Antoni's Wire Service

Date: Fri, 7 May 1999 19:22:44 -0300 (ADT)
From: Antoni Wysocki
To: Antoni's Wire Service
Subject: a few ideas on (over)running the planet


The dissolution in the late 80's/early 90's of the planned economies of Eastern Europe and the Soviet Union removed what had been the only really significant check on the ambitions of the United States in the post-World War 2 period. The end of the Cold War left the US plenipotent in the economic and the military spheres, but - and this is equally important - also in the realm of ideology.

Francis Fukuyama famously encapsulated the new reality in his essay "The End of History," published in The National Interest in 1989. Fukuyama asserted that the collapse of Soviet socialism revealed that - in the form of US-style capitalism - the ultimate mode of human organization had been realized. Than this no higher order of existence could be aspired to.

It is difficult to say which of these three advantages has been used to greater effect by the US in the past decade. True, with the demise of the Pentagon's only real rival, the Soviet war machine, the US has become extraordinarily uninhibited in its overt use of force (as we are currently seeing in Yugoslavia.) The message telegraphed by this assault - and by actions such as the US strikes against Afghanistan and Sudan last year - is that America will brook no limits to its scope of military action.

At the same time the economic clout of the US has been wielded like a bludgeon to profoundly reshape entire nations. In general this has been accomplished through the World Bank and the International Monetary Fund - International Financial Institutions or IFIs - which take their marching orders from the US. The Bank and Fund have extended credit to about half of the nations in the world on condition that these countries liberalize, privatize and otherwise make their common wealth available to international capital at fire-sale prices.

The IFIs are essentially instruments of US policy. Washington dominates them, first of all, by virtue of its control of an inordinate number of seats on their directing boards (seats are allocated in proportion to funding supplied by a given state and the US contribution is by far the largest); and, second, through Congressional directives instructing US nationals within the Bank and Fund to disburse money only to regimes supported by Washington (regardless of which countries the IFIs themselves have vetted.)

Yet, preeminent though the US is in the aforementioned spheres, it is perhaps in the domain of ideas that it has had the most profound influence upon international political economy in the past decade. The apparent success of the American strain of capitalism - as judged by its ability to yield robust economic growth - has nearly crowded out other forms of organization in the 1990's. The Southeast Asian currency crisis, which tripped up the "Asian Tigers," and Japan's recessionary performance are adduced as proof positive that the dirigiste form of capitalism practiced by these countries is unsuited to modern conditions. Asia's setbacks have bolstered the hegemonic position of the American doctrine to the point that it is widely seen as the only game in town.

A number of names have been applied to this "made in America" brand of capitalism : neoliberalism (as well as - confusingly - neoconservatism); globalisation; and - significantly - the "Washington consensus." Though rarely encountered in this context "laissez-faire" would likewise be an appropriate descriptor.

Two of the main features of the doctrine - liberalization (removal of tariffs, capital controls and other barriers to trade and investment) and privatization - I have mentioned above; the third common element is deregulation. In short the Washington consensus requires that countries reorient the public sector to explicitly serve the needs of international capital. Like a police escort for an official motorcade (think Suharto and the RCMP at the 1997 APEC summit in Vancouver) the proper role of government vis-a-vis big business is to make sure the road is kept clear of nasty protesters.

As already noted the Washington consensus was standard operating doctrine for the IFIs throughout the 1990's (and even before.) This is said to have changed somewhat in the wake of the Southeast Asian monetary meltdown of 1997-98; while (as stated above) one lesson drawn from the experience was that government intervention in economic matters was no longer appropriate, another was that too swift a retreat by the state could be counterproductive (although liberalization continued to be seen as an ultimate goal.)

Whatever the strength of the resulting "post-Washington consensus" in the IFIs - and the degree of acceptance of this revised doctrine is itself unclear - since 1995 the US has had an even more powerful mechanism through which to operate. Moreover in this institution - the World Trade Organization - neoliberalism has no effective rival.

The WTO was created over the course of seven years of negotiations as a means of administering and enforcing the international trade regime known as the General Agreement on Tariffs and Trade (GATT.) So comprehensive are the GATT's disciplines, and so dominating the WTO, that in Oct/96 Renato Ruggiero, the WTO's Director-General, made bold to remark to the United Nations Conference on Trade and Development (UNCTAD) : "We are writing the constitution of a single global economy."

