Lone, Troubled Adjustment Efforts, African Recovery, UN , Vol. 7 no.3/4.


Worldbeaters... Robert Mugabe

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Robert Mugabe has an impatient, authoritarian streak. When local reporters last year questioned his decision to intervene militarily in the Democratic Republic of the Congo (DRC) they were whisked off to prison, beaten and tortured.
Robert Mugabe

Photo: Camera Press Let's give the old man credit. Robert Gabriel Mugabe, lapsed-Marxist, victorious guerrilla fighter and African statesman, is now 76 years old. When he and his armed supporters finally ousted the nasty racist regime of Ian Smith in Rhodesia 20 years ago he did the world a favour. Smart and tough, he led the largest of three guerrilla forces during the bloody, decades-long independence war and was jailed for ten years without trial by Smith's government. The pugnacious Mugabe was a genuine people's hero.

At the war's end Mugabe negotiated the Lancaster House peace agreement, returning afterwards as President of the new Zimbabwe. The war was won with the support of the black peasant majority who make up nearly 70 per cent of the country's 12 million people. The justice of their case was never in question: whites were less than one per cent of the population yet owned nearly three-quarters of the best farmland.

Mugabe's promise to redistribute land to black farmers was the key to his support. But it wasn't easy to fulfill. The British Government tied his hands at Lancaster House, but worse was the economic collapse brought on by IMF structural-adjustment policies in the 1980s. His government became even more dependent on white farmers who produce most of the country's food and the majority of its cash-crop exports - especially tobacco.

As a result 4,400 white farmers still own more than half the country's best farmland. Promises to resettle a million people have come to naught. The state has bought more than 8.3 million acres of land from white farmers since 1980. But critics of the regime charge that much of it remains idle and that the best land has ended up in the hands of Mugabe's friends and comrades from 'liberation struggle' days. In fact charges of arrogance, brutality, corruption and incompetence have dogged Mugabe for decades.

Though he finally deleted all references to Marxism-Leninism from his country's constitution in 1991, he has never been shy of advocating the 'one-party state' - led of course by his own Zanu party. Initially he was forced to build a coalition with fellow guerrilla leader Joshua Nkomo and his Zapu forces, most of whom came from Matabeleland in the south. But when arms were found in Zapu-owned houses the portly Nkomo was dismissed and his supporters systematically brutalized and killed. Mugabe effectively has his one-party state: 147 of the country's 150 parliamentary seats are filled with Zanu politicians - although elections are pending.

As Mr Nkomo's fate may indicate, Robert Mugabe has an impatient, authoritarian streak. When local reporters last year questioned his decision to intervene militarily in the Democratic Republic of the Congo (DRC) they were whisked off to prison, beaten and tortured. Later, when the Supreme Court asked him to reaffirm the 'rule of law', Mugabe took to the airwaves in an hour-long tirade. He told the judges to resign and attacked white journalists and human-rights activists, vowing to take 'very stern measures' against them.

Tarnished reputation - Mugabe marries former secretary in 1996. Photographer unknown. Homosexuals have become another fixation for the devoutly Christian Mugabe. He has castigated gays as 'sodomists' and 'sexual perverts' and made 'unnatural sex acts' illegal with a penalty of up to ten years in prison. (His preachy moralism was somewhat tarnished when he married his former private secretary in 1996 with whom he had already fathered two children.)

But it is the blatant corruption of Mugabe's administration that ordinary Zimbabweans find so galling. Many of the plum bureaucratic jobs and government contracts have been handed out to his cronies in the armed forces. With predictable results: the Liberation War Veterans' Association recently said it would prefer a military government rather than see the opposition in power.

But Mugabe's costly armed intervention in the Congo has galvanized opposition to his rule and threatens to split the country. With unemployment over 70 per cent and inflation nudging 55 per cent the economic drain is taking its toll. The IMF recently shelved aid programmes worth $340 million as a result of what critics call a wasteful, colonial-style, military adventure.

Mind you, dabbling in the DRC will benefit Mugabe stalwarts among Zimbabwe's black business class. Copper concentrate from the Congo has already begun flowing south and the army recently announced that it is planning a joint venture with the DRC army, including diamond and gold dealing. Doubtless this will cement Mugabe's buddy-buddy ties with his military cronies.

Sources: Le Monde Diplomatique, Paris, June 1997; 'Government crack-down on civil society', Amnesty International news release, 8 February, 1999; Daily Mail & Guardian, Johannesburg, 5 November, 1999 & 17 March, 2000.

sense of humour

After a gay activist in London attempted a citizen's arrest of Mugabe, the wily elder statesman cranked up his anti-Brit rhetoric, accusing Tony Blair's 'gay gangster regime' of organizing the ambush to destabilize his government.

animal cunning
Mugabe is adept at playing the race card as and when it suits him. With elections approaching he engineered a land invasion of white farms by ex-combatants in an effort to curry favour with rural voters. This followed a humiliating rejection of his new draft constitution which would have given the state power to seize white farms without compensation. Corruption-sick voters wisely saw this as a green light for further enrichment of the governing élite.

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If there’s someone you think
deserves a thrashing, contact
[email protected]

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Dollar Doctrine

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Democracy / BUYING IT

Dollar doctrine
Frances Fox Piven and Richard A Cloward lift the
veil that separates democracy from economics.

Mass protests are inevitably noisy and cacophonous affairs, as different voices raise issues in different ways. But through the cacophony of the Seattle protests, certain strong and historically resonant themes emerge. For the protesters the inscrutable officials of the WTO with their extraordinary powers are usurpers of democratic rights. The charge strikes to the heart, and could well continue to galvanize protests around the globe.

Elites have always understood the threat of democracy. Writing in the wake of the passage of the Third Reform Bill which extended the franchise in nineteenth-century England, the historian JA Froude explained the dangers: 'It is one man, one vote. And as the poor and the ignorant are the majority, I think it is perfectly certain... that those who have the power will use it to bring about what they consider to be a more equitable distribution of the good things of this world.'

In the US democratic arrangements were the price paid for popular support in a successful colonial war against the mother country. Colonial élites were impatient with the commercial constraints imposed by ties with Britain. They raised the rallying cry of democracy to recruit an army of farmers, artisans and the urban poor. 'Faith ran high,' says Gary Wills, 'that a better world than any that had ever been known could be built where authority was distrusted and held in constant scrutiny.' When the war ended, these men were still fired up by the idea of democracy, and still armed. Under such conditions, the basic features of electoral representation were conceded early.

