SUMMERS LOBBIES FOR GLOBALIZATION.
US Treasury Secretary Lawrence Summers on Monday urged Americans not to neglect the rest of the world, and said global markets had helped the vast majority of citizens in the world's biggest economy, Reuters reports. "In many ways, the US, in the final decade of the 20th century, is more successful than it has ever been," Summers said in a speech he was to deliver at the World Affairs Council in Washington.
Investment in a prosperous global economy was "the most effective, and most cost-effective, means of investing in the forward defense of American interests", Summers said, calling for backing for international institutions like the World Bank and the IMF. "The challenge we will have to manage with respect to trade, labor, the environment, and other issues will be striking the right balance between all these objectives."
The news comes as Frédéric Lemaître of Le Monde (France, 1/25, p.17) comments that a few weeks after the failure of the WTO ministerial meetings in Seattle and the emergence of public skepticism about globalization, a number of multinationals are beginning to worry. The UNCTAD has been pointing out the inequalities entailed by globalization and the dangers this poses to multinationals themselves, and French multinational Suez-Lyonnaise des Eaux on Friday hosted a conference on the "social exigencies of globalization", saying there was "an absolute need to adapt to a changing world that will no longer submit only to the abstract law of numbers, to the simplifications they induce, to the logic of financial flows."
Businesses are expecting public bodies to lay down the new rules of the game, Lemaître continues. Even international organizations generally in favor of privatization, such as the World Bank, are raising questions. "Three billion people live on less than $2 a day," Jean-Christophe Bas of the World Bank is quoted as saying. "The rest of the world is paying the cost. Non-development is a moral problem, but also an economic one, and companies which today account for three quarters of investments in developing countries bear a share of responsibility."
Meanwhile, Canadian Finance Minister Paul Martin writes in the Financial Times (p.19) that a little over a year ago, world recession was avoided by the big industrialized countries cutting their interest rates and by the efforts of the IMF and the World Bank to limit the spread of the credit crunch in financial markets. But there is no room for complacency. A new framework is needed that preserves the benefits of capital mobility while minimizing the costs of instability to individual countries and to the global economy.
That is why the G20 is so important, Martin continues. Made up of the finance ministers and central bank governors of the G7 countries, emerging market economies, and representatives of the Bretton Woods institutions and the EU, the G20 provides a forum representing more than 80 percent of the world's population and roughly 60 percent of total world GDP.
Also, reports the Financial Times (1/25, p.5), rich and poor nations on Monday failed to agree on how to handle compliance with WTO investment rules, in a further display of the paralysis that has afflicted the organization. In a separate report, the FT (1/26, p.1) says EU Trade Commissioner Pascal Lamy on Tuesday announced bold plans to launch a new trade round of world trade talks before the end of this year. Following three hours of talks with WTO Director-General Mike Moore, Lamy said that as a first step, he wanted agreement on a "small package" to include concessions to developing countries facing problems implementing trade agreements from the Uruguay Round, including those on trade-related investment and intellectual property rules.
WORLD BANK'S STIGLITZ STICKS TO HIS GUNS: WEF INTERVIEW. Outgoing World Bank Chief Economist Joseph Stiglitz has not relented from his criticism of the international financial community, which he accuses of excluding poor countries from the decision-making process, reports the International Herald Tribune (p.1). Speaking ahead of the World Economic Forum (WEF)'s annual meeting in Davos-where he is to make his last public appearance as a World Bank official-Stiglitz said the world's poor countries are being denied a seat at the table where key international decisions are made even if those decisions hurt them.
In particular, Stiglitz cited his concern about whether the interests of poor countries had been "adequately represented in a lot of the international fora". Commenting on the way the IMF and other institutions handled the Asian financial crisis of 1997-1998, he said "decisions were made in the last crisis that really adversely affected working people, small businesses." Many people were thrown out of jobs "even though it was international financial markets that were at the root of the problem... It was small businesses that faced interest rates that put them into bankruptcy, in some countries more than 50 percent of the firms being put into bankruptcy. Yet these people whose interests were vitally at stake did not have a seat at the table when those important decisions were made."
One of the challenges for the international financial community, he said, was "to establish a framework in which economic policies are made which affect everybody" and to make sure that all those affected "can have a voice in those policies."
Despite his decision to leave the Bank, Stiglitz maintains cordial relations with World Bank President James Wolfensohn, who is widely regarded as a champion of the poor but who has couched his views in more diplomatic terms than those of Stiglitz, says the story. Stiglitz said he would now spend a few months at the Brookings Institution, before returning in the autumn to Stanford University.
The news comes as advocacy groups that paralyzed downtown Seattle during the WTO ministerial meetings last year plan to converge on Washington in April to protest the joint meeting of the World Bank and the IMF, with some groups pledging to "shut down" the gathering with civil disobedience, report the Washington Post (1/26, p.E1) and the International Herald Tribune (p.17). More than 60 organizers met last week in Washington to map out a week of political events aimed at keeping alive what they call "the spirit of Seattle". The groups view the Bank and the Fund as key institutions for an unjust global economic order that enriches some people and impoverishes others, the story says.
World Bank spokeswoman Caroline Anstey is quoted as saying, "Maybe the dialogue is going to be in the streets. I think it would be better if it were around tables discussing how we can reach solutions to these problems."
Meanwhile, reporting on the World Economic Forum in Davos, the Wall Street Journal (1/26, p.A17) reports that the social and environmental activists who helped sink last year's Seattle trade talks are now converging on the ultimate elite party; the WEF. Activists see such a gathering as giving insiders yet another chance to retreat from the public eye to make economic decisions about subjects ranging from Third World labor standards to genetically modified foods.
The Washington Times (p.A11) also reports, saying that WEF conference participants are divided between those who feel that globalization facilitates access to modern technology for the poor and those who claim it mostly helps advanced countries that have technology and capital to sell. One the eve of the Davos meetings, calls were made to participants to pay more attention to Africa's daunting problems and pauperization, the piece notes.
Also, WEF organizers Klaus Schwab and Claude Smadja comment in the IHT (p.6) that if it is to work, a truly multilateral system will have to integrate different regional sensitivities, priorities and interests in a way that makes different countries feel they have a good possibility of having their say and expressing their interests. The creation of the G20 structure to involve emerging market countries in economic coordination is the kind of initiative that needs to be nurtured. The discussion on redefining the IMF's role fits into the same kind of effort toward new concepts of global governance.