concluded UN International Conference on Financing for Development was a
depressing sign that even the UN has succumbed to the pressures of
international capital vis-a-vis the peoples of the world.
For a while it seemed that
that United Nations provided some sort of alternative forum for those
opposed to the current pattern of corporate globalisation. While the
Bretton Woods institutions (the IMF and the World Bank) have been clearly
aligned on the side of private international capital for some time now,
and the World Trade Organisation has shown itself to be functioning in a
similarly in equalising way, the United Nations and some of its
organisations appeared to be slightly more balanced.
After all, it was less than two years ago (in September 2000, to be exact)
that the UN General Assembly adopted the Millennium Declaration, which was
– at least in verbiage – a bold statement in favour of poverty reduction
and greater equality. This Declaration collectively committed member
governments to work towards the following International Development Goals,
to be reached as soon as 2015 :
Reduce by half the proportion of people living in extreme
poverty, those who are hungry and those who lack access to safe drinking
Achieve universal primary education and gender equality
Accomplish two-thirds declines in the rates of maternal
mortality and in mortality of children under five
Halt and reverse the spread of HIV-AIDS and provide
special assistance to AIDS orphans
Improve the lives of 100 million slum dwellers.
These are very ambitious
goals, and even if they are to be partly achieved in the proposed period,
they require substantial allocation of resources. It was believed that
governments of most countries, especially in the developed world, would
not have made such tall claims if they did not have at least a degree of
seriousness about these objectives. And few people assumed that the level
of cynicism of the parties to the Declaration would be so high that they
would discount all these goals almost immediately afterwards. Yet that is
unfortunately what seems to have happened.
The promises made by this
Declaration meant that the subsequent decision to hold a major
consultative process leading up to the UN Conference on Financing for
Development (which was held in Monterrey, Mexico, over 18-22 March)
attracted a lot of attention and interest. Many progressive groups and
people believed that this was an opportunity to force governments to
commit to programmes and policies that would at least halt, if not
reverse, the in equalising effects of corporate globalisation.
However, it soon became
quite clear that this was not the case. To start with, the consultations
not only included institutions like the World Bank and IMF but also
representatives of international business, who soon came dominate
discussions much more than others who were involved such as developing
country governments and some civil society organisations.
The High-Level Panel which
was set up to provide a report was chaired by Ernesto Zedillo, the
erstwhile unlamented President of Mexico who presided over the infamous
Mexican "Tequila crisis"
in spectacularly incompetent fashion. It included
several economists openly wedded to the neo-liberal economic paradigm,
such as Robert Rubin who advised President Clinton, and our own Dr. Manmohan Singh, and the Project Director was John Williamson, formerly of
the World Bank.
It therefore came as no
surprise that the report, submitted in June 2001, was a document that
could have been prepared in the corridors of the IMF or even the World
Economic Forum, the platform for international capital. While ostensibly
concerned with how to generate and mobilise resources for development, the
report actually presumed that private capital was the only way this could
occur, and devoted most of its attention and concern to discussing how
countries could best attract such capital.
Therefore the principal
recommendations were more in the nature of more hectoring to developing
countries, about how they had to set their own economic houses in order :
by ensuring sound "fundamentals"
of the standard neo-liberal type; placing
due emphasis on protection of property rights, going in for even more
trade liberalisation; and so on. Of course, the report also mentioned that
donor countries had to meet their target (declared more than two decades
ago) of providing Official Development Assistance of 0.7 per cent of GDP,
but for the most part, the onus was clearly on the developing countries.
The Monterrey Consensus,
adopted at the Conference, is obviously based on this report, but if
possible it goes even further in terms of meeting the interests of
international business and pushing the failed neo-liberal paradigm. While
the leading action is identified as the mobilisation of domestic financial
resources for development, the policies suggested are bound the cripple
governments’ abilities to do so. There is stress on financial and trade
liberalisation, both of which are known to reduce the revenue-raising
capacity of the state.
As far as mobilising
international resources of development is concerned, the focus of the
Monterrey Consensus is on how to attract foreign direct investment and
other private flows such as bank loans and portfolio investment. This is
regardless of the fact that it is precisely such flows that have failed so
far to provide the types of investment required for development, and have
been responsible for the most devastating effects which have even reversed
the development process, as most recently evident in Turkey and Argentina.
The other "engine of
development”, according to the Monterrey Consensus, is international
trade, and therefore it proposes comprehensive trade liberalisation by
developing countries. No matter that such trade has been responsible for
reindustrialising large parts of the developing world and constraining
development in general, that it has meant huge terms of trade losses
(amounting to many multiples of all form of capital inflow put together)
for many developing countries.
Meanwhile, there is hardly
any proposal that could be of some real use. There are no recommendations
to control and regulate cross-border capital flows, which are now
absolutely essential even to maintain stable international capitalism.
Instead the document harps on "corporate responsibility”, hoping for their
voluntary good behaviour, and "public-private partnerships
"internationally, even though these really amount to making taxpayers pay
for the generation of private profits. It is really as if the
scandal-ridden collapse of Enron, or the known cases of abuse of corporate
monopoly power by multinational drug companies, had simply not happened.
The section on external debt
relief – another crucial area where the action is required immediately -
is remarkably general and non-committal, hardly going beyond pious
platitudes to any meaningful commitments about actual debt reduction. Even
the relatively innocuous proposal made by George Soros – of increasing the
allocation of Special Drawing Rights of developing countries in an effort
to increase their international liquidity – was thrown out of court by the
US, which found that this was "not a promising path”.
Indeed, so blatant is the
Monterrey Consensus about the direction of its strategy thrust, that it
has been widely welcomed by business groups. The International Business
Forum expressed its satisfaction at the outcome, But even they had to
point out that they had "hoped for even more emphasis on building local
"rather than relying so openly on foreign capital to come
in and make good.
As if the adoption of this
document were not enough, developing countries have
had to suffer insult upon injury in the form of patronising offers to
increase ODA. The US, has declared that it will increase ODA by $5 billion
over the next three budget years, starting from October 2003. The highly
self-satisfied tone with which this was announced concealed the fact that
currently ODA from the US amounts to only 0.12 per cent of GDP, among the
lowest in the world, and even this increase would take it up to only 0.18
per cent !
The European Union has announced that it will increase ODA from 0.33 per
cent of GNP to 0.39 per cent by 2006, once again hardly enough to cause
much celebration. Currently only five donor countries meet the 0.7 per
cent of GDP goal that has been known for so many years. In any case, even
such aid is bound to come with many adverse conditions attached : as
President Bush declared , "Greater contributions from developed nations
must be linked to greater responsibility from developing nations.”
But citizens of many developing countries may feel that
their real problem is not the paucity of ODA, but rather the nature of
their involvement with imperialism in the world economy, which is the real
problem as far as the financing of development is concerned. This reduces
their incomes through terms of trade losses, forces them to keep paying
for external debt many times over which never contributed to development
in the first place, and prevents them from garnering resources
domestically because of the need to attract and placate international
capital. And so perhaps the best thing that donor countries, and other
organisations such as the IMF and the World Bank and the World Trade
Organisation could for developing countries would be not to offer them
some more crumbs from the rich nations table while forcing them into
unequal economic relationships, but simply to leave them alone.