Illustration: Neal Cresswell But they were hedged in - at first by limitations on the franchise such as property or racial or literacy or gender qualifications, and later by procedural obstructions, such as onerous voter-registration systems and bans on threatening forms of political speech and association.

Nineteenth-century electoral representative arrangements were quickly corrupted by clientelist relations which traded votes for personal favors - then, in the twentieth century, as radical protests by farmers and workers began to penetrate the political parties, by the steadily growing influence on electoral campaigns of big money and mass propaganda techniques. There is a vast literature exploring the mysteries of American exceptionalism, of its failure to develop a labor party and its late and limited welfare-state programs. Maybe the simplest explanation is that democratic rights were in fact sharply limited.

But perhaps the largest inhibition on popular influence through democratic institutions in the US was the vigour of laissez-faire ideology - the doctrine that the economic relationships of capitalism are the product of 'nature' rather than a result of human design. As nature is governed by inviolable laws, so too, it is argued, are economic activities governed by market laws. Such natural laws brook no interference by government. The penalty for inhibiting the market processes that generate wealth is the risk of economic disaster. The economic grievances that fired popular aspirations for democracy were seen as beyond the reach of the democratic majorities that influenced government.

Why was laissez faire so exceptionally vigorous in the US? As elsewhere, the economy was in fact closely dependent on government policies which established the framework of currency, tariff, contract, labor and property law. Government deployed the military forces that were used to break strikes at home and protect imperial interests abroad. Government also subsidized the infrastructure of transportation and communication without which a modern economy could not exist.

However, the reality of the state's role in the economy remained obscure, in part as a result of the organization of government itself. Important economic policies were embedded in the constitution, or were the province of a national government which until the twentieth century was largely remote from popular politics.

 A politics dominated by business has created the institutions which make business domination seem inevitable

When property and labor rights were disputed, decisions were relegated to courts whose judges were not exposed to electoral scrutiny and who justified their opinions as the mystical but seemingly indisputable requirements of constitutional and common law. Or critical economic policies were delegated to inscrutable and unelected bureaucracies, such as the Federal Reserve Bank. Meanwhile, there was a realm in which a kind of democracy seemed to flourish, largely in local government, where popular enthusiasms surged in fierce political contests over the distribution of patronage and ethnic honors, or over the management of the schools and garbage collection.

In other words, the distinctive organization of American government did indeed create realms in which politics flourished, and those realms seemed to operate apart from the economy.

The ideological separation of economy and polity began to break down in the twentieth century. Government intervention to aid a burgeoning industrial economy became ever more transparent. This rapid economic growth produced new hardships spurring waves of protest by farmers and workers. The contrived insulation of the economy from democratic politics weakened. Political rights became an instrument for popular influence on economic issues. New policies were inaugurated in the pre-World War One US to break up the trusts and to regulate the railroads. The Great Depression of the 1930s sparked another surge of protest, with the national government belatedly granting unions some legal rights. The 1930s also saw the inauguration of the basic programs of a limited welfare state in the US. Then, three decades later, the protests of the 1960s led by the civil-rights movement forced the expansion of these regulatory and economic-security programs.

These victories were also limited and in some cases were won only to be lost, at least until the next surge of protest. But even partial victories represented elements of a new compact won through the flawed American democracy, setting at least some limits on business power.

There are no permanent victories in politics. In the early 1970s American corporations, goaded on by the pressures exerted on their profits by international competition and rising commodity prices, mobilized to take back much of what had been won. They launched a concerted mobilization against unions, and job security and other workplace protections were rolled back. Wages fell. But US business wanted more than they could win in the workplace alone. They wanted a reversal of the social compact, a rollback of business regulation, of welfare-state spending and of taxes. To win such policies they also needed to roll back the influence of ordinary people over government. They needed to roll back democracy.

Corporate America mobilized for politics by turning to the tried and true of US political history. Big money poured into the parties, especially but not only the Republican Party. Media techniques of persuasion and manipulation turned campaigns into frenzied advertising spectacles. Political duplicity in legislating business giveaways reached new heights. This much is obvious - as is the invasion of US-style of money-and-media elections spreading to Europe, particularly to Britain.

Less obvious is the revival of the doctrine of laissez faire, this time conceived as natural laws enveloping the planet. National governments whose policies violated these new 'natural' laws would be punished by floods of imports that undercut domestic producers, or by currency markets, or by investors circling the globe in search of cheaper labor or better tax deals. There is no room for democracy in this new ideology because democracy is exercised as influence over national governments. If governments are helpless in global markets, then so too are democratic publics.

No wonder there is a collapse of popular political morale in the US. There is a startling rise in the number of citizens who tell survey-takers of their cynicism and disaffection with government and politics. No wonder the turn in US politics is towards 'family values' and to candidates who are said to exemplify strength and personal morality. The politics of institutional reform is forced into the shadows in favor of a fundamentalist politics of personal moral rejuvenation.

There is of course some short-term truth in this neo-liberal doctrine. What it ignores is that national governments have themselves created the framework of currency, trade and tax policies in which global markets are flourishing, as well as the supra-national organizations which promote and enforce these policies. A politics dominated by business has created the institutions which make business domination seem inevitable.

Almost inevitable. The spreading protests against the WTO, the IMF, the World Bank, suggest the veil of doctrine is lifting. The protesters make familiar demands for democratic scrutiny and public accountability. Also familiar, they see their antagonists as the international corporations, the new men of property. But something is new as well - the protests are squarely aimed at institutions constructed precisely to evade democratic accountability.

 Frances Fox Piven and Richard Cloward
have written many books on US politics
including Why Americans Don't Vote.

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The Facts

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A farmer from Silmiougou in Bukina Faso. Photo by MARK EDWARDS / STILL

As the juggernaut of globalization judders on,
Africa is increasingly being left behind. Despite having followed the West's political and economic prescriptions, African development at the start of the new century has ground to a halt.

Africa has endured two decades of structural adjustment during which the International Monetary Fund (IMF) has called the tune and demanded that governments dance to it. Yet at the end of those two decades Africa's income per person (the IMF's own chosen measure) is lower than it was at the beginning, while the world as a whole has made steady progress and the rich world's income has gone through the roof.1

Copper production in Zambia

After the disasters of the 1980s and early 1990s, the last five years have finally seen the economy of Africa as a whole growing. Yet this growth in GNP barely keeps pace with the increase in population, and has no serious impact on poverty. Between 1997 and 1998 (the most recent years for which there are statistics) on the World Bank's own figures the GNP per capita of 13 African countries went up - but that of 21 African countries actually went down.2 In 22 African countries the GNP per capita is still lower than it was in 1980.

