From Melbourne to Prague:
the Struggle for a Deglobalized World
By Walden Bello
** [Talk delivered at a series of engagements on the occasion of
demonstrations against the World Economic Forum (Davos) in Melbourne, Australia, 6-10
We are, here in Melbourne in the next few days and in Prague in two
weeks' time, participating in an historic enterprise: that of creating a critical mass to
turn the tide against corporate-driven globalization.
For years, we were told that globalization was benign, that it was a
process that brought about the greatest good for the greatest number, that good
citizenship lay in accepting the impersonal rule of the market and good governance meant
governments getting out of the way of market forces and letting the most effective
incarnation of market freedom, the transnational corporation, go about its task of
bringing about the most efficient mix of capital, land, technology and labor.
The unrestricted flow of goods and capital in a world without borders
was said to be the best of all possible worlds, though when some observers pointed out
that to be consistent with the precepts of their 18th century prophet, Adam Smith,
proponents of the neoliberal doctrine would also have to allow the unrestricted flow of
labor to create this best of all possible worlds, they were, quite simply, ignored.
Such inconsistencies could be overlooked since for over two decades,
neoliberalism or, as it was grandiosely styled, the "Washington Consensus" had
carried all before it. As one of its key partisans has nostalgically remarked recently,
"the Washington Consensus 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." (1)
Globalization Unravels I: The Asian Financial Collapse
The unrestricted flow of speculative capital in accordance with
Washington Consensus doctrine was what our governments in East Asia institutionalized in
the early 1990s, under the strong urging of the International Monetary Fund and the
US Treasury Department. The result: the $100 billion that flowed in between 1993 and 1997
flowed out in the bat of an eyelash during the Great Panic of the summer of 1997, bringing
about the collapse of our economies and spinning them into a mire of recession and massive
unemployment from which most still have to recover. Since 1997, financial instability or
the constant erosion of our currencies has become a way of life under IMF- imposed
monetary regimes that leave the value of our money to be determined day-to-day by the
changing whims, moods, and preferences of foreign investors and currency speculators.
Globalization Unravels II: The Failure of Structural Adjustment
The Asian financial crisis put the International Monetary Fund on the
hotseat, leading to a widespread popular reappraisal of its role in the Third World in the
1980s and early 1990s, when structural adjustment programs were imposed on over 70
developing countries. After over 15 years, there were hardly any cases of successful
adjustment programs. What structural adjustment had done, instead, was to institutionalize
stagnation in Africa and Latin America, alongside rises in the levels of absolute poverty
and income inequality.
Structural adjustment and related free-market policies that were
imposed beginning in the early 1980s were the central factor that triggered a sharp
rise in inequality globally, with one authoritative UNCTAD study covering 124 countries
showing that the income share of the richest 20 per cent of the worlds population
rose from 69 to 83 per cent between 1965 and 1990. (2) Adjustment policies were a central
factor behind the rapid concentration of global income in recent years--a process which,
in 1998, saw Bill Gates, with a net worth of $90 billion, Warren Buffet, with $36 billion,
and Microsoft co-founder Paul Allen, with $30 billion, achieve a combined income that was
greater than the total combined income of the 600 million that live in the worlds 48
least developed countries, a great number of which had been subjected to adjustment
Structural adjustment has also been a central cause of the lack of any
progress in the campaign against poverty. The number of people globally living in
poverty--that is, on less than a dollar a day-- increased from 1.1 billion in 1985 to 1.2
billion in 1998, and is expected to reach 1.3 billion this year. (3) According to a recent
World Bank study, the absolute number of people living in poverty rose in the 1990s
in Eastern Europe, South Asia, Latin America and the Caribbean, and sub-Saharan
Africa--all areas that came under the sway of adjustment programs. (4)
Confronted with this dismal record, James Wolfensohn of the World Bank
had the sense to move the institution away from its identification with structural
adjustment with public relations initiatives like the SAPRI, or the Structural Adjustment
Program Review Initiative, that it said would be jointly conducted with NGOs. But the IMF
under the doctrinaire Michel Camdessus refused to see the handwriting on the wall; it
sought, instead, to embed adjustment policies permanently in the economic structure
through the establishment of the Extended Structural Adjustment Facility (ESAF).
Yet as a consequence of greater public scrutiny following its
disastrous policies in East Asia, the Fund could no longer pretend that adjustment had not
been a massive failure in Africa, Latin America and South Asia. During the World Bank-IMF
meetings in September 1999, the Fund conceded failure by renaming the ESAF the
"Poverty Reduction and Growth" Facility. There was no way, however, that the
Fund could successfully whitewash the results of its policies. When the G-7 proposed to
make IMF certification a condition for eligibility in the now defunct HIPC Initiative,
Rep. Maxine Walters of the US House of Representatives spoke for many liberal American
lawmakers when she commented, "Do we have to involve the IMF at all? Because, as we
have painfully discovered, the way the IMF works causes children to starve." (5)
So starved of legitimacy was the Fund that US Treasury Secretary Larry
Summers, who in an earlier incarnation as chief economist of the World Bank was one of the
chief backers of structural adjustment, told the US Congress that the "IMF-centered
process" of macroeconomic policymaking would be replaced by "a new, more open
and inclusive process that would involve multiple international organizations and give
national policymakers and civil society groups a more central role." (6)
Globalization Unravels III: The Debacle in Seattle
Freedom, said Hegel, is the recognition of necessity. Freedom, the
proponents of neoliberalism like Hegels disciple, Francis Fukuyama, tell us, lies in
the recognition of the inexorable irreversibility of free- market globalization. Thank
god, the 50,000 people who descended on Seattle in late November 1999 did not buy this
Hegelian- Fukuyaman notion of freedom as submission and surrender to what seemed to be the
ineluctable necessity of the World Trade Organization (WTO).
In the mid-nineties, the WTO had been sold to the global public as the
lynchpin of a multilateral system of economic governance that would provide the necessary
rules to facilitate the growth of global trade and the spread of its beneficial effects.
Nearly five years later, the implications and consequences of the founding of the WTO had
become as clear to large numbers of people as a robbery carried out in broad daylight.
What were some of these realizations?
By signing on to the Agreement on Trade-Related Investment Measures
(TRIMs), developing countries discovered that they had signed away their right to use
trade policy as a means of industrialization.