The WTO acknowledges no higher cause than the promotion of international trade. The twin rationales given for this are that countries which trade with one another do not war with one another and that only the expansion of commerce between nations can generalize prosperity to the point of the eliminating poverty.

As it happens neither premise is borne out in practice. On the first point it would seem more nearly correct to say that countries that war with one another do not trade with one another (consider the relationship between the US and Iraq.) As to the second, consider the following comment from the UNCTAD :

Since the early 1980s many governments have pursued reforms under structural adjustment programmes...However, despite many years of policy reform, barely any country in [sub-Saharan Africa] has successfully completed its adjustment programme with a return to sustained growth. Indeed, the path from adjustment to improved performance is, at best, a rough one and, at worst, a disappointing dead-end.
(Trade & Development Report 1998 : Overview, p.XII)

One should further keep in mind that UNCTAD is concerned here solely with the very inadequate measure of welfare described by Gross Domestic Product, which only examines the sum of a country's monetary transactions. The situation would be revealed as still worse if attention was paid to the (mal)distribution of wealth within structurally adjusted polities.

Yet, even if it were not so fundamental problems with the WTO credo would still remain. For one, the more goods are shipped over long distances the greater the toll on the environment from increased energy use (for at least as long as we rely primarily on fossil fuels.) For another, the insistence of the WTO that countries must produce for export, not domestic consumption, has a wide range of deleterious consequences such as encouraging the detrition of natural resources (if Brazilians alone ate their country's beef ranchers would not be levelling the Amazonian rain forest apace to create more range-land.)

The aforementioned deficiencies inhere in the WTO's very mandate : simply put, the expansion of international trade - held by the WTO to be a good in itself - is, in fact, fundamentally problematic. Unfortunately this by no means describes the full extent of the ills associated with the WTO. Both the WTO's institutional framework and its rulings on subjects within its ambit (which has grown to be more or less everything under the sun) are also areas of great concern.

The Third World Network, a highly respected non-governmental organization, described some of the shortcomings in the WTO's internal workings thus :

The WTO is probably the most non-transparent of international organisations. Most, if not all, its key decisions are worked out in informal meetings...A few big countries are also able to veto the issues or decisions they do not want even if the vast majority of countries agree to them...The vast majority of developing countries have very little real say in the WTO system. Many lack the financial and human resources to adequately participate, even in the formal meetings, let alone the many informal meetings to which they are not invited.
(Statement of the Third World Network at the WTO Symposia on Trade and Environment and Trade and Development, Geneva, 15-18 March/99)

Recently the WTO reorganized its website to include a section entitled "10 common misunderstandings." Amongst the purportedly mistaken notions this public relations exercise is meant to correct are that the WTO is "blindly for trade," "anti-green," and "undemocratic"; and that "small countries are powerless in the WTO." The page further avers that "Decisions in the WTO are generally by consensus. In principle, that's even more democratic than majority rule because everyone has to agree."

In practice the concept of consensus has been used by the developed countries as a device to get their way in the face of opposition - as dramatically revealed in the process of selection of a successor to outgoing Director-General R. Ruggiero. One candidate, Supachai Panitchpakdi, initially had the support of a handy majority of states while the other main contender, Mike Moore, was backed by far fewer nations...but had the US in his camp.

Last week Washington decided to make a big push on behalf of their man, sponsoring "travel to [WTO headquarters in] Geneva by 30 WTO members which lack missions there" and promising African nations "favourable terms on debts and on import quotas" if they would back Moore ('Supachai rejects call to quit,' Bangkok Post, May 4, 1999.) The upshot was that on April 29 the chair of the WTO Council came forward with a statement that Moore was favored by a margin of 62 delegations to 59 and therefore should be acclaimed Director-General.

Smelling a rat Supachai's supporters demanded to know who had done the polling and called for an election to determine how matters truly stood. They also drew attention to the fact that, prior to the American strong-arming, their candidate had enjoyed a clear lead throughout the race - but in all this time no official call was issued asking members to consentaneously appoint Supachai. Regardless, the US and others rejected the ballot option (with Canada's ambassador John Weekes opining that "a vote would undermine confidence in the system"!)

