Business as Usual After Genoa?

It seems like little happened in Genoa, not if you read most of the business magazines in the weeks following the demonstrations and riots that resulted in one death and 231 injured.

The Industry Standard – intelligence for the information economy failed to mention the protests. Newsweek – nothing. Likewise, the RedHerring demanded in its editorial a new tax cut for the USA but no mention of 100,000 people on the streets demanding change. BusinessWeek went further and devoted thirteen pages to surveying global branding and its importance. To be fair they did also carry four pages about “how to blunt the anti-globalisation backlash”.

Time magazine carried a thoughtful article by Michael Elliott, which at least mentioned amongst the condemnation of violence, poor policing (i.e. it was unprofessional) a failure to understand “what makes the anti-globalisation forces tick”. It didn’t suggest any solutions except the “need to learn to talk”, but at least it recognised that this could be just the start of an unfolding tragedy.

The Economist led with a robust editorial defence of the need for a new trade round in Doha, Qatar with a special report on world trade in general. It agonised on the need and importance of completing the existing trade round and starting a new one. But it recognised that there were genuine concerns about ethical and environmental issues together with the need to overhaul the antiquated structures of the World Trade Organisation (WTO).

Missing the Point

ROBERT B. ZOELLICK, the United States trade representative has said,
“There’s an odd balance. There’s this tremendous opportunity for political and economic influence through trade. And there’s an atmosphere after Seattle of wondering if globalization is a force that is in some way threatened by retrograde movements.” NY Times 5th August 2001

Proposal 1

Business and the international financial institutions (IFIs) can not shirk their responsibilities and have to start listening. They can demonstrate that they are prepared to enter into a dialogue with reformers and peaceful protesters. The head in the sand approach does nothing to improve trust and confidence. They are part of the problem and the solution to 2.8 billion people living on less than $2 per day in poverty. Instead of infrequent bilateral talks between Non Governmental Organisations (NGOs) and each IFI a new global forum of NGO’s and IFI’s should be set up. Those that agree to constructive and peaceful talks would be invited.

Cost of Summits

In the run up to the Genoa summit $100 million was spent on sprucing up the city, before $80 million was spent on the summit itself. Finally, the riots caused another $20 million of damage to property. Who knows how much will be paid out in further personal insurance claims? So $200 million is spent on a glittering set of meetings in the media spotlight. The outcome? A new global AIDS health fund, to “continue progress” on debt relief, a determination to press ahead with a new trade round and to avoid protesters by attending next year’s summit in the Canadian Rockies. To the outside world it looked like a poor outcome from such a well hyped and prestigious occasion.

Every day 23 of the most Heavily Indebted Poor Countries (HIPC) pay $59 million to rich counties and financial institutions to just service their debts.
Jubilee Report, July 2001

Proposal 2

Scrap the present summit structures and develop shorter more open conferences with greater emphasis on reporting from and to national parliaments on outcomes to hold Government leaders to account and scrutiny.

‘Simplistic’ Travelling Circus

It is clear that when protesters turn to violence they will hit the headlines, but the price is a focus on the violence and an overshadowing of the anti-globalisation campaigns. Those that demonstrate do so for a variety of reasons and there is clearly real turmoil and splits between the anarchist, violent tendency in the black bloc and the peaceful white bloc.

The British Prime Minister, Tony Blair has said he is relishing a fight with the protesters whose message is “simplistic”. He wants to push for free trade which he says will fund better education, health and housing in developing nations. The problem is the vagueness of his own message. Where is the detail of his vision? He should concentrate on promoting radical change of the structures and not underestimate the strength of feelings of the anti-globalisation campaigners. Dismissing their message is arrogant and worrying. Until radical change is brought about the protesters will step up their action and the agent provocateurs will become more bold and more violent.

The protesters in Genoa were loosely grouped under the Genoa Social Forum representing scores of different NGOs. Their aims and objectives vary widely, but generally share a belief that the market place and the current system of governance will not deliver radical change for improving the quality of life in developing nations and protecting and enhancing the environment. The media has characterised these protests as being anti-globalisation since protesters fear a growing dominance of world corporations. It is argued that companies are exerting more power and influence than governments.

