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Walden Bello - 2001
Walden Bello is a member of the House of Representatives of the Republic of the Philippines and president of the Freedom from Debt Coalition. A retired professor of sociology at the University of the Philippines, he is currently a senior analyst at the Bangkok-based analysis and advocacy institute Focus on the Global South. He is the author of 15 books, the most recent of which is The Food Wars.
Washington's Political Transition threatens Bretton Woods Twins (January 2001)
The coming to power of the Republicans in Washington, DC, spells deep trouble for the International Monetary Fund and the World Bank. The Bretton Woods institutions will lose their liberal internationalist protectors like Treasury Secretary Larry Summers who believe in using the Fund and Bank as central instruments to achieve US foreign economic policy objectives.
And coming in with President-elect George W. Bush will be a set of conservative analysts and technocrats representing the thinking of the US Congress' Advisory Commission on International Financial Institutions. Also known as the 'Meltzer Commission', after its chairman, banker Alan Meltzer, the body issued earlier this year a report condemning the IMF for promoting global macroeconomic instability and portraying the World Bank as irrelevant to the mission of promoting development and reducing global poverty. Confronted with four years of Republican hegemony, James Wolfensohn, president of the World Bank, is rumoured to be contemplating resigning before the end of his second term in office. The IMF's Stalingrad The Washington political transition catches the IMF and the World Bank at their most vulnerable state in years. If any event may be said to have contributed to undermining the Fund, it was the Asian financial crisis, whose legacy of collapsed financial systems, bankrupt corporations, and rising poverty and inequality continue to plague the region. Indeed, one can say that the Asian financial crisis was the Stalingrad of the IMF. Bearing in mind the limits of metaphor, the IMF during the Asian financial crisis acted like the German Sixth Army, making one wrong move after another on the way to disaster. It was the IMF that helped trigger the massive flow of volatile speculative capital into the region by pressing the Asian governments for capital account liberalisation prior to the crisis, egged on itself by the US Treasury Department. It was the IMF that confidently moved in after the panicky flight of speculative capital began, with a tight fiscal and monetary formula that, by drastically reducing government's capacity to act as a counterforce to the downturn in private sector activity, converted the financial crisis into an economic collapse. It was the IMF that assembled the high-profile multibillion-dollar rescue packages that were meant to rescue foreign creditors even as local banks, finance companies, and corporations were told to bite the bullet by accepting bankruptcy. It was the IMF that imposed on the fallen economies a program of radical deregulation and financial and trade liberalisation that was essentially Washington's pre-crisis agenda that the tigers had been able to frustrate during their days of prosperity. And it was the IMF that, at the urging of the US Treasury Department, killed the proposal for an Asian Monetary Fund (AMF), which would have pooled together the reserves from the more financially solid economies to serve as a fund from which those of them being subjected to speculative attack could draw to shore up their currencies. Among other things, this move contributed to widening the divergence in the policies toward the Asian region of the United States and Japan, the AMF's prime backer. As the stricken economies registered negative growth rates and record unemployment rates in 1998, and over one million people in Thailand and 21 million in Indonesia fell below the poverty line, the IMF joined corrupt governments, banks, and George Soros as the villains of the piece in the view of millions of newly impoverished Koreans, Thais, and Indonesians. But equally as consequential for its future as an institution was the fact that the IMF's actions brought the long simmering conflict over the role of the Fund within the US elite to a boil. The American right denounced the Fund for promoting moral hazard, with some personalities like former US Treasury Secretary George Shultz calling for its abolition, while orthodox liberals like Jeffrey Sachs and Jagdish Bhagwati attacked the Fund for being a threat to global macroeconomic stability and prosperity. Late in 1998, a conservative-liberal alliance in the US Congress came within a hair's breath of denying the IMF a $14.5 billion increase in the US quota. The quota increase was salvaged, with arm-twisting on the part of the Clinton administration, but it was clear that the long-time internationalist consensus that had propped up the Fund for over five decades was unraveling. Another Disaster The Fund's performance during the Asian financial crisis led to a widespread reappraisal of Fund's role in the Third World in the 1980s and early 1990's, when structural adjustment programs were imposed on over 90 developing and transition economies. Judged by the extremely narrow criterion of promoting growth, structural adjustment programs were a failure, with a number of studies showing that adjustment had brought about a negative effect on growth. Indeed, after over 15 years, it was hard to point to more than a handful as having brought about stable growth, among them the very questionable case of Pinochet's Chile. What structural adjustment had done, instead, was to institutionalise stagnation in Africa, Latin America, and other parts of the Third World, a fact reflected in a study of the Centre for Economic and Policy Research which shows that 77 per cent of countries for which data is available saw their per capita rate of growth fall significantly from the period 1960-1980 to the period 1980-2000, the structural adjustment period. In Latin America, for one, income expanded by 75 per cent during the sixties and seventies, when the region's economies were relatively closed, but grew by only six per cent in the past two decades. Broadening the criteria of success to include reduction of inequality and bringing down poverty, the results were unquestionable: structural adjustment was a blight on the Third World. A study by Mattias Lundberg and Lyn Squire of the World Bank summed it up thus: "The poor are far more vulnerable to shifts in relative international prices, and this vulnerability is magnified by the country's openness to trade...[A]t least in the short term, globalisation appears to increase both poverty and inequality". Imposed at the start of the 1980's, adjustment was a central factor in the 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 world's population rose from 69 to 83 per cent between 1965 and 1990. 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, poverty according to the unrealistic and restrictive World Bank criterion of earning 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. According to a recent World Bank study, the absolute number of people living in poverty rose in the 1990's in Eastern Europe, South Asia, Latin America and the Caribbean, and sub-Saharan Africa-all areas that came under the sway of adjustment programs. 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" and promised to learn from the World Bank in making the elimination of poverty the "centrepiece" of its programs. But this was too little, too late, and too incredible. Support for the IMF in Washington was down to the US Treasury. Indeed, so starved of legitimacy and support was the Fund at the end of the 20th century that US Treasury Secretary Larry Summers, who in an earlier incarnation as chief economist of the World Bank had been one of the chief backers of structural adjustment, found that he could only save it by damning it. The IMF, he told Congress, deserved to be preserved as a part of the international financial architecture, but when it came to dealing with developing countries, Washington would support "a new framework for providing international assistance...one that moves beyond a closed, IMF-centred process that has too often focused on narrow macroeconomic objectives at the expense of broader human development". Meltzer Torpedoes the Bank The Asian financial crisis triggered the IMF's crisis of legitimacy. However, under Australian-turned-American Jim Wolfensohn's command, the World Bank seemed likely to escape the massive damage sustained by its sister institution. Since assuming office in 1996, Wolfensohn, by opening up channels of communication with the non-governmental organisations and with the help of a well-oiled public relations machine, tried to recast the Bank's image as an institution that was not only moving away from structural adjustment but was also making poverty-elimination its central mission, promoting good governance, and supporting environmentally-sensitive lending. The best defence, in short, was to expand the agency's agenda. But the torpedo in the form of the Meltzer Commission found its mark in February of this year. Exhaustively examining documents and interviewing all kinds of experts, the Commission came up with a number of devastating findings that bear being pointed out: 70 per cent of the Bank's non-grant lending is concentrated in 11 countries, with 145 other member countries left to scramble for the remaining 30 per cent; 80 per cent of the bank's resources are devoted not to the poorest developing countries but to the better off ones that have positive credit ratings and, according to the Commission, can therefore raise their funds in international capital markets; the failure rate of Bank projects is 65-70 per cent in the poorest countries and 55-60 per cent in all developing countries. The World Bank, in short, 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 Bank's lending activities be devolved to the regional developing banks. It does not take much, however, for readers of the report to realise that, as one of the Commission's 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" Much to the chagrin of Wolfensohn, few people came to the defence of the Bank. Instead, the realities of the Bank's expanded mission were exposed in the months leading up to the World Bank-IMF meeting in Prague in September. The claim that the Bank was concerned about "good governance" was contradicted by the exposure of its profound involvement with the Suharto regime in Indonesia, to which it had funneled over $30 billion in 30 years. According to several reports, including a World Bank internal report that came out in 1999, the bank tolerated corruption, accorded factual status to false government statistics, legitimised the dictatorship by passing it off as a model for other countries, and was complacent about the state of human rights and the monopolistic control of the economy. That this close embrace of the Suharto regime continued well into the Wolfensohn era was particularly damning. The image of a new, environmentally sensitive Bank under Wolfensohn also evaporated in the avalanche of criticism that came after the Meltzer report. The Bank was a staunch backer of the controversial Chad-Cameroon Pipeline, which would seriously damage ecologically sensitive areas like Cameroon's Atlantic Littoral Forest, and Bank management was caught violating its own rules on environment and resettlement when it tried to push through the China Western Poverty Project that would have transformed an arid ecosystem supporting minority Tibetan and Mongolian sheepherders into land for settled agriculture for people from other parts of China. A look at the Bank's loan portfolio revealed the reality behind the rhetoric: loans for the environment as a percentage of the Bank's total loan portfolio declined from 3.6 per cent in FY 1994 to 1.02 per cent in 1998; funds allocated to environmental projects declined by 32.7 per cent between 1998 and 1999; and more than half of all lending by the World Bank's private sector divisions in 1998 was for environmentally harmful projects like dams, roads, and power. Indeed, so marginalized was the Bank's environmental staff within the bureaucracy that Herman Daly, the distinguished ecological economist, left the Bank staff because he felt that he and other in-house environmentalists were having no impact at all on agency policy. Confronted with a list of thoroughly documented charges from civil society groups during the now famous Prague Castle Debate sponsored by Czech President Vaclav Havel during the tumultuous IMF-World Bank meeting in Prague on September 23 of this year, Wolfensohn was reduced to giving the memorable answer, "I and my colleagues feel good about going to work everyday". It was an answer that, in underlining the depth of the Bretton Woods system crisis of legitimacy, was matched only by IMF Managing Director Horst Koehler's famous line at that same event: "I also have a heart, but I have to use my head in making decisions". All this makes for interesting politics in the next few years. The motivation of the incoming Republicans in criticizing the IMF and World Bank lies in their belief in free-market solutions to development and growth. This may not coincide with that of progressives, who see the IMF and World Bank as a tool of US hegemony. But the two sides can unite behind one agenda at this point: the radical downsizing, if not dismantling, of the Bretton Woods twins. 2000: The Year of Global Protests against Globalization (January 2001)
The last year will probably go down as one of those defining moments in the history of the world economy, like 1929. Of course, the structures of global capitalism appear to be solid, with many in the global elite in Washington, Europe, and Asia congratulating themselves for containing the Asian financial crisis and trying to exude confidence about launching a new round of trade negotiations under the World Trade Organization (WTO). What we witnessed, nevertheless, was a dramatic series of events that might, in fact, lead to that time when, as the poet says, 'all that is solid melts into thin air.'
For global capitalism, the year began a month early, on Nov. 30-Dec. 1, 1999, when the Third Ministerial of the WTO collapsed in Seattle. It ended earlier this month with an equally momentous event: the unraveling of the Climate Change Conference in the Hague. Seattle: the Turning Point The definitive history of the Seattle events still needs to be written, but they cannot be understood without the explosive interaction between the militant and unrelenting protests of some 50,000 people in the streets and the rebellion of developing country delegates inside the Seattle Convention Center. Much has been made about the different motivations of the street protesters and the Third World delegates and the differences within the ranks of the demonstrators themselves. True, some of their stands on key issues, such as the incorporation of labor standards into the WTO, were sometimes contradictory. But most of them were united by one thing: their opposition to the expansion of a system that promoted corporate-led globalization at the expense of social goals like justice, community, national sovereignty, cultural diversity, and ecological sustainability. Still, the Seattle debacle would not have occurred without another development: the inability of the European Union and the United States to bridge their differences on key issues, like what rules should govern their monopolistic competition for global agricultural markets. And the fallout from Seattle might have been less massive were it not for the brutal behavior of the Seattle police. The assaults on largely peaceful demonstrators by police in their Darth Vader-like uniforms in full view of television cameras made Seattle's mean streets the grand symbol of the crisis of globalization. When it was established in 1995, the WTO was regarded as the crown jewel of capitalism in the era of globalization. With the Seattle collapse, however, realities that had been ignored or belittled were acknowledged even by the powers-that-be whose brazen confidence in their own creation had been shaken. For instance, that the supreme institution of globalization was, in fact, fundamentally undemocratic and its processes non-transparent was recognized even by representatives of some of its stoutest defenders pre-Seattle. The global elite's crisis of confidence was evident, for instance, in the words of Stephen Byers, the UK Secretary for Trade and Industry: 'The 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.' Seattle was no one-off event. Bitter criticism of the WTO and the Bretton Woods institutions was the not-so-subtle undercurrent of the Tenth Assembly of the United Nations Conference on Trade and Development (UNCTAD X) held in Bangkok in February. Indeed, what brought an otherwise uneventful international meeting to the front pages of the world press was the pie-splattered face of outgoing IMF Managing Director Michel Camdessus, who was on the receiving end of a perfect pitch from anti-IMF activist Robert Naiman. From Washington to Melbourne Naiman's act helped set the stage for the first really big post-Seattle confrontation between pro-globalization and anti-globalization forces: the spring meeting of the IMF and the World Bank in Washington, DC. Some 30,000 protesters descended on America's capital in the middle of April and found a large section of the northwest part of the city walled off by some 10,000 policemen. For four rain-swept days, the protestors tried, unsuccessfully, to breach the police phalanx to reach the IMF-World Bank complex at 19th and H Sts., NW, resulting in hundreds of arrests. The police claimed victory. But it was a case of the protestors losing the battle but winning the war. Just the mere fact that 30,000 people had come to protest the Bretton Woods twins was already a massive victory according to organizers who said that the most one could mobilize in previous protests were a few hundred people. Moreover, the focus of the media was on Washington, and the first acquaintance of hundreds of millions of viewers throughout the world with the World Bank and IMF were as controversial institutions under siege from people accusing them of inflicting poverty and misery on the developing world. From Washington, the struggle shifted to Chiang Mai in the highlands of Northern Thailand, where the Asian Development Bank (ADB), a multilateral body notorious for funding gargantuan projects that disrupted communities and destabilized the environment, held its 33rd Annual Meeting in early May. So shaken was the ADB leadership by the sight of some 2000 people asking it to leave town that soon after the conference, ADB President Tadao Chino established an vice presidential level 'NGO Task Force' to deal with civil society. Fearful of even more massive protests in 2001, the ADB also shifted the site of its next annual meeting from Seattle to Honolulu in the belief that the latter would be a secure site. Chiang Mai had significance beyond the ADB, however. With a majority of the protesters being poor Thai farmers, the Chiang Mai demonstrations showed that the anti-globalization mass base went beyond middle class youth and organized labor in the advanced countries. Equally important, key organizers of the Chiang Mai actions, like Bamrung Kayotha, one of the leaders of the Forum of the Poor, had participated in the Seattle protest, and they saw Chiang Mai not as a discrete event but as a link in the chain of international protests against globalization. The battle lines were next drawn Down Under, in Melbourne, Australia, in early September. The glittering Crown Casino by Melbourne's upscale waterfront had been chosen as the site of the Asia-Pacific Summit of the World Economic Forum (Davos Forum) which had become a leading force in the effort to put a more liberal face to globalization. The casino, many activists felt, was a fitting symbol of finance-driven globalization. In nearly three days of street battles, some 5,000 protesters were at times able to seal off key entrances to the Casino, forcing the organizers to bring some delegates in and out by helicopter, again in full view of television. And again, as in Seattle, rough handling of demonstrators by the police, many of them mounted, magnified the global controversy over the event. The Battle of Prague Later that month came Europe's turn to serve as a battleground. Some 10,000 people came from all over the continent to Prague, prepared to engage in an apocalyptic confrontation with the Bretton Woods institutions during the latter's annual meeting in that beautiful Eastern European city in the most beautiful of seasons. Prague lived up to its billing. With demonstrations and street battles trapping delegates at the Congress Center or swirling around them as they tried to make their way back to their quarters in Prague's famed Old Town, the agenda of the meeting was, as one World Bank official put it, 'effectively seized' by the anti-globalization protesters. When a large number of delegates refused to go to the Congress Center in the next two days, the convention had to be abruptly concluded, a day before its scheduled ending. As important as the protests in Prague was the debate held on Sept. 23 at the famous Prague Castle between representatives of civil society and the leadership of the World Bank and the IMF, an event orchestrated by Czech President Vaclav Havel. Instead of bridging the gap between the two sides, the debate widened it, since, in response to concrete demands, World Bank President James Wolfensohn and IMF Managing Director Horst Koehler were not prepared to go beyond platitudes and generalities, as if worried that they might overstep the bounds set by their G7 masters. George Soros, who defended the Bank and Fund at the debate, said it all when he admitted that Wolfensohn and Koehler had 'performed terribly' and had blown their most important encounter with civil society. After Seattle, much talk about reforming the global economic system to bring on board those 'being left behind' by globalization was emitted by establishment personalities like Bill Gates, Bill Clinton, Tony Blair, Kofi Annan, and Nike CEO Phil Knight. The Davos Forum, in fact, placed the question of reform at the top of the agenda of the meetings it held for the global elite. A year after Seattle, however, there has been precious little in the way of concrete action. The most prominent reform initiative, the Group of Seven's plan to lessen the servicing of the external debt of the 41 Highly Indebted Poor Countries (HIPC) has actually delivered a debt reduction of only $US 1 billion since it began in 1996-or a reduction of their debt servicing by only 3 per cent in the past four and a half years! One year after the Seattle collapse, talk about reforming the decision-making process at the WTO has vanished, with Director General Mike Moore, in fact, saying that that the non-transparent, undemocratic 'Consensus/Green Room' system that triggered the developing country revolt in Seattle is 'non-negotiable.' When it comes to the question of the international financial architecture, serious discussion of controls on speculative capital like Tobin taxes has been avoided. An unreformed IMF continues to be at the center of the system's 'firefighting system.' A preemptive, pre- crisis credit line at the Fund (which no country wants to avail of) and a toothless Financial Stability Forum-where there is little developing country participation-appear to be the only 'innovations' to emerge from the Asian, Russian, and Brazilian financial crises of the last three years. At the IMF and the World Bank, similarly, there is no longer any talk about diluting the voting shares of the US and European Union in favor of greater voting power for the Third World countries, much less of doing away with the feudal practices of always having a European head the Fund and an American to lead the Bank. The much-vaunted consultative process in the preparation of 'Poverty Reduction Strategy Papers' (PRSP) by governments applying for loans is turning out to be nothing more than an effort to add a veneer of public participation to the same technocratic process that is churning out development strategies with the same old emphasis on growth via deregulation and liberalization of trade, with maybe a safety net here and there. At the Bank, strong resistance to innovations that would put the priority on social reforms led to the resignation of two reformers: Joseph Stiglitz, the chief economist, and Ravi Kanbur, the head of the World Development Report task force. Debacle in The Hague The protests throughout the year had a strong anti-TNC strain, with the World Bank, IMF, and WTO regarded as servitors of the corporations. A strong distrust of TNCs had, in fact, developed, even in the United States, where over 70 per cent of people surveyed felt corporations had too much power over their lives. Distrust and opposition to TNCs could only be deepened by the collapse in early December of the Hague Conference on Climate Change, owing to US's industry's unwillingness to significantly cut back on its emission of greenhouse gases. At a time that most indicators are showing an acceleration of global warming trends, Washington's move has reinforced the conviction of the anti-globalization movement that the US economic elite is determined to grab all the benefits of globalization while sticking the costs on the rest of the world. Assessing the post-Seattle situation, C. Fred Bergsten, a prominent advocate of globalization, told a Trilateral Commission meeting in Tokyo last April that 'the anti-globalization forces are now in the ascendancy.' That description is even more accurate now. With the global elite itself having lost confidence in them, a classic crisis of legitimacy has overtaken the key institutions of global economic governance. If legitimacy is not regained, it is only a matter of time before structures collapse, no matter how seemingly solid they are, since legitimacy is the foundation of power structures. The process of delegitimation is difficult to reverse once it takes hold. Indeed, what we might call, following Gramsci, as the 'withdrawal of consent' is likely to spread to the core institutions and practices of global capitalism, including the transnational corporation. 2001 promises to be an equally trying time for the globalist project. The Shakedown State: The Mafia as Government in The Philippines (6 January 2001)
The televised drama of the impeachment trial of President Joseph Estrada has transfixed the Philippines in the last few weeks. The trial and the events leading up to it have, in fact, been a veritable course in the realities of Philippine politics - even for Filipinos themselves. Ever since a close political ally of President Joseph Estrada, a powerful provincial politician named Chavit Singson, alleged over two months ago that he had delivered to the President 400 million pesos (about Rs.375 million) worth of the take from the illegal numbers game called jueteng, the nation has been forced to absorb one lesson after another, most of them rather unpleasant.
One of the most important lessons was driven home to me by a friend from Colombia who has been following the events unfolding in Manila. "In Colombia, the mafia is stronger than the government", he told me. "But you know, we still are luckier than you Fi lipinos". When I asked why, he said, "Because the mafia is the government in your country". The great German sociologist Max Weber once defined the state as the institution that has a legitimate monopoly over the use of force. This definition is inadequate when it comes to the Philippines, where the state maintains as well a monopoly or near mo nopoly over illegitimate services. Crime and corruption are prominent features of governments the world over, but in the normal state, the sources of corruption are forces that subvert the machinery of government from without. The mafia is not indigenous to the government; it corrupts and subverts public officials from the outside. In the Philippines, on the other hand, organised crime external to the government apparatus has been rare. Of course, small-time crooks and gangsters have always existed outside the officialdom. Syndicates are, however, another thing. Syndicates - whethe r in gambling, drugs, or kidnapping - are unthinkable without the central organising role played by government officials and politicians. Even before the dictatorship of Ferdinand Marcos (1972-86), the pattern was for local or regional politicians to absorb petty criminals or toughs into their warlord bands, to be used to muscle into, control, and expand lucrative sub rosa activitie s such as illegal gambling, prostitution, or protection rackets, which served as additional mechanisms to squeeze the economic surplus from the citizenry that could be deployed for increasingly expensive electoral struggles. The reign of Ferdinand Marcos in the 1970s and early 1980s was another important step in the "mafiasation" of government. The loss of competitive politics at the national, regional, and local levels led to the erosion of the already inadequate checks tha t the government machinery posed to regional and local political clans bent on expanding their access to the social surplus via criminal methods. Marcos-linked political clans were able to bring to a new level - the provincial and in some cases the regio nal - the organisation and control of activities like jueteng, prostitution, and drugs. At the same time, the expansion and centralisation of the central administrative machinery that marked the Marcos years opened up tremendous opportunities for economic mobility for middle-class or lower-middle-class bureaucrats. With the traditional elit es maintaining tight control over land and the private sector, the state became the choice arena for entrepreneurship by restive and ambitious elements from the more modest classes. Syndicates or Sindicatos not only flourished in the traditional c esspools of corruption like the Bureau of Internal Revenue and the Department of Public Works and Highways but emerged in other agencies such as those on top of agrarian reform, energy, education, and natural resources. The economic crisis that brought economic growth to virtually zero from 1983 to 1993 made the government's position even more attractive as a site of private capital accumulation, despite the personal probity of the top people in government like Presiden ts Corazon Aquino and Fidel Ramos. Indeed, it was under Aquino that a government reorganisation was undertaken that, unwittingly, created a massive new site of graft. The agency promoting the exploitation of the country's natural resources was joined to that responsible for protecting the environment to form the new Department of the Environment and Natural Resources. The upshot was the creation of tremendous opportunities for money-making via the sale of environmental permits and timber licences to log gers, mining firms, and other private sector entities that had no intention of complying with environmental laws. Solidly entrenched, the mafia was able to thwart efforts at reform by progressive officials until, under the Estrada administration, it fina lly secured the top leadership posts in the agency. The consequences of the massive expansion of the security forces under Marcos were similarly explosive. Many in the uniformed elite either lent themselves out as enforcers for local or national cronies of the dictator or carved out new illegal sources of income to supplement salaries that, more often than not, failed to match their new political role and status. By the time the Marcos regime ended, not a few officers had discovered that their command over men and firepower could be translated into succe ssful entepreneurship in the form of kidnapping the rich - especially rich Chinese - for ransom. Why, they reasoned, should this extremely profitable business be left to petty gangsters? With the perquisites of command and payoffs from politicians dimini shing after the 1986 People Power Revolution that dislodged Marcos, and with the economic crisis deepening under the succeeding Aquino administration, the organisation of kidnappings moved higher and higher up the chain of command of the military and the police. Ordinary gangsters could never mount the sophisticated operations that involved getting inside knowledge of the net worth of prospective targets from within the banking system. Indeed, when regular gangsters sought to organise independently of t he military and the police, they found out the hard way that the men in uniform would brook no competition. Some observers contend that this was the significance of the total rub-out of the upstart Kuratong Baleleng Gang a few years back, an operation ca rried out by security elites closely associated with the then Vice-President Estrada, like Panfilo Lacson, now the country's top police officer. From a sociological point of view, the most interesting item to come out of the revelations about the division of the spoils of the jueteng gambling racket is that the main project of the Estrada administration was to centralise crime under the pr esidency. Under Estrada, the most profitable criminal activities like jueteng were to be rationalised, with a sub rosa bureaucracy stretching from the President to the smallest jueteng collector paralleling and intertwining at key points wi th the formal hierarchy of government. What was exposed in the jueteng scandal was probably only the tip of the iceberg. Were the worlds of prostitution, drugs, and kidnapping also on the way to becoming equally centralised under Estrada? Many Fil ipinos are convinced they were, and are awaiting revelations about the drug-related financial take of the now-impeached President that might surface in the Senate trial. Had the Estrada project not been disrupted, the President would have become the apex of both the state and the underworld. This was the real Estrada Revolution - and Filipinos had thought the man was stupid! Removing Estrada from office will probably be only the first step in decriminalising the Philippine state. For what Filipinos are up against is a disease that is far advanced and in varying degrees of being institutionalised centrally. Which is why it is important that the next chief executive must be above suspicion when it comes to the question of ties to the underworld. The main reason many people are apprehensive about Vice-President Gloria Macapagal-Arroyo assuming office is that she is the godmoth er of the child of a man, Bong Pineda, who has been tagged one of the country's top illegal gambling lords. Ritual kinship bespeaks extremely close personal ties, and we Filipinos know that we cannot kick out Estrada only to make way for somebody who mig ht complete the 'mafiasation' of the Philippine state. The Missing Dimension in Kim Dae Jung's Sunshine Policy (February 2001)
The future of President Kim Dae Jung's "Sunshine Policy"-the most promising opportunity in years to melt the glacial structures of the Cold War in Northeast Asia-is now in question.
