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Gas: to export or not to export
Globalization and poverty reduction in Bangladesh: problems and promises
‘White man’s burden’ and the collapse of world trade negotiations
Paying the price of globalisation
Gas: to export or not to export
Moin Chisti
'To be or not to be, that is the question', so said Shakespeare. Here in Bangladesh should we or shouldn't we export gas has become a hot topic. Most people, however, are opposed to export because of the limited reserve. They feel that the precious natural resources should meet local demands first and for years to come. How much of this resource is at the moment ready for extraction and how many trillion cubic feet remain beneath the surface are yet to be accurately ascertained. Friends of Bangladesh including the former American envoy, John Holzman, would like to see this country prosper and reach, at least, a middle income level by exporting gas through pipeline to India. Such diplomatic pep talk may sound sweet to the ears but often tends to overlook the harsh realities on the ground. Pipeline gas export will necessitate the building up of physical infrastructure that would require billions of takas in investment and would take years to complete. Since neighbouring India, with a growing demand, is going to be the customer, regular export and supply may be at the cost of domestic need. The decision to export will, therefore, depend on discovering new reserves.
Unlike other exportable natural resources like jute, tea, tobacco or animal hides, gas can't be grown, recharged or recycled, There will come a time when the known reserve will be exhausted. The issue of export, consequently, has become a most sensitive matter. In fact the governments in Bangladesh have demonstrated extraordinary determination and maturity in handling the issue and withstanding all external and internal pressures. How much of this pressure is real and how much a figment of the press's imagination is yet to be known. Experts, of course, may differ on the issue but the fact is that Bangladesh must significantly increase its volume of export in order to strengthen its economy. As of today, if the statistics are reliable, the country has a balance of payment deficit with almost all trading partners, except, of course, its good friend the US. All efforts at balancing have had little effect. Cheaply produced merchandise from neighbouring countries, including China, are threatening to flood the market, which will create more yawning gaps if a free market policy has to be adhered to. The traditional tools in the hands of sovereign states such as the tariff and non-tariff barriers can no longer be used when the present trend is to open the borders. The world at the moment is bewildered and the developing countries, particularly, do not know how to ward off the negative effects of globalisation. Fierce competition, even among developing economies, prevents them from standing united against unfair trade practices that give clear advantages to the rich nations.
The marginalised small countries like Bangladesh face an uncertain future in the face of one-sided trade barriers erected by rich countries. The developed countries are ignoring all legitimate demands of the poor. Cancun is a recent example. Developing countries like Bangladesh have failed so far to extract benefits from such conferences as the Doha Rounds of WTO negotiations. The grim battle, in the meantime, to lift its population from abject poverty and significantly improve the quality of life of the teeming millions still remains unsuccessful. For Bangladeshi goods, traditional and non-traditional, to enter the world market and even the neighbouring countries in meaningful volumes will require negotiating strength derived from clouts both economic and political, which Bangladesh lacks at the moment. The continuity of the government is a necessary precondition for developing these clouts, as protracted and lengthy bargaining is required to derive benefits. What can Bangladesh do at the moment? Remain poor by letting go a golden opportunity to earn money by gas export and hold on to whatever reserve it has for future domestic use? Gas export will, however, provide tremendous economic means to the government to implement various poverty reduction schemes and programmes without having to look for outside help or assistance. The country may enter a new era of prosperity with people's per capita income rising steadily, kindling hopes of a prosperous future. There is, however, the dreaded possibility that the country may face the same consequences as Indonesia or Nigeria where billions were siphoned off by the corrupt rulers and their sycophants and by the purchase of luxury goods from abroad. Unnecessary spending cannot bring good to the people and they will continue to suffer in poverty, squalor and ignorance. There may come about, instead, a social upheaval uprooting the traditional family life and cherished values. Simple living is quickly replaced by vulgar consumerism. In fact the very fabric of a traditional society changes rapidly beyond recognition. All this, of course, may not happen if sufficient time is given to the government to build up social and physical infrastructure and make people aware of the pitfalls of consumerism. Time will also be needed to complete surveys to find out the actual reserve, to discover new fields and, most importantly, ensure the future of gas-based industries.