By signing on to the Agreement on Trade-Related Intellectual Property
Rights (TRIPs), countries realized that they had given high tech transnationals like
Microsoft and Intel the right to monopolize innovation in the knowledge-intensive
industries and provided biotechnology firms like Novartis and Monsanto the go-signal to
privatize the fruits of aeons of creative interaction between human communities and nature
such as seeds, plants, and animal life.
By signing on to the Agreement on Agriculture (AOA), 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.
By setting up the WTO, countries and governments discovered that they
had set up a legal system that enshrined the priority of free trade above every other
good--above the environment, justice, equity, and community. They finally got the
significance of consumer advocate Ralph Naders warning a few years earlier that the
WTO, was a system of "trade uber alles."
In joining the WTO, developing countries realized that they were not,
in fact, joining a democratic organization but one where decisions were made, not in
formal plenaries but in non-transparent backroom sessions, and where majority voting was
dispensed with in favor of a process called "consensus"--which was really a
process in which a few big trading powers imposed their consensus on the majority of the
The Seattle Ministerial brought together a wide variety of protesters
from all over the world focusing on a wide variety of issues. Some of their stands on key
issues, such as the incorporation of labor standards into the WTO, were sometimes
contradictory, it is true. But most of them, whether they were in the streets or they were
in meeting halls, were united by one thing: their opposition to the expansion of a system
that promoted corporate-led globalization at the expense of justice, community, national
sovereignty, cultural diversity, and ecological sustainability.
Seattle was a debacle created by corporate overreach, which is quite
similar to Paul Kennedys concept of "imperial overstretch" that is said to
be the central factor in the unraveling of empires. (7) The Ministerials collapse
from pressure from these multiple sources of opposition underlined the truth in Ralph
Naders prescient remark, made four years earlier, that the creation of global trade
pacts like the WTO was likely to be "the greatest blunder in the history of the
modern global corporation." Whereas previously, the corporations operating
within a more or less "private penumbra" made it difficult to effectively
crystallize opposition, he argued that "now that the global corporate strategic plan
is out in print...gives us an opportunity." (8)
Truth is eternal, but it only makes a difference in human lives when it
becomes power. In Seattle, truth was joined to the power of the people and became fact.
Suddenly, facts that had previously been ignored or belittled were acknowledged even by
the powers-that-be whose brazen confidence had been shaken. For instance, that the supreme
institution of globalization was, in fact, fundamentally undemocratic was recognized even
by representatives of its stoutest defenders: the United States and the United Kingdom.
Listen to US Trade Representative Charlene Barshefsky after the revolt
of the representatives of developing countries that helped bring down the Ministerial:
"The process... was a rather exclusionary one," she admitted. "All meetings
were held between 20 and 30 key countries... And that meant 100 countries, 100, were never
in the room... [T]his led to an extraordinarily bad feeling that they were left out of the
process and that the results... had been dictated to them by the 25 or 30 privileged
countries who were in the room." (9)
Listen to Stephen Byers, the UK Secretary for Trade and Industry, after
the Seattle shock: "WTO will not be able to continue in its present form. There has
to be fundamental and radical change in order for it to meet the needs and aspirations of
all 134 of its members." (10)
Globalization Unravels IV: Meltzer Torpedoes the Bank
The Asian financial crisis triggered the IMFs crisis of
legitimacy. The Seattle Ministerial collapse brought the WTO to a standstill. However,
under Australian-turned-American Jim Wolfensohns command, the World Bank seemed
likely to escape the massive damage sustained by its sister institutions. But the torpedo
in the form of the famous Meltzer Commission found its mark in February of this year.
Formed as one of the conditions for the US Congress voting for an
increase of its quota in the IMF in 1998, the Commission was a bipartisan body that was
tasked to probe the record of the Bank and Fund with the end in view of coming up with
recommendations for the reform of the two institutions. Exhaustively examining documents
and interviewing all kinds of experts, the Commission came up with the devastating
conclusion that with most of its resources going to the better off countries of the
developing world and with the astounding 65-70 per cent failure rate of its projects in
the poorest countries, the World Bank was irrelevant to the achievement of its avowed
mission of global poverty alleviation. And what to do with the Bank? The Commission urged
that most of the Banks lending activities be devolved to the regional developing
banks. It does not take much, however, for readers of the report to realize that, as one
of the Commissions members revealed, it "essentially wants to abolish the
International Monetary Fund and the World Bank," a goal that had "significant
pockets of support... in our Congress." (12)
Much to the chagrin of Wolfensohn, few people came to the defense of
the Bank, and it was in a state of shock that the agency held its joint spring meeting
with the IMF in a Washington, DC, that was shut down by some 40,000 protestors. The spirit
of demoralization that gripped the Bank was conveyed in Wolfensohns missive to Bank
staffers before the meeting that "the next week will be a trying time for most of
us." (13) That the April 2000 meeting of the Bretton Woods twins could take place
only under heavy police protection, with the use of a system of decoys to breach
protesters lines in order to bring apprehensive delegates to the fortified bunkers
at Pennsylvania and 19th NW in central DC spoke volumes about the tattered legitimacy of
the two institutions.
The Davos Process I: Relegitimizing Globalization
Why do I keep coming back to the question of legitimacy? Because, as
the great Italian thinker Antonio Gramsci pointed out, when legitimacy has vanished and is
not regained, it is only a matter of time before the structure collapses, no matter how
seemingly solid it is. Many of the key advocates of globalization realized this in the
wake of the joint crisis of the WTO and the Bretton Woods twins. They knew that the
strategy of denial that these three institutions deployed in the past would no longer work
and that the aggressive approach of pro- globalization firebrands like Martin Wolf of the
Financial Times, who accused NGOs of ignorance and of being an "uncivil
society," was likely to be counterproductive.