This became crystal clear during Kim's recent visit to Washington where US President George W. Bush and his aides all but spelled out disapproval of his bold rapprochement with North Korea. Even before his visit, the Sunshine Policy was already in danger from the new administration's expressed determination to build an anti-ballistic missile defense (ABM) system-one that would include a "theater missile defense (TMD) system" for Japan and the region. Fearing that this move would derail its effort to convince North Korea to give up its ballistic missile program, Kim joined visiting Russian President Vladimir Putin in issuing a joint statement of support for the 1972 US-Soviet treaty that bans anti-missile weapons systems. Though Seoul later tried to dilute the meaning of its gesture, it was clear to the rest of the world that, for the first time in over five decades, the two allies had experienced an open break in security policy. Withdrawal Syndrome Though its concerns were muted during the Clinton administration, the US security establishment was never comfortable with Kim's reconciliation policy with the North. The big fear was that rapprochement would bring into question the presence of the large US military presence on the peninsula, where 37,000 American troops are forward-deployed. South Korea, as noted expert Chalmers Johnson has pointed out, is a Pentagon colony. Continuing occupation, however, demands a credible justification. So long as South Koreans shared Washington's image of North Korean chief Kim Jong-Il as a megalomaniacal despot, there was no problem. But when Kim Jong-Il was transformed into a long lost beloved brother during Kim Dae-Jung's visit to Pyongyang in June, the nightmare of an eventual pullout began to haunt the Pentagon, and no amount of soothing words from the South Korean leader about the need for US troops and bases into the indefinite future could reassure the US military establishment. But the reasons for the hardening US position go beyond the Pentagon's wishing to maintain its position on the peninsula. Since the mid-1990's, US military strategy, at both the global and regional level, has gradually reoriented been reoriented around the premise of a deepening strategic rivalry with China. The Asia 2025 Study, which the Pentagon hardly kept confidential, identified China consistently as the main threat to US interests in six war-game scenarios covering South Asia, Southeast Asia, and East Asia. Even during the Clinton administration, the security elite had evinced discomfort with the Democrats' China policy, which put the emphasis on "engagement" rather than containment. With the Bush administration, containment has become the dominant aspect of the policy, and a central thrust is tightening the military cordon sanitaire around China. The troops and bases in Korea-the only US beachhead on the Asian mainland-are vital elements of the American noose. Fundamental Flaw The South Korean leader has the choice of freezing the process and pleasing the Americans or going forward and risking not only non-cooperation but possibly even Washington-supported destabilization. This dilemma highlights the fundamental flaw of the policy: that it has been for the most part a highly controlled, personality-driven process where most of South Korean society was relegated to the sidelines, with little function but to applaud. Not surprisingly, most Koreans, while obviously cheered by the reconciliation process, felt detached from it, feeling no personal responsibility for its success or failure. This personal distance from the process was driven home to me while discussing future economic strategies for Korea with progressive Korean economists. Even when taking the long view, none of them brought the integration of the North Korean market into their calculations. For all intents and purposes, a unified Korea remains a distant dream, and the lack of significant domestic protest against Washington's recalcitrance is the most damning proof of this. Not too late It is not too late, however, to bring the Korean people along. Kim should now reach out to all sectors of society, not to ask them to have faith in him and his judgment, but to actively bring them into the process, to encourage them to make their own unique contributions to this patriotic enterprise. In addition, President Kim should solicit the active backing of the governments and peoples of the Asia-Pacific region, underlining how a reconciled, if not reunified, Korea is one of the most critical keys to lasting regional peace. Mobilized domestic and regional constituencies for reconciliation and reunification are key to cracking the stalemate between Kim and Washington. When Davos Meets Porto Alegre: A Memoir (1 February 2001)
"Hemingway said that the rich are different from you and me. How can anyone expect the people in Davos to understand the crisis that globalization has visited on the lives of people like those of us here in Porto Alegre?" That was going to be my opening line. When I arrived at the university studio for the televised trans-Atlantic debate with George Soros, the financier, and other representatives of the global elite gathered in Davos, Switzerland, a visibly shaken Florian Rochat of the Swiss delegation was waiting for me. Swiss are known for being impassive, but Florian was visibly shaken. "They are arresting protestors in Davos and other places in Switzerland", he told me. "They're killing democracy in our country. Our friends there are asking you to support them in calling for the shutting down of the World Economic Forum".
That request drove out any lingering desire to be "nice" in the coming exchange, which had been billed by its producers as a "Dialogue between Davos and Porto Alegre". The ambitious, one-million dollar plus production involving four satellite hookups, aimed to explore if there was a common ground between the annual elite gathering in Davos and the newly launched World Social Forum (WSF) in this southern Brazilian city. Millions of people globally were waiting for the transmission. Since I had been in Davos last year, the producers requested that I make the opening statement for the Porto Alegre side. I obliged with the following: "We would like to begin by condemning the arrests of peaceful demonstrators to shield the global elite at Davos from protests. We would also like to register our consternation that while we in Porto Alegre have painstakingly come up with a diverse panel of speakers, you in Davos have come up with four white males to face us. Butr perhaps you are trying to make a political statement. "I was in Davos last year, and believe me, Davos is not worth a second visit. I am here in Porto Alegre this year, and let me say that Porto Alegre is the future while Davos is the past. Hemingway wrote that the rich are different from you and me, and indeed, we live on two different planets: Davos, the planet of the superrich, Porto Alegre, the planet of the poor, the marginalized, the concerned. Here in Porto Alegre, we are discussing how to save the planet. There in Davos, the global elite is discussing how to maintain its hegemony over the rest of us. In fact, the best gift that the 2000 corporate executives at Davos can give to the world is for them to board a spaceship and blast off for outer space. The rest of us will definitely be much better off without them". The press termed the next 1-1/2 hours not as a debate but as an emotional exchange that, as the Financial Times put it, "sometimes degenerated into personal insults". But I and the other panelists-among them, Oded Grajew of Brazil's Instituto Ethos, Bernard Cassen of Le Monde Diplomatique, Diane Matte of Women's Global March, Njoki Njehu of 50 Years Is Enough, Rafael Alegria of Via Campesina, Aminata Traole, former Minister of Culture of Mali, Fred Azcarate of Jobs with Justice, Trevor Ngbane of South Africa, Francois Houtart of Belgium, and Hebe de Bonafini of the Mothers of the Plaza de Mayo-were simply reflecting the non-conciliatory mood towards the Davos crowd of most of the 12,000 people who flocked to Porto Alegre. For this constituency, a significant number of whom watched the debate at a huge auditorium at the Catholic University, globalization was a deadly business, and many undoubtedly shared the feelings of Hebe de Bonafini when she screamed at Soros across the Atlantic divide, "Mr. Soros, you are a hypocrite. How many children's deaths have you been responsible for?" That Soros in the course of the debate made some utterances regarding the need to control the negative impacts of globalization hardly endeared him to this crowd, who saw him mainly as a finance speculator who had made billions of dollars at the expense of third world economies. The holding of the week-long World Social Forum was nothing short of a miracle. Proposed by the Workers' Party of Brazil (PT) and a coalition of Brazilian civil society organizations, supported with significant funding by donors such as Novib, the Dutch agency, and provided with strong international support by the French monthly Le Monde Diplomatique and Attac, the European anti-globalization alliance, the event was put together in less than eight months' time. The idea of holding an alternative to the annual retreat of the global corporate elite in Davos simply took off. While there were some glitches here and there, the event was resoundingly successful, despite the massive challenge of coordinating 16 plenary sessions, over 400 workshops, and numerous side events. A major reason for the WSF's success is that it had the organizational support of the government of the city of Porto Alegre and the government of the state of Rio Grande do Sul, both of which are controlled by the PT. Porto Alegre has, in fact, achieved the reputation of being a city that is run both efficiently and with sensitivity to social and environmental considerations. The city is said to be at the top of the quality of life index for Brazil. The sharing in Porto Allegre focused not only on drawing up strategies of resistance to globalization but also on elaborating alternative paradigms of economic, ecological, and social development. Militant action was not absent, with Jose Bove, the celebrated French anti-McDonalds' activist, and the Brazilian MST (Movement of the Landless), leading the destruction of two hectares of land planted with transgenic soybean crops by the biotechnological firm Monsanto. Porto Alegre achieved its goal of being a counterpoint to Davos. The combination of celebration, hard discussion, and militant solidarity that flowed from it contrasted with the negative images coming out of Davos. The Swiss town was the center of Switzerland's biggest security operation since the Second World War. The Swiss police pulled out all the stops to prevent protesters from reaching the Alpine resort, and fired water cannons and tear gas on demonstrators in Zurich, arresting many of them. Even conservative Swiss newspapers condemned the police operation as a threat to political liberties in Switzerland. Perhaps the outcome of the duel between Davos and Porto Alegre was best summed up by George Soros: "The excessive precautions were a victory for those who wanted to disrupt Davos. It was an overreaction. It helped to radicalize the situation". On his performance in the televised debate with Porto Alegre, Soros commented: "It showed it is not easy to dialogue...I don't particularly like to be abused. My masochism has its limits". Observed the Financial Times: "Such uncomfortable experiences seem temporarily to have scrambled his ability to deliver pithy soundbites". But Soros was not alone in flubbing his lines. Soon after my opening statement, Bernard Cassen of Le Monde Diplomatique leaned over and told me: "Walden, it wasn't Hemingway who said the rich are different from you and me. It was Scott Fitzgerald". The Power Crisis and a Paradigm Crisis (17 March 2001)
After having been taken for a ride by the ideology of centralised electrification, people are now being taken on another, equally dangerous spin by the ideology of privatisation.
In many developing nations today, state-owned centralised power systems are mired in mismanagement, corruption and debt. And in country after country, influential multilateral agencies such as the Asian Development Bank (ADB) and the World Bank have come up with a cure-all: privatisation and deregulation. This is the case in India, Thailand, and the Philippines. Yet the state ownership versus privatisation debate obscures the complexities of the crisis of power generation and delivery in the Third World. For what is behind the troubles of giant agencies such as the Electricity Generating Authority of Thailand (E gat) and the National Power Corporation (Napocor) in the Philippines is not the natural inefficiency of state-managed enterprises but the crisis of the paradigm that underpins them: centralised electrification. Centralised technologies are inextricably linked with the politics of domination of countries by central elites - by technocrats, urban elites and local and foreign big business. Behind the crisis of these technologies is the unravelling of a longtime de velopmentalist alliance among technocrats, multilateral agencies and private corporations dedicated to foisting devastating technologies on developing nations in the name of a vision of modernity and the search for profitability. The power industry, in p articular, illustrates this destructive symbiosis of modernity and profitability. One of the earliest expressions of the sense that generation and distribution of power was a central test of modernity was made by Lenin in 1921, when he defined socialism as Soviet Power plus Electricity. But it was not only Leninists who equated electr ic power with the desirable society. Jawaharlal Nehru, the dominant figure in post-Second World War India, called dams the temples of modern India, a statement that, as author Arundhati Roy points out, has made its way into primary school textbooks in ev ery Indian language. Big dams have become an article of faith inextricably linked with nationalism. To question their utility amounts almost to sedition. The technological blueprint for power development for the post-Second World War period was that of creating a limited number of power generators - giant dams, coal or oil-powered plants, or nuclear plants - at strategic points which would generate electr icity that would be distributed to every nook and cranny of the country. Traditional or local sources of power that allowed some degree of self-sufficiency were considered backward. If you were not hooked up to a central grid, you were backward. Centrali sed electrification with its big dams, big plants and big nukes became the rage. Indeed, there was an almost religious fervour about this vision among technocrats who defined their life's work as missionary electrification or the connection of the most d istant village to the central grid. It was, it must be noted, a grand mission that was supported in India, Thailand, South Vietnam and the Philippines by millions of dollars worth of grants from the US Agency for International Development (USAID). Not surprisingly, this generosity was no t unconnected to the less than salutary mission of pacifying rural areas permeable to communist agitation. In any event, in the name of missionary electrification, India's technocrats, Arundati Roy observes in her brilliant essay, 'The Cost of Living' (Frontline, February 18, 2000), not only built new dams and irrigation schemes but also took control o f small, traditional water-harvesting systems that had been managed for thousands of years and allowed them to atrophy. Here Roy expresses an essential truth: that centralised electrification preempted the development of alternative power systems that co uld have been more decentralised, more people-oriented, more environmentally benign, and less capital intensive. Centralised electrification, like every ideology, served certain interests, and these were definitely not those of the ordinary masses. The key interest groups were:
- key bilateral and multilateral development agencies. In Asia, the World Bank and the ADB became the biggest funders of centralised power technologies for export to Third World countries while USAID supported rural electrification. Centralised power dev elopment provided a grand rationale for the existence and expansion of these institutions into giant bureaucracies;
Aside from being an element in counterinsurgency programmes, rural electrification was simply a small concession to the countryside to pacify opposition to city-oriented centralised electrification. Large multipurpose dams that allegedly provided countri es simultaneously with the benefits of power and irrigation were concerned first and foremost with power for the urban sector. While these interests benefited, others paid the costs. Specifically, it was the rural areas and the environment that absorbed the costs of centralised electrification. Tremendous crimes have been committed in the name of power generation and irrigation, says Arundhati Roy, but these were hidden because governments never recorded these costs. In Thailand, for instance, the government has no records on how many communities and rural peoples have been displaced by the score of massive hydroelectric and irrigation dams built since the 1950s. Very few have been paid compensation. Communities relo cated, vanished, or were simply absorbed into urban slums. In India, Roy calculates that large dams have displaced about 33 million people in the last 50 years, about 60 per cent of them being either untouchables or indigenous peoples. As in the case of Thailand, India, in fact, does not have a national resettlement policy for those displaced by dams. Neither does the Philippines. The costs to the environment have been tremendous: in Thailand, hundreds of thousands of hectares of primal forest land was submerged, rivers changed course, fishing as a livelihood atrophied among riverine communities, and many species of fish vanished. In India, Roy points out, the evidence against Big Dams is mounting alarmingly - irrigation disasters, dam-induced floods, the fact that there are more drought prone and flood prone areas today than there were in 1947. The fact that not a single river i n the plains has potable water. Yet what benefits have 50 years or so of centralised electrification really brought? After imposing such high human and ecological costs, the amount of power generated by the controversial Pak Mun Dam in northeastern Thailand can barely supply the daily electricity needs of a handful of shopping malls in Bangkok. And in India, 22 per cen t of the power generated is lost in transmission and system inefficiencies. The proportion for the Philippines is at least 25 per cent, which is probably the standard for developing countries. In the Philippines, after 50 years of massive electrification , over 30 per cent of rural households have no access to electricity. In India, some 70 per cent have no access to electricity. Yet, this is not surprising, since centralised electrification was never really meant principally to deliver affordable power to people in an effective way. What it really meant to deliver was different:
Today, these systems of centralised electrification run by governments have become terribly expensive to maintain. Now the International Monetary Fund, the World Bank and the ADB want governments to privatise and deregulate these systems. While governmen ts had to keep electricity prices controlled in order to justify the existence of expensive generation, transmission and distribution facilities, the private sector will be expected to raise prices and streamline services - meaning that it will simply el iminate from the rolls of consumers those who cannot pay. After having been taken for a ride by the ideology of centralised electrification, people will now be taken on another, equally dangerous spin by the ideology of privatisation - by propaganda abou t the greater efficiency of the private delivery of essential services. Not surprisingly, it is the consumer, both rural and urban, who will foot the costs of the transition, for the private sector corporations - many of them transnational firms such as Enron and KEPCO - will not be pushed to absorb the full costs of these c apital-intensive systems purchased with massive loans by governments. In the Philippines, consumers will subsidise the sale of the National Power Corporation to the private sector by paying a tax designed to collect $10 billion in stranded costs. In country after country today, the physical assets of centralised systems are being divided up among private firms. But this is not among many small and medium firms, which would at least be consistent with the philosophy of free enterprise espoused by the proponents of deregulation. No, the model for the Third World is the system of power deregulation that California initiated in the early 1990s. For we are now told by technocrats and big business that the economies of scale dictate that the power fac ilities should go to a few, so-called efficient generators of energy. Thus, the dream of big centralised power that so many of our technocrats associated with national power has had, has turned out to be a bad dream. It has turned out to be simply a phas e in the delivery of electric power to the hands of private monopolies, many of them foreign transnationals. And with the botched California deregulation as a model, it need hardly be stated that we are likely to be headed for a much bigger economic disa ster than the crisis of state-run centralised power systems. People are, however, underestimated. For throughout the Third World at this point, in places like the Narmada valley in India, in Pak Mun in Thailand, people are actively engaged in struggles against the implementation of centralised technologies bent on delivering the illusion but not the reality of national progress. These struggles in the distant countryside are beginning to wake up the supposed urban beneficiaries of centralised electrification to the reality that this obsolete and flawed paradigm o f national advance is actually turning out to be phase in the delivery of horribly expensive national assets, at their expense, to the hands of private monopolies, such as the giant power distributor Meralco in the Philippines, a corporation that is the quintessential representative of the incestuous union of electricity, monopoly and super-profitability. People, in short, are increasingly aware that the struggle for community, for independence, for the future, is now inextricably linked to the struggle against bad centralised technologies that simply promote domination, dependence, and dissolution. The Global Conjuncture: Characteristics and Challenges (21 March 2001)
Today the movement against corporate-driven globalization is at a decisive juncture. There are different proposals on how to move forward. Oftentimes, clarification of the demands of the moment are clouded by what are, in effect, non-issues. For instance, among many of those who support attaching environmental and labor clauses to the World Trade Organization, one often encounters the feeling that the opposition of many social movements and civil society organizations to this approach stems from either lack of sympathy for labor rights and the environment or "softness" towards authoritarian regimes. This is regrettable since many of those most opposed to the social clause approach are also oftentimes strong backers of labor rights, labor organizing, and environmentally sensitive development in their countries.
Values are not the issue. Whether or not we adopt the social/environmental clause approach to constraining globalization is largely, in our view, a matter of strategy and tactics. And the question of what are appropriate strategy and tactics for the moment can only be determined by analyzing the current global conjuncture. Crisis of Legitimacy The global conjuncture or, to use a more precise term, the global correlation of forces after Seattle and Porto Alegre is quite different from that in the mid-1990's. The founding and ratification of World Trade Organization in 1994-95 (WTO) was the apogee of capitalism in the era of globalization. Socialism had collapsed and the Washington Consensus seemed to carry all before it. There seemed to be very little space for maneuver, and very little opportunity to influence events except to play by the rules and get whatever morsels of reform you could get. It was this sense of being overwhelmed by a juggernaut that informed the strategy of attaching social and environmental clauses to the WTO and other trade agreements that some labor and environmental groups came up with during that period. Today, the global correlation of forces is different-some would say, quite different. A crisis of legitimacy now envelops the key institutions of global economic governance: the International Monetary Fund (IMF), the World Bank, and the WTO. The Asian financial crisis of 1997-1998 was the Stalingrad of the IMF. It was clear to observers and ultimately to some people in the IMF itself that the Fund, with its prescription for capital account liberalization, helped create the crisis, and with its cure of tight money and tight budgets, converted a financial crisis into economic collapse in Thailand, Indonesia, and Korea. The now famous Meltzer Commission report and the massive demonstrations against the World Bank in Washington, DC, and Prague in 2000 combined to precipitate the World Bank's crisis of legitimacy. The Meltzer report, which is likely to inform the new Bush administration's perspective on the Bank, argues that the Bank is irrelevant to the question of solving poverty and should be radically reduced in terms of scale and functions. Seattle, of course, saw the magic combination of massive street protests, a revolt of the developing countries in the Seattle Convention Center, and irreconcilable differences between the European Union and the US scuttle the Third Ministerial and place the WTO in a state of limbo. Three quotations from extremely credible sources underline the depth of the crisis of confidence of the global elite in their key institutions of global economic governance post-Seattle:
- The Economist: The protesters "are right that the tide of 'globalization,' powerful as the engines driving it may be, can be turned back ... International economic integration is not an ineluctable process, as many of its most enthusiastic advocates appear to believe. It is one ... of many possible futures for the world economy; others may be chosen, and are even coming to seem more likely".