The protesters are not just a number of angry, young radicals. The ‘message’ is spreading to mainstream centre left activists. In an era of unprecedented economic growth and increase in private wealth, many middle income protesters have joined with traditional left wing student to demonstrate. As the world shrinks in terms of ease of travelling to the four corners of the globe, so more and more mobile people are enjoying the prospect of joining inter-continental demonstrations.

The advent of the internet and mobile communications means the organisation of protest is relatively easy. The parliamentary system of lobbying politicians is deemed to have failed by the young and they have the wealth and the ability to organise direct action protests.

The key is to deliver radical change that mainstream protesters will recognise. The anarchists hide behind the respectability of Jubilee Movement International, OXFAM, Cafod, Tearfund, Drop the Debt and Christian Aid groups. The churches and charities should not be forced off the streets; it should be the violent thugs who are spotlighted and isolated.

The next IMF/World Bank Group meeting in Washington has been shortened from four days to two days to limit the expected violence. The irony is that NGOs will lose out in terms of being given access to discuss their agenda. The World Bank has stated that there is “ a loss of time for dialogue”. Likewise the WTO have said that they will reduce the number of NGO delegates allowed to attend their Doha summit in November. The rioters are ensuring peaceful protesters lose out on all fronts – dialogue and access to the decision makers and their only gain is terrible publicity.

Proposal 3

A new dialogue is needed through a review of existing international financial institutions and their structures with full and active public consultation. This would help take the heat out of the growing anger that nobody is listening. But that review has to be meaningful and demonstrative that governments are prepared to make changes to the IMF/World Bank Group and the WTO. Developing nations should be persuaded to allow all general IFI and WTO meetings to be open to the press and public.

Fighting Poverty

Creating prosperity through reform of developing nations’ economies is the way forward. The suggestion that lower tariffs and a reduction in red tape can help increase trade between nations is quite correct. Can it help the world’s poor? Yes in theory but the present monolithic and inflexible systems in the IMF/World Bank Group and WTO will continue to fail to deliver rapid improvements for the environment and poor. The priority of keeping creditors happy to the detriment of the poor flies in the face of the rhetoric espoused by the international financial institutions. To be fair it is the nation state members who collectively allow the status quo to prevail.

The World Bank Group has agreed to relieve debt burdens through the Heavily Indebted Poor Countries (HIPC) Initiative of 1996. Yet to qualify for HIPC a country has to agree to two IMF designed Structural Adjustment Programmes (SAP). Each SAP lasts three years before multilateral debt relief is granted. SAPs enforce cuts that impact upon health care, food subsidies and education. Short term pain for a long term gain? The World Bank Group boasts of loaning US $16billion every year to poor countries. Can you justify diminishing a child’s schooling or increasing their chances of dying through reduced health care so that the IMF “provides incentives to countries for early repayment of their debts”?

12 million children die of preventable diseases each year half of whom die of malnutrition.
UNICEF, 1998

Jubilee Movement International in their recent report have argued that the HIPC debts are unsustainable “if realistic projections for economic growth and commodity prices are used, instead of the World Bank/IMF’s over-optimistic economic growth and inflated commodity price projections”. It has not provided, as the President of the World Bank promised at its launch, “an exit from debt problems and a release of substantial new resources for poverty reduction.”

JMI calls for a new arrangement of standstill debt serving which is unsustainable allowing the individual country to retain sovereignty over its financial affairs for a period of time to allow rescheduling and adjudication by an independent panel of experts, unconnected with the creditors. If they judge the debt to be unsustainable it should be cancelled to give that country every opportunity to finally get ahead. This suggestion is backed by the United Nations Conference on Trade & Development (UNCTAD) report 2001. UNCTAD argues that “since standstills and exchange controls need to be imposed and implemented rapidly, the decision should rest with the country concerned, subject to a subsequent review by an international body.”

To tackle the problem of child labour and improving labour standards the International Labour Organisation has to not just report on the problems but have the backing of member states to name and shame and set out more radical ways to alleviate the abuses.

Proposal 4

Jubilee have called for the whole system should be scrapped as failing to deliver real change to the poorest nations. It is time to set up a new independent and transparent process that cancels existing debts and allows a fair system of financial support to replace it.