Natural gas is like a natural treasure and the people of Bangladesh alone possess the right to use it first. The money required for gigantic investments in the gas fields need not necessarily come from gas export alone. We are successfully progressing towards expanding our export base. I am sure we have enough talent, vision, skill and enlightened leadership to take this nation to its cherished goal.
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Globalization and poverty reduction in Bangladesh: problems and promises
Stephen C. Smith
As I visit Bangladesh I find that one of the biggest headlines has been the collapse of the World Trade Organisation (WTO) trade talks in Cancun, Mexico. I can’t help but wonder how these events are playing back home in Washington, where I teach. My main professional interest is in development and poverty reduction. The WTO is one of the main facilitators of globalization. So one is led to reflect, in a broader context, on the balance between the problems and promises of globalization, and in turn what they mean for the prospect of bringing to an end the extreme poverty in a country like Bangladesh. I can’t possibly give a full or even adequate answer to this question, but I can raise some issues that, while perhaps well known, are so important that I hope I can be forgiven for raising them anew.
Globalization is a much overused word. It has been discussed in terms of cultural influences, such as Ronald McDonald and Arnold Schwarzenegger in Kolkata as well as California. Thus globalization refers also to an emerging “global culture”, in which people more often consume similar goods and services across countries, and use a common language of business, English; these changes can facilitate economic integration, and in turn are further promoted by it. But I want to focus on its economic aspects, in which as the form of the word implies, globalization is a process, by which the economies of the world become increasingly integrated, so that countries such as Bangladesh are becoming increasingly integrated with the rest of the world. The end result could be the virtual negation of national borders as a business barrier. This includes not only international trade, and international finance, but thirdly the emerging global factory, as the production of a firm, even of a single one of its products, takes place in many parts of the world. Fourth, it means the free flow of productive ideas, which is potentially far more important than the conventional economic flows in stimulating growth. When the “dam” of economic barriers between Hong Kong and Guangdong Province in China broke in 1978, a flood of capital flowed across the border; but what impressed me the most in my visit there, was the continuing flood of ideas across the border. It seems that with the ideas being available, the capital can be found. Fifth and finally, the term suggests the globalization of economic institutions, which, in the framework of Nobel Laureate Douglass North, means the “rules of the game” of economic exchange.
While globalization affects everyone in the world, so far it seems more visible in the developed countries. One result is a widening inequality of incomes in my own country, as the highly educated gain from globalization, but the unskilled face competition from workers in the developing world. This has led to some political conflict, but it has so far remained quite orderly. Yet there is no doubt that globalization can in many ways have a greater impact on people in developing countries. By most conventional measures the developing regions that have been most fully engaged in globalization have greatly benefited. Again the best examples are found in East Asia, most recently in the spectacular growth observed in China since 1978, where the incidence of extreme poverty has also fallen sharply. Since 1991, India has begun to follow in this path, though less spectacularly. Bangladesh has great potential to grow along with India, and of course the performance of Bangladesh has been relatively good compared with the dismal performance of most low-income countries, particularly in Africa. But poor countries face some significant obstacles to benefiting from globalization, and in some respects the majority in Bangladesh seem to be poised precariously between these two possibilities: gaining from the promise of globalization, or finding themselves left further behind.
Indeed, when we talk about globalization we need to keep foremost in mind the problems of global poverty as well as the promise of global affluence. I mean promises in two senses. Yes, globalization does hold out the promise, meaning the hopeful prospect, the possibility or the potential, of making new inroads in the struggle against extreme poverty. But I also use the word in the sense that promises have been made, in the sense of an affirmation or even a guarantee, that if developing countries agree to globalize, then poverty can be defeated. So, is the optimism justified? As a preview, the answer is “yes, but...” Yes globalization can help, but it is not sufficient, and it must be undertaken carefully — the market alone cannot guarantee a favourable outcome. There is an important role both for honest and competent government, and for the type of committed and effective NGO that Bangladesh is famous for worldwide, to facilitate and calibrate this process for the best outcome.