Implications for Strategy and Tactics Today we are in a different ballgame from that in the mid-nineties, when the social and environmental clause strategy was devised. Whatever merits it may have had then, today such an approach is unsound and counterproductive, both tactically and strategically. Tactically, it is unsound because the only way to smuggle it into the WTO is by having a new trade round that would simply open up the space for other forces to add new agenda for liberalization and globalization such as competition policy, investment policy, more agricultural liberalization, a new round of industrial tariff cuts, a TRIPs even more congenial to TNC interests. A new round is a Pandora's Box. The WTO, says C. Fred Bergsten, is like a bicycle. It can only remain upright by moving forward in terms of more liberalization and globalization. Our immediate goal must be to pin the bicycle down and out of locomotion by preventing a new trade round. More broadly, we are engaged in an epochal struggle for legitimacy, and, as in every kind of warfare, the strategy revolves around the issue of who has the momentum, who has what Clausewitz called the "moral initiative". Strategically, the social and environmental clause strategy is obsolete given the new global correlation of forces. To borrow from military strategy, using the social/environmental clause strategy is like employing a pre-Stalingrad strategy of defensive warfare to a post-Stalingrad situation that demands offensive warfare. The Soft Corporate Counteroffensive The shifting balance of forces is causing the global elite to reassess its own strategy and tactics, a development indicated by the fact that a number of key corporations, like Caterpillar and Boeing, as Naomi Klein points out, are now endorsing social clauses as a way to secure fast track authority for the US president that would facilitate new round of liberalization and globalization via the WTO and regional free trade agreements like the proposed Free Trade of the Americas Agreement (FTAA). The global elite-the Davos crowd-is beginning to embrace the social clause as part of a strategy to relegitimize globalization. They do not have to read Gramsci to know that unless legitimacy is regained, global power structures whose cohesion is principally dependent on the perception of legitimacy could begin to unravel. But the social clause is not the only element in what we might term the "soft corporate counteroffensive". There are two other moves that must be highlighted. One is participating in the Global Compact promoted by UN Secretary General Kofi Annan. A brainchild of Annan and the Davos crew, the Global Compact is said to commit corporations to nine principles, the most important of which have to do with respecting labor rights, human rights, and the environment. However, compliance is voluntary and self-monitored, and consistent corporate rights violators like Nike, Shell, and Rio Tinto are making use of this platform to bluewash their very tarnished image. Even George Soros admits that the Global Compact is nothing more than a device to whitewash the corporate image, and it is unfortunate that some civil society organizations have been manipulated into endorsing it. A third prong of the soft counteroffensive is the corporate embrace of civil society. In a manner similar to the way they coopted gender diversity and racial diversity into their drive to market dominance (a process so insightfully analyzed by Naomi Klein in her classic book No Logo), the smart corporations now see "civil society"-meaning us-as the key to both legitimacy and marketing success. NGOs are now being literally deluged with requests to join this corporation's NGO advisory committee or that multilateral organization's NGO consultative group. A few weeks ago, even the IMF held its first NGO consultation in Singapore. Of course, the Davos elite club has begun to justify its existence by saying that it has began to incorporate labor unions and NGOs into its annual retreat held in Switzerland at the end of January. In the leadup to this year's meeting, for instance, Davos chiefs Klaus Schwab and Claude Smadja made sure to trumpet the fact that "a thousand business leaders from the forum's member companies will be joined by dozens of heads of state or government and nearly 70 representatives of civil society to discuss, and hopefully advance, the major issues on the global agenda". The idea is to project dialogue when in fact monologue governs and to gain legitimacy via the mere mention of "consulting civil society". A new civil society-labor strategy needs to be elaborated to respond to the dangers, openings, and opportunities of the new conjuncture. We would like to present a strategy that 1) addresses the soft counteroffensive, 2) delineates the line of struggle or line of march against the key global institutions, and 3) proposes an alternative paradigm of global economic governance. Countering the Soft Counteroffensive Allow us to first address the soft corporate counteroffensive. We must meet the challenge of relegitimization of the globalist project head on by discarding the labor and environmental clause strategy when it comes to the WTO and other trade agreements. We must also oppose and expose the Global Compact as a whitewash mechanism and ask NGOs and labor unions that have joined it to withdraw. We must, furthermore, be very discriminating about lending our participation to consultation initiatives launched by the mutilaterals and corporations. Clearly, it is time to boycott the Davos meetings and the Davos process, which has become the premier site for developing corporate cultural hegemony over the rest of us by drawing the participation of some of us. Moving to the Offensive Moving on to an offensive strategy against the key institutions of globalization, priority must be put on stopping a new trade round from being launched at the Qatar Ministerial in November of this year. Beyond this, we must support the moves of many peasant and farmer groups like Via Campesina to remove agriculture from WTO discipline. We must ensure that no consensus emerges in the current negotiations on the GATS, the General Agreement on Trade in Services, which would stalemate the process. We must likewise put ourselves squarely behind the drive to place public health above TRIPs and profits by supporting the drive to reproduce and mass-market patented AIDs drugs at cheap prices. We must campaign to enshrine the priority of the precautionary principle above free trade, deriving momentum from the GMO, mad cow and foot-and-mouth eco-health disasters. Likewise, we must place ourselves firmly behind the South's demand for the recognition and institutionalization of "Special and Differential Treatment"-that underdeveloped countries require a different set of trade rules-in trade negotiations among countries. The overall strategy is to disempower or radically "shrink" the WTO so that it becomes simply another forum, with very limited and very diluted coercive capabilities, for trade negotiations. When it comes to the IMF and the World Bank, the time is ripe to press and build up a global campaign for decommissioning or neutering these institutions. Currently, there are a number of influential appointees in the economic agencies of the Bush administration who favor either eliminating or radically reducing the role of the Bretton Woods institutions. With many Republicans and Democrats in Congress evincing similar sentiments, international civil society and labor unions might add their weight to form a critical mass that would determine the future of these institutions. As the head of one international agency who follows politics in this area fairly closely told us, "The mutilateral institutions are today very vulnerable to a pincer movement carried out by, on the one hand, the conservatives in the new administration and, on the other, international civil society". It might be added that another factor that should spur decisive action on our part is that the staffs of both institutions are severely demoralized currently by the combination of external criticism and/or internal mismanagement. Windows of opportunity are rare, and we better move before this one slams shut. Next, unions and civil society organizations must band together to scuttle-while they are still in the dockyard the Free Trade of the Americas Agreement and similar global free trade treaties that are now being pushed-partly as a substitute for the stalemated WTO. These regional or bilateral agreements are as much guided by the destructive principles of neoliberalism-liberalization, deregulation, and privatization-as the WTO. Here it must be noted that full opposition to both the FTAA and a new trade round were two of the agreements contained in the common statement signed by hundreds of unions and civil society organizations at the World Social Forum in Porto Alegre a few weeks ago. Finally, we must extend the crisis of legitimacy from the multilateral institutions of global governance to the engine of globalization itself: the transnational corporation. TNCs are in disrepute today, and even in the US a recent survey has shown that 70 per cent of the people feel that TNCs have too much power over their lives. Corporations find it less and less possible to operate without engaging in criminal activity. This similarity between the mafia and the TNC is something that we must continually stress in this campaign of delegitimation. It is only when we realize how great is the potential of campaigns to unmask the criminal that is at the heart of the corporation that we begin to see how inappropriate and untimely is Kofi Annan's Global Compact and understand how it functions less as a lifesaver for society than a lifesaver for TNCs. Promoting the Alternative Finally, to the question of the alternative. Our side has always been criticized for only opposing and not proposing. Well, that is no longer valid-if it ever was-after Porto Alegre. Under the banner "Another World is Possible", the 12,000 people who came to the southern Brazilian city not only wrested the moral ascendancy from the Davos crowd, as the Financial Times pointed out in its feature piece "Attack on Planet Davos". They also came to engage in hard discussion on how to create an alternative world in non-utopian and pragmatic ways. We disagree with the view that thinking about the alternative is a task that for the most part is still in a primeval state. In fact, we feel that that many or most of the basic or broad principles for an alternative order are already with us, and it is really a question of specifying these broad principles to concrete societies in ways that respect the diversity of societies. Work on alternatives has been a collective past and present effort, one to which many North and South have contributed. Allow us to synthesize the key points of this collective effort under the rubric "deglobalization". While the following model addresses principally the situation of countries in the South, many points have relevance as well to societies and economies in the North. Deglobalization What is deglobalization? We are not talking about withdrawing from the international economy. We are speaking about reorienting our economies from the emphasis on production for export to production for the local market;
- about drawing most of our financial resources for development from within rather than becoming dependent on foreign investment and foreign financial markets;
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, to use the language of the great social democratic scholar Karl Polanyi, about re-embedding the economy in society, rather than having society driven by the economy. Deglobalization or the re-empowerment 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. Incidentally, the idea that the need for one central set of global rules is unquestionable and that the challenge is to replace the neoliberal rules with social democratic ones is a remnant of a techno-optimist variant of Marxism that infuses both the Social Democratic and Leninist visions of the world, producing what Indian author Arundathi Roy calls the predilection for "gigantism". A Plural World 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. They failed to address a number of needs illuminated by recent advances in feminist, ecological, and post-post development economics. All we wish to point out here is that the pre-1994 situation underlines 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. All we want to stress is that 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 Bretton Woods institutions, but, through a combination of passive and active measures, to either a) decommission them; b) neuter them (e.g., converting the IMF into a pure research institution monitoring exchange rates of global capital flows); or c) radically reduce their powers and turn them into just another set of actors coexisting with and being checked by other international organizations, agreements, and regional groupings. This strategy would include strengthening diverse actors and institutions as UNCTAD, multilateral environmental agreements, the International Labor Organization, and evolving economic blocs such as Mercosur in Latin America, SAARC in South Asia, SADCC in Southern Africa, and a revitalized ASEAN in Southeast Asia. A key aspect of "strengthening", of course, is making sure these formations evolve in a people-oriented direction and cease to remain regional elite projects. But above all, it would support the formation of new international and regional institutions that would be dedicated to creating and protecting the space for devolving the greater part of production, trade, and economic decision-making to the national and local level. The primal role of international organizations in a world where toleration of diversity is a central principle of economic organization would be, as the British philosopher John Gray puts it, "to express and protect local and national cultures by embodying and sheltering their distinctive practices". More space, more flexibility, more compromise-these should be the goals of the Southern agenda and the international 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. In conclusion, in this post-Seattle, or should we now say, post-Porto Alegre world, our side has the momentum, the initiative, the ascendancy. Of course, the structures of global capitalism seem as firm as ever. While guarding against unwarranted optimism, we must also not underestimate the possibilities in the more fluid situation of the moment. Let us remember that power structures ultimately cannot survive without the perception that they are legitimate. The other side knows this, which is why the invocation of "civil society" has become more desperate, more shrill. From the WTO to the corporation, the key institutions of capitalism in this era of globalization are undergoing a profound crisis of legitimacy. Let us not waste the opportunities opening up by being wed to the thinking, calculations, and strategies of the past. Developing States Resist Calls for New Trade Talks (27 March 2001)
The World Trade Organisation is taking a low profile with its two-day seminar on trade and development for Asian governments in Chiang Mai starting today. This is not surprising. For while trade and the environment make up the formal agenda of the meeting, the informal agenda is to press Asian governments to commit to a new trade talks at the WTO ministerial meeting in Qatar in November.
This is typical WTO: Use every key inter-governmental meeting to get governments to fall into line behind a new trade round. The WTO did this at the Asia Pacific Economic Co-operation summit in Brunei last November. It did it again at an African leaders summit several weeks ago. As well as twisting the arms of Asian governments to support a new round of talks, the WTO is attempting to get backing for a new round from Asian civil society. The WTO knows that even if the governments fall into line in Chiang Mai, civil society opposition at home could still push them off the bandwagon. Thus we have a trade and environment seminar for civil society organisations - in Chiang Mai on March 29 and 30 - fronted for the WTO by the Geneva-based International Centre for Trade and Sustainable Development. Most developing countries are opposed to a new trade round. They have not yet absorbed the demands on them made at the Uruguay Round. Many countries have still not changed their domestic legislation to make them WTO-consistent. They are bitter that many lost rather than gained from the Uruguay Round. The United Nations Development Programme estimates that under the WTO regime, in the period 1995 to 2004, the 48 least developed countries will actually be worse off by $600 million (26.6 billion baht) a year, with sub-Saharan Africa actually worse off by $1.2 billion (53.2 billion baht). The UN Development Programme also says that 70% of the gains of the Uruguay Round will go to developed countries, with most of the rest going to a relatively few large export-oriented developing countries. Mike Moore, the WTO director-general, and Clare Short, Britain's development minister, have tried to sell a new round as a development round. But the reality is that the main agenda for liberalisation has more to do with opening up their economies to greater penetration by northern transnational corporations. The "new issues" that the developed countries want to make the centrepiece of negotiations are investment policy, competition policy, government procurement policy, labour standards and environmental standards. The object of the first three is to give transnational corporations national treatment - that is, to strike down preferential treatment given to local producers and contractors. As for labour and environmental clauses in WTO agreements, developing countries fear that their intent is simply to serve as barriers to the entry of developing country imports while many southern NGOs regard them as giving the WTO tremendous power in areas where it does not have competence. A new round is like a Pandora's box. Once you open it, all sorts of issues detrimental to the interests of peoples and countries may emerge. The United States may even use it to force other economies to accept genetically modified organisms. Instead of engaging in a new round of trade liberalisation, the WTO should spend the next few years repairing the Uruguay Round so that it does less harm to the interests of developing countries. Here are a number of priority issues:
- Trade-related intellectual property rights should be revised so as to ban the patenting of all life forms including micro-organisms and to strengthen intellectual property systems to protect the accumulated knowledge of local and indigenous communities from bio-piracy.
"The process was a rather exclusionary one", she said. "All meetings were held between 20 and 30 key countries. That meant 100 countries, 100, were never in the room. This led to the 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 in the room". After the developing countries rebelled against this exclusionary decision-making process in Seattle, Stephen Byers, the British minister of trade and industry, said: "The 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". Yet scarcely three months, during UN Conference on Trade and Development (UNCTAD) in Bangkok in February 2000, Mike Moore said the Green Room/consensus process was non-negotiable. Decision-making is fundamental. The developing countries and international civil society cannot agree to a new trade round unless the inequity in decision-making is banished from the WTO. When the WTO came into being in 1995, free trade was seen as a panacea, a cure for poverty, inequality and almost everything else. The Washington Consensus that formed the intellectual pillar of free trade and structural adjustment seemed to carry all before it. Today, the situation is radically different. The alleged benefits of free trade and free markets are challenged everywhere. As for the so-called positive relationship between free trade and growth, the emerging consensus is laid out by Dani Rodrik, Professor in international political economics at Harvard University: "Do lower trade barriers spur greater economic progress? The available studies reveal no systematic relationship between a country's average level of tariff and non-tariff barriers and its subsequent economic growth. If anything, the evidence for the 1990s indicates a positive relationship between import tariffs and economic growth. The only clear pattern is that countries dismantle their trade restrictions as they grow richer". This finding explains why today's rich countries, with few exceptions, embarked on modern economic growth behind protective barriers but now display low trade barriers. WTO Tries to Subvert Developing Countries' Resistance to New Trade Talks (27 March 2001)
The recent World Trade Organisation (WTO) meeting in Chiang Mai that evoked widespread protest underlines the desperation that now grips what is probably the world's most unpopular organization.
Initially, the seminar had a low profile. This was not surprising. For while trade and environment was the formal agenda of the meeting, the informal agenda was a very controversial one: to pressure government officials to commit themselves to launching a new round during the Fourth WTO Ministerial in Qatar in November. This is typical WTO modus operandi: use every key inter-governmental meeting to get governments into line behind a new trade round. The WTO did this at the APEC Summit in Bandar Seri Bagawan last November. They tried to do this again, unsuccessfully, at an African leaders' meeting several weeks ago. Even as the WTO is twisting the arms of Asian governments behind a new round, it is also attempting to gain support for a new round from Asian civil society. The WTO knows that even if the governments commit to a new round in Chiang Mai, civil society opposition in their countries could still push them off the bandwagon. Thus a trade and environment seminar for civil society organizations, also held in Chiang Mai and fronted for the WTO by the Geneva-based International Center for Trade and Sustainable Development (ICTSD), was held immediately after the inter-governmental meeting. Why a New Trade Round is Bad for the South Most developing countries are opposed to a new trade round. The reasons are obvious. They have not yet absorbed the demands on them by the Uruguay Round. Many countries, for instance, have still not changed their domestic legislation to make them WTO-consistent. They are bitter that many of them, in fact, lost rather than gained from the Uruguay Round. The United Nations Development Program estimates that under the WTO regime, in the period 1995 to 2004, the 48 least developed countries will actually be worse off by $600 million a year, with sub-Saharan Africa actually worse off by $1.2 billion! UNDP also says that 70 per cent of the gains of the Uruguay Round will go to developed countries, with most of the remainder going to a relatively few large export-oriented developing countries. WTO Director General Mike Moore and UK Development Minister Clare Short have tried to sell a new round as a "Development Round". But the reality is that main agenda for liberalization has more to do with opening up their economies to greater penetration by northern transnational corporations. The so-called "New Issues" that the developed countries want to make the centerpiece of negotiations are investment policy, competition policy, government procurement policy, labor standards, and environmental standards. The object of the first three is to give TNC's "national treatment", that is, to strike down preferential treatment given to local producers and contractors. As for labor and environmental clauses in WTO agreements, developing countries fear that their intent is simply to serve as barriers to the entry of developing country imports while many southern NGOs regard them as giving the WTO tremendous power in areas where it does not have competence. A new round is like a Pandora's box. Once you open it, all sorts of issues detrimental to the interests of peoples and countries may emerge. The United States may even use it to push for a revision of the Agreement on Sanitary and Phytosanitary Standards along lines that would support its concept of "sound science" as a methodology in order to force other economies to accept genetically modified organisms (GMOs). What WTO Members Should Be Doing Instead of engaging in a new round of trade liberalization, the majority of members of the WTO should spend the next few years repairing the Uruguay Round so that it does less harm to the interests of developing countries. In other words, they should work to significantly dilute the impact of a bad agreement, as part of a strategy to ultimately reduce the power of the WTO. Here there are a number of priority areas:
1. The Trade Related Intellectual Property Rights should be revised so as to ban the patenting of all life forms including microorganisms and to strengthen intellectual property systems-the so-called sui generis systems-that protect the knowledge of local and indigenous communities from biopiracy. The priority of public health concerns over intellectual property rights should also be established-a move that will, among other things, enable HIV-positive people to buy life-prolonging patented drugs as low prices.
After the developing countries rebelled against this exclusionary decision-making process in Seattle, Stephen Byers, the UK Minister of Trade and Industry, commented: "The 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". Yet scarcely three months after Seattle, during UNCTAD X in Bangkok in February 2000, Mike Moore said that the Green Room/Consensus process was "non-negotiable". Decision-making is a fundamental issue. The developing countries and international civil society cannot agree to a new trade round unless the fundamental inequity in decision-making is banished from the WTO. Is Free Trade Obsolete? When the WTO came into being in 1995, free trade was seen as a panacea, a cure for poverty, inequality, and almost everything else. The Washington Consensus that formed the intellectual pillar of free trade and structural adjustment seemed to carry all before it. Today, the situation is radically different. The alleged benefits of free trade and free markets are challenged everywhere. For instance, an authoritative UNCTAD study covering 124 countries showed that during a period of greater global trade liberalization from 1965 to 1990, the income share of the richest 20 per cent of the world's population rose from 69 to 83 per cent of total global income. As for the so-called positive relationship between free trade and growth, the emerging consensus is laid out by Harvard Professor Dani Rodrik: "Do lower trade barriers spur greater economic progress? The available studies reveal no systematic relationship between a country's average level of tariff and non-tariff barriers and its subsequent economic growth. If anything, the evidence for the 1990's indicates a positive relationship between import tariffs and economic growth. The only clear pattern is that countries dismantle their trade restrictions as they grow richer. This finding explains why today's rich countries, with few exceptions, embarked on modern economic growth behind protective barriers but now display low trade barriers". In the face of such evidence, C. Fred Bergsten, the head of Washington's Institute of International Economics (IIE), a noted partisan of free trade and the WTO, now says that there "has to be an honest recognition and admission that there [free market globalization] has costs and losers", [that] "globalization does increase income and social disparities within countries" and "does leave some countries and groups behind". What the developing world needs is not a new round but a moratorium on trade liberalization. Needed: A Moratorium on Trade Liberalization (4 April 2001)
On March 27th and 28th, the World Trade Organization is holding a Seminar on Trade and Development for Asian governments in Chiang Mai, Thailand. The seminar has a low profile. This is not surprising. For while trade and environment is the formal agenda of the meeting, the informal agenda is a very controversial one: to pressure government officials, including delegates from the Philippines, to commit themselves to launching a new round during the Fourth WTO Ministerial in Qatar in November.
This is typical WTO modus operandi: use every key inter-governmental meeting to get governments into line behind a new trade round. The WTO did this at the APEC Summit in Bandar Seri Bagawan last November. They tried to do this again, unsuccessfully, at an African leaders' meeting several weeks ago. Even as the WTO is twisting the arms of Asian governments behind a new round, it is also attempting to gain support for a new round from Asian civil society. The WTO knows that even if the governments commit to a new round in Chiang Mai, civil society opposition in their countries could still push them off the bandwagon. Thus a trade and environment seminar for civil society organizations, also to be held in Chiang Mai and fronted for the WTO by the Geneva-based International Center for Trade and Sustainable Development (ICTSD), will immediately follow the governmental meeting. Why a New Trade Round is Bad for the South Most developing countries are opposed to a new trade round. The reasons are obvious. They have not yet absorbed the demands on them by the Uruguay Round. Many countries, for instance, have still not changed their domestic legislation to make them WTO-consistent. They are bitter that many of them, in fact, lost rather than gained from the Uruguay Round. The United Nations Development Program estimates that under the WTO regime, in the period 1995 to 2004, the 48 least developed countries will actually be worse off by $600 million a year, with sub-Saharan Africa actually worse off by $1.2 billion! UNDP also says that 70 per cent of the gains of the Uruguay Round will go to developed countries, with most of the remainder going to a relatively few large export-oriented developing countries. WTO Director General Mike Moore and UK Development Minister Clare Short have tried to sell a new round as a "Development Round". But the reality is that main agenda for liberalization has more to do with opening up their economies to greater penetration by northern transnational corporations. The so-called "New Issues" that the developed countries want to make the centerpiece of negotiations are investment policy, competition policy, government procurement policy, labor standards, and environmental standards. The object of the first three is to give TNC's "national treatment", that is, to strike down preferential treatment given to local producers and contractors. As for labor and environmental clauses in WTO agreements, developing countries fear that their intent is simply to serve as barriers to the entry of developing country imports while many southern NGO's regard them as giving the WTO tremendous power in areas where it does not have competence. A new round is like a Pandora's box. Once you open it, all sorts of issues detrimental to the interests of peoples and countries may emerge. The United States may even use it to push for a revision of the Agreement on Sanitary and Phytosanitary Standards along lines that would support its concept of "sound science" as a methodology in order to force other economies to accept genetically modified organisms (GMO's). What the WTO Should be Doing Instead of engaging in a new round of trade liberalization, the majority of members of the WTO should spend the next few years repairing the Uruguay Round so that it does less harm to the interests of developing countries. In other words, they should work to significantly dilute the impact of a bad agreement, as part of a strategy to radically reduce the powers of the WTO. The Philippines, under the leadership of Agriculture Secretary Leonie Montemayor, a longtime critic of the WTO, can play a key role in this process. Here there are a number of priority areas: 1. The Trade Related Intellectual Property Rights should be revised so as to ban the patenting of all life forms including microorganisms and to strengthen intellectual property systems-the so-called sui generis systems-to protect the knowledge of local and indigenous communities from biopiracy. The priority of public health concerns over intellectual property rights should also be established-a move that will, among other things, enable HIV-positive people to buy life prolonging patented drugs as low prices. 2. The Agreement on Agriculture (AOA) should be radically amended to eliminate tariff peaks and tariff escalation against Southern agricultural exports, end the massive subsidies for developed country farming interests, do away with the different forms of direct income support for developed country farming interests, institute a food security exception to market access rules, and recognize the principle of "Special and Differential Treatment" for developing countries that would allow them greater latitude in their interpretation and implementation of AOA rules. The aim of this process is to effectively bring agriculture out of the straitjacket of the WTO. 3. The Agreement on Trade-Related Investment Measures (TRIMs) must be revised to drop the ban on local-content policies. Trade policy has traditionally been a mechanism used by developing countries to industrialize. The ban on local-content policies, which specify that a determined amount of a product be sourced locally instead of being imported, practically eliminates this positive use of trade policy for development. 4. The Special Ministerial Decision approved at Marrakesh in 1994 to provide assistance to Net Food Importing Developing Countries (NFIDs) still has to go into effect in spite of the fact that the AOA has raised the prices of food imports by these countries. It should be implemented immediately. 5. The WTO must force the developed countries to live up to the commitments they made to lift import barriers under the Agreement on Textiles and Clothing. Seven years into the WTO, the US, EU, and other developed countries have scarcely lifted their quotas against Third World imports. For all intents and purposes, the restrictive Multifiber Agreements (MFA) remain in place. 6. Last but not least, the WTO decision making structure must be overhauled. The so-called "Green Room/Consensus process" has ensured that a few countries dominate decision making in the WTO. Even Charlene Barshefsky, the US Trade Representative during the 1999 Seattle Summit, acknowledged that the WTO was undemocratic: "The process...was a rather exclusionary one. 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 in the room". After the developing countries rebelled against this exclusionary decision making process in Seattle, Stephen Byers, the UK Minister of Trade and Industry, commented: "The 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". Yet scarcely three months later, during UNCTAD X in Bangkok in February 2000, Mike Moore said that the Green Room/Consensus process was "non-negotiable". Decision-making is a fundamental issue. The developing countries and international civil society cannot agree to a new trade round unless the fundamental inequity in decision making is banished from the WTO. Is Free Trade Obsolete? When the WTO came into being in 1995, free trade was seen as a panacea, a cure for poverty, inequality, and almost everything else. The Washington Consensus that formed the intellectual pillars of free trade and structural adjustment seemed to carry all before it. Today, the situation is radically different. The alleged benefits of free trade and free markets are challenged everywhere. For instance, an authoritative UNCTAD study covering 124 countries showed that during a period of greater global trade liberalization from 1965 to 1990, the income share of the richest 20 per cent of the world's population rose from 69 to 83 per cent of total global income. As for the so-called positive relationship between free trade and growth, the emerging consensus is laid out by Harvard Professor Dani Rodrik: Do lower trade barriers spur greater economic progress? The available studies Reveal no systematic relationship between a country's average level of tariff and non-tariff barriers and its subsequent economic growth. If anything, the evidence for the 1990's indicates a positive relationship between import tariffs and economic growth. The only clear pattern is that countries dismantle their trade restrictions as they grow richer. This finding explains why today's rich countries, with few exceptions, embarked on modern economic growth behind protective barriers but now display low trade barriers. In the face of such evidence, C. Fred Bergsten, the head of Washington's Institute of International Economics (IIE), a noted partisan of free trade and the WTO now says that there "has to be an honest recognition and admission that there [free market globalization] has costs and losers", [that] "globalization does increase income and social disparities within countries" and "does leave some countries and groups behind". What the developing world needs is not a new round but a moratorium on trade liberalization. Honolulu Face-off: Civil Society 1, Asian Development Bank 0 (May 2001)
When President Tadao Chino of the Asian Development Bank (ADB) came down to meet representatives of the over 1000 protesters that had gathered in front of the Honolulu Convention Center on Wednesday, May 9, the move was a major victory for opponents of the Manila-based agency. For years, the ADB president had refused to meet critics of the ADB in a public, transparent situation. During the Bank's annual meeting in Chiang Mai last year, ADB staff had gone to considerable lengths to prevent such an occurrence, and they were prepared to stonewall us again at this year's meeting.