To the more sober minded among the pro-globalization forces, the first
thing to do was to recognize the facts. Fact No. 1, according to the influential free
trader C. Fred Bergsten, head of Washingtons Institute of International Economics,
was that "the anti-globalization forces are now in the ascendancy." (14) And
Fact No. 2 was that central to the response to these forces "has to be an honest
recognition and admission that there are costs and losers," that "globalization
does increase income and social disparities within countries" and "does leave
some countries and some groups behind." (15)
Here is where the Davos process--of which the current exercise of the
World Economic Forum (WEF) is a part--has proven to be central to the project of
relegitimizing globalization. Davos, high up in the Swiss Alps, is not the center of a
global capitalist conspiracy to divide up the world. Davos is where the global elite meets
under the umbrella of the WEF to iron out a rough consensus on how to ideologically
confront and defuse the challenges to the system. Meeting shortly after what many regarded
as the cataclysm in Seattle, the Davos crew in late January composed the politically
correct line. Repeated like a mantra by personalities like Bill Clinton, Tony Blair, Bill
Gates, Nike CEO Phil Knight, and WEF guru Klaus Schwab, the chorus went this way:
"Globalization is the wave of the future. But globalization is leaving the majority
behind. Those voices spoke out in Seattle. Its time to bring the fruits of
globalization and free trade to the many."
It was British Prime Minister Tony Blair who best articulated the
vision and rhetoric of "compassionate globalization." Blair said:
"Alongside the advance of global markets and technologies, we are seeing a new search
for community, locally, nationally, and globally that is a response to change and
insecurity, but also reflects the best of our nature and enduring values. With it is
coming a new political agenda--one that is founded on mutual responsibility--both within
nations and across the world." (16)
He continued: "We have the chance in this century to achieve an
open world, an open economy, and an open economy with unprecedented opportunities for
people and business. But we will succeed only if that open society and economy is
underpinned by a strong ethos of mutual responsibility--by social inclusion within
nations, and by a common commitment internationally to help those affected by genocide,
debt, and environment." (17)
"I call it a Third Way," Blair declared with passion.
"It provides a new alternative in politics--on the centre and centre-left, but on new
terms. Supporting wealth creation. Tackling vested interests. Using market mechanisms. But
always staying true to clear values--social justice, democracy, cooperation.... From
Europe to North America, Brazil to New Zealand, two great strands of progressive thought
are coming together. The liberal commitment to individual free in the market economy, and
the social democratic commitment to social justice through the action of government, are
being combined." (18)
Now, one thing that the British public has finally realized about Mr.
Blair is that with him, there is a huge gap between rhetoric and substance. What actually
does "globalization with a conscience" or the "Third Way" or
"globalization with compassion" have to offer? To find out, one must turn from
Blair to Bergsten, who, to his credit, dispenses with the soaring rhetoric and admits that
the program is actually a system of "transitional safety nets...to help the
adjustment to dislocation" and "enable people to take advantage of the
phenomenon [of globalization] and roll with it rather than oppose it." (19) In short,
instead of being run over by the globalization express, people will be asked to quietly
and peacefully roll over and adjust to the constant and unpredictable change wrought by
the TNCs search for profitability.
The Davos Process II: Coopting the United Nations
As important as the rhetoric in the Davos response is the process of
bringing people onto the bandwagon. This would be achieved through dialogue, consultation,
and the formation of "partnerships" between TNCs, governments, the United
Nations, and civil society organizations.
The UN was a piece of cake. Discussions with Secretary General Kofi
Annan produced the "Global Compact" that has become the centerpiece of the
United Nations Millennial Celebrations. Signed by 44 TNCs, the Compact has been
promoted by Annan as a major step forward for it supposedly commits its signatories to
respect human, labor, and environmental rights and provide positive examples of such
behavior. To many NGOs, on the other hand, the Global Compact is turning out to be one of
the UNs biggest blunders for the following reasons:
Despite a Compact provision that membership in the Compact will not
be given to business entities complicit in human rights violations, the founding
membership includes the worst corporate transgressors of human rights, environmental
rights, and labor rights: Nike, Rio Tinto, Shell, Novartis, and BP Amoco.
The Compact will provide a great public relations venue for these
corporations to promote a clean image very different from the reality since compliance
with the Compact will be self-monitored and no sanctions exist for violating the
The Corporations will be able to use the UN logo as a seal of
corporate responsibility, thus appropriating the UNs image of international civil
service "not only for short-term profit but also for the long-term business goal of
positive brand image." (20)
The Davos Process III: Managing Civil Society
As for civil society organizations, they were not as naive as Annan and
the UN and thus neutralizing them demanded more sophisticated measures. As a first step,
one had to divide their ranks by publicly defining some as "reasonable NGOs"
that were interested in a "serious debate" about the problems of globalization
and others as "unreasonable NGOs" whose agenda was to "close down
discussion." (21) Then towards those identified as "reasonable," one put
into motion what one might call a strategy of "disarmament by dialogue" designed
to integrate them into a "working partnership" for reform.
Here the model was the "NGO Committee on the World Bank" and
other joint World Bank-NGO bodies set up by Wolfensohn and his lieutenants in the
mid-nineties. While the NGOs that joined these bodies may have done so with the best of
intentions, Wolfensohn knew that their membership in itself already helped to legitimize
the Bank and that over time these NGOs would develop a stake in maintaining the formal
relationship with the Bank. Not only was Wolfensohn able to split the Washington, DC, NGO
community, but he was able to harness the energies of a number of NGOs--many of them
unwittingly--to project the image of a Bank that was serious about reforming itself and
reorienting its approach to eliminating poverty before Meltzer Commission was able to
expose the hollowness of the Banks claims.
Wolfensohn s neutralization of a significant section of the
Washington, DC, NGO community in the mid-1990s should serve as a warning to civil society
of the mettle of the forces it is up against. The stakes are great, and how civil society
responds at this historical moment to the aggressive courtship being mounted for its hand
will make the difference in the future of the globalization project. Developments are so
fluid in the correlation of forces in the struggle between the pro- globalization and
anti-globalization camps that strategies that might have been realistic and appropriate
pre-Seattle, when the multilateral institutions had more solidity and legitimacy, may be
timid and inappropriate, if not counterproductive, now that the multilateral agencies are
in a profound crisis of legitimacy.
Let me be specific:
Will NGOs breathe life into a WTO process that is at standstill by
pushing for the incorporation of labor and environmental clauses into the WTO agreements
instead of reducing the power and authority of this instrument of corporate rule by doing
all in their power, for instance, to prevent another trade round from ever taking place?