In the international context, the “rules of the game” have been largely promulgated through the IMF and World Bank, especially concerning portfolio loan and aid flows. It is difficult to explain succinctly in one paragraph the World Bank and IMF vision of how globalization can reduce, if not end, global poverty. It is not just that the two IFIs differ in a number of respects. As I tell my students, the term “World Bank” itself should not be used as a singular noun. They have about 10,000 professional staff, and many of them disagree vehemently with each other, and with official Bank policy, though often only in private, because as in many large bureaucracies there tends to be a certain level of “group think”. In any case, in a nutshell the belief is that a fully integrated, market-based, free-trading international economy operating under commonly agreed and adhered to rules for trade and investment, should make economies everywhere more efficient and productive, and hence richer. Economic theory and evidence indicates that the greater extent of the market, the greater the opportunities for the division of labour, which in turn is the source of gains in efficiency, both directly and indirectly through the increased incentive to innovate and invest. The larger the market that can be sold to, the greater the gains from trade and the division of labour. The view is that with globalization, there would be an increased demand for labour of the poor in the developing countries, as they face higher demand for their labour-intensive products. And in any case, as the upper and middle classes of the developing economies become more affluent, some of this income will trickle down to the poorest of the poor, one way or another, even if only through redistribution of income.
There are important nuances to this strong form of the argument. I find that in the World Bank there has been in recent years a growing acceptance that active and well-designed poverty programmes are needed as well, and that the poor cannot be employed in the global economy if they are too uneducated and unhealthy. This view was popular in the 1970s, went completely out of fashion through the 1980s, and slowly came back into acceptance through the 1990s. Moreover, as an over-indebted country by definition cannot grow out of its debt, if the government has to pay most of its discretionary income to debt service, it won’t be able to support health and education investments. Indeed, that is the idea behind the poverty reduction strategy papers (PRSPs) and the highly indebted poor countries’ (HIPC) debt reduction process (though for Africa and some countries elsewhere, the amounts of debt relief being talked about are generally too little to make any sort of transformative difference). There is a glimmering of understanding at the Bank, not very sharp, that sometimes local elites prefer that the poor stay poor, to maintain their own power and command over cheap labour, and will act to keep this situation going. By and large, there is the sense that while globalization may not be sufficient for poverty reduction, it is probably necessary, because that is the only way to guarantee continued growth in the 21st century for most countries.
However, globalization does raise some troubling concerns. There is a legitimate worry that inequalities may be accentuated both across and within countries. Extreme inequality is not only distasteful, but the evidence is that it can be economically harmful as well. For example, the greater the inequality, for a given average income, the larger the fraction of the population who are likely to face credit constraints, and this in turn can retard growth. Indeed, the evidence is that, other things being equal, on average low-inequality countries grow faster than high-inequality countries. Moreover, there is the reasonable concern that environmental degradation may be accelerated in a race to the bottom of global competition, and that in turn may lock the country into a worse poverty trap than it started in. Finally there is the justifiable apprehension that the international dominance of the richest countries may be expanded and locked in, and that some peoples and regions may be left behind. Certainly, some of these concerns have been greatly exaggerated, but they represent legitimate issues that need to be addressed. Yet it is also under-appreciated that by providing for many types of interactions with people in developed countries, poor countries can also potentially benefit directly and indirectly from globalization, through scientific and technological exchanges as well as business. My personal observations confirm my reading of the formal literature, that it is productive ideas that matter most. With good ideas, capital will usually follow, along with opportunities for trade — at least given some very basic prerequisites such as keeping corruption in check and preventing civil conflicts from boiling over.
In 1995, a new player came onto the scene, the WTO, which more than its predecessor (GATT) is also playing a role in establishing the rules of the game. Up to now, the benefits of the WTO have not been equally distributed. And despite the great pressures for reform on the developing countries, protectionism on the part of developed countries continues unchecked. The damage from trade protectionism tends to fall most heavily on the poorest developing countries. Developed country protection focusses on agriculture and the basic manufactured products such as textiles. As I write this article, I find that the headline in the papers here is a move by shrimp companies in America to push for anti-dumping action against Bangladesh. Such anti-dumping actions have risen significantly in recent years. In fact there has been immense damage done to developing countries by often unwarranted anti-dumping actions and other more traditional forms of protectionism. The UN recently estimated that the cost of protection to developing countries may exceed $100 billion per year. In comparison, the scope of foreign aid may be likened to a small bandage on a large wound inflicted by protectionism.