But the ADB's 34th Annual General Meeting (AGM) created tremendous controversy in Hawaii for a number of reasons. For a start, there is the history of US imperialism and colonialism, which, according to local organizers, has made Hawaii the most, militarized piece of earth in the world. Through a combination of brainwashing, economic dependency and old fashioned repression, US authorities have done their best to contain indigenous and local Hawaiians' struggles for sovereignty and self determination. What a site for the annual meeting of an institution that claims to advance the interests of the poor and under-privileged! Despite Hawaii's distance from most anywhere in Asia, the 34th AGM attracted critics from across the Asia-Pacific and North America and served as a coalescing point for anti-globalisation protesters who very effectively linked traditional US imperialism with the market capitalism promoted by institutions such as the ADB. A captive audience President Chino expected a perfunctory meeting, in which the civil society delegation would hand him a petition and he would scamper back to the safety of the convention center and his retinue of assistants. What he did not expect was that Ms Dawan would not release his hand once he had offered it to her in a handshake. Her firm but gentle grip allowed Dr. Bello to read aloud the collectively written petition to a captive Chino for the next 15 minutes. And despite the demands of Chino's assistants that the police break up the meeting-since the ADB president had come to receive a written petition, not to hear it read aloud to him-the police were pretty much unable to do anything. The statement, signed by 50 non-governmental and people's organizations from throughout the Asia Pacific region, read in part: "The Asian Development Bank...is an institution that is now widely recognized as having imposed tremendous sufferings on the peoples of the Asia-Pacific. In the name of development, its projects and programs have destroyed the livelihoods of people, brought about the disintegration of local and indigenous communities, promoted the sharp rise of inequality, deepened poverty, and destabilized the environment. We, representatives of peoples, communities, and organizations throughout the region, have had enough of this destruction in the name of development. We have had enough of an arrogant institution that is one of the most non-transparent, undemocratic, and unaccountable organizations in existence. The people of the region want the ADB out of their lives...and yield the space for others to promote alternative strategies of development that truly serve the people's interests." The petition specifically demanded the cancellation of four controversial projects: the Samut Prakarn Wastewater Management Project in Thailand, which threatens irreparable damage to a sensitive coastal ecosystem and is ridden with corruption; the Cordillera Highland Agricultural Resource Management Project in the Philippines (Charm), which is undermining traditional community-based farming by encouraging cash-cropping; the Chashma Right Bank Irrigation Project in Pakistan, which involves involuntary resettlement of villagers; and the Sri Lanka Water Resource Management project, which threatens serious ecological disruption to affected communities. Small victory The 15-minute long airing of peoples' demands was a small victory for transparency, but that it will result in cancellation of controversial projects, or changes in the ADB's non-transparent decision-making structures is unlikely. All Chino could promise once Dawan gently released his hand was the same old mantra that ADB officials have been reciting to critics for years: "your views will be taken into account." The meeting with Chino was the highpoint of a rally that saw the participation of some 1500 people, who marched from Magic Island, through the famous Waikiki Beach area, to Ala Moana Park. Despite police and media warnings about the potential for violence instigated by "external agitators," the events of May 9 were peaceful, though militant. The Honolulu police had spent from US$ 4 to US$ 7 million to upgrade its coercive capacities for the protests in response to the ADB's request for protection. The security syndrome pretty much took over in the weeks leading up to the conference, leading ADB officials themselves to complain that (in the words of a senior staff member) "the US neglected substantive preparations for the event." Indeed, except for events and programs related to dealing with NGOs and people's movements, the substantive agenda of the 34th AGM was remarkably thin, consisting largely of vague declarations regarding the non-functioning Asian Currency Arrangement. The success of the protest march was due in great part to the work of ADB Watch, a local coalition of indigenous, peace, social justice, and environmental groups. In addition to the march, the coalition organized a conference on indigenous rights and struggles, a teach-in on globalization coordinated with the International Forum on Globalization (IFG), a seminar on globalisation and militarisation, and a two-day series of talks, "Voices of the South," featuring speakers from across Asia and the Pacific. Observers remarked that the participation of native peoples and the theme of native people's rights distinguished the mobilization against the 34th ADB AGM from previous protests. Indeed, about half of the participants in the May 9 march were native Hawaiians, and a prominent theme in the weeklong anti-ADB events was protest against the US's destruction of their national sovereignty. Poor judgment The protesters in Honolulu-both Hawaiian and non Hawaiians were also reacting to a growing trend that the ADB's 34th AGM symbolized: the refashioning of our cities and towns to become meeting sites for the institutions of global capitalism. Hawaii State and Honolulu City authorities were emphatic that the 34th AGM would serve to showcase Hawaii as the "Geneva of the Pacific." They see an enormously lucrative future in being able to host international meetings and summits organized by institutions such as the World Bank, International Monetary Fund and the World Trade Organization. All the more reason for them to ensure that one way or another, the Aloha spirit would prevail during the ADB meetings, if not through willing acceptance by local residents, then through beefed-up security measures and repressive ordinances. In the words of a prominent local resident, the ADB's AGM was part of a longer-term vision "to make Hawaii a safe place for global pariahs to meet." Hawaii, with its decades-long history of military build up and its relative geographic isolation must appear a particularly appropriate candidate for a future global convention centre. It is the home of the US Pacific Fleet and has over 50 surveillance stations tracking ship movements from Peru to Madagascar. Different parts of the islands serve as storage areas for nuclear and biological weapons, incineration sites for weapons disposal, sites for bombing exercises, and training areas for tropical mountain and jungle combats. Not only has land been appropriated from native and other local residents in the name of "national security," but also, parts of the islands have experienced widespread environmental destruction and contamination as a result of military exercises and storage. And to protect this military pearl, US authorities have ensured an adequate supply of security personnel around the clock. Not surprisingly, many local residents were bitter about the future implications of holding the ADB's 34th AGM in Honolulu. According to a local community organizer, "Hawaii is already a safe place for the military to be. Now we see all the institutions of finance capital coming in to the same point that is a military stronghold, using the same military structure to control the public and resulting in even more militarisation as with the ADB AGM." Given Hawaii's historical particularities, the ADB management displayed remarkably poor judgment and ineptitude in dealing with the range of sensitive issues that cropped up both before and during the AGM. At the forefront of these were public outrage at the huge costs of providing security for the AGM and at the special measures taken by local security authorities to ensure that the AGM went off smoothly at any cost. President Chino's brief adventure with the masses outside the Convention Centre was perhaps the only prudent move that the organization took in its attempts at damage control. Non-transparent governance The ADB prides itself for being the first multilateral lending agency to have a Board-approved policy statement on good governance, which it defines as governance marked by "accountability, participation, predictability, and transparency." Many Bank staff members are, however, extremely cynical about the new policy. One senior person we interviewed said: "It's a question of practicing what you preach. There's a lot of discontent inside the Bank, precisely because it is one of the most non-accountable. non-participatory, and non-transparent institutions around." As an example, she pointed to informal rules that reserve certain positions to the dominant countries, in particular the US and Japan. The US speaks loudest when it comes to good governance, but it considers key positions in the Bank "its private property, and no talk about democracy and transparency will change that." A good case in the position of the General Counsel of the Bank. The US has locked up this position, an attitude that has brought it criticism from the Board for "lack of transparency." Mindful of the criticism, the US last year pushed to have a US citizen continue to fill the post, but chose an American citizen from Hawaii with a Japanese name. Japan is equally non-transparent in its relationship to the ADB. Japan's Ministry of Finance (MOF) determines who will be president - Chino is a graduate of the MOF- and who will fill the key position of head of Budget and Staffing. This has had detrimental consequences for innovation. One is ideological: the MOF is probably the most conservative of Japan's economic agencies. The other is structural: the chief of Budget and Staffing, for instance, is replaced every three years by the MOF and according to a member of the Bank's Executive Board who we interviewed, "which means that the occupant has little incentive to innovate and all the incentive to carry on as usual." Ironically, Japanese control of the Bank has not resulted in the adoption of the bottom-up, participatory management that Japanese firms are noted for. Instead, the ADB has reproduced the over-centralized, hierarchical structures of the MOF, with hiring of the lowliest programmer for a small project and travel outside the Asia-Pacific region by any Bank staff needing the personal approval of the president. "Hierarchy is everywhere; quality control is nowhere," said one senior informant. "This is, let's face it, a mediocre organization." The threat from civil society The 34th AGM underlined the reality that the days when the ADB could pretty much ignore peoples' movements and civil society organizations (CSOs) are pretty much over. The institution is getting more and more defensive as more and more damning facts come into public view. A recent internal evaluation of a sample of ADB projects in 1998 and 1999 showed that close to 70 per cent of ADB projects are not sustainable. A report to the Bank's donors admitted that although the ADB boasts of poverty reduction being its "overarching vision and goal," the fact of the matter is that "few projects have been designed specifically to address this objective," and that "there has been little lending directly targeted at women or the environment." In addition to project lending, "structural adjustment lending," which seeks to transform economies across the board in the direction of greater market freedom, has also come under criticism internally. One key review decries the "proliferation of policy conditionalities" or measures promoting liberalization, deregulation, and privatization, noting that the average number of conditionalities per program loan is 32! Practically admitting the failure of the Bank's conditionality-burdened program lending, the document states that "besides the issue of proliferation of conditionalities is the more basic issue of the efficacy of the policy conditionality approach." With the ADB no longer able to dismiss the scrutiny and demands of civil society, reform was one of the notes sounded at the Honolulu meeting. Whether anything will come out of this institutional breast-beating remains to be seen. But as the alternative events and protests that accompanied the annual meeting underlined, CSOs and people's organizations are determined to keep up the pressure on the ADB. The May 1st Riot: Birth of Peronism Philippine-style? (7 May 2001)
When President Gloria Macapagal-Arroyo appealed for help to defend Malacanang Palace from a looming assault by the Estrada loyalists on Sunday, April 29, the left was the first to respond, with militants from Akbayan and other progressive groups immediately taking positions at the Mendiola and Nagtahan approaches to the Palace. But it was an action that we carried out with a certain amount of ambivalence, if not trepidation.
It was not so much because we were putting our bodies on the line to defend a government many of whose policies we had misgivings about. That night and the following night, the choices were clear: either come out in defense of Gloria's government or watch from the sidelines as a corrupt counter-elite rode back to power. For us in Akbayan!, the Citizens' Action Party, there simply was no middle ground. No, our feelings of discomfort stemmed from the fact that we, supposedly a mass party for the masses, were ranged against masses mobilized by almost millenarian fervor -which went to show, said a friend, that history not only was cunning but had an ironic sense of humor. A Genuine Mass Uprising True, many of the people at the Edsa Shrine had been paid from 500 to 3000 pesos to go there. True, the backbone of the pro-Erap forces were members of the Iglesia ni Kristo (Church of Christ) and the charismatic El Shaddai movement who had been ordered to Edsa by their hierarchs. True, opposition senatorial candidates like Juan Ponce Enrile and Miriam Defensor-Santiago, as well as Estrada offspring J.V. Ejercito must bear responsibility for inciting the crowd to march on Malacanang. True, many of the shantytown youth spearheading the assault were high on shabu and other drugs. But when all is said and done, one would be hard put to deny the truth that the vast majority of those who went to the Edsa Shrine and later marched on Malacanang were mainly motivated by resentments against the rich, by feelings that a terrible injustice had been done to their hero, Joseph "Erap" Estrada, by a sense that they were acting to protect the constitution and democracy. To say that they were simply manipulated by cynical politicians is to express a half-truth and to do the masses a great injustice. How a corrupt lout masquerading as a man of the masses like Estrada was able to capture the fierce loyalties of the poor, downtrodden, and marginalized will be the subject of many studies in political psychology in the months and years to come. But the reality is that, for all their vast corruption and incompetence while in office, Estrada and his backers have been able to do something that has eluded the left for decades, and that is to organize the people along class lines into a powerful mass movement. "Erapism" and Peronism The closest approximation to the Estrada movement is Peronism in Argentina. The parallels are stark: Juan Domingo Peron's main base of support was the villas de miseria, or urban poor settlements, ringing Buenos Aires. Peron was squeezed out of power by the traditional aristocracy and the military, with the support of the middle class. Peron was brought back to power by the rampaging descamisados ("the shirtless ones"). Whether the urban poor and the pro-Estrada politicians will manage a similar feat in the Philippines remains to be seen, for it is increasingly clear that this week's setback was not the last act of a national drama. The fact is that just as Peronism altered the political landscape of Argentina irreversibly, becoming the dominant expression of lower-class participation in politics, so is Estrada's populism transforming that of the Philippines. Class-oriented politics has finally come to this country, but it has done so with a vengeance, in a way that the classic parties of the left never anticipated: as an alliance among the urban and rural poor, party bosses with a strong grip on the electoral machinery, and a charismatic personality to whom populist rhetoric and the populist style is second nature. Sobering Lessons To the forces that made up the so-called Edsa II Coalition that drove Estrada from power last January, the May Day riot in Mendiola was a moment of crystal clarity. To the middle class that served the mass base of Edsa II, the Mendiola Riot underscored the gap between their political values and those of the masses. Anti-corruption and good governance was the battle cry that mobilized the middle class in January. In contrast, while the masses care about good governance, their rallying around Estrada showed that they value much more the promise of a better life, being accorded respect as human beings by those who are better off, being able to identify with those who claim to lead them. To the Catholic Church hierarchy, recent events underlined how badly out of synch it is with the vast masses of Filipinos. Indeed, along with President Arroyo and former Presidents Cory Aquino and Fidel Ramos, Cardinal Jaime Sin was one of the principal figures of the so-called "Edsa III's" rogues' gallery. If the Iglesia ni Kristo and the El Shaddai were welcomed at the Edsa Shrine by the pro-Estrada masses, this was not only because of their numbers, but because they represented faiths that were seen as more relevant to the needs, aspirations, and fears of the poor. For the traditional "patrician" elite symbolized by the Makati Business Club, which has tremendous influence on the economic and social policy of the current administration, the Mendiola Riot should have underscored the fact that trickle-down economics cum paternalism and tokenism is no longer a viable strategy for appeasing the poor. And if she wishes to mount an effective challenge to the formidable populism of Estrada, President Arroyo must realize that a conditio sine qua non is her breaking with her Makati Business Club handlers and her UP School of Economics advisers. For these circles are locked into a losers' strategy when it comes to addressing the masses' central preoccupation: the rapid reduction of poverty and social inequality. Indeed, one cannot say that this administration has a strategy for addressing poverty. What it has is a neoliberal strategy for stimulating growth by making the country attractive to foreign investors, liberalizing trade and capital flows, pursuing export-oriented growth, and cutting the budget deficit. In this view, the important thing is to get the "macroeconomic fundamentals right", and then leave it to market forces to trigger the economic growth that will create the resources that will trickle down to the poor. Until then, an anti-poverty program is largely a matter of setting up safety nets. However theoretically attractive this approach may be, there is scant empirical support for its success in addressing the formidable problems of poverty and inequality that have now been accentuated by the same process of globalization it aims to promote. It is a surefire path to political disaster in a country with a vast urban and rural underclass. Unenlightened Elite It is, however, unlikely that after the moment of clarity has passed, most of the key actors of Edsa II will remember the lessons of Edsa III. The Philippine elite, the Catholic Church, and the middle class have a notoriously short memory, and the fears triggered by the raw reality of class uprising that they saw in the last few days is likely to dominate their sentiments for reform, leading them eventually to throw their support for stronger police measures and conservative socioeconomic policies. The traditional elite in this country is notorious for its lack of a truly enlightened faction, and with much of the political counter-elite consolidating around Estrada's bankrupt populism, a Filipino Franklin D. Roosevelt simply is not in the cards. Challenge to the Left The one possible exception among the Edsa II forces is the left. Here the task of unlearning ineffective paradigms and practices in order to better compete for the loyalties of the masses is a formidable challenge. Sticking to the explanation that it was simply manipulation by the pro-Estrada elite that triggered the Mendiola Riot, as some groups have noisily contended, is a sure route to irrelevance. Likewise, saying that unionized, class-conscious workers proved impermeable to Erap's populist appeal doesn't get one very far, since under conditions of globalization, irregular and marginal employment has become the dominant condition for the vast majority of workers, and it is these non-unionized strata that are most readily susceptible to Erap's millenarian populism. But the challenge goes beyond dumping facile explanations, to an abandonment of both the orthodox Leninist and western-oriented Social Democratic approaches to organizing the masses. Theory must be innovatively married to an instinct, a "feel", for where the masses are at and to populist language and symbolism while remaining faithful to the core values of equality, democracy, liberty, and decency. No less than a sea change in strategy, methods of organizing, and even as something as basic as language is demanded. Unless the left looks at the recent crisis with humility, as an opportunity to learn and revitalize itself, the fire next time might not only sweep away the elite but also decimate the progressive movement, rendering it, as in Argentina, forever irrelevant. Will Japanese Tourists fly into Pearl Harbor II? (9 May 2001)
Honolulu is bracing for Pearl Harbor II in the first 11 days of May. All the ingredients are there.
- First, thousands of Japanese tourists are flying in, the foot-soldiers of an annual invasion popularly known as "Golden Week."
Hawaii's tourist industry is fretting, worried that Golden Week, one of the most lucrative times of the year owing to the descent onto the fabled islands of tourists with tremendous purchasing power, might not materialize this year owing to fears of violence. The image that haunts Robert Fishman, head of the Hawaii Tourist Authority, and other Hawaii officials is that of Pike's Market on the Seattle waterfront on Nov. 30, 1999, when aggressive policemen in Darth Vader outfits started clubbing people, failing to distinguish tourists from the peaceful demonstrators that took refuge in one of that city's prime attractions. A fatalistic sense that a Seattle is in the making is felt on all sides, including the ADB. Ian Gill, a senior external relations officer of the ADB, has thrown up his hands, claiming, according to one ADB source, that the preparations are "totally chaotic." The main source of escalating tension is the police, a view that is shared even by ADB personnel. One senior Bank official told a member of the Hawaii Organizing Committee for the event, that the ADB was concerned about the Hawaii Police rattling their sabers and taking advantage of the annual meeting to acquire funding to modernize their riot-control equipment for other uses. Arguing that they had to prepare for the "worst-case scenario," the police initially demanded $7 million for the purchase of sophisticated weapons and equipment. In the lead-up to the event, the police have already moved to restrict traditional civil liberties. Police have banned the standard free-speech zone near the Convention Center. This means that there is no place next to the Convention Center where ADB opponents and critics can express their opinions. The police also tried to declare two sites suitable for large rallies, Waikiki's Ala Wai Community Park and the Ala Moana Beach Park, off limits to demonstrators. ADBWatch, the coalition of groups organizing the protests, claims that already, people have been questioned and motorists stopped for having "Shut Down ADB" bumper stickers. It has also denounced police efforts to obtain the authority to instantly arrest anybody engaging in "sleeping activities" in a public part or on a beach, including Waikiki. A bill to this effect will be heard by the Honolulu City Council in the next few days, as will a measure allowing police to use stun guns, which are currently banned in Hawaii. Other constitutionally questionable legislation has already been passed, however, including banning "possession with intent to use of any device capable of emitting an obnoxious substance." Backing up Honolulu's 2,000 policemen are 5,500 members of the Hawaii Army and Air Force National Guard. In fact, National Guard personnel will double up as drivers for ADB delegates for security purposes-at US taxpayers' expense, it must be added. Also getting into the act are private security agencies, with one ADB senior official expressing alarm that burly Samoans are being hired to "manage" demonstrators at the Hawaii Convention Center. That police and state officials have gone overboard in security preparations is evident to many in Hawaii. A local newspaper quoted Honolulu Public Safety Director Ted Sakai as admitting that "95 per cent of protests will be peaceful." An ADB senior official reports that Hawaiians are very sensitive to what they see as possible oppression by the authorities through. purchase of police equipment and the passing of restrictive laws in the Hawaii legislature. The way the security question is overshadowing everything else is disturbing ADB officials who were initially eager to use the Honolulu meeting to "clean up" the ADB's well-deserved image of being an agency that uproots people, promotes socially disruptive development, and destroys the environment. Officials at the Manila-based agency are, in fact, furious that what they see as the "mishandling" of the security issue by Hawaii officials is giving their agency an image associated with police repression. A senior member of a preparatory mission to the Honolulu in March complained to University of Hawaii officials about the atmosphere of negativity about the Bank and its activities that now blankets the city. Yet, the ADB has to share responsibility for escalating the expectations of confrontation, according to a member of the Hawaii Organizing Committee for the event. "They [the ADB] could have told us right from the beginning that practically all the protests that have been staged at its previous annual meetings were peaceful," the source, who wished to remain anonymous, said. Even the 2,000-strong protests by fisherfolk and farmers in Chiang Mai last year were exemplary for the way they combined militance with non-violence. Instead, when it moved the site of its 34th annual meeting from Seattle to Honolulu, Bank representatives told Hawaii authorities it was doing this because, unlike Seattle, Honolulu was "peaceful and free of demonstrators." Once it became clear, however, that it was no longer immune to demonstrators even in Paradise, the initial requests it made for security "triggered runaway fears in the mind of a police force obsessed with the Seattle example." "If you prepare for violence, you will trigger violence," says Cha Smith, who works with ADBWatch. They are turning the Aloha State into a Police State." So what would you do if you were a Japanese tourist in Honolulu during Golden Week? "Better carry a gas mask and a hard hat," she advises. "Better yet, don't come to Hawaii until after May 15." Global Capitalism: Multilateral System in Crisis (5 June 2001)
The increasingly brazen employment of the global multilateral system to serve the interests of the United States was one of the causes of the crisis that gripped the system at the end of decade. "Hegemonic leadership", in short, was giving way to direct control - a reality that was underlined by wry jokes from European and Japanese technocrats that during the Asian financial crisis, IMF managing director Michel Camdessus was microman-aged by US Treasury Secretary Robert Rubin and his key aide, Larry Summers.
