Red
ink holds UN trade challenge at
bay By Vijay Prashad
The United Nations Conference on Trade and
Development (UNCTAD) started its 13th conference
at the weekend in Doha, Qatar. Delegates walking
around the convention center had to negotiate a
10-meter Louise Bourgeois statue of a spider, a
fitting image for a meeting where powerful
countries have begun to spin their webs into which
will tumble the unwitting.
While panels on
investment opportunities took place in the open
spaces of the conference, in the back rooms
negotiations continued apace. Red pens scrawled
over the "President's suggested distilled
negotiation text", continuing the fights that
began in Geneva. A leaked draft of the text gives
us a good sense
of the stakes at Doha.
Since it would be inefficient for the 194
member states to negotiate a document such as this
individually, the UNCTAD body is divided into a
series of negotiating blocs. The largest group is
the Group of 77 (G-77) + China, which represents
132 countries. By sheer heft, the G-77 + China
should be the most powerful bloc, but it is not.
The most powerful is Group B, which
represents the states of the North Atlantic and
its allies. In the negotiating process, Group B
divides into two sections: the European Union (EU)
and the JUSSCANNZ group (which comprises Japan,
the United States, Switzerland, Canada, Australia,
Norway and New Zealand). At UNCTAD, the JUSSCANNZ
Group (abbreviated as JZ) is the most engaged
grouping. Switzerland's ambassador to the UNCTAD
seems to have taken on the role of group leader.
The most common comment on the leaked text
is the following phrase "JZ delete". The red pen
of the JZ delegation flashed across the
"consensus" document, mainly fighting back against
the G-77's attempt to bring matters of finance,
commodity prices and hunger onto the agenda.
One of the special sentences deleted by
the JZ group is this, "Securing access to food -
one of the most basic human needs - is a priority
(JZ delete)." Another that the European Union
deleted after the G-77 + China added it in was
that people have the right to "medicine at
affordable prices (G-77) {EU delete}".
The
main differences between the G-77 + China and the
JZ/EU groupings is evident in two areas: (1) the
role of the state in development, (2) the question
of financial regulation.
The State. Buried
in the Accra Accord (the final document of UNCTAD
XII in 2008) is an indication of the philosophical
difference between the South and the North on
state policy and development. The North prefers
the "market" as the conductor of social affairs.
The South is keen on State intervention to frame
the market's operations.
"Developing
countries," the Accra Accord noted,"should pursue
development strategies that are compatible with
their specific conditions within the framework of
an enabling State." This "enabling state" is to
deploy "its administrative and political means for
the task of economic development, efficiently
focusing human and financial resources".
At Doha, the negotiators are at work
debating the adjective to qualify the state: the
G-77 + China and the UNCTAD chair prefer the Accra
term, "enabling", while the JZ and EU want
"effective". From the JZ we get, "An effective
State, working with private, non-profit and other
stakeholders, can help forge a coherent
development strategy and provide the right
enabling environment for productive economic
activity."
The "effective state" is one
that follows the World Bank's dictum of "Good
Governance" - a bureaucratic entity with a legal
foundation that is compatible with the "business
civilization" of our era. When the G-77 + China
added the fragment, "The State has an important
role to play," we got the red ink, "JZ delete".
The state could not enable or play an important
role. It was to be a conduit for the
"stakeholders", not citizens or workers, but the
"private" sector (with "private" a polite word for
"corporate").
Finance. The
JZ group clears the first paragraph of the
statement, which is essentially verbiage, and then
cuts the next five paragraphs. The red line runs
through any consideration of finance, hunger,
energy and climate change. The finance paragraph
suggests that no development-centered
globalization can take place unless we "reconnect
finance with the real economy". This is heresy to
the advocates of finance-driven globalization.
Later in the text, the squabbles persist.
The G-77 + China propose mechanisms to regulate
and supervise financial markets and to allow
"fiscal space" for states to "respond to the
global recession with countercyclical policies".