Proposal 5

Beef up the ILO into a global organisation with funding and teeth to improve labour standards.

A Green Future

The WTO lists ten benefits of its existence including promoting peace, cutting the cost of living, providing more choice, raising incomes, making life more efficient and encouraging good government. The environment is not one of them. It is a trade organisation and falls back on the argument that environmental standards can be used as protectionist measures to deny countries access to markets. Sustainable development is mentioned in the preamble to the Agreement Establishing the WTO, but there is a chasm between environmentalists and the international financial institutions over what the priorities should be.

Likewise the World Bank Group on its website says it emphasises the need to protect the environment. It has even gone so far as to produce a new green strategy for the future. The strategy is long on warm words about a sustainable future but the result is slow progress in environmental benefits.

The Bonn Accord and other Multilateral Environmental Agreements (MEAs) demonstrate the enormous problems of trying to gain agreements. The few successes of the current system include the Montreal Protocol on CFCs, the Basel Convention on hazardous waste and the Convention on International Trade in Endangered Species (CITES). However, without a permanent organisation to act as a broker between nation states it is left to patching together important agreements in a few days between nation state ministers and civil servants. For such incredibly far reaching consequences for the planet it is no way to do ‘green business’.

Proposal 6

At Genoa, the G8 leaders backed a Russian proposal to convene a global climate change conference in 2003. That conference could launch a new World Environment Organisation with a permanent secretariat and binding rules for member states.

Radical Reform to Restore Democracy

Elected politicians and democratic parliaments should be the decision makers who are both accountable and accessible. There is a danger that corporations and lobby groups are fast becoming too influential and powerful.

Politicians and business leaders should grasp the nettle and see that they need to make themselves more accessible and accountable. When it takes the same time for British Members of Parliament to cast a single vote in the House of Commons (20 minutes) as it does to set up an email account and website, there is a real danger that the opportunity to restore confidence in our democracy is passing by. Record low turnouts in the USA Presidential and British General Elections are an ominous sign that time is running out.

Particularly a down turn in the global economy will produce more unemployed and less growth for developing nations. There is undoubtedly a worry that at that point the protests will grow and business will face a wave of demand for change. If the international business community has an opportunity to work with politicians and create a new world order of rooting out the causes of the protests it needs to take it quickly. Ultimately it will benefit from finding a new moral conscience. Either way Governments should unite to legislate and force businesses and the international financial and trade institutions to adopt radical reform.

In a customer driven society politicians need to understand that they are being left behind with particularly young people wanting to see fast action using the latest technology. There will always be an element in society that take direct and sometimes violent action. Many people from time to time will demonstrate on the streets, BUT we need to prove to the mainstream opinion that elected politicians and a healthy democracy through parliaments are the fairest and most effective way to change things.

Proposal 7

By taking the lead elected politicians can demonstrate that it is they who are in charge and fully accountable for global decisions. But it will take a combination of better consultation, a greater responsiveness to people’s demands and new structures to cast votes more simply.

Summary - An Agenda for Real Change

In the 21st century governments need take the lead in transforming the globalisation of the planet. Corporations should not be forcing change for profit but rather elected politicians should be demanding radical reform to improve the quality of life.

  1. A new global forum for dialogue between IFIs and NGOs
  2. Scrap glittering summits and introduce transparent regular conferences reporting from and to national parliaments.
  3. Set up a new review of IFIs and WTO structures.
  4. Cancel unsustainable debts to developing nations and create a new independent financing process.
  5. Beef up the International Labour Organisation with binding standards and rules
  6. Create a new World Environment Organisation
  7. Overhauling democratic structures using the latest technology to consult more quickly and get in touch with people’s wishes.

References

Global Shift - by Peter Dicken, 1999

House of Commons Library briefings, London, June/July/August 2001

IMF – Financing the Funds Operations, April 2001

The Globalisation of Poverty - by Michel Chossudovsky, 2000

United Nations Conference on Trade & Development report 2001

World Bank – Environment Strategy, July 2001

WTO – Trading into the future, April 2001

WTO – WTO Policy issues for Parliamentarians, May 2001

www.jubilee2000uk.org

www.savethechildren.org.uk

www.jubileedebtcampaign.org.uk

Year Book of International Organisation 2000 - 2001