This reality of course helps explain the vehemence of the developing countries’ reaction at Cancun. The developing countries did a good job of standing up for some matters of principle, such as against agricultural subsidies and barriers that prevent developing countries from exporting goods in which they have a natural advantage. Yet even if out of the recent debacle in Cancun comes a sweeping improvement, there are still limits as concerns poverty reduction. Fixing the biases in international institutions would help to ensure that globalization is unambiguously good for developing countries. But it would still not be good enough to ensure an end to extreme poverty.
International agreements are still needed to level the globalization playing field as it affects the poor. Some of this involves international change, some national change that can be facilitated by the international community. For example, to effectively prevent propping up corrupt governments and violent and exploitative rebels that stay in power through international trade, in legal goods such as diamonds (mined with slave labour) as well as illegal goods such as narcotics. Codes of conduct for multinational corporations, regarding political and other behaviour, will need to be developed further. And further reasonable limits on the applicability of international property rights will have to be agreed to, such as medicines in the case of life-threatening emergencies in poor countries that cannot afford to pay monopoly rents, prices far exceeding production costs. Direct foreign investment by multi-national corporations (MNC) contributes to development, and indeed plays a vital role, as the headline concerns about a pull-out of multinational oil and gas concerns from Bangladesh in recent days shows is well understood. In addition, a country also eventually needs its own MNCs, or at the very least the conditions capable of inducing international firms to treat their country as a home base, to fully develop.
As Jeff Sachs has noted, it is difficult to see how globalization per se can overcome some of the most punishing geographic constraints on development. The most important example may be tropical parasites and diseases for which the major pharmaceutical companies have low incentives to find a cure. Foundation research grants and donor funds for community mobilisation can play an important role in addressing these health problems. Another problem of course is very low developing country agriculture productivity, particularly in tropical areas such as Bangladesh, for which techniques developed in the temperate regions cannot be readily transferred. Here again there is low incentive for companies from the developed world to innovate, because they have a limited market at home. And once again, foundation grants to research universities, the CGIAR system, and other organisations, are needed. The innovations needed are by no means an automatic consequence of globalization.
Clearly, another issue is very rapid population growth, which creates a footrace between resources available and resources needed, and ultimately challenges carrying capacity and threatens ecological collapse, as indeed looms in parts of the Sahel. Desertification and other forms of environmental degradation and pressures threaten to make growth unsustainable, and to make the cost of clean-up and ecological restoration unattainable.
And of course without the resources for a decent quality primary education, it is almost impossible for the rural poor to participate in the fruits of globalization. Simply putting more children onto the enrolment books will make a country look better on the international tables but does nothing concrete to help. Students need to attend, the teachers cannot be truant, and minimum quality is needed to prevent functional illiteracy from the point of view of modernising workplaces. Some research by Nancy Birdsall and others has shown that it is school quality that matters more than school quantity.
To unlock the poverty trap in which the poor find themselves, they need what I call the “keys to capability”. The credit for the underlying framework goes to a native son of this region, the Nobel Laureate Amartya Sen, though the blame for any misapplication goes to me. To escape from poverty you need the possibility, the freedom, to take the needed steps. The keys, ultimately, are about the freedoms they bestow: Sen’s working out of the concept of development as freedom would alone have made him deserving of his Nobel Prize. In providing various kinds of freedom, the keys are intrinsically valuable, a direct part of what is meant by human development. They are also means to the end of increasing income, thus helping to secure an escape from poverty that is resilient to the many shocks people face in life, and so are sustainable in the long run.
As I frame it in my forthcoming book, Ending Global Poverty, there are eight keys to capability (other equally valid schemes are possible of course). First is health and nutrition for adults to be able to work and take control of their lives, and children to grow to their potential. Second, a basic education to be able to take advantage of opportunities, such as those opened up by globalization. Third, the skills and means to access and use new knowledge and technologies. Fourth, basic insurance, and credit for working capital, family emergencies (“consumption smoothing”) and other needs. Fifth, a non-degraded and stable environment. Sixth, access to functioning markets with opportunities to acquire and securely hold productive resources including land. Seventh, freedom from coercive exploitation and psychological terror. And eighth, full participation as a member of an empowered community.