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Africa's debt burden is more than twice as large as that of any other region when measured as a proportion of its economic size.

In addition, for all the West's insistence that Africa pursue free trade, the World Bank estimates that the West's own high tariffs, anti-dumping regulations and technical barriers to trade in industrialized countries cost sub-Saharan Africa $20 billion a year in lost exports.4


The real prices received by African farmers for four key export crops in the mid-1990s were around 60 per cent of what they were in 1973.

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[image, unknown] A sea change in the 1990s saw 45 out of 50 African countries hold multiparty elections, in addition to the four which had a democratic system in place at the start of the decade. Only 10 of these elections, however, produced a change of government.4 As the list of current conflicts shows, taking the gun out of African politics will not be easy.

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The most basic index of well-being is life itself - how many years a human can expect to live. Yet while other regions' life expectancy is steadily improving, Africa's is now going backwards.
. Life expectancy declined in no fewer than 31 African countries between 1995 and 1998.8
. The average sub-Saharan African can expect to live 14 years less than someone in the next-poorest region, South Asia - and 30 years less than someone in the industrialized world.
. In Zimbabwe and Uganda the impact of deaths attributed to aids has reduced average life expectancy in 1998 to below what it was in 1960.5

[image, unknown]
Looking on the bright side in Rwanda.

African governments are often decried for wasting precious money on the military. Yet on average their military spending (as a share of total expenditure) is broadly comparable to that of the West. And they spend proportionally more on education than any other region in the world.

An old Soviet-supplied tank in Eritrea.
[image, unknown]

1 1980: World Bank World Development Report 1982. 1990: World Bank World Development Report 1992. 1998: UNICEF State of the World's Children 2000.
2 UNICEF State of the World's Children reports for 1999 and 2000.
3 World Bank World Development Report 1998/1999.
4 KY Amoako, Director of UN Economic Commission for Africa, keynote address to Africa Confidential conference, 19 April 2000.
5 UNICEF State of the World's Children 2000.
6 Calculated from population and life expectancy figures in UNICEF State of the World's Children 1982.
7 UNDP Human Development Report 1992.
8 UNICEF State of the World's Children reports for 1997 and 2000.
9 UNctad Trade and Development Report 1998.

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Chronicle 2000

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Health hazard / CHRONICLE

Chronicle 2000

Our media feed us news dominated by rich-world events and preoccupations.
Here the NI redresses the balance with an alternative view of the year's key events.


Click a month above to read an alternative view of the key events of that month.

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Trade Unions / KEYNOTE


What's the point of fiction in a world full of trouble? Peter Whittaker makes the case and introduces his selection of new writing from the South.

If trade unions are dinosaurs, says David Ransom, we must all be living in Jurassic Park. Otherwise, how to explain the presence of millions of trade unionists on city streets around the world every May Day? Why all the blacklists and deathlists of people who are doomed to extinction anyway?

The truth is that trade unions are still very much alive. They matter, and in future they are going to matter even more. For just so long as people have to sell their labour to someone else in order to survive, so will the ‘freedom of association’ at work be fought for and celebrated. For just so long as human beings do not turn into machines when they go to work, so will they aspire to a measure of dignity, self-expression and democracy at their workplaces. Those who wish this were not so are sitting on a periodically dormant but nonetheless active volcano.

Coal miners in Britain came under sustained attack during the strike of 1984.
Phil Wolmuth / Panos

A similar mistake has been made many times before. For the first two decades of the 19th century in Britain, during the early years of the Industrial Revolution, trade unions were legislated away by the Combination Acts. In a paranoid political atmosphere, heavy with the smell of rebellion in the ‘lower orders’, employees were prohibited from even thinking to ‘combine’ against their employers, on pain of summary arrest, imprisonment and deportation. If not the first – and by no means the last – then this was certainly the crudest attempt to make freedom of association in Britain entirely subject to the sanction of the state.

It didn’t work. The result, as the great historian EP Thompson tells us, ‘dissolved the remaining ties of loyalty between working people and their masters, so that disaffection spread in a world which the authorities could not penetrate’. Having had this unintended effect, the Combination Acts were hastily repealed and the long, slow haul towards democracy at work resumed once more.1

Richard Sennett, an equally acute observer of our present times, found a related anxiety among the ludicrously rich and powerful at the World Economic Forum in Davos, Switzerland. It is, Sennett tells us, ‘more like a court than a conference’, held every year in the ski resort where Thomas Mann wrote The Magic Mountain. ‘They of course fear the resurgence of unions,’ he writes, ‘but become acutely and personally uncomfortable, fidgeting or breaking eye contact or retreating into taking notes, if forced to discuss the people who, in their jargon, are "left behind". They know that the great majority of those who toil are left behind.’2

Who, or what, remains to express the outrage such studied indifference merits, and organize to make a change? Trade unions have a long and vibrant tradition of gathering our collective strength. But they also have a history of human frailty. There are the corrupt union mafias and power brokers, the bosses like Jimmy Hoffa in the US or Fidel Velásquez in Mexico, who was 96 when last elected to head up the official unions in 1997, for a term set to last until 2004. Trade unions have sometimes preferred to discipline, rather than represent, their own members. And they have been in decline for almost 30 years in the North, losing membership and influence, circling their defensive wagons around a restricted outlook and increasingly meagre ambitions.

One credible explanation for this is that they have been the victims of their own success. They have ridden the industrial capitalist tiger since it was born. In a bitter and bloody contest, usually against all the odds, they have induced it to behave in ways that offend against its true nature. Arguably, without trade unions there would today be little sign of what almost everyone in the North now takes for granted: the right to vote, to education, to good healthcare, to safety at work, to rest and leisure. The tiger has been tamed.

You don’t have to look very far back to notice the change. Take Adelaide, South Australia, in 1930. In that year there were state elections. One of the parties stood on a platform that included the right to strike, equal pay for women, workers’ compensation for sickness or accident, a 40-hour working week and two weeks paid annual holiday for all workers. Such a political platform today would be modest if not retrogressive. But, no more than a lifetime ago, it was advocated by trade unionists in the Communist Party, which at the time liked to think of itself as revolutionary.3

According to this explanation, so successful have trade unions been that most working people have now reached an accommodation with capitalism – and trade unions have thereby done themselves out of a job. They have saved capitalism from itself.