Will they throw a life saver to the Bretton Woods institutions by
participating in the civil society-World Bank-IMF consultations that are to be the central
element of the "Comprehensive Development Framework" that Wolfensohn and the IMF
leadership sees as the key to the relegitimization of the Bretton Woods twins?
Will they allow themselves to be sucked into the Davos process of
"reasonable dialogue" and "frank consultation" when the other side
sees dialogue and consultation mainly as the first step to the disarmament of the other
Reform or Disempowerment?
Our tactics will depend not only on the balance of forces but will turn
even more fundamentally on our answer to the question: Should we seek to transform or to
disable the main institutions of corporate-led globalization?
Institutions should be saved and reformed if they're functioning, while
defective, nevertheless can be reoriented to promote the interests of society and the
environment. They should be abolished if they have become fundamentally dysfunctional. Can
we really say that the IMF can be reformed to bring about global financial stability, the
World Bank to reduce poverty, and the WTO to bring about fair trade? Are they not, in
fact, imprisoned within paradigms and structures that create outcomes that contradict
these objectives? Can we truly say that these institutions can be reengineered to handle
the multiple problems that have been thrown up by the process of corporate-led
Perhaps we can best appreciate the current situation by borrowing from
Thomas Kuhns classic Structure of Scientific Revolutions. (21) Scientific paradigms,
says Kuhn, enter into crisis when they can no longer explain or handle dissonant data
after dissonant data thrown up by observation. At this point, the community of science
diverges in its responses. Some try to salvage the dominant paradigm with endless minute
adjustments that merely prolong its inevitable demise. A brave few try to cut cleanly from
it in favor of a simpler, more elegant, and more useful paradigm--in a manner similar to
the way the founders of early modern science simply junked the old, hopelessly complex
Ptolemaic paradigm for explaining the cosmos (the sun and other celestial bodies moving
around the earth) in favor of the simpler Copernican paradigm (the earth moving around the
Like scientific paradigms in crisis, the dominant institutions of
globalization can no longer handle the multiple problems thrown up by the process of
corporate-led globalization. Instead of trying to reform the multilateral institutions,
would it in fact be more realistic and "cost-effective," to use a horrid
neo-liberal term, to move to disempower, if not abolish them, and create totally new
institutions that do not have the baggage of illegitimacy, institutional failure, and
Jurassic mindsets that attach to the IMF, World Bank, and WTO?
Disabling the Corporation
Indeed, I would contend that the focus of our efforts these days is not
to try to reform the multilateral agencies but to deepen the crisis of legitimacy of the
whole system. Gramsci once described the bureaucracy as but an "outer trench behind
which lay a powerful system of fortresses and earthworks." We must no longer think
simply in terms of neutralizing the multilateral agencies that form the outer trenches of
the system but of disabling the transnational corporations that are fortresses and the
earthworks that constitute the core of the global economic system. I am talking about
disabling not just the WTO, the IMF, and the World Bank but the transnational corporation
itself. And I am not talking about a process of "reregulating" the TNCs but of
eventually disabling or dismantling them as fundamental hazards to people, society, the
environment, to everything we hold dear.
Is this off the wall? Only if we think that the shocking
irresponsibility and secrecy with which the Monsantos and Novartises have foisted
biotechnology on us is a departure from the corporate norm. Only if we also see as
deviations from the normal Shells systematic devastation of Ogoniland in Nigeria,
the Seven Sisters conspiracy to prevent the development of renewable energy sources
in order to keep us slaves to a petroleum civilization, Rio Tinto and the mining
giants practice of poisoning rivers and communities, and Mitsubishis recently
exposed 20-year-cover up of a myriad of product-safety violations to prevent a recall that
would cut into profitability. Only if we think that it is acceptable business practice and
ethics to pull up stakes, lay off people, and destroy long-established communities in
order to pursue ever-cheaper labor around the globe--a process that most TNCs now engage
No, these are not departures from normal corporate behavior. They are
normal corporate behavior. And corporate crime against people and the environment has,
like the Mafia, become a way of life because, as the British philosopher John Gray tells
us, "Global market competition and technological innovation have interacted to give
us an anarchic world economy." To such a world of anarchy, scarcity, and conflict
created by global laissez-faire, Gray continues, "Thomas Hobbes and Thomas Malthus
are better guides than Adam Smith or Friedrich von Hayek, with their Utopian vision of a
humanity united by 'the benevolent harmonies of competition.'" (22) Smiths
world of peacefully competing enterprises has, in the age of the TNC, degenerated into
Hobbes "war of all against all."
Gray goes on to say that "as it is presently organized, global
capitalism is supremely ill-suited to cope with the risks of geo-political conflict that
are endemic in a world of worsening scarcities. Yet a regulatory framework for coexistence
and cooperation among the worlds diverse economies figures on no historical or
political agenda." (23) Recent events underline his point. When the ice cap on the
North Pole is melting at an unprecedented rate and the ozone layer above the South Pole
has declined by 30 per cent, owing precisely to the dynamics of this corporate
civilizations insatiable desire for growth and profits, the need for cooperation
among peoples and societies is more stark than ever. We must do better than entrust
production and exchange to entities that systematically and fundamentally work to erode
solidarity, discourage cooperation, oppose regulation except profit-enhancing and
monopoly-creating regulation, all in the name of the Market and Efficiency.
It is said that in the age of globalization, nation-states have become
obsolete forms of social organization. I disagree. It is the corporation that has become
obsolete. It is the corporation that serves as a fetter to humanitys movement to new
and necessary social arrangements to achieve the most quintessentially human values of
justice, equity, democracy, and to achieve a new equilibrium between our species and the
rest of the planet. Disabling, disempowering, or dismantling the transnational corporation
should be high on our agenda as a strategic end. And when we say this, we do not equate
the TNC with private enterprise, for there are benevolent and malevolent expressions of
private enterprise. We must seek to disable or eliminate the malevolent ones, like the
Mafia and the TNC. (24)
The Struggle for the Future I: Deglobalization It is often said that we
must not only know what we are against but what we are for. I agree--though it is very
important to know very clearly what we want to terminate so that we do not end up
unwittingly fortifying it so that, like a WTO fortified with social and environmental
clauses, it is given a new leash on life.
Let me end, therefore, by giving you my idea of an alternative. It is,
however, one that has been formulated for a Third World, and specifically Southeast Asian,
context. Let me call this alternative route to the future "deglobalization."