So much for democracy and egalitarianism at the WTO. As to the organization being "blindly for trade," and "anti-green," the record speaks for itself. One of the WTO's most important functions is the arbitration of trade disputes between nations; a quick review of verdicts rendered in such cases gives a very different impression than that propounded by the WTO public relations crew.

The action brought against the European Union by the US over bananas exemplifies the WTO's "trade uber alles" approach. The EU has for some time provided a price structure which favors bananas grown in a number of very poor nations. The countries in question are former colonies and the arrangement was instituted as a form of compensation for the ravages of the colonial past.

The US, prompted by Dole, Chiquita and Del Monte, objected to the system and the American complaint was upheld by the WTO despite evidence that dismantling of the established order could ruin the fragile economies of the erstwhile colonies. While the arrangement had been a lifeline for the EU's client states the turnover involved amounted to only about 4% of the revenues of the three companies named above; which in turn control roughly 65% of the world trade in bananas ('David overlooked as Goliath claims victory over Goliath,' by Larry Elliott, the Guardian, Apr.08/99.)

The WTO's environmental credentials are no less dubious. E.g., the organization has found against two separate US regulations protecting endangered species and required the US government to lower its fuel emissions standards. (Interestingly Washington made little fuss about any of these decisions but when the WTO last year found against the US in a purely commercial case as to whether Japan favored domestic film processors over foreign ones the American government blustered and protested and hinted that it might leave the WTO altogether.)

Having inveighed so heavily against the WTO I must, in fairness, add a qualification. States like to cloak themselves in the garments of righteousness whenever they are called to account for their actions upon the international stage. Perhaps the most typical ploy of public officials is to claim that they are acting to defend the interests of their citizens against unjust, external forces. However, since various developed countries, and especially the United States, conceive of "the national interest" as virtually synonymous with the fortunes of commercial conglomerates headquartered domestically, on examination initiatives taken by these governments almost invariably turn out to be driven by some major corporate interest.

A further ambiguity arises because certain measures enacted by national administrations provide eleemosynary beneficial effects in the course of serving their real ends of pleasing powerful domestic actors. The Canadian Parliament, for instance, restricted a gasoline additive manufactured by Ethyl, a US company, provoking a lawsuit under Chapter 11 of the North American Free Trade Agreement. To elicit support Ottawa gave out that the substance posed a danger to human health - and indeed, it would seem that the cited risks are real. Yet, an environmentalist and legal scholar who investigated the matter has informed me that the real reason Ottawa targetted Ethyl's product was that the Canadian auto industry lobbied hard for such action for their own ends; public health considerations only entered into the equation as a rationalization after the fact.

I would suggest that, as a rule, the personnel that enforce trade liberalization regimes are, per se, neither pro- nor anti-"green"; for or against cultural autonomy...Heretical as it may sound I would argue that such mechanisms may even introduce improvements. For instance, while at the moment I cannot call to mind an instance in which a WTO panel, in settling a dispute, has strengthened environmental protections, according to Elizabeth May the Canada/US softwood lumber dispute of the 1980's had this effect (see At the Cutting Edge, E. May, 1998 Key Porter Books, pp.52-3.)

Ironically enough, under these circumstances it is perhaps a mark of probity that WTO dispute settlement panels fearlessly strike down protectionist measures left and right, regardless of the averments of national governments that the legislation under fire serves the commonweal. Unfortunately, while the justifications offered for protectionist measures may be fraudulent, proscribing the offending conditions on these grounds without regard to the positive effects of such laws (adventitious though these may be) is apt to result in the benefits being lost altogether.

There is undoubtedly a great deal to criticize about the WTO. Some of this is structural : the institution is obviously heavily tilted in favor of the developed world. Ultimately, though, it is the ideology of the WTO which is at fault; and it is an ideology which is not peculiar to that forum.

Worldwide, politicians - and often the general populace - acknowledge no purpose more compelling than making money. Since the neoliberal model apparently provides the most efficient mechanism for increasing the total stock of lucre the officers of the WTO can hardly be blamed for their vigorous promotion of neoliberal economic policies. Until we the people make it clear that our allegiance is to values other than that of the almighty dollar it is simply irrational to look to the WTO or other elements of the new world order for a more progressive vision.