All this is cut by the JZ. All that is to remain
is this, "UNCTAD's activities should be delivered
within its core mandate, within its existing
capacities and resources, and without prejudice to
the work of other international organizations."
Mentioning the "other international
organizations", the JZ must have in mind the
International Monetary Fund (IMF).
The
IMF's current World Economic Outlook ("Growth
Resumes, Dangers Remain", April 2012) offers an
empirical assessment of the overleveraged and
toxic financial system but stops short of any call
for regulation.
"In many large economies,"
the IMF notes (p 21), "financial sectors became
bloated and overleveraged during the decade before
the financial crisis. Over time, shrinkage and
deleveraging are necessary steps to improving
system stability."
European banks will
have to conduct deleveraging operations for US$2.6
trillion over the next few years, with governments
and multilateral organizations willing to provide
all kinds of mechanisms to enable banks to restore
their balances. The enabling can take place to
help banks, but there will be no regulation of the
banks going forward (apart from the likelihood of
anemic leverage ratios). The UNCTAD draft does not
mention Europe.
The IMF report points out
that one of the great threats to the developing
world is the "volatile capital inflows", the hot
money that darts in and out of countries in search
of quick profits rather than with any concern for
investment toward development.
Certain
countries protected themselves from the worst
effects of the financial crisis by using
"macro-prudential measures designed to manage
capital inflows, such as taxes on certain inflows,
minimum holding periods, and currency-specific
requirements" (p 26). The IMF does not take an
adverse position on these policies and frameworks,
but sees them as playing "an important role in
ameliorating the impact of volatile capital flows
on financial stability".
Nothing of the
kind is being permitted in the UNCTAD draft. The
JZ Group struck down this common-sense statement,
"Adequate regulation and supervision of financial
markets, and debt management, can play important
roles with regard to crisis prevention and
resolution." An IMF subservient to the North is
allowed latitude to praise macro-prudential tools,
but these are not to be championed by UNCTAD.
The IMF report notes that over the past
decade commodity prices have risen by about
three-fold. Food and raw material prices have
reached near the peaks attained in the 1970s. The
IMF blames this rise on the entry of the "emerging
market economies", namely the BRICS (Brazil,
Russia, India, China, South Africa) and their
allied states over the past decade.
It is
likely that commodity prices will fall
precipitously as a result of slack demand over the
next few years. To curtail the volatility of
commodity prices, the IMF recommends
countercyclical policies (save during booms, spend
during downswings), reduction of public debt and
flexibility of exchange rates.
There is no
talk of the role of speculators in the commodity
markets. The UNCTAD statement entered this
discussion in a very muted way, "It is important
for policymakers to identify and implement
innovative and coherent policies at national,
regional and international levels to reduce the
volatility of commodity prices." The red pen came
out, and JZ deleted the sentence. There is to be
no link between hunger and financial domination of
commodity markets.
At the opening plenary,
UN deputy secretary general Asha-Rose Migiro read
out a statement from secretary general Ban
Ki-moon, who called upon UNCTAD XIII to set the
"foundations of the post-crisis development
consensus." "Much is at stake," Ban said.
Indeed this is true, but there is a long
way to go before a "consensus" can be reached with
"JZ delete" throwing red ink at the UNCTAD
document. No wonder that, on April 22, Sanya
Reid-Smith of the Third World Network took the JZ
and EU delegates to task for retreating from their
prior commitments. And no wonder that Ambassador
Omar Hilale of Morocco promised that the G-77
would stand firm and produce a strong outcome by
April 25, despite the shenanigans of the JZ group.
Vijay Prashad is Professor and
Director of International Studies at Trinity
College, Hartford, United States. This spring he
will publish two books: Arab Spring, Libyan
Winter (AK Press) and Uncle Swami: South
Asians in America Today (New Press). He is the
author of Darker Nations: A People's History
of the Third World (New Press), which won the
2009 Muzaffar Ahmed Book Prize.
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