It should be obvious that few, if any, of the keys to capability will be automatically supplied by the process of globalization itself. But all of the keys will help unlock the potential for the poor to participate in its benefits.
The poor, and particularly the ultra-poor, in Bangladesh suffer a deficiency of all of these requirements. But I have been much encouraged by the progress I have seen in my BRAC visits, and more generally, I remain optimistic about the future of Bangladesh. In my visit here I have seen NGOs, particularly BRAC, working to fashion each of these keys. I am featuring several BRAC programmes in my book as a result of a series of “screening procedures” that I used for including programmes. Complex, knotted problems generally call for integrated solutions, which I have seen in BRAC these past couple of weeks, not only in the areas surrounding Dhaka, and in the north-east of the country, but also in the north-west, in the Nilphamari area, in its “targeting the ultra-poor” programmes, from which I have just returned from three days of field visits. The rest of the developing world has already learned much from Bangladesh, particularly in the field of micro-finance, but also in fields such as non-formal primary education. More research and evaluation is needed, but it seems to me that the world still has much more to learn from Bangladesh’s NGO experience, particularly BRAC’s ultra-poor programmes, which are addressing several of the keys to capability in an integrated way. This is important because studies from around the developing world, not just Bangladesh, show that to date, it has been mainly the moderately poor rather than the ultra-poor who have benefited from development and from poverty programmes. The world can also learn from innovations in other BRAC programmes and in other important NGOs such as Grameen and ASA. While in future years I hope Bangladesh develops many more innovative exports, from the standpoint of human development no “export” will prove more important than the international diffusion of the ideas developed by its home-grown NGOs.
All of this leaves a large agenda. There is much more innovating and learning to be done, and far more resources will be needed. Funds are needed to evaluate programmes using randomised trials and otherwise with greater rigour than Bangladeshi programmes have been generally subject to (or most of the rest of the world for that matter). Resources are needed to scale up the programmes we find to be effective. Bangladeshi NGOs, including BRAC, ASA, and Grameen, have shown an extraordinary ability to scale up programmes that is yet to be matched anywhere else in the developing world, in my experience. But reaching truly national scale will require NGOs and government to work together more closely. I have not studied government here, and in any case that is not my field. I do not know whether to believe the international corruption rankings that put Bangladesh at or near the very top in this unfortunate category. So much in the way of development progress is working reasonably well here, compared to what I have seen in Africa and the Andes, that the suggestion may be that governance is not quite the be all and end all of growth prospects in globalization that some publications of the World Bank have made out. But clearly, there is enormous need for improvement in governmental functioning here, and lessening of corruption. From my viewpoint the fight against corruption is part of the fight against poverty, because studies clearly show that, as a percentage of family or micro-enterprise income, the burden of corruption on the poor is much higher than on that of the non-poor.
Some of the problems lie beyond the control of any one country. Global warming and rising sea levels threaten Bangladesh, a problem not of the country’s own making (which sadly, my own country has had no small part in, and in which the current administration will accept little or no responsibility).
But the government also has a vital role to play. I believe there is much that the government can learn from NGOs here in Bangladesh, even as the NGOs need the government to help them reach the scale and scope needed for a more universal impact on poverty. Government programmes, from education, health and environmental protection, to protection of legal rights of women and other poor people, to agriculture and micro-finance, can all be improved by adopting some of the lessons learned in BRAC and other NGO programmes. I have been encouraged by what I have observed in the budding partnership between BRAC and the government in the vital field of education.
In sum I believe that globalization is helpful but by itself insufficient to address problems of poverty; but that by directly working to reduce poverty Bangladesh will also increase its ability to reap some of the promises of globalization; and that NGOs will continue to have a vital role to play in the coming years.
Stephen Smith is Professor of Economics at George Washington University in Washington DC, USA; he is co-author, with Michael Todaro, of Economic Development, 8th Ed., Pearson, 2003.