Unfortunately, capitalism does not want to be saved from itself. As sharks must keep swimming to stay alive, so capitalism must be free to roam the globe, forever accumulating yet more wealth, power and profits if it is not to collapse in ruins. Anything that stands in its way will be attacked.

So far, trade unions have shown what is possible only in a tiny enclave: the 20 per cent of the world’s people who consume 80 per cent of its shrinking resources. You can understand why, in the North, unions might therefore wish to circle the wagons against the rest of the world. But the manoeuvre is self-defeating if the most important battles are being fought somewhere else – which is why trade unionists have always been internationalist in their outlook. Thanks to corporate globalization, most of the world’s industrial labour force now works in the South – in conditions resembling those of early 19th-century Britain. And, in the South, people are turning to trade unions in increasing numbers, not least because there’s nowhere else for them to turn now that their governments are effectively run by the International Monetary Fund (IMF) and the World Bank.

Trade unions have a tradition of gathering our collective strength. But they also have a history of human frailty.

This might suggest a rather comforting process of evolution, of historical ‘stages’ through which all working people must pass. The ‘backward’ follow the ‘advanced’ in orderly succession along a single path towards the same destination. Given enough time and application, the workers of the Majority World will eventually catch up with their Northern brothers and sisters.

The growth of trade unions in the South has, indeed, already had some civilizing effects. In Brazil the progressive Workers’ Party (PT) emerged from the trade unions in the car factories of São Paulo, led by the charismatic Luís Inácio ‘Lula’ da Silva. The PT played, and still plays, a major role in steering that country away from military dictatorship and in restraining its rapacious oligarchy.4 The Nigeria Labour Congress, COSATU in South Africa, the ZCTU in Zimbabwe, are having a similar effect in Africa. Trini Leung describes (see 'Taming the Tigers') how unions have been taming the savage regimes of the ‘Little Tigers’ in Asia – perhaps, eventually, even China as well. Arguably, it was the strike by Russian coal miners in 1989 that finally put the Soviet Union out of its misery, in a pattern repeated elsewhere in the former Soviet bloc, including Poland and Romania.

So far, so good. But travel any further along this path of historical evolution and you find it gets you nowhere. The distance between the ‘advanced’ and the ‘backward’ is getting bigger, not smaller – there is no catching up going on. On the contrary, the advance party has disappeared over the horizon. The vast majority has been left behind in a wilderness and is beginning to wonder whether it was ever on the same path at all.

Second, the inability of capitalism to deliver even the most basic necessities of life becomes glaring when magnified to the global scale on which it operates. Why, it can’t even create the jobs – let alone a halfway decent living. Economist Susan George points out that between 1993 and 1996 the world’s top 100 firms increased their sales by 24 per cent, while the number of people they employed actually fell.5 Unemployment has been rising sharply, and strangely unremarked, almost everywhere. Even in places where it is said to have declined, like the US or Britain, it looms behind the smoke and mirrors of part-time, ‘flexible’ work, employment programmes and official statistics.

Third, a few chickens are coming home to roost in the North. Unions have been on the defensive not just because of their own frailties, but because they’ve come under sustained attack. Governments allied to business interests and free-market orthodoxy would like to see the back of them altogether, so the attacks continue. Nirvana turns out to be no paradise, even for those who have good jobs. According to a recent survey of employee attitudes in Britain, an astonishing 80 per cent lack any real commitment to their employers: ‘The uncommitted majority say they don’t know what is expected of them, that their line managers don’t care about them as individuals, that they feel poorly suited to their jobs and that their bosses generally disregard their views.’6

People cannot live by bread alone. The trade-union struggle has always been about more than wage slavery. Roman Emperors famously threw ‘bread and circuses’ at their subjects to keep them quiet and so, increasingly, does corporate capitalism. Trade unionists prefer to make a song and dance. As the song has it: ‘Hearts starve as well as bodies; give us bread, but give us roses.’ Less contemptuous of common humanity, more suggestive of human aspiration and dignity, more beautiful and better fun, the song puts work in its proper place. ‘We are not a market,’ begins the La Falda Declaration of South American Chemical and Paper Workers, ‘first and foremost, we are a people.’

This is what trade unions have always stood for and where their future invariably lies. The French intellectual André Gorz has sketched out what it looks like now. ‘Our needs for many products and services are already more than adequately met,’ he suggests, ‘and many of our as-yet-unsatisfied needs will be met not by producing more, but by producing differently, producing other things, or even producing less. This is especially true as regards our needs for air, water, space, silence, beauty, time and human contact... In a context in which there is not enough paid full-time work to go round, abandoning the work ethic becomes a condition of survival for the trade-union movement. To do so is no betrayal on the movement’s part. The liberation from work and the idea of "working less so that everyone can work" were, after all, at the origin of the struggle of the labour movement.’7

Don’t be tempted to dismiss this as wishful thinking, even if Gorz refers largely to the North. French and German unions in particular are taking his ideas very seriously indeed. There is here a realistic prospect of breaking out of absolute dependence on capitalist industrial growth, unsustainable levels of consumption and spiralling inequalities. Political liberation is one thing, economic liberation quite another. If trade unions don’t strive for economic liberation, who will?

As their influence – and particularly that of their women members – has grown in the South, so has their interaction with society at large. Broad alliances have opened out into what’s sometimes called ‘social unionism’ and the world beyond work. What little is really known about how poverty is overcome – these days we tend to know more about how it is created – tells us that poor people have, in the end, always had to do it for themselves. They don’t require instructions from above but basic freedoms and human rights. Critical to these in the countryside is the right to land, and in cities the right to a living wage. Critical to both is the freedom of association – the right to organize, whether for land rights or in trade unions.8

Trade-union members in the North have for the most part – and with some striking exceptions – become accustomed to thinking of their brothers and sisters in the South as living in a distant, powerless and largely irrelevant ‘Third World’. Too often they have left international questions to aid agencies or government departments. In their turn, aid agencies have tended to guard ‘development’ or ‘poverty reduction’ as their private professional territory, and seen trade unions as little more than a nuisance.

But corporate globalization has thrown everything into the air. What is self-evidently needed now, and is finally starting to happen, is an internationalist process of ‘globalization from below’, in which unions and aid agencies have an overriding, urgent responsibility to collaborate.9 Trade unionists have, after all, taken the first step by providing the bulk of the anti-globalization demonstrations in Seattle, Quebec City and Genoa.