The Multilateral System in Crisis Equally important as a source of delegitimization was the spreading realization that the system could not deliver on its promise. That the system could not create prosperity for all but only the illusion of it was something that many observers had known for sometime. However, the realities of growing global poverty and inequality were neutralized by the high growth rates and the prosperity of a few enclaves of the world economy, like East Asia in the 1980s, which were (mistakenly) painted as paragons of market-led development. However, when the Asian economies collapsed in 1997, the follies of neoliberal economics were brought to the fore. All talk about the Asian financial crisis being caused by crony capitalism could not obscure the fact that it had been the liberation of speculative capital from the constraints of regulation, largely on account of pressure from the IMF, that brought about Asia's collapse. The IMF also came under severe public scrutiny for imposing draconian programs on the Asian economies in the wake of the crisis policies that merely accelerated economic contraction, saved foreign banks and speculative investors, and restructured economies along "American lines". The IMF's role in East Asia triggered a fresh reexamination of its role in imposing structural adjustment programs in much of Africa, South Asia, and Latin America in the 1980s, and the fact that these programs had, as they did in Asia, exacerbated stagnation, widened inequalities, and deepened poverty now became widely realized - so much so that the IMF, in a desperate effort to exorcise its record, felt compelled to change the name of the extended structural adjustment fund (ESAF) facility into the poverty reduction and growth facility prior to the World Bank-IMF annual meeting in Washington in September 1999. The Asian financial crisis triggered the unraveling of the legitimacy of the IMF. In the case of the WTO, the situation was even more dramatic. In the last five years of the decade, growing numbers of people and communities began to realize that in signing on to the WTO, they had signed on to a charter for corporate rule that enshrined what consumer advocate Ralph Nader called the principle of "trade uber alles", or corporate trade above equity, justice, environment and most everything else we hold dear. Many developing countries discovered that in signing on to the WTO, they had signed away their rights to development. The many streams of discontent and opposition converged on the streets of Seattle and in the meeting rooms of the Seattle Convention Center in December 1999 to bring down the third ministerial of the WTO and trigger a severe institutional crisis from which the organization has yet to recover. The World Bank, under the leadership of Australian-turned-American James Wolfensohn, appeared to be charting a course that would allow it to escape the damage inflicted on its sister institutions, until it was subjected to fire in early 2000 from an unexpected quarter: the Meltzer Commission. Ever since he took over as chief of the institution in the mid-1990s, Australian-American James Wolfensohn had managed to defuse criticism through very skilled public relations work and co-optation of nongovernmental organizations. But when the same criticisms that had been made by people from the left were made by a commission created by the US Congress, the game was up. Headed by a banker, Alan Meltzer, the commission concluded that the bank's performance when it came to addressing its avowed goal of eliminating global poverty was miserable and that it would be better to devolve the task to regional bodies. The Crisis of the Corporation By the end of the last decade of the 20th century, in short, the triumphalism that marked the beginning of the decade had evaporated and given way to a deep crisis of legitimacy of the multilateral order. The crisis of the multilateral system was, moreover, translating into a deepening unease globally with the prime actor of globalization: the corporation. Several factors came together to focus public attention on the corporation in the 1990s - the most egregious being the predatory practices of Microsoft, the environmental depredations of Shell, the irresponsibility of Monsanto and Novartis in promoting genetically modified organisms, Nike's systematic exploitation of dirt-cheap labor, and Mitsubishi, Ford and Firestone's concealment from consumers of serious product defects. A sense of environmental emergency was also spreading by the beginning of the 21st century, and to increasing numbers of people, the rapid melting of the polar ice caps could be traced to Big Oil and the automobile giants' continuing promotion of an environmentally destabilizing petroleum civilization, and, more generally, to the process of uncontrolled growth driven by the transnational corporations. Ironically, in the United States, it was during the apogee of the new economy that the distrust of the corporation was also at its highest in decades. A Business Week survey said "72% of Americans say business has too much power over their lives". And the magazine warned: "Corporate America, ignore these trends at your peril". Some of the more enlightened members of the global elite took such warnings seriously, and their annual meeting in Davos, Switzerland, became the venue to elaborate a response that would go beyond the bankrupt strategy of denying that corporate-driven globalization was creating tremendous problems to promote a vision of "globalization with compassion". Yet, the task was formidable, for it became increasingly clear that in an unregulated global market, it was even more difficult to reconcile the demands of social responsibility with the demands of profitability. The best that "globalization with a conscience" could offer was, as C. Fred Bergsten, a noted pro-globalization advocate, admitted, 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". Strategic Power and Corporate Power Corporate power is one dimension of US power. But there is, equally of consequence, the strategic power of the US state, a dimension that is explored in the third part of the book. Strategic power cannot be reduced, as in orthodox Marxism, to simply being driven by the dynamics of corporate control. The US state cannot be reduced simply to being a servant of US capital. The Pentagon has its own dynamics, and one cannot understand the US role in the Balkans or its changing posture towards China as simply determined by the interests of US corporations. Indeed, in Asia, it has been strategic extension, not corporate expansionism, that has been the mainspring of US policy, at least until the mid-1980s. And, in the case of China, US capital's desire to exploit the China market has increasingly found itself in opposition to the Pentagon's definition of China as the Enemy, which must be headed off at the pass instead of being assisted by western investment to become a full-blown threat. In many instances, indeed, corporate power and state power may not be in synch. Having said this, a primordial aim of the US transnational garrison state that is ensconced deeply in East Asia, the Middle East and Europe and projects power to the rest of the globe, is the maintenance of a global order that secures the primacy of US economic interests. With the growing illegitimacy of corporate-driven globalization and the growing divide between a prosperous minority and an increasingly marginalized majority, military intervention to maintain the global status will become a constant feature of international relations, whether this is justified in terms of fighting drugs, fighting terrorism, containing "rogue states", opposing "Islamic fundamentalism", or containing China. One cannot say, however, that the military structure of US hegemony is suffering as profound a crisis of legitimacy as that which has gripped the processes and institutions of corporate globalization. The US military structure remains solidly rooted in both Europe and Asia, and the reason it remains so is to be found at the level of the ideological: the deep-seated fear of both European and Asian elites that without the US to serve as a "benevolent hegemon", they would not be able to create by themselves benign regional orders that would ensure the peace among themselves. The Crisis of Liberal Democracy It is not, however, corporate power or military power that is the US' strongest asset but its ideological power. The US is a Lockean democracy, and its ability to project its mission as the extension of systems centered on free elections to choose governments devoted to promoting liberal rights and freedoms continues to be a strong fountain of legitimacy in many parts of the world. The trend away from authoritarian regimes and toward formal democracies in the third world happened in spite of rather than because of the United States. Yet, especially under the Clinton administration, Washington was able to skillfully jibe to catch the democratic winds, in the process reconstructing its image from being a supporter of repressive regimes to being an opponent of dictatorships. In the last few years, however, Washington or Westminster-style democracies with their focus on formal rights and formal elections and their bias against economic equality achieved through such measures as asset and income redistribution have led to increasingly stagnant and polarized political systems, such as those in the Philippines, Brazil and Pakistan. This stagnation of third world liberal democratic systems has been paralleled by the realization of increasing numbers of Americans that their liberal democracy has been so thoroughly corrupted by corporate money politics that it deserves being designated a plutocracy. Liberal democracy Washington-style is, in other words, entering into crisis everywhere. It was this massive crisis of legitimacy that propelled thousands of people from both the North and the South to engage in militant protest civil disobedience in Seattle during the WTO ministerial in December 1999; in Washington during the World Bank-IMF spring meeting in April 2000; in Chiang Mai, Thailand, during the Asian Development Bank annual meeting in May 2000; in Melbourne during the World Economic Forum gathering in early September 2000; and in Prague during the World Bank-IMF annual meeting in September 2000. These mass actions, in turn, further eroded the credibility of the institutions of globalization, despite the effort of television and mass media to portray the protesters as either uninformed critics or anarchists. The structures of the system may appear to still be firm, but when legitimacy or consensus goes, it may only be a matter of time before the structures themselves begin to unravel. The Challenge Yet the crisis of the system does not necessarily result in its replacement by a more benign system of international relations. As Rosa Luxemburg so presciently pointed out before the rise of fascism in crisis-ridden Europe, the outcome may be "barbarism", where the ideals and themes of the progressive opposition are hijacked and perverted by demagogic forces that are hostile to freedom, equality and democracy. Which is why the articulation of an alternative order is so critical at this point in time. Creating this alternative vision and program centered on a participatory process to create the institutions that would once again subordinate the market to society, promote genuine equality across gender and color lines and within and among countries, and establish a benign relationship between human community and the biosphere remains the great challenge of the opponents of corporate-driven globalization. On the success of this enterprise depends our future. All Roads Lead to Genoa (July 2001)
The meeting of the G8 in Genoa this month [July 2001] is taking place at a time when global capitalism has passed from triumph to a crisis of legitimacy. As the world stands on the brink of a deep recession, it is useful to reflect on the challenge this poses for the new protest movement.
The last decade of the 20th century began with the collapse of the socialist economies of Eastern Europe and much triumphalist talk about the genesis of a new market-driven global economy that rendered borders obsolete and rode on the advances of information technology. Yet even as the prophets of globalisation talked about the growing irrelevance of national interests, the main beneficiaries of the new global order were US transnational corporations. Supposedly an agent of free trade, the World Trade Organisation's (WTO) most important agreements promoted monopolies for US firms: the Trade Related Intellectual Property Rights Agreement consolidated the hold of these corporations over high tech innovations, while the Agreement on Agriculture institutionalised a system of monopolistic competition for third-country markets by US and EU agribusinesses. The increasingly brazen employment of the global multilateral system to serve the interests of the United States has been one of the reasons why the legitimacy of this system has collapsed. Equally important as a source of de-legitimisation was the spreading realisation that the system could not deliver on its promise. In the last five years of the decade, growing numbers of people began to realise that in signing on to the WTO, they had signed on to a charter for corporate rule that enshrined the principle of corporate trade above equity, justice, environment, and almost everything else. The streams of discontent and opposition converged in the streets to bring down the Seattle meeting of the WTO and trigger a severe institutional crisis from which the organisation has yet to recover. The crisis of the multilateral system was, moreover, translating into a deepening unease with the prime actor of globalisation: the corporation. Several factors came together to focus public attention on the corporation - the most egregious being the predatory practices of Microsoft, the environmental depredations of Shell, the irresponsibility of Monsanto and Novartis in promoting genetically modified organisms, and Nike's systematic exploitation of dirt-cheap labor. A sense of environmental emergency was also spreading. With the growing illegitimacy of corporate-driven globalisation and the growing divide between a prosperous minority and an increasingly marginalised majority, military intervention to maintain the global status will become a constant feature of international relations, whether this is justified in terms of fighting drugs, fighting terrorism, containing "rogue states", opposing "Islamic fundamentalism" or containing China. It is not, however, corporate power or military power that is the US's strongest asset but its ideological power as the champion of democracy and freedom. In the last few years, however, Washington or Westminster-style democracies, with their focus on formal rights and formal elections and their bias against economic equality, have degenerated into stagnant and polarised political systems similar to those of the Philippines, Brazil and Pakistan. This has been paralleled by the realisation by increasing numbers of Americans that their liberal democracy has been so thoroughly corrupted by corporate money politics that it deserves being designated a plutocracy. The fact that a man who lost the popular vote - and according to some studies, the electoral vote as well - ended up president of the world's most powerful liberal democracy has not helped. The fact that the UK government will govern with 24 per cent of the vote points to the same crisis of legitimacy in the UK. With such a collapse of legitimacy, it may only be a matter of time before the structures themselves begin to unravel, but the crisis of the system does not necessarily result in its replacement by a more benign one. Which is why the articulation of an alternative is so critical at this point in time. Creating this alternative vision centred on participatory democratic institutions that would once again subordinate the market to society, promote genuine equality, and establish a benign relationship between human communities and the biosphere remains the great challenge of the opponents of corporate-driven globalisation. On the success of this enterprise depends our future. Genoa and the Multiple Crises of Globalisation (July 2001)
Genoa is a name associated with the emergence of capitalism in Europe six centuries ago. Genoa may also now become a symbol of the crisis of corporate-driven globalisation.
The siege that thousands of protesters are planning to mount on the Group of Eight's annual summit in that historic Italian city in the third week of July has become emblematic of the global state of siege that now surrounds the key institutions of the global economy and global politics. The historical context of the coming meeting is that in a little over a decade, the system of global capitalism has passed from triumph to crisis. As the world stands on the brink of a deep recession, it would be useful to reflect on some of the key dimensions of this historic transition-on the multiple crises wracking the globalist project. The last decade of the twentieth century began with the resounding collapse of the socialist economies of Eastern Europe and a lot of triumphalist talk about the genesis of a new market-driven global economy that rendered borders obsolete and rode on the advances of information technology. The key agents of the new global economy were the transnational corporations, which were depicted as the supreme incarnation of market freedom owing to their superior ability to bring about the most efficient mix of land, labour, capital, and technology. Midway in the decade was born the World Trade Organisation (WTO), which was painted by partisans of globalisation as providing the legal and institutional scaffolding for the new global economy. By creating a rules-based global system grounded in the primordial principle of free trade, the WTO would serve as the catalyst of an economic process that would bring about the greatest good for the greatest number. It was the third pillar of a holy trinity that would serve as the guardian of the new economic order, the other two being the International Monetary Fund (IMF), which promoted ever freer global capital flows, and the World Bank, which would supervise the transformation of developing countries along free market lines and manage their integration into the new world economy. Multilateralism in crisis Yet even as the prophets of globalisation talked about the increasing obsolescence of the nation-state and the growing irrelevance of national interests, the main beneficiary of the new post-Cold War global order was the United States. Though it was supposedly a mechanism for freer trade, the WTO's most important agreements promoted monopoly for US firms: the Trade Related Intellectual Property Rights Agreement (TRIPs) consolidated the hold over high-tech innovations by US corporations such as Intel and Microsoft, while the Agreement on Agriculture institutionalised a system of monopolistic competition for third-country markets between the agribusiness interests of the United States and the European Union. When the Asian financial crisis engulfed countries that had been seen by many in the US business and political elites as America's most formidable competitors, Washington did not try to save the Asian economies by promoting expansionary policies, Instead, it used the IMF to dismantle the structures of state-assisted Asian capitalism that had been regarded as formidable barriers to the entry of goods and investments from US transnationals that had been clamouring vociferously for years to get their piece of the "Asian miracle". It was less the belief in spreading the alleged benefits of free trade than maximising geo-economic and geo-strategic advantage that lay behind US support for the policies of the IMF, the World Bank, and the WTO. As Chalmers Johnson has noted, a good case can be made that Washington's opportunistic behaviour during the Asian financial crisis reflected the fact that "having defeated the fascists and the communists, the United States now sought to defeat its last remaining rivals for global dominance: the nations of East Asia that had used the conditions of the Cold War to enrich themselves". (1) Acting to achieve its interests under multilateral cover was the preferred US strategy for most of the post-war period, whether it was the Bretton Woods institutions, United Nations, or the Group of Eight that provided the framework for "hegemonic leadership". Yet when these institutions got in the way of US interests, Washington did not hesitate to act unilaterally. This was increasingly the case in the 1990s, with the removal of the incentives for multilateral behaviour posed by Soviet competition. The instrumental use of multilateral agencies was stark when it came to the UN. While using the United Nations to provide cover for its policy of isolating Iraq, Washington also refused to pay its dues to the UN for not kow-towing wholeheartedly to US policy. Or it simply disregarded the UN when it could not get a mandate and proceeded to work its will through more pliable institutions, as it did when it resorted to NATO cover for the bombing of Yugoslavia during the Kosovo conflict. The G8 (then G7, without Russia) emerged in the 1970s to provide a mechanism for more multilaterally-shared decision-making among the advanced capitalist countries, especially in economic matters. Yet, especially under the administration of George W. Bush, Washington has embarked on a unilateralist course that has brought it to sharp conflict with other members on the burning issues of climate change, missile defence, and reconciliation between the two Koreas. The brusque junking of a painstakingly negotiated agreement, the Kyoto Protocol on Climate Change, marks a new low in unilateralist behaviour, and its contribution to eroding the European Union-United States alliance that has served as the foundation of Western hegemony in the last 50 years cannot be underestimated. Legitimacy crisis Increasing resort to unilateralism and the brazen manipulation of multilateral mechanisms to achieve hegemony by the United States was a key source of the crisis of legitimacy that began to grip the global order in the late 1990s. But equally important as the erosion of multilateralism as a source of de-legitimisation was the spreading realisation that the system could not deliver on its promise. That the system could not create prosperity for all but only the illusion of it was something that many observers had known for sometime. However, the realities of growing global poverty and inequality were neutralised by the high growth rates and the prosperity of a few enclaves of the world economy, like East Asia in the 1980s, which were (mistakenly) painted as paragons of market-led development. However, when the Asian economies collapsed in 1997, the follies of neoliberal economics were brought to the fore. All talk about the Asian financial crisis being caused by crony capitalism could not obscure the fact that it was the liberation of speculative capital from the constraints of regulation, largely in response to pressure from the International Monetary Fund (IMF), that brought about Asia's collapse. The IMF also came under severe public scrutiny for imposing draconian programs on the Asian economies in the wake of the crisis-policies that merely accelerated economic contraction, saved foreign banks and speculative investors, and restructured economies along "American lines". The IMF's role in East Asia triggered a fresh re-examination of its role in imposing structural adjustment programs in much of Africa, South Asia, and Latin America in the 1980s, and the fact that these programs had, as they did in Asia, exacerbated stagnation, widened inequalities, and deepened poverty now became widely realised-so much so that the IMF, in a desperate effort to exorcise its record, felt compelled to change the name of the extended structural adjustment fund facility (ESAF) into the poverty reduction and growth facility prior to the World Bank-IMF annual meeting in Washington in September 1999. The Asian financial crisis triggered the unravelling of the legitimacy of the IMF. In the case of the WTO, the situation was even more dramatic. In the last five years of the decade, growing numbers of people and communities began to realise that in signing on to the WTO, they had signed on to a charter for corporate rule that enshrined what consumer advocate Ralph Nader called the principle of "trade uber alles", or corporate trade above equity, justice, environment, and most everything else we hold dear. Many developing countries discovered that in signing on to the WTO, they had signed away their rights to development. The many streams of discontent and opposition converged in the streets of Seattle and the meeting rooms of the Seattle Convention Centre in December 1999 to bring down the third ministerial of the WTO and trigger a severe institutional crisis from which the organisation has yet to recover. The World Bank, under the leadership of Australian-turned-American James Wolfensohn, appeared to be charting a course that would allow it to escape the damage inflicted on its sister institutions, until it was subjected to fire in early 2000 from an unexpected quarter: the Meltzer Commission. Ever since he took over as chief of the institution in the mid-1990s Wolfensohn had managed to defuse criticism through very skilled public relations work and co-option of non-governmental organisations (NGOs). But when the same criticisms that had been made by people from the left were made by a commission created by the US Congress, the game was up. Headed by conservative academic, Alan Meltzer, the commission concluded that the Bank's performance when it came to addressing its avowed goal of eliminating global poverty was miserable and that it would be better to devolve the task to regional bodies. Not surprisingly, in the face of criticism coming from left to right, reform of the multilateral system has been prominent in the rhetoric of the multilateral agencies and the G8 governments that are their most powerful backers. Debt forgiveness, a new global financial architecture, and reform of the decision-making structures of the WTO and Bretton Woods twins have been among the high-profile issues on which expectations of change were promoted. These initiatives have, for the most part, proved disappointing, with little in the way of concrete action. The most prominent reform initiative, the G8's plan to lighten the servicing of the external debt of the 41 highly indebted poor countries (HIPC), has actually delivered a debt reduction of only $1 billion since it began in 1996-or a reduction of their debt servicing by only three percent in the past five years! When it comes to the question of the international financial architecture, serious discussion of controls on speculative capital like the Tobin tax has been avoided. An unreformed IMF continues to be at the centre of the "firefighting system". A pre-emptive, pre-crisis credit line at the Fund (which no country wants to use) and a toothless Financial Stability Forum-where there is little developing country participation-appear to be the only "innovations" to emerge from the Asian, Russian, and Brazilian financial crises of the last three years. Reform of the decision-making structures of the multilateral institutions that serve as the key rule-setting and global management institutions of contemporary capitalism was also supposed to be spearheaded by the G8. Yet, talk about democratising the WTO has vanished, with Director General Mike Moore saying that that the non-transparent "consensus" system that triggered the developing country revolt in Seattle in December 1998 is "non-negotiable". (2) And with respect to the IMF and the World Bank, there is no longer any discussion about diluting the voting shares of the US and European Union in favour of greater voting power for the developing countries, much less of doing away with the feudal practices of always having a European head the Fund and an American to lead the Bank. The corporation under scrutiny By the end of the last decade of the twentieth century, in short, the triumphalism that marked the beginning of the decade had evaporated and given way to a deep crisis of legitimacy of the multilateral order. The crisis of the multilateral system was, moreover, translating into a deepening unease globally with the prime actor of globalisation: the corporation. Several factors came together to focus public attention on the corporation in the 1990s-the most egregious being the predatory practices of Microsoft, the environmental depredations of Shell, the irresponsibility of Monsanto and Novartis in promoting genetically modified organisms, Nike's systematic exploitation of dirt-cheap labour, and Mitsubishi, Ford, and Firestone's concealment from consumers of serious product defects. A sense of environmental emergency was also spreading by the beginning of the 21st century, and to increasing numbers of people, the rapid melting of the polar ice caps could be traced to Big Oil and the automobile giants' continuing promotion of an environmentally destabilising petroleum civilisation, and, more generally, to the process of uncontrolled growth driven by the transnational corporations (TNCs). Ironically, in the United States, it was during the apogee of the New Economy that the distrust of the corporation was also at its highest in decades. According to Business Week survey, "72 per cent of Americans say business has too much power over their lives". (3) And the magazine warned: "Corporate America, ignore these trends at your peril". (4) Some of the more enlightened members of the global elite took such arnings seriously, and their annual meeting in Davos, Switzerland, became the venue to elaborate a response that would go beyond the bankrupt strategy of denying that corporate-driven globalisation was creating tremendous problems to promote a vision of "globalisation with compassion". Yet, the task was formidable, for it became increasingly clear that in an unregulated global market, it was even more difficult to reconcile the demands of social responsibility with the demands of profitability. The best that "globalisation with a conscience" could offer was, as C. Fred Bergsten, a noted pro-globalisation advocate, admitted, a system of "transitional safety nets...to help the adjustment to dislocation" and "enable people to take advantage of the phenomenon [of globalisation] and roll with it rather than oppose it". (5) The strategic nexus Corporate power is one dimension of global power. But there is, equally of consequence, strategic power, and this, even more than corporate power, is concentrated in the United States. Strategic power cannot be reduced, as in orthodox Marxism, to simply being determined by the dynamics of corporate control. The US state cannot be reduced simply to being a servant of US capital. The Pentagon has its own dynamics, and one cannot understand the US role in the Balkans or its changing posture towards China as simply determined by the interests of US corporations. Indeed, in Asia, it has been strategic extension, not corporate expansionism, that has been the mainspring of US policy, at least until the mid-1980s. And, in the case of China, US capital's desire to exploit the China market has increasingly found itself in opposition to the Pentagon's definition of China as the Enemy, which must be headed off at the pass instead of being assisted by western investment to become a full-blown threat. In many instances, indeed, corporate power and state power may not be in synch. Having said this, a primordial aim of the US transnational garrison state that is ensconced deeply in East Asia, the Middle East, and Europe and projects power to the rest of the globe, is the maintenance of a global order that secures the primacy of US economic interests. New York Times columnist Thomas Friedman may be wrong about the benign impact of globalisation, but he is definitely on target when