What is deglobalization?
I am not talking about withdrawing from the international economy. I am
speaking about reorienting our economies from production for export to production for the
about drawing most of our financial resources for development from
within rather than becoming dependent on foreign investment and foreign financial markets;
about carrying out the long-postponed measures of income
redistribution and land redistribution to create a vibrant internal market that would be
the anchor of the economy;
about deemphasizing growth and maximizing equity in order to
radically reduce environmental disequilibrium;
about not leaving strategic economic decisions to the market but
making them subject to democratic choice;
about subjecting the private sector and the state to constant
monitoring by civil society;
about creating a new production and exchange complex that includes
community cooperatives, private enterprises, and state enterprises, and excludes TNCs;
about enshrining the principle of subsidiarity in economic life by
encouraging production of goods to take place at the community and national level if it
can be done so at reasonable cost in order to preserve community.
We are talking, moreover, about a strategy that consciously
subordinates the logic of the market, the pursuit of cost efficiency to the values of
security, equity, and social solidarity. We are speaking, in short, about reembedding the
economy in society, rather than having society driven by the economy.
The Struggle for the Future II: A Plural World
Deglobalization or the reempowerment of the local and national,
however, can only succeed if it takes place within an alternative system of global
economic governance. What are the contours of such a world economic order? The answer to
this is contained in our critique of the Bretton Woods cum WTO system as a monolithic
system of universal rules imposed by highly centralized institutions to further the
interests of corporations--and, in particular, US corporations. To try to supplant this
with another centralized global system of rules and institutions, though these may be
premised on different principles, is likely to reproduce the same Jurassic trap that
ensnared organizations as different as IBM, the IMF, and the Soviet state, and this is the
inability to tolerate and profit from diversity.
Today's 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 organizations interacting with one another, guided
by broad and flexible agreements and understandings.
We are not talking about something completely new. For 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 institutions that a number of Latin American and Asian countries were
able to achieve a modicum of industrial development in the period from 1950 to 1970. It
was under such a pluralistic system, under a General Agreement on Tariffs and Trade (GATT)
that was limited in its power, flexible, and more sympathetic to the special status of
developing countries, that the East and Southeast Asian countries were able to become
newly industrializing countries through activist state trade and industrial policies that
departed significantly from the free-market biases enshrined in the WTO.
Of course, economic relations among countries prior to the attempt to
institutionalize one global free market system beginning in the early 1980's were not
ideal, nor were the Third World economies that resulted ideal. But these conditions and
structures underline the fact that the alternative to an economic Pax Romana built around
the World Bank-IMF-WTO system is not a Hobbesian state of nature. The reality of
international relations in a world marked by a multiplicity of international and regional
institutions that check one another is a far cry from the propaganda image of a
"nasty" and "brutish" world. Of course, the threat of unilateral
action by the powerful is ever present in such a system, but it is one that even the most
powerful hesitate to take for fear of its consequences on their legitimacy as well as the
reaction it would provoke in the form of opposing coalitions.
In other words, what developing countries and international civil
society should aim at is not to reform the TNC-driven WTO and BrettonWoods institutions,
but, through a combination of passive and active measures, to radically reduce their
powers and to turn them into just another set of actors coexisting with and being checked
by other international organizations, agreements, and regional groupings. These would
include such diverse actors and institutions as UNCTAD, multilateral environmental
agreements, the International Labor Organization, the European Union, and evolving trade
blocs such as Mercosur in Latin America, SAARC in South Asia, SADCC in Southern Africa,
and a revitalized ASEAN in Southeast Asia.
More space, more flexibility, more compromise--these should be the
goals of the Southern agenda and the civil society effort to build a new system of global
economic governance. It is in such a more fluid, less structured, more pluralistic world,
with multiple checks and balances, that the nations and communities of the South--and the
North--will be able to carve out the space to develop based on their values, their
rhythms, and the strategies of their choice.
Let me quote John Gray one last time. "It is legitimate and indeed
imperative," he says, "that we seek a form of rootedness which is sheltered from
overthrow by technologies and market processes which in achieving a global reach that is
disembedded from any community or culture, cannot avoid desolating the earths human
settlements and its non-human environments." The role of international arrangements
in a world where toleration of diversity is a central principle of economic organization
would be "to express and protect local and national cultures by embodying and
sheltering their distinctive practices." (25)
Let us put an end to this arrogant globalist project of making the
world a synthetic unity of individual atoms shorn of culture and community. Let us herald,
instead, an internationalism that is built on, tolerates, respects, and enhances the
diversity of human communities and the diversity of life.
C. Fred Bergsten, "The Backlash against Globalization,"
Speech delivered at the 2000 Meeting of the Trilateral Commission, Tokyo, April 2000.
Downloaded from Internet.
Cited in Giovanni Andrea Cornia, "Inequality and Poverty Trends
in the Era of Liberalization and Globalization," Paper delivered at the "United
Nations Millenium Conference," Tokyo, January 19-20, 2000.
Ibid.; see also, "Number of Worlds Poor Unchanged in the
1990s," Reuters, August 3, 2000.
Quoted in Associated Press, reproduced in Business World, Nov. 15,
Op-ed column, Washington Post, reproduced in Today (Manila), Nov. 15,
Paul Kennedy, The Rise and Fall of the Great Powers (New York:
Vintage Books, 1989).
Ralph Nader, speech at International Forum on Globalization Teach-in
on "The Social, Ecological, Cultural, and Political Costs of Economic
Globalization," Riverside Church, New York, Nov. 10, 1995; quoted in Joshua Karliner,
The Corporate Planet (San Francisco: Sierra Club, 1997), p. 207.
Press briefing, Seattle, Washington, Dec. 2, 1999.
Quoted in "Deadline Set for WTO Reforms," Guardian News
Service, Jan. 10, 2000.
James Wolfensohn, Memo on "Disruptions at Spring Meetings,"
World Bank, Washington, DC, April 13, 2000.
Prime Minister Anthony Blair, Speech at the World Economic Forum,
Davos, Switzerland, January 28, 2000.
Letter of International Coalition against Global Compact, July 26,
The Wolfensohn memo, above, is an interesting exercise in this
branding or categorization of NGOs.