‘Tempestuous’ was how Ed Sweeney described the current state of the relationship between unions and NGOs when I talked with him in his office near Wimbledon. He is the General Secretary of UNIFI, the finance-workers’ union in Britain, and one of a new, young, articulate breed of union leaders whose views have been forged by corporate globalization. He also chairs an informal International Development Committee at the Trades Union Congress.

‘I just think it’s all wrong, daft, really silly,’ he says. ‘It’s difficult if they [NGOs and unions] question each other’s integrity. But that’s what they’ve all started to do. I’ve made it my goal in life to try and smooth that over... Some trade unionists are surprised that somebody like me could have such an interest in globalization. We’re private-sector, we deal in the finance world, our people do nothing but exploit money. Well, our industry is global. We’ve seen the interconnection at first hand. We were able, for example, to use the debate about asylum-seekers to say: "Hold on a moment! Don’t say it’s just about economic migrants. This is actually an impact of globalization."’

'We are not a market. We are people.'

Another impact is privatization. Whether the push comes from the World Bank or the International Monetary Fund via ‘structural adjustment’, or from a New Labour government in Britain in the form of ‘public-private partnership’, the same motive force is at work: transnational corporate capital and the lust for lucrative tax dollars. And around the world, from Colombia to Mauritius, trade unions are mounting a rebellion against any further extension of the private profit motive into public services. They are going to need all the allies they can get. We need to break down the artificial barriers that have been erected between ‘producers’ and ‘consumers’ of public services, so that the struggle includes us all.

Not so long ago I was asked to speak to a union meeting in Birmingham. Rather to my surprise, they wanted to know more about the Tobin Tax on currency speculation. It is being promoted by War on Want, an aid agency with close links to trade unions. Then someone spoke about the liberation struggle in Western Sahara (see NI 297). A few of the people at the meeting had undertaken the difficult journey there – in solidarity with a place that has no obvious connection to their daily working lives. And then Clare Short, the Secretary of State for International Development, delivered a whistle-stop homily on the eradication of poverty and the New Labour Government’s prescription for ‘development’, which evidently would not include a Tobin Tax.

I commented to my neighbour on the ‘informative’ contribution she’d made. ‘Stuff and patronizing nonsense,’ he growled. My guess is that the growl is about to become a roar.

1 EP Thompson, The Making of the Working Class, Penguin, London, 1991.
2 Richard Sennett, The Corrosion of Character, WW Norton, New York and London, 1999.
3 Gilbert Giles Roper, Labour’s TitanThe Story of Percy Brookfield, Warnambool Institute Press, 1983; I am grateful to David Pitt for showing me this intriguing little book.
4 Emir Sader and Ken Silverstein, Without Fear of Being Happy, Verso, London and New York, 1991.
5 http://www.tni.org/george/articles/point.htm
6 The Observer, 26 August 2001.
7 André Gorz, ‘Summary for Trade Unionists’ from A Critique of Economic Reason, Verso, London, 1989.
8 The most interesting, if just about the only empirical, long-term poverty-impact study I know of is by Roger Riddell, Anthony Bebbington and Lennart Peck, Promoting Development by Proxy: the development impact of government support to Swedish NGOs, ODI monograph, London 1995.
9 For a thorough discussion of these issues, see Dan Gallin, Trade Unions and NGOs: A Necessary Partnership for Social Development, UN Research Institute for Social Development, June 2000.

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A parliament for the planet

When George Bush announced that he was engaged in ‘a fight to save the civilized world’, he was assuming powers and responsibilities he does not possess. Though his attack on Afghanistan was retrospectively legalized by the United Nations Security Council, it plainly offends the provisions of the UN Charter (which permits states to defend themselves against armed attack but says nothing about subsequent retaliation). But the Security Council, whose five permanent members also happen to be the world’s five biggest arms dealers, tends to do precisely as the US requests. ‘World leaders’, in other words, can define their powers as they please.

This is just the latest manifestation of the permanent crisis of legitimacy which blights every global decision-making body. Those who claim to lead the world were never granted their powers: they grabbed them. The eight middle-aged men whose G8 meetings are the ultimate repository of global power represent just 13 per cent of the world’s population. They were all elected to pursue domestic imperatives: their global role is simply an unmandated by-product of their national role.

The World Bank and International Monetary Fund (IMF), which apportion votes according to the money they receive, are governed by the countries in which they don’t operate. The UN General Assembly represents governments rather than people and, while in theory it operates on a one- country-one-vote basis, in practice a poor nation of 900 million swings less weight than a rich nation of 60 million. UN ambassadors, as appointees, are remote from the populations they are supposed to represent, but all too close to their national-security services. While some poor nations can’t afford to send delegates to World Trade Organization (WTO) meetings, rich nations are represented by huge parties of business lobbyists. Many of the WTO’s key decisions are made in secret.

There is, we are told by almost everyone, no alternative to this rule of finance and fear. We might not like the way the world is run, but even the most radical NGOs and campaigners tend to call at most for the replacement of the World Bank and IMF, while failing to address the political framework which legitimized them. There is, in other words, a widespread tacit acceptance of a model of benign dictatorship in which rich and powerful nations govern the world on behalf of everyone else.

In 1937 George Orwell observed that: ‘every revolutionary opinion draws part of its strength from a secret conviction that nothing can be changed.’ Bourgeois socialists, he charged, were prepared to demand the death of capitalism and the destruction of the British Empire only because they knew that these things were unlikely to happen. ‘For, apart from any other consideration, the high standard of life we enjoy in England depends upon keeping a tight hold on the Empire… in order that England may live in comparative comfort, a hundred million Indians must live on the verge of starvation – an evil state of affairs, but you acquiesce to it every time you step into a taxi or eat a plate of strawberries and cream.’ The middle-class socialist, he insisted, ‘is perfectly ready to accept the products of Empire and to save his soul by sneering at the people who hold the Empire together’.

Since then, empires have waxed and waned, but that basic economic formula holds true: we in the rich world live in comparative comfort only because of the inordinate power our governments wield, and the inordinate wealth which flows from that power. We acquiesce in this system every time we buy salad from a supermarket (grown with water stolen from Kenyan nomads) or step into a plane to travel to the latest climate talks. Accepting the need for global democracy means accepting the loss of our own nations’ power to ensure that the world is run for our benefit. Are we ready for this, or is there lurking still some residual fear of the Yellow Peril, an age-old, long-imprinted urge towards paternalism?

As far as I can see, there is only one means by which this crisis of legitimacy can be effectively resolved. It’s a notion which most people find repugnant, but only, I believe, because they have failed to grasp both its implications and the extent of their own acceptance of the undemocratic fudge by which the world is run. Global democracy is meaningless unless ultimate oversight resides in a directly elected assembly. We need a world parliament.