he asserts that: The hidden hand of the market will never work without a hidden fist McDonald's cannot flourish without McDonnell Douglas, the designer of the US Air Force F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies to flourish is called the US Army, Air Force, Navy, and Marine Corps. (6) With the growing illegitimacy of corporate-driven globalisation and the growing divide between a prosperous minority and an increasingly marginalized majority, military intervention to maintain the global status will become a constant feature of international relations, whether this is justified in terms of fighting drugs, fighting terrorism, containing "rogue states", opposing "Islamic fundamentalism", or containing China. One cannot say, however, that the military structure of US hegemony is suffering as profound a crisis of legitimacy as that which has gripped the processes and institutions of corporate globalisation. The US military structure remains solidly rooted in both Europe and Asia, and the reason it remains so is to be found at the level of the ideological: the deep-seated fear of both European and Asian elites that without the US to serve as a "benevolent hegemon", they would not be able to create by themselves benign regional orders that would ensure the peace among themselves. Nonetheless, this sentiment is not as strong as before. The collapse of Soviet power created the condition for a reassessment by Washington's allies of the role of US power. Doubts have increased with the Pentagon's insistence on building a missile defence system against potential rather than real enemies while preparing the ground for a new Cold War crusade against China. Indeed, these developments have indeed opened the eyes of many of Washington's allies that the greatest threat to their security may now be Washington itself. Democratic degeneration It is not, however, corporate power or military power that is the US's strongest asset but, following the thinking of Antonio Gramsci, its ideological power-its "soft power". The US is a Lockean democracy, and its ability to project its mission as the extension of systems centred on free elections to choose governments devoted to promoting liberal rights and freedoms continues to be a strong fountain of legitimacy in many parts of the world. The trend away from authoritarian regimes and toward formal democracies in the Third World happened in spite of rather than because of the United States. Yet, especially under the Clinton administration, Washington was able to skilfully jibe to catch the democratic winds, in the process reconstructing its image from being a supporter of repressive regimes to being an opponent of dictatorships. In the last few years, however, Washington or Westminster-style democracies-or, as William Robinson calls them, "polyarchies" (7) - with their focus on formal rights and formal elections and their bias against economic equality achieved through such measures as asset and income redistribution - have degenerated into increasingly stagnant and polarised political systems, such as those in the Philippines, Brazil, and Pakistan. The World Bank and the Asian Development Bank continually talk about the plague of corruption in developing countries. It is, however, the deeper corruption that is embedded in economic and political structures that are superficially democratic but perverted by the realities of economic inequality that is the greater concern of the vast masses of people in the South. This stagnation of Third World liberal democratic systems has been paralleled by the realisation of increasing numbers of Americans that their liberal democracy has been so thoroughly corrupted by corporate money politics that it deserves being designated a plutocracy. Indeed, as William Pfaff notes, "nothing on the scale of the American system of political expenditure and influence exists anywhere". (8) The fact that the candidate most favoured by Big Business lost the popular vote-and according to some studies, the electoral vote as well-and still ended up president of the world's most powerful liberal democracy has not helped in shoring up the legitimacy of the political system in a country that has been described by many observers as already being in a state of "cultural civil war". There is also a growing crisis with democratic governance in Europe, brought on partly by the increasing captivity of party politics to moneyed interests, as the case of Helmut Kohl and the Christian Democratic Party illustrated. But there is as well another, related cause of disaffection, and this is the non-transparent process that technocratic elites allied to corporate elites have, in the name of European integration and rationalisation, eroded the principle of subsidiarity by funnelling effective decision-making power upwards to technocratic structures, at the apex of which stands the European Commission, that are largely unaccountable to electorates on the ground. The crisis of overproduction What makes the crisis of legitimacy of the key institutions of the global economic and political system so volatile from the point of view of the elites of the North is that is intersecting with a profound structural crisis of the global economy. The G8 came into existence to co-ordinate the macroeconomic policies of the rich countries in order to navigate between the Scylla of inflation and the Charybdis of stagnation. However, in the last few years, efforts to synchronise fiscal and monetary initiatives have proved elusive, and what modicum of co-operation was achieved has failed to bring Japan out of a decade-long recession or prevent the onset of a new global recession. The reason that the economic slowdown seems to be immune to orthodox fiscal and monetary mechanisms, even when co-ordinated across borders, is that structural imbalances have been building up for some time. The boom of the early and mid-nineties resulted in a burst of global investment activity that led to tremendous overcapacity all around. (9) The indicators are stark. The US computer industry's capacity has been rising at 40 per cent annually, far above projected increases in demand. The world auto industry is now selling just 74 per cent of the 70.1 million cars it builds each year. So much investment took place in global telecommunications infrastructure that traffic carried over fibre-optic networks is reported to be only 2.5 per cent of capacity. (10) Seen in retrospect, profits stopped growing in the US corporate sector after 1997, (11) leading firms to a wave of mergers, the main purpose of which was the elimination of competition. The most prominent of these were the Daimler Benz-Chrysler-Mitsubishi union, the Renault take-over of Nissan, the Mobil-Exxon merger, the BP-Amoco-Arco deal, and the blockbuster "Star Alliance" in the airline industry. Another avenue that was taken to avoid the crunch of profitability in industry was to push investment to speculative activity, notably to the stock market and the real estate sector, leading to the spectacular boom and bust in East Asia in the 1990s. (12) It was this same hothouse speculation that underpinned the Wall Street-Silicon Valley complex that drove the US economy and the global economy in the nineties. This "New Economy" seemed for a time to defy the laws of economics, with Internet stars such as Amazon.com registering an explosive and seemingly permanent rise in stock values even as they continued to operate at a loss. But all talk about the emergence of a New Economy vanished when the law of gravity caught up with the speculative sector in late 1990s, resulting in the wiping out of $4.6 trillion in investor wealth in Wall Street, a sum that, as Business Week pointed out, was half of the US Gross Domestic Product and four times the wealth wiped out in the 1987 crash. (13) Two things about this structural crisis, in short, are increasingly clear: it is no ordinary bust and it comes at an extraordinary time of great popular disaffection with the globalist project and its key institutions. The global protest movement In retrospect, with the deepening crisis of legitimacy of the prime institutions of the global system in the latter half of the 1990s, Seattle was a cataclysm that was waiting to happen. The force of pent up global rage went on to manifest itself in Washington during the World Bank-IMF spring meeting in April 2000, in Chiang Mai, Thailand, during the Asian Development Bank annual meeting in May 2000, in Melbourne during the World Economic Forum gathering in early September 2000, and in Prague during the World Bank-IMF annual meeting in late September 2000. While the global elite assembled in Davos in late January 2001 to ponder the meaning of the burgeoning "anti-globalisation movement", some 12,000 representatives of civil society organisations and political movements met in Porto Alegre, Brazil, to declare that "another world is possible". The World Economic Forum had found its political and ideological nemesis in the World Social Forum. Celebration of the power of the movement was one aspect of Porto Alegre; the other was the gathering of energies for the next move. That move was directed at the Summit of the Americas in Quebec City in late April 2001, which had been called to push forward a key project of the US corporate elite, the Free Trade Area of the Americas (FTAA). Despite the effort of some of the established media to portray the protesters as either uninformed or anarchists, the confrontation in Quebec, like Seattle, was a major setback, in terms of legitimacy, for the system of corporate-driven globalisation. So was the clash with 20,000 protesters that grabbed the centre stage during the European Union summit in Gothenburg three weeks ago. Genoa: next stop in the anti-globalisation express To contain the anti-globalisation shock troops that are now on the road headed for Genoa, nervous Italian authorities are deploying 20,000 police and troops, backed up by 15 helicopters, four aircraft, and seven naval boats. In a sign of panic, the government has announced that it will close Genoa's airport between July 18 and 22 and seal off a "red zone" in the inner city that will be kept free of demonstrators. Undaunted, protest organisers say they will bring 200,000 people to Genoa and that they will definitely breach the red zone. They may yet make Genoa the most dramatic example of the mass "withdrawal of consent" that is shaking the system of global capitalism to the core. One must not, of course, overestimate the impact of these protests so far, nor gloss over their weaknesses in terms of shared agenda or decision-making. However, neither must one underestimate their consequences. As C. Fred Bergsten, one of the most ardent promoters of the Washington Consensus, now admits, "the anti-globalisation forces are now in the ascendancy". (14) Bergsten is haunted by a "Gramscian" fear: the structures of the system may appear to still be solid, but when legitimacy or consensus goes, it may only be a matter of time before the structures themselves begin to unravel, especially when one factors in the crisis of overproduction noted above, with the recession, unemployment, and increases in poverty and inequality that will come with it. The future in the balance Yet the crisis of the system will not necessarily result in its replacement by a more benign system of international relations. As Rosa Luxemburg so presciently pointed out before the rise of fascism in crisis-ridden Europe in the early part of the 20th century, the outcome may be "barbarism", where the ideals and themes of the progressive opposition are hijacked and perverted by demagogic forces that are hostile to freedom, equality, and democracy. Which is why the articulation of the alternative or the alternatives is so critical. Creating these alternative visions and programs centred on a participatory process to create the institutions that would once again subordinate the market to society, promote genuine equality across gender and colour lines and within and among countries, and establish a benign relationship between human community and the biosphere remains the great challenge of the opponents of corporate-driven globalisation. On the success of this enterprise depends a future that now hangs in the balance. References
"Creative Destruction": Next Phase of the Global Economy? (August 2001)
The controversy that now surrounds the Group of Eight (G8) after the violent protests that marked its meeting in Genoa is so difficult to shake off because, for some time now, this club of leaders of some of the world’s biggest economies has had little to show in terms of positive achievements.
The End of Fine-tuning? The G8 came into existence in 1975 with the grand objective of coordinating the macroeconomic policies of the rich countries in order to navigate a direction of stable growth that would avoid the Scylla of high inflation on the one side and the Charybdis of deep recession on the other. The record was sketchy in the early years. However, in the last few years, efforts to synchronize fiscal and monetary initiatives have proved frustrating, with efforts at coordination failing to contain the Asian financial crisis, stabilize the euro-dollar-yen exchange rate, bring Japan out of a decade-long recession, or prevent the onset of a global downturn. The 0.7 per cent growth that the US economy registered in the second quarter of this year is the latest evidence of strong resistance to technocratic fine-tuning in the form of interest-rate cuts. Crisis of Overproduction The reason that the economic slowdown seems to be immune to orthodox fiscal and monetary mechanisms, even when coordinated across borders, is that beneath the glitzy nine-year expansion of the world’s lead economy, the US economy, deep-seated global structural imbalances had been building up for some time. The boom of the early and mid-nineties resulted in a burst of global investment activity that led to tremendous over-capacity all around. The indicators are stark. The US computer industry’s capacity has been rising at 40 per cent annually, far above projected increases in demand. The world auto industry is now selling just 74 per cent of the 70.1 million cars it builds each year. So much investment took place in global telecommunications infrastructure that traffic carried over fiber-optic networks is reported to be only 2.5 per cent of capacity. There is, says economist Gary Shilling, an "oversupply of nearly everything". Profits apparently stopped growing in the US corporate sector after 1997, leading firms to a wave of mergers, the main purpose of which was the elimination of competition. The most prominent of these were the Daimler Benz-Chrysler-Mitsubishi union, the Renault takeover of Nissan, the Mobil-Exxon merger, the BP-Amoco-Arco deal, and the blockbuster "Star Alliance" in the airline industry. Crisis of Finance Capital In addition to mergers, another avenue that was taken to avoid the crisis of profitability in industry was to push investment to speculative activity, notably to the stock market and the real estate sector, leading to the spectacular boom and bust in East Asia in the 1990s. At the time of the Asian crisis-which, incidentally, has not been surmounted-many observers pointed out that it was the same hothouse speculation that underpinned the Wall Street-Silicon Valley complex that drove the US economy. What optimists-the most prominent being US Federal Reserve Board Chairman Alan Greenspan- called the "New Economy" seemed for a time to defy the laws of economics, with Internet stars such as Amazon.com registering an explosive and seemingly permanent rise in stock values even as they continued to operate at a loss. But all talk about the emergence of a New Economy vanished when the law of gravity caught up with the speculative sector in late 1990s, resulting in the wiping out of $4.6 trillion in investor wealth in Wall Street, a sum that, as Business Week pointed out, was half of the US Gross Domestic Product and four times the wealth wiped out in the 1987 crash. The Kondratieff phenomenon According to Gary Shilling and a number of other pessimists, probably the reason the macroeconomic imbalances are working themselves out in what is likely to be a deeper than expected recession is that we are now at the downward curve of the so-called "Kondratieff Cycle". Discovered by the Russia n economist Nikolai Kondratieff, the progress of global capitalism is marked not only by short-term business cycles but by long-term "supercycles". Kondratieff cycles are roughly 50 to 60 year-long waves. The upward curve of the Kondratieff cycle is marked by the intensive exploitation of new technologies, followed by a crest as technological exploitation matures, then a downward curve as the old technologies produce diminishing returns while new technologies are still in an experimental stage in terms of profitable exploitation, and finally a trough or prolonged deflationary period. The trough of the last wave was in the 1930s and 1940s, a period marked by the Great Depression and World War II. The ascent of the current wave began in the 1950s and the crest was reached in the 1980s and 1990s. The profitable exploitation of the postwar advances in the key energy, automobile, petrochemical, and manufacturing industries ended while that of information technology was still at a relatively early stage. From this perspective, the "New Economy" of the late 1990s was not a tra nscendence of the business cycle, as many economists believed it to be, but the last glorious phase of the current supercycle before the descent into prolonged deflation. In other words, the uniqueness of the current conjuncture lies in the fact that the downward curve of the current short-term cycle coincides with the move into descent of the Kondratieff supercycle. Marxists say that what underlies such conjunctures is that the old "relations of production'" or the complex of existing capitalist property relations and institutions, come into conflict with the further development of the "forces of production" or technologies, which is only possible if this process is no longer driven by the search for profit. Are we in for about with more than a normal recession? To use Joseph Schumpeter’s terms, are we moving into a long period of "creative destruction?" Policy Implications What are the implications of global deflation for economic policymaking in the South? Well, one is that while, theoretically, you might stand to benefit more the more globalized your economy is in the period of ascent, you also stand to suffer more in the period of descent because you have far fewer mechanisms to buffer your economy from the forces of global deflation. The IMF-WTO neoliberal approach of promoting ever freer flows of goods and capital that continues to guide the technocratic and economic elites of many developing countries becomes, in this new global context, not only dysfunctional, as it has been for some time, but suicidal. It is interesting to see that some establishment analysts, such as Hong Kong-based economist Andy Xie of Morgan Stanley, are beginning to raise doubts about the viability of outward-oriented, foreign capital-intensive growth in this period. "The region came out of the Asian Crisis by hitching onto the US IT [Information Technology] bubble", says Xie. "The day of reckoning has evidently arrived . There is no other easy ride in sight". This burst of the US IT bubble, he contends, "is not just a cyclical event" but signals "the beginning of a slower US economy perhaps for a decade". Governments will realize that there is no alternative but to rely on domestic demand to drive growth, and will consequently be "forced to remove anti-consumption policies". In Southeast Asia, Malaysia has already traveled along this path and Thailand under Prime Minister Thaksin Shinawatra is seriously considering it. In any event, export-oriented growth is out; inward -oriented domestic-demand-led growth is in. Which means not only erecting tariff and other barriers to protect producers but undertaking decisive measures of asset and income redistribution to create the mass of consumers with effective demand that will serve as the engine of economic growth as global demand falls off. Global deflation is, in short, as much a crisis as an opportunity. And the opportunities are greater for those in the periphery of the global economy than those in the center-if the South’s policymakers are bold enough to shake off obsolescent strategies and pursue innovative ones. One can only hope that another Great Depression does not take place. But one cannot also but remember that it was the Great Depression, with the collapse of world trade that it triggered, that created the space for Latin American countries to build up their manufacturing and industrial sectors and emerge from the crisis far stronger than when they entered it. Endless War? (18 September 2001)
The assault on the World Trade Center was horrific, despicable, and unpardonable, but it is important not to lose perspective, especially a historical one. For a response that is dictated primarily by fury such as that now displayed by some American politicians, while understandable, is likely to simply serve as one more proof for Santayana's dictum that those who do not remember history are bound to repeat it.
The moral equation The scale and consequences of the World Trade Center attack are massive indeed, but this was not the worst act of mass terrorism in US history, as some US media are wont to claim. The over 5000 lives lost in New York are irreplaceable, but one must not forget that the atomic raids on Hiroshima and Nagasaki killed 210,000 people, most of them civilians, most perishing instantaneously. But one may object that you can't really compare the World Trade Center attack to the nuclear bombings since, after all, Hiroshima and Nagasaki were targets in a war. But why not, since the purpose of the nuclear bombings was not mainly to destroy military or infrastructural targets, but to terrorize and destroy the civilian population? Indeed, the wholeallied air campaign against Germany and Japan in 1944-45, which produced the firestorms in Dresden, Hamburg, and Tokyo, that killed tens of thousands had as its central aim to kill and maim as many civilians as possible. Similarly, during the Korean War, terror bombing of civilians was the policy of the US Air Force's Far Eastern Command, which was instructed to pulverize anything that moved in enemy territory. So successful was the policy that in the summer of 1951, the commander was able to report that "there is no structure left to be targeted". During the Cold War, mass elimination of the enemy's civilian population, alongside the destruction of his armed forces or industry, was institutionalized in the strategy of massive nuclear retaliation that lay at the center of the doctrine of Deterrence. In Vietnam, where the US was frustrated by the fact that combatants and civilians were indistinguishable, indiscriminate killing of civilians was a central part of a "counterinsurgency war" in which 20,000 civilians were systematically assassinated under the CIA's Operation Phoenix Program in the Mekong Delta. But must not such actions against civilians be judged in the context of a broader strategic objective of sapping the enemy's will to fight and thus bring the war to a conclusion? But then how different is this justification from the terrorists' aim to change the foreign policy of the US government by eroding the support of the country's civilian population? The point is not to engage in a "maleficent calculus", as Jeremy Bentham would have called this exercise, but to point out that the US government hardly possesses the high ground in the current moral equation. Indeed, one can say that terrorists like Osama bin Laden, an ex-CIA prot?g?, have learned their lessons on the strategic targeting of the civilian population from Washington's traditional strategy of total warfare, where damage to the civilian population is not simply seen as collateral but as essential to achieving the ends of war. The Clausewitzian Calculus In the aftermath of the World Trade Center assault, the perpetrators of the dastardly deed have been called "irrational" or "madmen" or people that embody evil. This is understandable as an emotional reaction but dangerous as a basis for policy. The truth is the perpetrators of the deed were very rational. If they were indeed people connected with Osama bin Laden, their goal was most likely to raise the costs to the United States of maintaining its current policies in the Middle East, which they consider unjust and inequitable, and this was their way of doing it. They very rationally picked the targets and weapons to be used, paying attention not only to maximum destruction but also to maximum symbolism. The choice of the World Trade Center towers and the Pentagon as the targets, and American Airlines and United Airlines planes as the delivery vehicles doubling as warheads, was the product of cold-blooded thinking and planning. The loss of their own lives was factored into the calculation. What we saw was a rational calculus of means to achieve a desired end. In the view of these people, terrorism, like war, is the extension of politics by other means. These are Clausewitzian minds, and the worst mistake one can make is to regard them as madmen. Pearl Harbor or Tet? One metaphor that the Washington establishment has used to capture the essence of recent events is that of a second Pearl Harbor, with the implication that, like the first, the September 11 tragedy will galvanizethe American people to an unprecedented level of unity to win the war against still unidentified enemies. The other side, one suspects, operates with a different metaphor, and this is that of the Tet Offensive of 1968. The objective of the Vietnamese was to launch massive simultaneous uprisings that, even if defeated separately, would nevertheless add up to a strategic victory by convincing the other side, especially its civilian base, that the war was unwinnable. The aim was to rob the US of the will to win the war, and here the Vietnamese succeeded. The perpetrators of World Trade Center assault are operating with a similar calculus, and, despite the current jingoistic talk in Washington, it is not certain that they are wrong. Will the American people really bear any burden and pay any price in a struggle that will persist way into the future, with no assurance of victory, indeed, with no clear sense of who the enemies are and of what "victory" will consist of? The media is full of news about the creation of an alliance against terrorism, conveying the impression that coordination among key states combined with the outrage of citizens everywhere will give a Washington-led coalition an unbeatable edge. Perhaps in the short run, although even this is not certain. For the problem is that, as in guerrilla wars, this is not a war that will be won strictly or mainly by military means. The underlying issues If it was bin Laden's network that was responsible for the World Trade Center attack, then the underlying issues are the twin pillars of US policy in the Middle East. One is subordination of the interests of the peoples of the region to the US' untrammeled access to Middle East oil in order to maintain its petroleum-based civilization. To this end, the US overthrew the nationalist government of Mossadegh in Iran in 1953, cultivated the repressive Shah of Iran as the gendarme of the Persian Gulf, supported anti-democratic feudal regimes in the Arabian peninsula, and introduced a massive permanent military presence in Saudi Arabia, which contains some of Islam's most sacred shrines and cities. The war against Saddam Hussein was justified as a war to beat back aggression, but everybody knew that Washington's key motivation was to ensure that the region's most massive oil reserves would remain under the control of pro-Western elites. The other pillar is unstinting support for Israel. That Arab feelings about Israel are so elemental is not difficult to comprehend. It is hard to argue against the fact that the state of Israel was born on the basis of the massive dispossession of the Palestinian people from their country and their lands. It is impossible to deny that Israel is a European settler-state, one whose establishment was essentially a displacement from European territory of the ethno-cultural contradictions of European society. The Holocaust was an unspeakable crime against humanity, but it was utterly wrong to impose its political consequences-chief of which was the creation of Israel-on a people who had nothing to do with it. It is hard to contradict Arab claims that it was essentially support from the United States that created the state of Israel; that it has been massive US military aid and backing that has maintained it in the last half century; and that it is deep confidence in perpetual US military and political support that enables Israel to oppose in practice the emergence of a viable Palestinian state. Unless the US abandons these two pillars of its policies, there will always be thousands of recruits for acts of terrorism such as that which occurred last week. And while we may condemn terrorist acts-as we must, strongly-it is another thing to expect desperate people not to adopt them, especially when they can point to the fact that it was such methods that targeted civilians as well as military personnel, combined with the Intifada, that forced Israel to agree to the 1993 Oslo Accord that led to the creation of the Palestinian entity. Yet another reason why the strategic equation does not favor the US is that there are a great many people in the world that are ambivalent about terrorism. In contrast to Europe, there has been a relatively muted response to the World Trade Center event in the South. A survey would probably reveal that while many people in the Third World are appalled by hijackers' methods, they are not unsympathetic to their objectives. As one Chinese-Filipino entrepreneur said, "It's horrible, but on the other hand, the US had it coming". If this reaction is common among middle class people, it would not be surprising if such ambivalence towards terrorism is widespread among the 80 per cent of the world's population that are marginalized by current global political and economic arrangements. There is simply too much distrust, dislike, or just plain hatred of a country that has become so callous in its pursuit of economic power and arrogant in its political and military relations with the rest of the world and so brazen in declaring its cultural superiority over the rest of us. As in the equation of guerrilla war, civilian ambivalence in the theater of battle translates strategically to a minus when it comes to the staying power of the authorities and a plus when it comes to that of the terrorists. In sum, if there is one thing we can be certain of, it is that massive retaliation on the part of the US will not put an end to terrorism. It will simply amplify the upward spiral of violence, as the other side will resort to even more spectacular deeds, fed by unending waves of recruits. The September 11 tragedy is the clearest evidence of the bankruptcy of the 30-year-old policy of mailed fist, massive retaliation response to terrorism. This policy has simply resulted in the extreme professionalization of terrorism. The only response that will really contribute to global security and peace is for Washington to address not the symptoms but the roots of terrorism. It is for the United States to reexamine and substantially change its policies in the Middle East and the Third World, supporting for a change arrangements that will not stand in the way of the achievement of equity, justice, and genuine national sovereignty for currently marginalized peoples. Any other way leads to endless war. How to Lose a War (October 2001)
After over two weeks of Anglo-American bombardment of Afghanistan, once one gets beyond the sound and fury of American bombs and the smokescreen of CNN propaganda, it appears that in the war between the United States and Osama bin Laden, the latter is coming out ahead.