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‘White man’s burden’ and the collapse of world trade negotiations
Chowdhury Irad Ahmed Siddiky
One hundred years ago, the famous English author Rudyard Kipling wrote his poem, “White Man’s Burden.” The British Empire spanned the globe and the United States had just joined the ranks of global imperialist powers with its conquest of the Philippines. Today, the US is the world’s lone super power. New York Times writer Thomas L. Friedman celebrates that power in an article in the March 28th issue of the New York Times Magazine. Published exactly 100 years after Kipling’s poem, the headline reads, “…the emerging global order demands an enforcer. That’s America’s burden.”
What was Kipling’s burden, and what is Friedman’s? Kipling wrote, “Take up the White Man’s burden… To serve your captive’s need… To veil the threat of terror… to seek another’s profit.” In other words, imperialism would selflessly bring peace and civilisation to the ungrateful non-white peoples of the world, who Kipling called the “new-caught sullen peoples, half devil and half child.” Friedman, much like Kipling, also writes, “from Tehran to Paris, from Indonesia to Russia, the US is called the capital of global arrogance, and that resentment of America is on the rise globally. But that’s the price ‘we’ pay for global leadership.” Today, America and the western world’s new burden, as described by Friedman, sounds suspiciously like Kipling’s “White Man’s Burden.” His message is for the “English-speaking and Teutonic peoples” to rule over Kipling’s “lesser breed without the law” in fulfilment of their divine mission, the “White Man’s Burden.” The divine responsibility of this burden seems to have been passed from Pax Romana to Pax Americana through Pax Britannica.
Nation-states are not isolated political entities but are part of a global economic system with numerous different players in competition with one another. There is the world trading system organised under the World Trade Organisation (WTO), governing world trade in legal products. There is the capital system comprising the genuine movements of capital. There is the currency system permitting trade, capital movements and the much larger speculative movements. There are illegal trading systems, notably in drugs. There is the big trade in arms, both legal and illegal, ranging from the weapons of mass destruction to the light weapons and ammunition, which play such a central role in today’s violence. The agents or players involved in these systems are numerous. Though they include nation-states, they also include directly economic players from multi-nations to small traders (legal and illegal), the players in the currency markets, the IMF, the World Bank and all those who pontificate on the world economy such as us.
An economy is a comprehensive and complex entity of which trade is only one sector. “Trade is a social act,” wrote the famous English classical economist John Stuart Mill in his essay “On Liberty.” Yet nowadays, neo-liberal economists and policymakers tend to view trade as the economy itself, downplaying the importance of the public sector and other non-market social sectors of the economy. Prior to the coming of capitalistic industrialisation, the market played only a minor part in the economic life of societies. Even where market places could be seen to be operating, they were peripheral to the main economic organisation and activity of society. In modern market economies, the needs of the market determine the social behaviour of individuals, whereas in pre-industrial, underdeveloped and primitive economies, the needs of society at large determined the economic behaviour of individuals.
After World War II, the United Kingdom and the United States submitted proposals to the Economic and Social Council (ECOSOC) of the United Nations regarding the establishment of an international trade body that was to be named the International Trade Organisation (ITO). ECOSOC convened a conference, the United Nations Conference on Trade and Employment, in 1946 to consider the UK and US proposals. A preparatory committee drafted the ITO Charter and it was approved in 1948 at the conference in Havana, Cuba. The charter is often referred to as the Havana Charter or the ITO Charter. The first round of trade negotiations took place while the preparatory committee was still working on drafting the charter because the participants were anxious to begin the process of trade liberalisation as soon as possible. Their results were incorporated into the General Agreement, which was signed in 1947.
The General Agreement on Tariffs and Trade, known as the GATT, is one-third of the Bretton Woods system that was created after World War II to ensure a stable trade and economic world environment. The International Monetary Fund (IMF) and the World Bank are the other two bodies of the Bretton Woods system. While often referred to as an international organisation, the GATT had a “de facto” role as an international organisation before the creation of the World Trade Organisation. Since the original signatory nations expected the GATT to become part of the more permanent ITO Charter, the text of the GATT contained very little “institutional” structure. This deliberate lack of detail within the agreement had created increasing difficulties as membership and roles of so many of the world’s post-colonial nations had grown in GATT that was governing world trade in an unjust and imperial manner. The WTO was established on January 1, 1995 by the Final Act of the Uruguay Round of negotiations. It was the same stale wine of mercantilism served in a new bottle, the WTO.
