Latest update May 6th, 2024 12:59 AM
Feb 22, 2009 Features / Columnists, Ravi Dev
There was a time when to criticise the IMF and World Bank, either for their policies or their modus operandi, was to be immediately classified as “radicals” or “communists” or worse. Remember Burnham and Jagan in the 70s and 80s?
Formed after WWII to ostensibly ensure that the global trade and financial architecture would not collapse ignominiously as it did in the 1930s, (and to assist in the development of the poorer nations), critics claimed that they and their affiliate International Financial Institutions (IFIs) actually worked to further the interests of the US and Europe, which effectively controlled them.
But in the intervening decades, as the evidence has piled up – not necessarily the incontrovertible observation that the poorer countries always came out poorer after the ministrations of the IFIs, but moreso from the periodic slumps of the “developed ones – the acknowledgement that the IFIs must be “reformed” spread even into “mainstream” thinking.
Last November, as it became apparent that the financial meltdown in the financial sector of the developed economies could bring down not only their real economies but the entire edifice, President Bush hurriedly expanded the old, cosy G-8 club into G-20 and convened a meeting in Washington. Their final communiqué was unusually detailed – and candid – about the IFIs: “We are committed to advancing the reform of the Bretton Woods Institutions (IFIs) so that they can more adequately reflect changing economic weights in the world economy in order to increase their legitimacy and effectiveness. In this respect, emerging and developing economies, including the poorest countries, should have greater voice and representation.”
Words like “legitimacy”, “effectiveness” and “including poorest countries” from the old guard? Why? What was the world coming to? It would appear that the threat of the whole house of cards crashing ignominiously into the ground had focused some reluctant minds wonderfully. Had they at last seen the wisdom of the old aphorism that if they didn’t hang together in this moment of crisis they would all hang separately? Well, the proof of the pudding, as they say, is in the eating.
The G-20 communiqué was also unusual in that it contained timelines for the Ministers to accomplish specified tasks and set the date for a follow-up meeting – eventually April 2nd, 2009 – in London for reviewing progress. This gives us an opportunity to evaluate how far the promises of a new dispensation will go.
In all the macro-institutions that came out of Bretton Woods, the WTO (succeeding GATT) has been the most open and democratic – not that it has not been subjected to arm-twisting by the old vested interests. But with its almost universal membership, it does present the greatest opportunity for the poor and the powerless – like Guyana – to maybe have a say in defining the rules of the game we are forced to play. With the latest Round (Doha) explicitly dedicated to development, the skirmishing by the developed nations for over seven years to stymie reform that would lead to a more level playing field for poorer countries had left many of our leaders very cynical of any real progress soon.
However, the G-20 communiqué, in its section “Commitment to an Open Global Economy” promised “We underscore the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty. In this regard, within the next 12 months, we will refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports. Further, we shall strive to reach agreement this year (2008) on modalities that lead to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. We instruct our Trade Ministers to achieve this objective and stand ready to assist directly, as necessary.”
Here was an opportunity to see if the “big ones” were willing to put their money where their mouths were. And with the expansion of G-8 to G-20, we could also get a hint as to whether India and China, which had stood firm over the interests of developing countries’ farmers, could exert any real pressure “from within”.
Very sadly, 2008 came and went but there was no “conclusion to the Doha Development Agenda”, much less “an ambitious and balanced outcome”. We are still up in the air as to whether the subsidies of the developed countries will ever be removed or whether they can unrestrictedly continue to flood our markets with their subsidised goods, even if it means destruction of our farming base.
So what is a poor country like ours to think about the promised reforms that would give us a fairer shake at securing funding from the IFIs for our development plans bereft of the straightjacket of growth-inhibiting conditionalities? More cynicism? But not only have they not kept their promise on Doha, which, one may say, was not in their interest.
On the issue of protectionism, which every one of their experts has assured them is the surest way to torpedo any chance of a global recovery – including their own in the longer term – even the new administration of President Obama, from whom “change” had been expected, has faltered. The US introduced a “Buy American” clause in its stimulus package which is sure to provoke retaliation in its trading partners.
Back in 1930, on the cusp of the Great Depression, Keynes, the future architect of the Bretton Woods IFIs, wrote in his “Economic Possibilities For Our Grandchildren: “But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not.
Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.”
So maybe we have a further twenty-one years of waiting for “daylight”.
GRA catch EXXON trying to hunch GUYANA over 11 BUS dollars in one shot!!!!
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