Thomas Kuhn, The Structure of Scientific Revolutions (Chicago:
University of Chicago Press, 1971).
John Gray, False Dawn (New York: New Press, 1998), p. 207.
For excellent recent critiques of the corporation, see David Korten,
When Corporations Rule the World (San Francisco: Kumarian Press/Beret-Koehler, 1995),
Joshua Karliner, The Corporate Planet (San Francisco: Sierra Club Books, 1997), and
Richard Barnet and John Cavanagh, Global Dreams: Imperial Corporations and the New World
Order (New York: Simon and Shuster, 1994).
John Gray, Enlightenments Wake (London: Routledge, 1995), p.
[Walden Belo is Executive Director of Focus on the Global South, a
program of research, analysis, and advocacy of the Chulalongkorn University Social
Research Institute (CUSRI) in Bangkok, Thailand; and Professor of Sociology and Public
Administration at the University of the Philippines.]
JAUNTA BEEFS UP OFFICER CORPS
Monday, November 27, 2000
WILLIAM BARNES in Bangkok
The main officer training school, the equivalent of the United States'
West Point, has tripled its intake this year to 1,500 officer cadets.
Official media have been silent on the expansion but military analysts
believe it may be partly a response to a shortage of civil servants in a country
devastated by frequent college closures and economic malaise.
"Burma is not a communist state but it is an army state. The
regime thinks it must have its hands on all the chief levers of power so it wouldn't
surprise me at all if it thinks it needs more officers," one observer said.
The Defence Services Academy at Pyin-Oo-Lwin--better known as the old
British hill station of Maymyo--has trained most of the junta's leadership. It takes high
school graduates and gives them a degree-equivalent education.
Its graduates are valued for their loyalty, the quality ruling generals
value above all else in their recruits.
The military has swollen from 180,000 to more than 400,000 since
nationwide pro-democracy protests in 1988 that led to the formation of the present junta
from a military establishment that has ruled since a 1962 coup.
Although no one doubts that Burma's army is the largest it has ever
been, many of its battalions are believed to be under strength. It may be that more
officers are needed to stiffen the ranks, or that further expansion is contemplated.
Some figures within the regime have suggested in the past that it was
aiming to enlarge its numbers to a half a million in uniform.
The Defence Services Academy has undergone dramatic expansion in both
facilities and in courses offered over the past three years, according to Jane's Defence
The country's colleges were closed for most of the 1990s for fear of
political protests by students. The Government has had difficulty finding suitable
candidates to work in senior technical and administrative positions in the administration,
according to Jane's.
Military salaries were increased fivefold in April, compared with
three-fold increases for civil servants. Raging inflation has severely punished state
employees on fixed salaries.
The regime is loath to delegate even quite technical decisions to
On the other hand, outside observers have rarely given top marks for
the quality of the regime's leadership.
The Burmese army has in the past appeared to want to try to emulate the
military's dominant role in former president Suharto's Indonesia. But even under Mr
Suharto's discredited rule, highly educated technocrats played a key role in developing
"They are a pretty paranoid bunch. Even if they could stomach
taking more advice from experts they would still want military officers to be there
looking over their shoulder," a Burma watcher in Bangkok said.
The cash-strapped regime is taking in foreign currency from natural gas
exports to Thailand, which may explain the recent pay rises. It also might help resurrect
military projects that had been shelved earlier, Jane's said.
SINGAPORE'S TRADE INITIATIVES UNDERMINE
ASEAN ECONOMIC POLICY
The Association of Southeast Asian Nations held its annual summit in
Singapore Nov. 22-25. But Singapore, the most modernized of the organization's members,
has embarked on a separate series of trade initiatives without the consent of its larger,
poorer partners. While the nations signed several new regional initiatives at the summit,
Singapore's actions place the economic future of the organization in doubt.
ASEAN has always been a strange animal. Its 10 members ranging from
democracies to dictatorships have little in common. Singapore is a squeaky-clean,
politically stable global transshipment and financial hub. Cambodia, ASEAN's newest
member, is still reeling from a brutal civil war and remains almost totally dependent upon
foreign aid. Per capita income in Cambodia is less than 1 percent of Singapore's $30,000
per capita income.
This year's ASEAN summit threw these differences into sharp contrast.
Agreement upon an e-commerce treaty was one of the summit's successes. But in Myanmar,
ASEAN's most politically repressive member, simply owning a computer requires government
approval. Talk of a wider free trade agreement among members, in the works for decades,
remains just talk. Most ASEAN states export strikingly similar goods, undermining
arguments for a free trade agreement. In its most ambitious incarnation, the ASEAN Free
Trade Area would not achieve zero tariffs until 2010.
Singapore's government, frustrated by the slow pace of integration,
feels its neighbors' economic shortcomings should not weigh it down. At the summit,
Singaporean Prime Minister Goh Chok Tong stated, Those who can run faster should run
faster. They should not be restrained by those who don't want to run at all. To this end,
Singapore continues efforts to bolster its trading position independent of ASEAN. It has
signed bilateral trade deals with Australia, Canada, Chile, Japan, Mexico, New Zealand,
South Korea and the United States, and it is negotiating more comprehensive deals with
almost all of them. Singapore's unilateral actions have upset many of its ASEAN partners,
most notably Malaysia. The latter wants ASEAN to conclude its own trade agreement first,
then negotiate with other countries as a bloc.
Singapore, however, sees this idea as a nonstarter. Differences among
ASEAN's 10 economies make for an awkward grouping, and the negotiations predicated on
ASEAN's founding principle of noninterference are excruciatingly slow. In contrast,
Singapore's small size and lack of an agricultural sector allow its government to
negotiate free trade deals quickly. Furthermore, its position as the world's largest
transshipment center means the economy benefits from trade, so Singapore supports free
trade among all states even in the rare occurrences when it is excluded. In making itself
a major economic entrepot and transit point, Singapore has attained additional political
clout as well. Singapore's total 1999 trade flows including re-exports totaled more than
$210 billion. That sum is roughly equivalent to the combined GDPs of Indonesia and
Politically, ASEAN hits rough patches from time to time as well. After
Singaporean Prime Minister Lee Kuan Yew predicted Indonesian President Abdurrahman Wahid
would resign soon, the often- unpredictable Wahid stated Singaporeans despise Malays and
threatened to shut off Singapore's fresh water supplies.