"Making the Rubble Bounce" It is doubtful if Washington has achieved anything of tactical or strategic value except to make the "rubble bounce", as the consequences of multiple nuclear explosions in one area were cynically described during Cold War. Indeed, the bombing, which has taken the lives of many civilians, has worsened the US's strategic position in Southwest and South Asia by eroding the stability of the pro-US regimes in the Muslim world. A radical fundamentalist regime is now a real possibility in Islamabad, while Washington faces the unpleasant prospect of having to serve ultimately as a police force between an increasingly isolated Saudi elite and a restive youthful population that regards bin Laden as a hero. Meanwhile in the rest of the developing world, the shock over the September 11 assault is giving way to disapproval of the US bombing and, even more worrisome to Washington, to bin Laden's emergence in the public consciousness as a feisty underdog skillfully running circles around a big bully who only knows one response: massive retaliation. A telling sign of the times in Bangkok and many other cities in Southeast Asia is the way young people are snapping up bin Laden T-shirts, and not only for reasons of novelty. Anglo-Saxon Brotherhood CNN images of US President George Bush, Prime Minister Tony Blair, and US Secretary of State Colin Powell ticking off the latest statement of support for the US mask the reality that Washington and London are losing the propaganda war. Their effort to paint the military campaign as a conflict between civilization and terrorists has instead come across as a crusade of the Anglo-Saxon brotherhood against the Islamic world. So jarring has British Prime Minister Tony Blair's public relations drive to make Britain an equal partner in the war effort that the foreign minister of Belgium, which currently holds the presidency of the European Union, has felt compelled to criticize Blair for compromising the interests of the EU. In the aftermath of the September 11 assault, a number of writers wrote about the possibility that that move could have been a bait to get the US bogged down in a war of intervention in the Middle East that would inflame the Muslim world against it. Whether or not that was indeed bin Laden's strategic objective, the US bombing of Afghanistan has created precisely such a situation. Moderate leaders of Thailand's normally sedate Muslim community now openly express support for bin Laden. In Indonesia, once regarded as a model of tolerant Islam, a recent survey revealed that half of the respondents regard bin Laden as a fighter for justice and less than 35 per cent regard him as a terrorist. The global support that US President George Bush has flaunted is deceptive. Of course, a lot of governments would express their support for the UN Security Council's call for a global campaign against terrorism. Far fewer countries, however, are actually actively cooperating in intelligence and police surveillance activities. Even fewer have endorsed the military campaign and opened up their territory to transit by US planes on the way to Southwest Asia. And when one gets down to the decisive test of offering troops and weapons to fight alongside the British and the Americans in the harsh plains and icy mountains of Afghanistan, one is down to the hardcore of the Western Cold War alliance. Translating Guerrilla War to a Global Setting Bin Laden's terrorist methods are despicable, but one must grant the devil his due. Whether through study or practice, he has absorbed the lessons of guerrilla warfare in a national, Afghan setting and translated it to a global setting. Serving as the international correlate of the national popular base is the youth of the global Muslim community, among whom feelings of resentment against Western domination were a volatile mix that was simply waiting to be ignited. The September 11 attacks were horrific and heinous, but from one angle, what were they except a variant of Che Guevara's "foco" theory? According to Guevara, the aim of a bold guerrilla action is twofold: to demoralize the enemy and to empower your popular base by getting them to participate in an action that shows that the all-powerful government is indeed vulnerable. The enemy is then provoked into a military response that further saps his credibility in what is basically a political and ideological battle. For bin Laden, terrorism is not the end but a means to an end. And that end is something that none of Bush's rhetoric about defending civilization through revenge bombing can compete with: a vision of Muslim Asia rid of American economic and military power, Israel, and corrupt surrogate elites, and returned to justice and Islamic sanctity. Lost Opportunity Yet Washington was not exactly without weapons in this ideological war. In the aftermath of September 11, it could have responded in a way that could have blunted bin Laden's political and ideological appeal and opened up a new era in US-Arab relations. First, it could have foresworn unilateral military action and announced to the world that it would go the legal route in pursuing justice, no matter how long this took. It could have announced its pursuit of a process combining patient multinational investigation, diplomacy, and the employment of accepted international mechanisms like the International Court of Justice. These methods may take time but they work, and they ensure that justice and fairness are served. For instance, patient diplomacy secured the extradition from Libya of suspects in the 1988 bombing of a Pan Am jumbo jet over Lockerbie, Scotland, and their successful prosecution under an especially constituted court in the Hague. Likewise, the International Criminal Tribunal for former Yugoslavia, set up under the auspices of the ICJ, has successfully prosecuted some wartime Croat and Serbian terrorists and is currently prosecuting former Serbian strongman Slobodan Milosevic, though of course much remains to be done. The second prong of a progressive US response could have been Washington's announcing a fundamental change in its policies in the Middle East, the main points of which would be the withdrawal of troops from Saudi Arabia, the ending of sanctions and military action against Iraq, decisive support for the immediate establishment of a Palestinian state, and ordering Israel to immediately refrain from attacks on Palestinian communities. Foreign policy realists will say that this strategy is impossible to sell to the American people, but they have been wrong before. Had the US taken this route, instead of taking the law-as usual-in its own hands, it could have emerged as an example of a great power showing restraint and paved the way to a new era of relations among people and nations. The instincts of a unilateral, imperial past, however, have prevailed, and they have now run rampage to such an extent that, even on the home front, the rights of dissent and democratic diversity that have been one of the powerful ideological attractions of US society are fundamentally threatened by the draconian legislation being pushed by law-and-order types like Secretary of Justice John Ashcroft that are taking advantage of the current crisis to push through their pre-September 11 authoritarian agendas. No Win Situation As things now stand, Washington has painted itself into a no-win situation.
- If it kills bin Laden, he becomes a martyr, a source of never-ending inspiration, especially to young Muslims.
As Tom Spencer, a policy analyst of Britain's Conservative Party, has observed, bin Laden has been turned into a "Robin Hood". September 11 was an unspeakable crime against humanity, but the US response has converted the equation in many people's minds into a war between vision and power, righteousness and might, and, perverse as this may sound, spirit versus matter. You won't get this from CNN and the New York Times, but Washington has stumbled into bin Laden's preferred terrain of battle. Report from Doha (November 2001)
The revised draft ministerial declaration issued in the afternoon of November 13 continues to highly detrimental to the interests of developing countries.
The new text, as many have already pointed out, continues to relegated to the margins the developing countries' demand that implementation issues should serve as the core work agenda of the WTO in the next few years. This text affirms the loud complaints in Doha by developing country representatives that their voice no longer counts in the WTO. Likewise the text continues to place at centre stage the developed countries' desire to initiate a process that would lead to negotiations on the so-called "new issues" of investment, competition policy, government procurement, and trade facilitation. The text explicitly calls for the immediate initiation of negotiations on government procurement and on trade facilitation. While there appears to be some dilution in the language on investment and competition policy, in fact the text sets in motion activities by the working groups on investment and competition policy that are calculated to give momentum to the adoption of a decision to launch negotiations in these areas during the Fifth Session of the Ministerial. The revised text also ignores the proposal for a "development box" to be added to the Agreement on Agriculture that many developing countries have pushed for in Doha to promote food security and development. Focus further notes with disapproval the revised text's dropping of the phrase that the ILO is the "appropriate forum" for dialogue on trade and labor issues. The new formulation leaves the door open for the WTO to expand its jurisdiction to an area where it does not belong. It is alleged that the compromise language relating to countries' concern about public health is a step forward, but as some observers have pointed out, the so-called compromise will still leave unchanged the language of the TRIPs agreement, and this will serve as the basis for future legal challenges to countries that override patents for public health purposes. In sum, there are minimal changes to this version of the ministerial declaration. Its adoption will constitute a setback for developing countries in the WTO. Standoff in Negotiations DOHA, Sunday 11 November - Intense backroom discussions marked the first two days of the WTO meeting. Developing countries feel that the ministerial draft circulated by Director General Michael Moore and Stuart Harbinson, chairperson of the General Council, is unbalanced and does not reflect their opinions and interest. Murasoli Maran, India's Minister of Trade and Industry, stated that the ministerial was "a mere formality and we are being coerced against our will". The United States, the European Union, and other developed countries want to launch a new round of trade negotiations that would include addressing the "new issues" of investment, government procurement, competition policy, and trade facilitation. The developing countries want the ministerial to focus mainly on implementation matters related to the previous round, the Uruguay Round. "This is simply a matter of capacity. With all the outstanding problems of implementation, developing countries simply cannot take on new commitments to liberalize now", said Minister of Industry and Trade Iddi Samba from Tanzania. Samba also attacked the "non-transparent process that is marginalising the African countries. He added, "No matter how loudly we say it, it seems our opinions no longer count". Given the standoff between developed and developing countries, the fate of the Fourth Ministerial Session of the WTO hang in the balance as it entered its third day on Sunday, November 11. Snapshots from Doha Standing on both sides of the entrance to the huge Al Dafna Hall at the Sheraton, the protesters carried a common sign that read "No Voice at the WTO", calling attention to the lack of transparency, democracy, and civil society input in the decision-making processes of the organization. Once over 5000 had filed in, the demonstrators started chanting "What do we want? Democracy!" An effort by Jose Bove, the famous French anti-McDonalds activist, to lead the demonstrators into the hall was initially countered by Qatari security forces. A few moments later, however, they were allowed in. Fulfilling a pledge made at an open session earlier in the day by the Crown Prince, none of the activists was arrested or detained. Superparanoia is the only word that can describe the state of mind of the US security force in Doha. As delegates began to arrive, the US Trade Representative's office moved to get US NGO representatives billeted at the Ritz Carlton with the government people. One of them was Anuradha Mittal, executive director of food First. When they found out that Anuradha was a citizen of India, they "freaked out", she said. They prevented her from riding on the same bus from the hotel to the conference site, refused her access to US official briefings, and did not provide her with a security phone and a gas mask, which they were distributing to other members of the American entourage. Much fewer NGO representatives are in Doha compared to Seattle, according to a report in the Peninsula, a Doha newspaper. Here is an excerpt from the article: "While the numbers of NGO representatives and mediapersons covering the 4th ministerial meeting of the WTO in Doha pales in comparison to those at the 1999 conference in Seattle, the number of delegates has more or less remained the same, said an official yesterday. "As against the expected attendance of 4500 announced earlier by the organizers, about 3800 people are in Doha to attend the conference. "Briefing the media ahead of the meeting's formal inauguration, WTO spokesman Keith Rockwell said the largest delegation of 159 has come from Japan. This is followed by the French (75), Canada (62), Indonesia (60), United States (51), and India (48). "The European Union has a presence of 508 delegates, including about 50 representatives of the European Commission. Apart from the delegations of the 142 member countries, 28 observers and 48 international organizations are represented in Doha. Rockwell said the number of delegates attending the conference is 2,641. There are 388 representatives of the non-governmental organizations and 808 media persons. He said the Seattle conference was covered by about 2700 journalists and 650 NGOs had sent in nearly 1300 representatives". Dispatch From Doha (14 November 2001)
November 10
About 100 NGO delegates staged an anti-World Trade Organization demonstration on Friday, immediately before the opening of the trade body's fourth ministerial session in Doha, Qatar. Standing on both sides of the entrance to the huge Al Dafna Hall at the Sheraton Hotel, the protesters, with tape on their mouths, held up signs saying "No Voice at the WTO", calling attention to the lack of democracy, transparency and civil society input into the organization's decision-making processes. After over 5,000 delegates had filed in, the demonstrators started chanting "What do we want? Democracy!" An effort by José Bové, the French anti-McDonalds activist, to lead the demonstrators into the hall was at first repelled by Qatari security forces. A few moments later, however, the demonstrators were allowed in. Fulfilling a pledge made at an open session earlier in the day by Crown Prince Sheik Jassim bin Hamad, security forces did not arrest or detain any of the activists. Desperate is the only word to describe the actions of the trade superpowers represented at the meeting. Tremendous pressure is being exerted on developing countries to endorse a new round of trade negotiations. The weapons include manipulation of the WTO's undemocratic system of decision-making and blunter forms of trade blackmail. Intense Security Massive security preparations have turned Doha, a city of over 600,000, into a high security zone, to the consternation of ordinary Qataris, many of whom claim that the United States is exaggerating the dangers of holding the conference in the Gulf city. The security arrangements have isolated the conference site and are making transportation to and from hotels an exercise in resourcefulness for many delegates. An armed attack by an allegedly deranged Qatari gunman on a munitions base on the outskirts of Doha, used by the United States, earlier in the week has heightened the tension. Even before that incident, the office of the US Trade Representative had moved to gather representatives of US NGOs from their separate lodgings to join the US official delegation at the Ritz Carlton, which has been converted into an armed camp, with logistical connections to US warships waiting in the Gulf for possible evacuation of American delegates. There is more than enough space in the hotel, since the number of people in the official US delegation has shrunk from about 300 to fifty. So paranoid is the US security force at the Ritz Carlton that they prevented Anuradha Mittal, executive director of the Oakland-based think tank Food First, from riding on the same bus from the hotel to the conference site after they discovered that she is an Indian citizen. She said that they also refused to give her access to US official briefings or provide her with a security phone and gas mask, which they were distributing to other members of the American entourage. The dramatic shrinkage in the number of official delegates is not confined to the US delegation. The Canadian delegation, usually one of the biggest, is down to fifty. Says Maude Barlow, a noted critic of her government's trade policies: "People were suddenly all getting sick or disabled at the last minute, and to try to cover the cost of the government plane, they even invited me for the ride to Qatar". Differing Priorities The smaller number of key actors from the United States and other members of so-called "Quad" (European Union, Canada and Japan) is not, however, likely to change the dynamics of the conference. The majority of developing countries want the Ministerial to focus on matters related to the implementation of the commitments made under the Uruguay Round. This position was laid out in a recent declaration of the Group of 77, which identified "104 implementation issues" that needed to be "meaningfully resolved, with urgency before the Fourth Ministerial Meeting and without any extraneous linkages". Developing countries have been groaning under the weight of implementing the twenty-eight different agreements that comprised the Uruguay Round agreement, while the big trading powers have refused or been slow to implement their commitments to provide greater market access in agriculture and textiles to developing countries or cut back the massive subsidization of their agricultural interests. The European Union and the United States, on the other hand, have put some of their differences aside-temporarily-to present a common front for a new round of trade negotiations that would focus on expanding the mandate of the WTO to cover the so-called "new issues" of investment, competition policy, government procurement and trade facilitation. Essentially, these are the same issues that formed their common agenda of global economic liberalization prior to the disastrous WTO Ministerial in December 1999. Learning from Seattle, the EU and United States have de-emphasized their disagreement on agricultural trade issues, and the United States apparently does not intend to make the linkage between trade and labor standards-a key point of conflict with developing countries in Seattle (and, for different reasons, also an issue of great concern to US labor unions)-an issue in Doha. Controversial Draft Declaration The proposed draft declaration for the Ministerial meeting is an example of the sort of underhanded tactics that the big trading powers are resorting to. According to Aileen Kwa, a Geneva-based analyst who monitors the WTO for Focus on the Global South, the draft does not emphasize the developing countries' stated priorities of implementation issues, the "Special and Differential Treatment" of developing countries, greater access to developed country markets, and reviews of the agreements on Trade Related Investment Measures (TRIMs), Trade Related Intellectual Property Rights (TRIPs), and services (GATS). Instead, the draft projects an alleged consensus on negotiations on the issues of competition, investment policy, government procurement, and trade facilitation that are the priorities of the minority of rich and powerful trading countries. "Despite clearly stated positions that the developing countries are unwilling to go into a new round until past implementation and decision-making are addressed", says Kwa, "the draft declaration favorably positions the launching of a comprehensive new round with an open agenda". The draft has been openly denounced by Nigeria as "one-sided" and "showing not much regard for our countries". Bitter complaints from the poor countries prompted Stuart Harbinson of Hong Kong, chair of the WTO General Council, to walk out of a briefing in Geneva last week. Many governments are incensed that the draft fails to acknowledge the strong stand they have made on the principle that nothing in the Trade Related Property Rights Agreement (TRIPs) shall prevent them from taking measures to protect public health by overriding patents. Then there was the case of an African ambassador who wanted to attend the Singapore mini-ministerial: When he approached the WTO secretariat for an invitation, he was told that it was not hosting the meeting. When he tried the Singapore mission in Geneva, the response was that the mission was simply coordinating the meeting and was not in a position to send out invitations. Developing country disaffection with the Green Room process was one of the reasons the Third Ministerial collapsed in 1999. At that time, Charlene Barshefsky, then US Trade Representative, admitted that the WTO decision-making process was non-transparent and inequitable and had to be changed. Stephen Byers, the UK Secretary of State for Trade and Industry, was even more emphatic, saying that the "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". That moment of candor was, however, forgotten quickly as the developed countries realized that in an organization like the WTO, where the developing countries are in the majority, the big powers can only dominate through such non-democratic mechanisms as the Green Room and the so-called "Consensus System". Barely two months after Seattle, Michael Moore, WTO director general, told developing countries at the UNCTAD X gathering in Bangkok in February 2000 that the green room/consensus system was "non-negotiable". And there the matter has lain since. Capitalizing on Tragedy The trade superpowers have not wasted any opportunity to push for a new trade round. The smoke had not yet cleared from the ruins of the World Trade Center in New York before US Trade Representative Robert Zoellick seized on the tragedy to press for even greater trade liberalization via the WTO and other mechanisms, asserting that free trade was one of the best ways of countering terrorism. Others have been more brazen: At a recent conference in Budapest, David Hartridge, an influential senior official at the WTO Secretariat, openly declared that the September 11 terrorists and activists against corporate-driven globalization shared a propensity for "violent behavior" and warned people from going to Geneva for demonstrations against the WTO in mid-November because "there will be violence". While the developing countries held the line in the months after the disastrous collapse of the Seattle Ministerial in December 1999, many observers fear that their resolve might now be weakening in the face of concerted pressure from the developed countries. Aside from being subjected to the WTO's exclusionary decision-making process, some countries are being bludgeoned more directly. According to Shefali Sharma of the Institute for Agriculture and Trade Policy, the United States has sent letters to Haiti, the Dominican Republic, and several other countries revoking their preferential trade status on some trade agreements owing to their opposition to liberalization of government procurement, which is at the top of the US agenda for the Ministerial. Last Hurrah? The powerful trading countries may well get their way and ram through a declaration that agrees to a comprehensive round of trade negotiations in Doha. But the greatest obstacle to trade liberalization may no longer be the developing countries but the global economy itself, which is contracting very quickly owing to the very interlocking of economies brought about by globalization and liberalization. In both developed and developing countries, pressures to save domestic industries, focus on domestic-demand-led growth, and counteract the vulnerabilities of export-led economies at a time of a deep global recession will probably stymie any significant movement toward more liberalization. The Fourth Ministerial may well turn out to be the last hurrah of the WTO and the project of radical economic globalization of which it was the crown jewel. November 13 As the Fourth Ministerial entered its final day of intense negotiations on November 13, developed and developing countries still seemed to be locked in a stalemate on a number of key issues, including agricultural subsidies, trade-related intellectual property rights and public health, a review of anti-dumping rules, and extending WTO coverage to investment, competition policy and government procurement. The future of the WTO hangs in the balance. Members of the WTO secretariat say that the organization cannot afford another Seattle in Doha. Failure to create consensus around a Ministerial Declaration may well lead to an unraveling of the trade body. November 14 A final declaration for the fourth WTO Ministerial Session was finally issued on November 14 after negotiations that extended well past the original deadline. Trade czars Robert Zoellick of the United States and Pascal Lamy of the European Union are hailing the agreement as launching a new global round of trade negotiations. Many analysts dispute this, saying that negotiations on investment and competition policy-which are are the top of the US and EU agenda-cannot be launched until after the fifth ministerial in 2003, and only after a "written consensus decision" is issued by the WTO. Overall, however, the declaration was a defeat for the developing countries whose demand that the ministerial focus its work mainly on implementation issues connected with the previous trade round - the so-called Uruguay Round - which received only perfunctory mention. Developing countries did win an important concession giving public health precedence over patents, which the pharmecutical industry had strongly resisted, but as a number of observers have pointed out, the declaration leaves unchanged the language of the Agreement on Trade-Related Intellectual Property Rights (TRIPs), which could serve as the basis for future legal challenges to their efforts to override pharmaceutical patents. The European Union successfully watered down developing country demands for getting rid of agricultural export subsidies and the United States refused to accede to developing country demands that it accelerate the phaseout of its textile quotas. Yet the developed countries' victory may well be short-term since their arm-twisting was greatly resented and resisted by the poor countries. The declaration, in fact, could only be finalized after India agreed to abstain at the last-minute, after resisting for hours. The legacy of the Doha summit may well be the continuing erosion of legitimacy of the WTO. The Meaning of Doha (December 2001)
Over two weeks after the controversial Fourth Ministerial of the World Trade Organization in Doha, Qatar, the world is still confused about what exactly was agreed by the 140 plus member countries. Given the critical importance of the WTO to the future of developing countries, it is essential to clarify things. Was a new trade round launched at Doha? Was Doha a victory, and for whom?
A New Round? Something was launched at Doha, but to call it a "round" of trade negotiations might be stretching the concept of a round. A round means negotiations on a broad range of issues directed at trade liberalization. What was agreed at Doha were: a) negotiations to clarify or revise some existing agreements, e.g., anti-dumping; and b) eventual negotiations for new agreements, e.g., on the so-called "new issues" of transparency in government procurement, investment, competition policy, and trade facilitation. Getting immediate negotiations going to bring investment, government procurement, competition policy, and trade facilitation under the jurisdiction of the WTO was at the top of the agenda of the trading powers in Doha. They fell short of this objective, being able to secure a commitment for negotiations on these issues only after the fifth ministerial in 2003-and only with an "explicit consensus" from member countries, a condition that India insisted on. But though they fell short of immediately launching new negotiations, the big powers nevertheless forced a significant step towards that goal, something that had been stymied in Seattle owing to the collapse of the Third Ministerial in December 1999. Taking a historical view, C. Ramanohar Reddy of The Hindu places the Doha agreement on the new issues in perspective: "In 1996, at Singapore, it was merely a question of agreeing to 'study' these four issues. In 1999, at Seattle, the EU tried but failed to go from a study to negotiations. However, in 2001, the EU and the US have been successful in taking the first steps toward negotiated agreements. It is now just a question of time-maybe not before 2005, but it will be done-before three non-trade issues...are brought within the ambit of the WTO." Doha and the Developing Countries What is clear is that, contrary to the claims of European Trade Commissioner Pascal Lamy, Doha did not launch a "development round". The key points of the Doha Declaration, in fact, contradict the interests of the developing countries. For example,
- There is only a perfunctory acknowledgement of the need to review implementation issues, which was the key agenda of the developing countries coming into Doha;
The resolution of the TRIPs and public health issue is being trumpeted as a victory for developing countries. This is exaggerated. Even Martin Wolf of the Financial Times, who is always the first to proclaim his view that the WTO is good for the poor, is skeptical: "In Doha, agreement was reached that 'the TRIPs agreement does not and should not prevent members from taking measures to protect public health.' How far this will stretch is not clear". Wolf is right to express doubt. While an attachment to the declaration does recognize that there is nothing in TRIPs that would prevent countries from taking measures to promote public health, there is no commitment to change the wording of the TRIPs agreement. In other words, the statement is purely political and, as the Economist, another pro-WTO advocate concedes, "not legally binding". This is a serious flaw since TRIPs as it is currently written can serve as the basis for future legal challenges for countries that override patents in the interest of public health. A Defeat for Democracy and Development In fact, Doha was a defeat for the developing countries, notwithstanding the resistance they-and in particular, India-put up against arm-twisting, blackmail, and intimidation from the big trading powers. Those of us in Doha were witness, as Collective Statement of NGO's present in Qatar put it, "to the highhanded unethical negotiating practices of the developed countries like linking aid budgets and trade preferences to the trade positions of developing countries, and targetting individual developing country negotiators". Doha was a victory for the forces with a strong interest in subverting the interests of the developing countries that form the majority of the membership of the World Trade Organization by keeping the decision-making process non-transparent and undemocratic. Why Doha will Backfire This is why this victory may well be a Pyrrhic one for the big trading powers. For the combination of developing country resentments inflamed by the Doha process and a deep global recession brought about precisely by the indiscriminate locking together of economies by accelerated trade and financial liberalization will likely lead to the erosion of the credibility and legitimacy of the institutional pillars of free trade like the WTO. And without credibility and legitimacy, institutions, no matter how seemingly solid they may seem, eventually unravel. At the conclusion of the Fourth Ministerial, Director General Mike Moore thanked the delegates for "saving the WTO". The end result may well be, instead, the acceleration of the decline of the WTO. The American Way of War (December 2001)
By Washington's logic, firecrackers should now be going off everywhere, as the counter-terror crusaders zero in on Osama bin Laden's hideout in Tora Bora. However, Europe is cool, there is apprehension throughout the South, and outright despondency blankets much of the Arab and Muslim world.