If, like most people in the developed world, you abhor this idea, I invite you to examine your reaction carefully. Is it because you believe such a body might become remote and excessively powerful? Or is it really because you cannot bear the idea that a resident of Kensington would have no greater say than a resident of Kinshasa? That Sri Lankans would have the same number of representatives as Australians (and more as their population increases)? That the people of China would, collectively, be 41 times as powerful as the people of Canada? Are you really a new internationalist or are you, secretly, an old paternalist?

The key point here is that power exists at the international level whether we like it or not. The absence of an accountable forum does not prevent global decision-making taking place – merely ensures that it does not take place democratically. It’s not a question of removing further powers from nation-states or from their citizens, but of democratizing those powers which are already being wielded supranationally.

A parliament - in which people parley, or talk - has already been established by the new world order’s dissidents I’m often told, in response to this proposal, that democracy at the European level is bad enough: why should we want to extend the principle to the rest of the world? Well, one might, perhaps with good reason, lament the existence of the European Union (which, unlike the world, is a political artefact), but the real question is whether it would be better or worse off without the European Parliament. For all its feebleness and faults, the parliament is surely an essential counterweight to the unelected Commission and the photocopy democracy of the European Council.
A more legitimate concern is that a global parliament might be readily bought or subverted. This is a real danger for any representative body, but there are plenty of lessons to be learnt from systems, like Britain’s, which possess insufficient safeguards. The private funding of elections, for example, could be prohibited. Parliament could provide a small, fixed sum for every candidate: anyone who spent more than this on campaigning would be disqualified. It should be forbidden to use party whips to force representatives into line, if parties exist at all. But there’s no question that, like any other assembly, we would have to keep holding a world parliament to account, by means of exposure, embarrassment and dissent.

Advocates of a world parliament have been careful so far not to be too prescriptive about the form it might take. If it is to gain popular consent and legitimacy, it’s essential that the model be permitted to evolve in response to grassroots concerns, rather than being handed down from on high, like the European Parliament or the United Nations. But two irreducible essentials emerge. The first is that all of its members should be directly elected. The obvious and revolutionary implication is that it thereby bypasses national governments. One could envisage, for example, 600 constituencies, each containing some ten million people, which would, where necessary, straddle national boundaries.

The second is that the parliament’s own powers must be strictly limited: both by the principle of subsidiarity (devolving power to the smallest appropriate political unit), and by restricting its capacity for executive action. We could, perhaps, see it performing like a collection of supercharged select committees, holding the executive agencies to account, producing policy reports, replacing or regenerating defunct institutions. But it would control no army and it would exercise no coercive power over states. If it possessed a presidency, this would be a titular and administrative role, but would carry no power of its own. The parliament would simply become the means of forcing multilateral bodies to operate in the best interests of everyone, rather than those of just the rich and powerful.

But it’s not hard to see how this modest function could transform the way the world works. Multilateral institutions like the World Bank and IMF, whose role is to police the debtors on behalf of the creditor nations, would disappear immediately. A democratic assembly would be likely to replace them with something like Keynes’s ‘International Clearing Union’, which would force creditors as well as debtors to eliminate Third World debt and redress imbalances in trade. The WTO, if it survived at all, would be forced to open its decision-making processes to democratic scrutiny. If a global parliament administered a global fund (arising, for example, from the proposed ‘Tobin Tax’ on international financial trans-actions), it could ensure that the money did not become the plaything of powerful nation-states. The UN’s humanitarian funding gaps would surely be plugged, and weaker nations could be given the money necessary to attend international negotiations.

Interestingly, the parliament could legitimize other internationalist proposals. As Troy Davis of the World Citizen Foundation has pointed out, without representation the legitimacy of global taxation is questionable. The absence of an international legislature undermines the authority of an international judiciary (such as the proposed criminal court). Judges presiding over the war-crimes tribunals at the Hague and in Arusha have been forced, in effect, to make up the law as they go along. The only fair and lasting means of reducing CO2 (namely ‘contraction and convergence’, which means working out how much pollution the planet can take, then allocating an equal pollution quota to everyone on earth) would surely be impossible to implement without a world parliament.

So, given that nation-states will be reluctant to surrender their illegitimate control over global governance, how do we persuade them to make way? The answer, I think, is that we don’t. We simply start without them. There are signs that this is happening, organically, already.

The ‘world social forums’ and People’s Global Action meetings which have sprung up in response to the World Economic Forum and G8 meetings have brought together campaigners from all over the world to discuss alternative global futures. These are, of course, unelected, unrepresentative bodies. But if these gatherings could transform themselves into representative bodies, whose members are chosen democratically by populations all over the world, we could rapidly find ourselves building a world parliament in exile.

As its moral power grew and the moral power of the existing means of world governance shrank correspondingly, it’s not hard to see how a legitimate representative assembly could emerge through consent rather than coercion. If it does, it will have solved the fundamental problem under-pinning the development of any new body: that of public ownership. The European Parliament is perceived as both remote and boring by many of the people it represents, largely because it was imposed from above by national governments. A world parliament would belong to the people from the beginning of the process.

We have been gathering every few months in different parts of the world to search for solutions, unaware, perhaps, that the gathering itself could be the solution. A parliament – in which people parley, or talk – has already been established by the new world order’s dissidents. Now we must invite the rest of the world to take part.

George Monbiot ’s latest book Captive State: the corporate
takeover of Britain
is now published in paperback by Pan Macmillan.
Around 400 of his articles are available online at www.monbiot.com

Where's Mr President?
Carnival day in Bolivia, the South American mainland's poorest country.
Find the G8 leaders, no longer able to shout down the crowd. Key below the picture.

[image, unknown]

Left to right: [in the white circles]
George Bush, Jean Chrétien, Gerhard Schröder, Jacques Chirac,
Silvio Berlusconi, Vladimir Putin, Junichiro Koizumi, Tony Blair.


Radio New Internationalist - The Arrogance

The Arrogance

This week we’re linking up Asia, Latin America and the Middle East to explore why that bundle of international economic policies favoured by the neo-cons can fail so badly… and uncover a common link. It’s ‘The Arrogance’… the arrogance of the World Bank in Indonesia, of the International Monetary Fund in Latin America, and US policy-preachers now working in Iraq. Today’s guests – all of whom are working closely with international policy makers – open the doors to a range of very personal experiences:

  • Jim Shultz, Executive Director of The Democracy Center in Bolivia remembers the 34 people killed in protests over the International Monetary Fund’s fatally flawed tax policies;
  • Farah Sofa, from WALHI (Friends of the Earth, Indonesia), tells us about their negotiations with the World Bank, which is now supporting Indonesian industrial timber plantation projects the size of whole countries; and
  • Pratap Chatterjee, Managing Editor, CorpWatch takes us to Iraq and shows us around both the healthcare system being imposed on the Iraqi people, and the colourful crooks and incompetents that are mismanaging it.