This is not to say ASEAN is useless as a political group. ASEAN allows
10 Southeast Asian states to speak with a coherent voice in international forums, thus
granting them stature none could hope to have alone. It allows them to stand up to the
major regional powers, China and the United States. It also is evolving into the region's
political fulcrum: China, Japan and South Korea recently agreed ASEAN is an ideal forum
for their own trilateral cooperation. It even has some rather clever mechanisms like the
ASEAN Regional Forum, Asia's premier security talk-shop for allowing states to communicate
frankly without risking diplomatic breaches. But tensions among the wildly varied states
constantly crop up.
It is these tensions that will limit ASEAN's future as an economic
entity. Governments willing to trade with Internet-savvy Singapore cringe at the thought
of investing in some of its more unstable partners, such as Indonesia, the Philippines or
Vietnam. Singapore largely has written off free trade within ASEAN as a viable short- term
goal, preferring instead to focus its efforts on more developed partners outside Southeast
Asia. Without Singapore's leadership, an ASEAN free trade agreement and regional economic
integration are doubtful.
*Stratfor.com's Global Intelligence Update -28 November 2000
SECRET BID TO THWART IRIAN JAYA SPLIT
Monday, November 27, 2000
Indonesia is running a secret campaign to stop the rich and restive
province of Irian Jaya breaking away, using a combination of bullying, clandestine
operations and persuasion, internal documents show.
A leaked Home Affairs Department plan marked "Top Secret"
calls for the raising of village-level militias and tough action against independence
Separatist passions are rising in the eastern province, stoked by human
rights abuses by soldiers and police and resentment at what many see as Jakarta's
plundering of its resources.
Many senior officials and military leaders fear its breakaway would
stoke other separatist movements and deprive the cash-strapped central Government of vital
The secret plan was drafted by the Home Affairs Department's
director-general for national unity, Ermaya Suradinata, who confirmed the document's
authenticity and said it was part of Jakarta's blueprint for a peaceful solution in Irian
"Rising calls for independence in Irian Jaya have gained momentum
as ... the independence group grows more solid than ever," it says, warning that
separatist sympathisers have infiltrated local government in the province, also known as
The document calls for a two-pronged strategy: a hearts-and-minds
campaign and a clandestine intelligence operation. Mr Suradinata said the clandestine
intelligence operations would prevent violence by "certain groups". There are
also fears bloodshed could erupt for the December 1 anniversary of tribal chiefs' 1961
declaration of independence.
Mr Suradinata said Jakarta wanted a peaceful solution, through
increased autonomy and development for the territory. "Solving the problem of Irian
Jaya cannot be done with violence. It must be done through dialogue," he said.
"They feel, especially in the more isolated areas, that the
Government is not paying enough attention."
In a grim echo of the failed strategy to keep East Timor under
Jakarta's control, the secret plan urges the formation of village militias.
Two militias operate in Irian Jaya: one in favour of independence and a
smaller pro-Jakarta group. But they have not yet reached the bloody level of the
pro-Jakarta East Timor militias.
Mr Suradinata said the militias were not intended as a paramilitary
force, but as "working partners" to help the Government implement its policy and
win over the Irianese.
SHOWDOWN BEGINS BETWEEN YEN AND YUAN
Two weeks ago, China and the United States signed an accord in
Washington, signalling that both parties agree that the mainland needs to move towards
greater exchange-rate flexibility.
There have been other signs China is moving towards currency
In June, Premier Zhu Rongji asked the Hong Kong Monetary Authority how
widening the yuan's trading band would affect the SAR, effectively announcing the
mainland's intent to move further in the direction of floating its currency. In July, Dai
Xianglong, the governor of the People's Bank of China, said China planned to make the yuan
convertible on the capital account. In addition, the central bank has stopped intervening
in the markets, and in late September controls on interest rates for foreign-currency
deposits and loans were relaxed.
Pundits have been swift to attribute the need for relaxation of the
exchange-rate regime to China's imminent accession to the World Trade Organisation (WTO).
But another, less obvious imperative is driving China's efforts to move closer to
convertibility: growing regional integration is producing a situation in which a stable
East Asian currency backed by a powerful economy might eventually find a niche as the
regional currency. This has not been loston mainland policymakers.
The Japanese Government is likewise moving firmly to establish a yen
bloc by promoting the yen's internationalisation, improving the appeal of yen-denominated
bonds and encouraging yen-denominated trade and capital transactions.
These efforts have been tied to the country's aid programmes. Under the
Miyazawa Initiative instituted in October, 1998, Japan offered a US$30 billion (about
HK$234 billion) assistance scheme to help countries affected by the regional financial
crisis. The New Miyazawa Initiative announced in mid-1999 seems more oriented toward
internationalising the yen.
Under this new initiative, Japan has allocated two trillion yen (about
HK$142 billion) as credit guarantees for purchases of bonds issued by Asian countries;
infrastructure development; and assistance under the Asian Currency Crisis Support
Facility of the Asian Development Bank (ADB). The creation of more extensive Asian capital
markets is thus being funded by yen loans and guarantees.
What factors are pushing reforms in the Chinese and Japanese financial
realms? Are these two financial giants, one existing and one potential, movingin
complementary or competitive arcs? In any examination of the motives behind the changes,
the concept of an Asian Monetary Fund (AMF) draws immediate attention.
The idea of a regional monetary fund, based on a system of regional
co-operation and joint responsibility for liquidity management, has been circulating among
Asian policymakers for the past few years. Japan proposed an AMF in mid-1997, at the start
of the regional financial crisis. But the idea was opposed, mainly by the US, on the
grounds that such an institution might undermine the International Monetary Fund (IMF).
The Japanese Government subsequently abandoned its official pursuit of
an AMF. The concept has been kept alive among potential players, however, and the finance
ministers of the 10 members of the Association of Southeast Asian Nations plus China,
Japan and South Korea known as Asean plus three are expected to unveil a blueprint for
something akin to an AMF by the end of this year, possibly as early as this week if Asean
plus three is able to hammer out details at its summit in Singapore.