The reasons are obvious: at least 4000 dead, a large number of them civilians, four million refugees, a return to tribal chaos with the dismemberment of central authority. What bin Laden and his organization did was horrific and inexcusable-but to do this to a country in the name of justice? Once again, the Americans have destroyed the town in order to save it. Washington, however, will not allow these details to spoil its triumphalist mood. The Taliban and Al Qaeda have been obliterated, but this victory has a wider significance for the Pentagon. Massive, precision-guided air power can win wars, with almost no commitment of US ground troops, and thus with almost no casualties. Ground forces cannot, of course, be totally dispensed with, but they are needed not so much for assault but for mopping up operations against demoralized and shell-shocked survivors of the rain of flame and steel-a role that can be filled by local mercenaries like the Northern Alliance. Air Power Buries the Vietnam Syndrome What was first tried out in the Kosovo conflict in 1999 has now been affirmed in Afghanistan. This war was the last nail in the coffin of the "Vietnam Syndrome". With this renewed confidence in what military historian Russell Weigley called "the American Way of War"-massive firepower, high technology, total victory-Washington is now seriously considering the same sort of intervention in other states that allegedly provide aid and comfort to the terrorists, with Yemen, Sudan, Somalia, and Iraq being the prime candidates. And it would be surprising if the events in Afghanistan have not given a boost to plans for a strong US military role in the war against drugs in Colombia. Newsweek reports that Colombian authorities seeking a more decisive US role are now "trying to show the parallels between the Taliban and their own guerrilla movements..". There is, of course, the not insignificant difference that Afghanistan is desert and Colombia is jungle, but then, is this not a minor problem that American technology can resolve without too much difficulty? The New Trusteeship Along with the return of confidence in the American Way of War, there is emerging a renewed respectability in direct intervention in the affairs of developing countries. Even before September 11, many developing societies, particularly in Africa and the Middle East, were already being characterized as "failed societies". Robert Kaplan's 1994 essay in The Atlantic was but one of several influential writings to forcefully expound the view that decolonization had led, not to the emergence of stable polities in Africa and the Middle East but to a descent into "anarchy" that threatened to destabilize the whole world. Post-September 11, respect for national sovereignty and self-determination has been further eroded in Washington and London, with conservative intellectuals giving voice to opinions that powerful states cannot articulate...yet. One influential formulation comes from Paul Johnson, author of Modern Times: "...the best medium-term solution will be to revive the old League of Nations Mandate System, which served well as a 'respectable' form of colonialism between the wars. Syria and Iraq were once highly successful mandates. Sudan, Libya, and Iran have likewise been placed under special regimes by international treaty. Countries that cannot live at peace with their neighbors and that wage covert war against the international community cannot expect total independence. With all the permanent members of the Security Council now backing, in varying degrees, the American-led initiative, it should not be difficult to devise a new form of United Nations mandate that places terrorist states under supervision". Not surprisingly, few of these visions address the fundamental reasons for extreme responses like terrorism: colonial borders that ensured post-colonial conflict, continuing marginalization of the new countries in an inequitable global economic order, continuing Northern control of areas containing massive oil and gas riches to fuel the oil and energy intensive civilization of the West. The next phase in Afghanistan is turning into the latest experiment for the New Trusteeship or New Mandate System, following the failure of the first major initiative owing to Somalian recalcitrance in 1993. The European Union is asked to provide-under British leadership, of course-a permanent occupation force, while the United Nations is brought in to broker a "representative government" among competing tribal groups to fill the political vacuum. Observing recent developments in Afghanistan, one cannot help but notice that Washington appears to be operating under the following principle: be unilateral in military action, but multilateral in political engineering-thus getting others to take the blame if the political structure collapses. War Without Borders The war against terror knows no borders, so the war at home must be pursued with equal vigor. September 11 was Pearl Harbor II and the Bush administration tells Americans that they are now in the midst of total war like World War II. Not even the Cold War was presented in such totalistic terms as the War against Terror. Laws and executive orders restricting the rights to privacy and free movement have been passed with a speed and in a manner that would have turned Joe McCarthy green with envy. The United States is only nine weeks into this war, observes David Corn in The Nation, but already legislation has been passed and executive orders signed that establish secret military tribunals to try non-US citizens; impose guilt by association on immigrants; authorize the Attorney General to indefinitely lock up aliens on mere suspicion; expand the use of wiretaps and secret searches; allow the use of secret evidence in immigration proceedings that aliens cannot confront or rebut; destroy the secrecy of the client-lawyer relationship by allowing the government to listen in; and institutionalize racial and ethnic profiling. The US's European allies have rushed to do the same thing-with many of them taking advantage, like Washington, of the anti- terrorist climate to try to push through a whole raft of legislation that had been waiting in the wings before September 11. Unlike in the US, however, citizens and parliaments are not going as gently into that good night-including, surprisingly, the British Parliament, which shot down Tony Blair's draconian proposal to allow prosecutors to apprehend and indefinitely jail any foreigner suspected of terrorism. Post-September US legislation is worrisome not only for its domestic implications but for its international consequences. What we see is the institutionalization of a regime of legal unilateralism: the latest package of laws and executive decrees self-endow Washington with the power to do almost anything abroad to bag terrorist targets-which US forces proceeded to display just recently, when, in an act indistinguishable from piracy, they boarded without consent a Singaporean ship in the Arabian Sea, overpowered the crew, and launched a fruitless search for terrorists. Had a suspect been discovered in that shipboard search, the Pentagon could have shipped him to a US base in, say, Germany, tried him there in a secret military tribunal, and, had he been found guilty by a process significantly less rigorous than civilian justice, transported him to be shot or imprisoned in the United States, possibly anonymously. The cooperation of states in whose territory terrorists are apprehended would be nice, but it would not be necessary, thank you. Deus ex machina In classical drama, September 11 was the deus ex machina-an external force or event that swings a destiny that hangs in the balance in favor of one of the protagonists. The Al Qaeda New York mission was the best possible gift to the US and the global establishment in the pre-September 11 historical conjuncture. Just a few weeks before, some 300,000 people had marched in Genoa in the biggest show of force yet of an anti-corporate globalization movement that had gone from strength to strength with demonstrations in Seattle, Washington, DC, Chiang Mai, Prague, Nice, Porto Alegre, Honolulu, and Gothenburg. The Genoa protests underlined the fact that the legitimacy of the key institutions of global economic governance-the International Monetary Fund (IMF), World Bank, and the World Trade Organization (WTO)-was at an all time low, as was the whole doctrine of liberalization, deregulation, and privatization that came under the rubric of neoliberal economics or the "Washington Consensus". This erosion of credibility had been brought about by a concatenation of disasters including the Asian financial crisis, the slow-motion disaster of structural adjustment in Africa and Latin America, and the spread of the financial crisis, first to Russia and Brazil and now to Argentina. What made the crisis of legitimacy of the key institutions of capitalist globalization so volatile is that it intersected with a profound structural crisis of the global economy. The main features of this structural crisis were overproduction in industry, increasing monopolization to counter the loss of profitability, and unregulated speculative activity in the financial markets. When $4.6 trillion in industrial wealth-the equivalent of one half of the US GDP-was wiped out in late 2000 and early 2001, the so-called "New Economy" vanished and collapsed into recession. The global reach of the recession and its depth have given rise to the term "synchronized downturn", which describes a process caused precisely by the greater interlocking and integration of economies brought about by the global liberalization of trade, investment, and finance. With globalization's promise of prosperity, an end to poverty, and reduced inequality evaporating, it was not surprising that, as pro- globalization economist C. Fred Bergsten told the Trilateral Commission, the anti-globalization forces were "in the ascendancy". Before September 11, moreover, an erosion of legitimacy haunted not only the institutions of global economic governance but also the institutions of political governance in the North, particularly the United States. Increasing numbers of Americans had begun to realize that their liberal democracy had been so thoroughly corrupted by corporate money politics that it deserved being designated a plutocracy. In the US presidential campaign of 2000, Senator John McCain ran a popular campaign that was centered on one issue: reforming a system of corporate control of the electoral system that, in scale, was unparalleled in the world. The fact that the candidate most favored by Big Business lost the popular vote-and according to some studies, the electoral vote as well-and still ended up president of the world's most powerful liberal democracy did not help in shoring up the legitimacy of a political system that had been described by many observers as already in a state of being in a state of "cultural civil war" between conservatives and liberals, a polarization that had roughly half the country on each side of the divide. Reversal of Fortune While understanding the deep sense of injustice that makes terrorists out of ordinary people, progressives have always condemned terrorism, not only because it takes innocent lives but also because it provides an opening for the counterrevolution. Indeed, post-September 11 events unfolded according to the historical script. The smoke from the ruins of the World Trade Center was still acrid and thick when United States Trade Representative Robert Zoellick seized the opportunity it provided to regain the momentum for corporate-driven globalization. Arguing that accelerated liberalization was necessary to counter September 11's blow against the world economy, Zoellick, European Union Trade Commissioner Pascal Lamy, and World Trade Organization Director General Mike Moore led the charge to stampede the developing countries into approving the launching of a new phase of trade liberalization during the Fourth Ministerial of the WTO in Doha, Qatar, last November. The Doha Declaration set the bicycle of trade liberalization that is the WTO back upright and in motion after its collapse in Seattle. Horst Kohler, managing director of the IMF, and Jim Wolfensohn, president of the World Bank, also saw the war as an opportunity to reverse the crisis of their institutions. Kohler has cheerfully cooperated in turning the Fund into a key component of Washington's overall program for strategic states such as Pakistan and Indonesia, even as it left a non-strategic country like Argentina, which faces imminent bankruptcy, twisting in the wind. His presidency and his institution threatened by a pincer movement of criticism from the left and the right, Jim Wolfensohn, for his part, has seized on September 11 to project his institution as the key partner of the Pentagon in the war against terrorism, filling the "soft" role of addressing the poverty that breeds terrorism while the Pentagon plays the "hard" role of blasting the terrorists. As for the crisis of political governance in the US, September 11 has turned George W. Bush from a minority president whose party lost control of the Senate into arguably the most powerful US president in recent times-and one with an overall job approval rating of 86 per cent, according to a recent New York Times poll. Nearly eight in ten Americans support his policy of indefinite detention for non-citizens suspected of being a threat to national security, and seven in ten support government's listening in on conversations between clients and their lawyers. Liberals have been thoroughly cowed, with Harvard liberal luminary Laurence Tribe condoning the use of military tribunals and the indefinite detention of over 1200 people, while his equally famous colleague Alan Dershowitz, The Nation reports, "has suggested that the use of torture may be justified, as long as it is authorized by a warrant". Even Richard Falk of Princeton University, an icon of left liberalism, was initially compelled to justify Bush's war as a "just war", though he has since retracted-thank god! From Locke to Hobbes The damage to the American political psyche and political system may be far-reaching. Americans have often prided themselves with having a political system whose role is to maximize and protect individual liberty along the lines propounded by John Locke and Thomas Jefferson. That Lockean-Jeffersonian tradition has been rudely overturned in the last few weeks, as Americans have been stampeded to giving government vast new powers over the individual in the name of guaranteeing order and security. Instead of moving to the future, America's limited democracy has regressed in its inspiration from the seventeenth century Locke to the sixteenth century Hobbes, whose master work Leviathan held that citizens owe unconditional loyalty to a state that guarantees the security of their life and limb. The extent to which assaults on traditional liberties can now take place with impunity was shown recently when Attorney General John Ashcroft said that critics of the Bush administration's security measures were fear-mongers "who scare peace-loving people with phantoms of lost liberty [and] aid terrorists". The fact that the liberal Democratic Senators he was directing these remarks at a Senate hearing dared not respond shows how skillfully the conservatives have used the anti-terrorist struggle to win the real war at home, which is the war against liberals and progressives. Fighting for the Future The anti-corporate globalization movement that had been surging before September 11 is now fighting desperately to regain momentum. Three developments are particularly threatening: First, the police, after being pilloried for provocateur-type tactics in Genoa, has regained its confidence in the new context marked by greater public acceptance of limitations on basic political rights. The police's new aggressiveness was in full display during the recent IMF-World Bank meeting in Ottawa on November 18-19, when with no provocation and in full view of the press, Canadian police in full riot gear swooped down on a peaceful anti-corporate globalization protest to apprehend young marchers who were doing nothing but marching peacefully. Second, the definition of "terrorist" that is being used in both European and American legislation is so vague that it can be applied to non-violent groups that espouse civil disobedience, which is an essential weapon of the movement, or to groups that do some damage to property but in a symbolic fashion that harms nobody. Third, the big anti-globalization events involve the massing of hundreds of thousands of people across borders, and this can now be easily thwarted invoking the new legislation legalizing the arbitrary questioning, detention, expulsion, or refusal of entry to foreigners on the mere grounds of suspicion of their being terrorists, terrorist supporters, or terrorist fellow travelers-in short, anybody that can be conveniently tainted with the terrorist brush. All this adds up to a chilling effect on mass protests, with the authorities and dominant media all too happy to have the digital images of terrorists attacks blend in the public mind with the militant but peaceful civil disobedience of anti-globalization activists. Darth Vader or Luke Skywalker? Washington is savoring its triumph. But while the image it wants to promote is that of America being Luke Skywalker liberating Afghan people from a repressive Taliban Empire, in large parts of the Third World it comes across, as John Lloyd of the Financial Times points out, more as Luke's antagonist, the evil Darth Vader. Indeed, the American way of war reinforces this, with death raining down from an unseen, distant hand. This was war that was impersonal and terrifying to the nth degree, and there is a great deal of truth in Newsweek writer John Barry's comment that, with their unnervingly accurate bombing campaign, "to many Taliban, the Americans must have seemed like creatures from another planet: out there somewhere, in the sky or across the horizon, powerful beyond comprehension". George Lucas could not have managed a better script for the Empire striking back than the Afghanistan campaign. There is one thing sure, however: empires always spawn resistance. It is, in fact, arguable that while the US may have won another battle, its strategic situation in the Middle East and South Asia has been eroded by this very conflict. A fundamentalist regime is now a possibility in Pakistan. The Washington-backed Saudi feudal elite is now more than ever isolated from the masses, with a critical mass of Saudi youths apparently regarding bin Laden as a hero-confronting the US with the prospect of Washington ultimately serving as a police force to save the elite from its people. With the bombing of Afghanistan and the Bush administration's strong tilt towards Israel, a deep anger against the US and the West is digging in from Muslim North Africa to Muslim Indonesia, providing fertile ground for the expansion of movements that will seek to wrest power from US-allied regimes. Will it be advanced technology or popular mobilization that will be the decisive factor in this epochal struggle for freedom, justice, and sovereignty of the peoples of the South against the empire? Will the outcome be Afganistan or Vietnam? Will the survivor be Darth Vader or Luke Skywalker? The jury is still out on these questions and will be for some time. As for the anti-corporate globalization movement, Sept. 11 may yet turn out to be a temporary reversal from which it can draw more strength. The massive street mobilizations paralleling big assemblies of the global elite, like the meetings of the IMF and the G8, have now reached the limits of their effectiveness, and this may well push the movement to come up with innovative approaches combining mass, legal, and parliamentary strategies. Indeed, if there is a clear silver lining in the post-September 11 situation, it is that three movements that had formerly gone their independent ways-the peace movement, the human rights movement, and the anti-corporate globalization movement- now find it critical to collaborate more closely with one another. This is a potent alliance that can make a significant contribution to changing the correlation of forces in medium and long term, as the exclusionary, marginalizing, and repressive thrusts of the global system inexorably assert themselves. The guardians and propagandists of the empire are proclaiming victory too soon. To borrow the World War II imagery that George W. Bush, Donald Rumsfeld, and John Ashcroft are so fond of invoking these days, we are not in 1945, folks, but 1941. In the Eyes of the World (December 2001)
The assault on the World Trade Center was unpardonable, but it is important not to lose perspective, especially a historical one. For a response dictated by fury such as that now displayed by some American politicians, while understandable, is likely to simply serve as one more proof for Santayana’s dictum that those who do not remember history are bound to repeat it.
The scale and consequences of the September 11 attack are massive indeed, but this was not the worst act of mass terrorism in US history, as some US media are wont to claim. The over 7,000 lives lost are irreplaceable, but one must not forget that the atomic raids on Hiroshima and Nagasaki killed 210,000 people, most of them civilians, most perishing instantaneously. But one may object that you can’t compare the September 11 attack to the nuclear bombings since, after all, Hiroshima and Nagasaki were targets in a war. But why not, since the purpose of the nuclear bombings was not mainly to destroy military or infrastructural targets, but to terrorize and destroy the civilian population? Indeed, the whole allied air campaign against Germany and Japan in 1944–45, which produced the firestorms in Dresden, Hamburg, and Tokyo that killed tens of thousands, had as its central aim to kill and maim as many civilians as possible. Similarly, during the Korean War, terror bombing of civilians was the policy of the US Air Force’s Far Eastern Bombing Command, which was instructed to pulverize anything that moved in enemy territory. After indiscriminately dropping 1,400 tons of bombs and 23,000 gallons of napalm, the unit commander, General O’Donnell, uttered his famous lines: "Everything is destroyed. There is nothing standing worthy of the name. Just before the Chinese came we were grounded. There were no more targets in Korea". During the Cold War, mass elimination of the enemy’s civilian population, alongside the destruction of his armed forces or industry, was institutionalized in the strategy of massive nuclear retaliation that lay at the center of the doctrine of deterrence. In Indochina, where the US was frustrated by the fact that combatants and civilians seemed indistinguishable, indiscriminate killing of civilians was a central component of the American war. In the air war, US forces detonated 13 million tons of high explosive from 1965 to 1971, or the energy equivalent of 450 Hiroshima nuclear bombs. In the "counterinsurgency war" on the ground, 20,000 civilians were systematically assassinated under the CIA’s Operation Phoenix program in the Mekong Delta. But must not such actions against civilians be judged in the context of a broader strategic objective of sapping the enemy’s will to fight and thus bringing the war to a conclusion? Then how different is this justification from the terrorists’ aim to change the foreign policy of the US government by eroding the support of the country’s civilian population? The point is not to engage in a "maleficent calculus", as the 19th-century English philosopher Jeremy Bentham would have called this exercise, but to point out that the US government hardly possesses the high ground in the current moral equation. Indeed, one can say that terrorists like Osama bin Laden, an ex-CIA protégé, have learned their lessons on the strategic targeting of the civilian population from Washington’s traditional strategy of total warfare, where damage to the civilian population is not simply seen as collateral but as essential to achieving the ends of war. In the aftermath of the World Trade Center assault, the perpetrators of the horrible deed have been called "irrational" or "madmen" or people that embody evil. This is understandable as an emotional reaction but dangerous as a basis for policy. The truth is the perpetrators of the deed were very rational. If they were indeed people connected with Osama bin Laden, their goal was most likely to raise the costs to the United States of maintaining its current policies in the Middle East, which they consider unjust and inequitable, and this was their way of doing it. They very rationally picked the targets and weapons to be used, paying attention not only to maximum destruction but also to maximum symbolism. The choice of the World Trade Center towers and the Pentagon as the targets, and American and United Airlines planes as the delivery vehicles doubling as warheads, was the product of cold-blooded thinking and planning. The loss of their own lives was factored into the calculation. What we saw was a rational calculus of means to achieve a desired end. In the view of these people, terrorism, like war, is the extension of politics by other means. These are Clausewitzian minds, and the worst mistake one can make is to regard them as madmen. One metaphor that the Washington establishment has used to capture the essence of recent events is that of a second Pearl Harbor, with the implication that like the first, the September 11 tragedy will galvanize the American people to an unprecedented level of unity to win the war against still unidentified enemies. The other side, one suspects, operates with a different metaphor, that of the Tet Offensive of 1968. The objective of the Vietnamese was to launch massive simultaneous uprisings that, even if defeated separately, would nevertheless add up to a strategic victory by convincing the other side, especially its civilian base, that the war was unwinnable. The aim was to rob the US of the will to win the war, and here the Vietnamese succeeded. The perpetrators of the September 11 assault are operating with a similar calculus and, despite the current jingoistic talk in Washington, it is not certain that they are wrong. Will the American people really bear any burden and pay any price in a struggle that will persist long into the future, with no assurance of victory-indeed, with no clear sense of who the enemies are and of what "victory" will consist of? The media are full of news about an alliance against terrorism, conveying the impression that coordination among key states combined with the outrage of citizens everywhere will give a Washington-led coalition an unbeatable edge. Perhaps it will in the short run, although even this is not certain. For the problem is that, as in guerrilla wars, this is not a war that will be won strictly or mainly by military means. If it was bin Laden’s network that was responsible for the World Trade Center attack, then the underlying issues are the twin pillars of US policy in the Middle East. One is subordination of the interests of the peoples of the region to the untrammeled access by the US to Middle East oil in order to maintain its high-consumption petroleum-based civilization. To this end, the US overthrew the nationalist government of Mossadegh in Iran in 1953, cultivated the repressive Shah of Iran as the gendarme of the Persian Gulf, supported antidemocratic feudal regimes in the Arabian peninsula, and introduced a massive permanent military presence in Saudi Arabia, which contains some of Islam’s most sacred shrines and cities. The war against Saddam Hussein was justified as a war to beat back aggression, but everybody knew that Washington’s key motivation was to ensure that the region’s most massive oil reserves would remain under the control of pro-Western elites. The other pillar is unstinting support for Israel. That Arab feelings about Israel are so elemental is not difficult to comprehend. It is hard to argue against the fact that the state of Israel was born on the basis of the massive dispossession of the Palestinian people of their country and their lands. It is impossible to deny that Israel is a European settler-state, one whose establishment was essentially a displacement from European territory of the ethnocultural contradictions of European society. The Holocaust was an unspeakable crime against humanity, but it was utterly wrong to impose its political consequences-chief of which was the creation of Israel-on a people who had nothing to do with it. It is hard to contradict Arab claims that it was essentially support from the United States that created the state of Israel; that it has been massive US military aid and backing that has maintained it in the last half century; and that it is deep confidence in perpetual US military and political support that enables Israel to sabotage in practice the emergence of a viable Palestinian state. Unless the US abandons these two pillars of its policies, there will always be thousands of recruits for acts of terrorism such as that which occurred on September 11. And while we may condemn terrorist acts-as we must, strongly-it is another thing to expect desperate people not to adopt them, especially when they can point to the fact that it was such methods that targeted civilians as well as military personnel, combined with the Intifada, that forced Israel to agree to the 1993 Oslo Accord that led to the creation of the Palestinian entity. Another reason why the strategic equation does not favor the US is that there are a great many people in the world who are ambivalent about terrorism. In contrast to the European reaction, the response to the September 11 event in the South has been muted. A survey would probably reveal that while many people in the Third World are appalled by the hijackers’ methods, they are not unsympathetic to their political objectives. As one Chinese-Filipino entrepreneur said, "It’s horrible, but on the other hand, the US had it coming". If this reaction is common among middle-class people, it would not be surprising if such ambivalence towards terrorism is widespread among the 80 percent of the world’s population marginalized by current global political and economic arrangements. There is simply too much distrust, dislike, or just plain hatred of a country that has become so callous in its pursuit of economic power and arrogant in its political and military relations with the rest of the world and so brazen in declaring its cultural superiority over the rest of us. As in the equation of guerrilla war, civilian ambivalence in the theater of battle translates strategically to a minus when it comes to the staying power of the authorities and a plus when it comes to that of the terrorists. In sum, if there is one thing we can be certain of, it is that massive retaliation on the part of the US will not put an end to terrorism. It will simply amplify the upward spiral of violence, as the other side will resort to even more spectacular deeds, fed by unending waves of recruits. The September 11 tragedy is the clearest evidence of the bankruptcy of the 30-year-old policy of mailed-fist, massive retaliation response to terrorism. This policy has simply resulted in the extreme professionalization of terrorism. The only response that will really contribute to global security and peace is for Washington to address not the symptoms but the roots of terrorism. It is for the United States to reexamine and substantially change its policies in the Middle East and the Third World, supporting arrangements that will promote equity, justice, and genuine national sovereignty for currently marginalized peoples. Any other way leads to endless war. |