Last week and this week, we’ve been featuring the CD… Rhythm of the River… which showcases a range of artists from the World Music Network’s Riverboat Records series. From rhapsody to rap, it offers music with which to relax, then rage.

Listen now (click the play button) or download the program (click this link)

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Bretton Woods II: Scrap the Unholy Trinity - the IMF, the World Bank and the WTO

The 'Bretton Woods II' conference in Washington in a couple of weeks' time looks set to be as irrelevant as President Bush. There'll doubtless be a lot of hand-wringing about the Unholy Trinity of the International Monetary Fund (IMF), World Bank and World Trade Organization (WTO). To judge by their performance to date on the economic meltdown, they look just about as relevant as President Bush.

Lamentably enough, however, they're a good deal more dangerous than that, because they may not be pensioned off. They should now accompany Bush into disgraceful retirement.

So pernicious has been the influence of the IMF that no country with any choice in the matter will go anywhere near it. Those that have no choice (Iceland, Ukraine, Hungary so far) find themselves forced into perverse policies in exchange for 'assistance'. The Fund has already announced that it will only deal with countries that have been obedient to its rules. These are aimed at supporting not the people of the countries it deals with but the interests and the ideology of the very same private financial institutions that have driven the world down the road to ruin. The Fund is completely unaccountable and must be scrapped.

The World Bank's appalling history of large-scale, corporate-friendly, environmentally destructive and utterly incompetent projects beggars belief. That it has been charged with funding the global response to climate change is bad news for the climate. It can only be explained by the absence of anything better.

The WTO knows of no other purpose than the pursuit of trade 'liberalization'. In the world of financial services – where the WTO also has a keen interest – that translates as irresponsible deregulation, of precisely the kind that almost everyone now agrees lies behind the financial meltdown. Translated back into what's so touchingly referred to as the 'real economy', trade liberalization has no different effect from deregulation in finance. The WTO trade 'round' is currently stalled – it would save everyone a lot of grief if it were simply left to expire altogether.

Scrapping the Holy Trinity does not necessarily mean there's no useful function at all for such 'multilateral' institutions – though entirely detached from the UN, as they are at present, their usefulness is strictly questionable. Certainly, that element of their power that derives from their unaccountability must be removed. Quite what would then remain is a matter for debate.

There could, indeed, be a need for some sort of international currency, other than the US dollar. Certainly, the worldwide consensus on regressive taxation, which the IMF has done so much to promote, must be broken immediately. Certainly, there's an imperative to scrap 'Third World' debt NOW. None of this will be done, however, without scrapping the IMF first.

There is, certainly, an urgent need to finance sustainable development, but the World Bank clearly has no idea what that means.

And there is, certainly, a need to extend the principles of fair trade into world trade. The transnational corporations that like world trade precisely because they control more than two-thirds of it already have more than enough power as it is. If there were such a thing, a World Fair Trade Organization would promote the interests that transnational corporations don't and can't. The tired old contradiction between 'free trade' and 'protectionism' is utterly barren, spurious and outdated. Climate change is, if nothing else, changing the landscape of trade as well.

Lest we forget, the Unholy Trinity is composed of publicly funded institutions. Yet they are publicly unaccountable. So they are worse than useless. There is, for example, absolutely no prospect of reaching the UN Millennium Development Goals by 2015 (or, indeed, ever) while they remain in place. Likewise with repairing climate change.

The time is long overdue for a clean start.

The NI magazine for December is just being completed. It will have a big feature on the 'meltdown' and the first, positive outlines (such as the Beijing Declaration) of what we're calling a 'Clean Start'. Now that the 'real economy' is going into recession, with a full-blooded slump on the cards, there's a terrible inevitability about the catastrophe striking hardest at the Majority World. We'll do our best, in the magazine and on this website, to keep you abreast of developments.

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IMF whistleblower: 'We make or break human life every day of every year'

Illustration: Alan Hughes

Dear Mr Camdessus
Today I resigned from the staff of the International Monetary Fund after over 12 years, and 1,000 days of official Fund work in the field, hawking your medicines and your bag of tricks to governments and to people in Latin America and the Caribbean and Africa. To me resignation is
a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving peoples. Mr Camdessus, the blood is so much, you know, it runs in rivers. It dries up too; it cakes all over me; sometimes I feel there is not enough soap in the whole world to cleanse me from the things that I did in your name ...

Budhoo: The charges I make strike at the soul of humankind and its conscience.
Photo: Anthony Swift

Thus begins the unprecedented, open, 150-page resignation letter of Davison L Budhoo, who this year relinquished his position as an economist on the staff of the IMF in order to raise public clamour for the Fund's reform. Blasting through the grey language that usually cloaks such matters he accuses the Fund of corruption, self-interest and deceit.

The IMF's programme in Trinidad and Tobago is a case in point and in his resignation letter Budhoo asserts: 'We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about (the) economic and financial performance of that country.'

According to Budhoo, IMF employees 'manipulated' a key indicator of Trinidad and Tobago's ability to compete and export (the labour cost index) to hammer home the point that massive devaluation was needed if the country was not to head for mounting economic chaos; the true figure he says, was far more encouraging. 'What we had done was to manufacture this and other statistical indices to allow us to prove our point and push a particular policy line, irrespective of the economic realities of the country,' says Budhoo who claims that such 'errors' were commonplace within the Fund.

Even when the inaccuracy was exposed by the Fund's own statisticians, the IMF neither owned up, nor apologized to the government, nor publicly corrected its misinformation despite the implications of its judgement for foreign investment.

'It was simply dropped as a hot potato and not referred to. Publication of a correction would have damaged the case for further devaluation, real wage cuts and other demand management measures wanted by the Fund.'

Budhoo puts the excesses of such 'joyrides in the IMF bulldozer when the moon is high' down to the zeal of what he calls the Fund's 'professionalized' political ideology, rather than to a political conspiracy. The generous financial rewards paid in salaries and extras to Fund staff, combined with a lack of accountability, have produced a 'honeypot' mentality; a preoccupation with material gratification and a lust for power which has stimulated personal greed and ambition, commitment to the status quo and an environment of 'yesmanship and stultifying conformity'.