The Chiang Mai Initiative, which Asean plus three finance ministers
signed in May, essentially agrees that signatories, by building a network of bilateral
swap and repurchase agreements, will make available reserves sufficient to allow any other
signatory to address speculative selling pressure on its currency and thereby avoid having
This agreement provides an initial structure to integrate the financial
and monetary spheres of Southeast and East Asian economies, aiming thereby to reduce the
possibility of future crises and promoting regional long-term financing for development.
In the near term, the only possible scenario is for Japan (with
reserves in excess of US$300 billion) to be the source of any lifelines. What is being
built is a yen-based bailout mechanism for Asian economies. How the existing agreement is
to be built into an AMF will become clearer over the next few months. What is clear is
that there is a desire, in East Asia, for a local lender of last resort, one that can
dispense macro- and micro-economic advice more appropriate for Asian economies than can
Japan is representing itself as less than dynamic in this process but
appears to have orchestrated the Chiang Mai Initiative and is actively pushing forward the
regional mechanism. Japan's former vice-minister for international financial affairs,
Eisuke Sakakibara, has described Chiang Mai as a first step towards a regional mechanism.
Mr Sakakibara also said a regional fund would benefit from the participation of other
Asian nations, but no one has publicly mentioned a role for Hong Kong.
External opposition to the fund appears to be waning, with even the
IMF's new managing director, Horst Koehler, saying he welcomes discussions about an AMF
provided it is to be complementary to, rather than competitive with, the IMF.
Opposition to the idea of an AMF comes mainly from the US. Fred
Bergsten, the director of the Institute for International Economics, has argued that it is
impossible for either China or Japan to lead an AMF because of opposition from the other
and has instead urged the establishment of an Asian Pacific Monetary Fund that would
include the US. East Asian countries suggest that if Western countries can accept the ADB
as a regional equivalent of the World Bank, they should have no objection to an AMF as a
regional variant of the IMF.
If, as appears likely, an AMF is established and regional monetary
co-operation increases, what opportunities or demands will this create for Asean or, more
widely, the East Asian region? It may trigger the creation of an Asean currency area,
nominally a Thai initiative, to reduce member countries' dependence on the US dollar in
their business dealings.
A common currency has been suggested by Malaysia, which has reportedly
asked the IMF to study the feasibility of a common Asean currency. The IMF has refused to
confirm whether this study has been completed or even exists. Given the regional
integration Asean plus three is pursuing, it is more likely planning will centre on an
East Asian currency rather than an Asean one.
Most feasible is to adopt one of the region's existing powerful
currencies as the currency of settlement for the AMF, for swap agreements and for trade
purposes (much as the US dollar serves in many parts of the world). China and Japan both
hope their own currency will fill this position. The mainland's recent efforts to push the
yuan towards convertibility and Japan's endeavours, official and otherwise, to have the
yen adopted as the region's trading and swap currency are aimed at ensuring the yuan, or
the yen, is well-positioned as Asean plus three integration progresses. Regional currency
dominance will position either country well in other areas of endeavour.
If either currency becomes the regional currency, it will also become
the third global currency. The stakes are thus global rather than regional, and a much
larger game is in the making. Will the regional currency be the yen or the yuan?
International opinion is siding with the yen.
Japan, although willing to adopt the mantle of regional financial and
monetary leader, does not want to be seen to be initiating rivalry in this sphere.
Consequently, it asked Thailand to make the proposals at the May meeting that gave rise to
the Chiang Mai Initiative.
Japan has also done what it can to placate China, actively supporting
the mainland's bid for accession to the WTO. But the potential rivalry between these two
giants will be brought into the open over the next few years.
China will not stand by and allow Japan to assume primacy in this
critical financial competition, but at present its arsenal is limited. It has size, it has
huge markets, but its international financial muscle remains weak.
Eventually, free convertibility of the yuan is essential if China is to
respond. Hong Kong's role in this rivalry and whether yuan convertibility will come in
time to prevent the yen from becoming the currency of choice for East Asia are issues only
time will answer. The battle has just begun.
* Geoff Wade is the co-ordinator of the China-Asean Project at the
University of Hong Kong's Centre of Asian Studies.
THAW CONTINUES WITH PLAN FOR SINGLE
North and South Korea have agreed to launch a "Korean euro",
their own single currency, for use in addition to US dollars for inter-Korean trade.
The two Koreas also exchanged lists of long-lost relatives, dispelling
concerns about the North's threat to cancel a new round of family reunions set to start
later this month.
The accord on the single currency came as both sides held a second and
final day of economic talks in the communist state on finalising agreements on investment
guarantees and the avoidance of double taxation between them. "The new currency would
be the special means of payment to be used exclusively for inter-Korean trade
settlement," South Korean Assistant Finance and Economy Minister Lee Kyong-Keun said.
The South's chief delegate compared the new inter-Korean currency to
the euro, used in 11 European countries and launched in January last year. But he did not
elaborate or say what the new currency would be called.
In another step towards healing more than half a century of separation,
the two Koreas also exchanged lists of 200 people from each side who are anxiously
awaiting reunion meetings with their long-lost relatives. The two Koreas will select 100
people from each list to be reunited with their families over three days from November 30.
The humanitarian event, to bring together families separated since the
Cold War division of the peninsula in 1945, is one of the successful outcomes of the
historic inter-Korean summit in June. The summit, between South Korean President Kim
Dae-jung and North Korean leader Kim Jong-il, led to the first reunion of 200 people from
each side in heart-wrenching scenes in Seoul in August. The two Koreas also agreed, during
follow up peace talks, to organise another two reunions this year.
At separate economic talks in Pyongyang, South Korea negotiators cited
progress but admitted they had not yet reached full agreement. "We have significantly
narrowed our differences to finalise the four economic accords," the South's chief
delegate Mr Lee said, according to South Korean reports from Pyongyang. He added: "We
plan to iron out fully the differences, yet to be settled down, at the chief delegates'
During the first day of the economic talks, Mr Lee asked for
"transparency" in checking how 150,000 tonnes of food aid sent last month was
distributed in the North. The North disclosed in documents details of food distribution
and allowed South Korean officials to inspect one of the food distribution centres. The
North stated in the documents, which were also released in Seoul, that some food shipped
from the South over the past month had yet to reach some "inland areas" due to a
lack of transportation.
"I think the North is distributing the food in a transparent
way," Mr Lee was quoted as saying in Pyongyang after the on-the-spot inspection.