Budhoo was allegedly on short rations from the honeypot because of his intransigence, but he nevertheless pulled $143,000 a year in salary and other subsidies, excluding those related to official travel and mission work. A staffer on the same rate of pay but on assignment in the Third World and with five children being educated in Geneva 'compliments of the honeypot', receives more than the basic pay of any head of state.

And the IMF's charms become virtually irresistible when supplemented by the 'intangibles': VIP treatment at airports, royalty-class and first-class travel, Dallas-style hotels, generous allowances for overnight stays in playground cities and for high-class nightclubbing in 'sin cities', personal secretaries on every mission, G-5 Visas allowing staff to bring maids into the United States, not to mention medical, insurance and pension perks.

'In a very meaningful way,' writes Budhoo, 'our staff perversion is the logical consequence of... the prevailing 1944 international ethos of superior man (sic) and inferior man, and the Western man and his system to be saved and nurtured, and the Southern man to be overlooked and cast aside ...'

Hopes of joining what Budhoo dubs the 'new nobility' in this 'ultimate paradise' are often enough to gain the compliance of Third World officials who might otherwise oppose the introduction of Fund programmes. The honeypot's charms make it easy for the Fund to poach skilled personnel from Third World administrations already desperately short of such skills.

Lured by the honeypot, staff sent on IMF missions to applicant countries develop an evangelical zeal. 'You go saying: "This is what we want. This is the programme. We must get it anyhow - whatever is necessary to get it". It's from this spirit that a lot of the manipulation comes.' What is wanted out of a mission is contained in a briefing paper, drawn up in advance by the mission chief and approved by the managing director of the IMF. 'You refer to the briefing paper in everything you do, because it details the official Fund stand for the country. It's the way the Fund operates.'

Less flamboyant and more measured in person than in print, Budhoo speaks with disillusionment about the Fund: 'The IMF was never designed to help the Third World or end poverty. It was established by the Bretton Woods conference of 1944 to restore economic and financial order to the Western world. There was no element of compassion for humanity in its formulation. The Fund's aim is first and foremost to secure the interests of developed countries.'

Budhoo asserts that the IMF and World Bank are key elements in an economic order that is deepening Third World poverty, the debt crisis, and a flight of capital from developing to developed countries which has soared in recent decades: in 1986 it amounted to well over $30-billion from the Caribbean and Latin America alone.

The IMF package for Trinidad and Tobago is an example of how Fund policies worsen Third World poverty. This programme required the removal of Government subsidies from basic food-stuffs, school books and drugs, The Fund also wished to cut the public wage bill (increase unemployment); lift import controls (allowing an influx of consumer goods, thereby undermining local production); privatize national industries at outrageously discounted prices; raise interest rates (also hitting the competitiveness of local producers); and remove exchange controls ('so that a privileged few could legitimately drain the country of the few remaining dregs of foreign reserves').

'Quite frankly, our "program" is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce,' writes Budhoo. 'It's like a terrorist attack, you know, splashing around rifle fire and bazookas and even nerve gas indiscriminately so as to get the highest death toll in the shortest possible time.'

Such packages - which are repeated in scores of countries around the world - affect the poorest first, and amount to economic suicide for the governments concerned. In effect, Budhoo writes, 'we are asking the Government of Trinidad and Tobago to ... self-destruct itself and unleash unstoppable economic and social chaos'.

Budhoo also explains why the IMF never suggests cuts to defence, police or public control measures instead of to basic services and subsidies for the poor: 'It's one thing to push around countries and say, "OK you have to treat the poor that way". But with the arms industry you are talking about very powerful people - both inside and outside the country. They won't be pushed around. They are supposed to be among those who benefit. The US being a Fund shareholder and the staff taking its cue from the US, who is the Fund to tell a country to limit its arms expenditure? You can tell them to let people die, but not to limit their arms.'

Meanwhile, there is little evidence that IMF programs have set countries on any sort of breakthrough path. Claims have been made about Taiwan and South Korea, but tremendous amounts of US aid have been pumped into those countries for political purposes. 'I dare anyone in the Fund to point to a country and say it is much better off economically today because of a Fund programme,' says Budhoo. And this is not an empty challenge. For Budhoo deals in cold, stark facts. He is a man in the know, whose voice is now unfettered.

'As from today,' he writes in his resignation letter, 'I tear off the mask of studied ambiguity that your organization did give me twelve years ago. As from today conscience becomes my only guide.

'In guilt and self-realization of my own worthlessness as a human being... I would like to enlighten public opinion about our role and our operations in our member countries of the Third World. Do I hear you bristling with disapproval? "Enlightening public opinion" are nasty words in the vocabulary of the Fund; I know it; I know it. Well, not so for me. In my new dictionary, 'enlightening public opinion' spells the only means to salvation. For If I can do that - if I can get people to begin to comprehend the universality and the depth of our perversion - I would have achieved something rare and precious for the starving and dispossessed two-thirds of mankind (sic) from whose ranks I come, and for whose cause I must now fight.'

Anthony Swift is a freelance journalist who is currently working on a book about children in difficult and dangerous circumstances.

The impact of IMF policies

In one third of recent cases countries were required by the IMF to reduce badly needed food subsidies. The result was a dramatic increase in malnutrition: in Peru it rocketed amongst under six year-olds from 41% to 68% between 1960 and 1983; Ghana saw pre-school malnutrition swell from 35% to 54% between 1980 and 1984; and in Botswana child malnutrition increased from 25% to 31% between 1982 and 1984.

Government spending on health was cut in nearly half the African countries and in 60% of Latin American countries where the IMF was involved from 1980 to 1985: the money spent on an individual's health plummeted by 85% in Ghana between 1974 and 1982; by 78% in Bolivia from 1980 to 1982; and by 32% in El Salvador from 1980 to 1984. The grim harvest of these cuts was an increase in preventable diseases and hence deaths - especially in Ghana.


Between 1980 and 1985 inflation soared, and wages crashed by 9 per cent in Latin America and 15 per cent in Sub-Saharan Africa from 1980 to 1985: in Mexico they tell by 30% between 1981 and 1984; in Ghana by 22% between 1979 and 1984; and in Sri Lanka by 18% between 1978 and 1983. The number of people below the poverty line increased by up to 75% in parts of Ghana between 1974 to 1984.

From Adjustment with a Human Face: a study by UNICEF 1987.



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