Pax Americana
During the Cold War, opening the rest of the world’s markets had to be balanced against containing communism. With the end of the Cold War, “The successor to a doctrine of containment must be a strategy of enlargement, enlargement of the world’s free community of market democracies”, declared US national security advisor Anthony Lake. In less than a decade, the strategic global doctrine of pre-emptive strikes was introduced by President George W. Bush, that for the first time justified a pre-emptive US strike against any regime thought to possess weapons of mass destruction or made a mockery of the war on terrorism. The introduction of this latest doctrine of pre-emption added a new dimension of coercion to the already existing US foreign policy of enlargement. Enlargement with pre-emptive coercion based on imagined imminent threat to US political and economic security created a new world order based on compliance to US hegemony. The multilateral economic organisations, above all the IMF and the World Bank, are important vehicles of the enlargement strategy. But here the US faces a dilemma.
On the one hand, it wishes to control these organisations so that they promote US foreign policy objectives. Therefore it has to ensure that appointment procedures yield people at the top of the organisations who will in turn ensure that the organisations explain to the world why all benefit from free markets in the longer run and why alternative institutional arrangements are not viable. Or at least the people in prominent positions within them who say contrary things can be silenced or got rid of.
On the other hand, the more overtly the US controls the organisations and the more it is seen to intervene in ways that violate the rules of multilateral decision-making, the more they lose the legitimacy of multilateralism and the less effectively they can achieve certain kinds of US objectives. The US has to structure and operate within organisations in a way that looks as though the multilateral organisations like the UN, the IMF and the World Bank act in accordance with rules decided by the collective of member governments rather than according to US discretionary judgements. The strategy of pre-emptive coercion based on any elusive but imminent threat makes that task difficult, if not impossible.
This point can be made more generally. “The supremacy of a social group manifests itself in two ways,” Antonio Gramsci proposed, “as ‘domination’ and as ‘intellectual and moral leadership’… A social group dominates antagonistic groups, which it tends to ‘liquidate’, or subjugate perhaps even by armed force; it leads to kindred or allied groups.” Hegemony, Gramsci said, is the additional power, beyond domination, that accrues to a dominant group by its convincing subordinate groups that its rule serves not only its own interests but also those of the subordinate groups. In other words, hegemony is soft power, the ability to make others want the same thing as yourself, as distinct from hard power, the ability to force others to give you what you want.
The strategic US foreign policy of “Either you are with us or against us” shifted the nature of US hegemony from soft power to hard power, increasing the divergence between what Gramsci called “domination” and what he called “intellectual and moral leadership.” When there is no divergence in the US role between “domination” and “intellectual and moral leadership,” the convincing through soft power takes place through some combination of (1) belief that the system of rule created by the dominant group brings material and other benefits to all or most, and that the feasible alternatives are worse, and (2) the processes and procedures of the dominant system of rule are fair, and will be enforced on the dominant group as well as on the subordinate group. As a result, we can find “an overwhelming number of the least developed countries (LDCs) like Bangladesh induced to join the World Trade Organisation (WTO) because they were persuaded to believe that the WTO is a rule based organisation with an enforceable dispute settlement mechanism, despite protectionist trade policies of developed nations. Unfortunately, the realities of immiserising growth in these LDCs tell a different story. Immiserising growth can arise whenever growth occurs subject to distortions.
This distortion can come from tariff when the smallness of the country implies that free trade is the optimal policy. “An average person in a developing country selling a product in the world market confronts barriers that are roughly twice as high as those faced by the counterparts in industrial nations. Tariff rates for textiles are usually among the highest in the developing world. Precisely because of this, France with its $24 billion of diversified exports to the USA pays $331 million as import duties per annum while Bangladesh, with its exports of readymade garments of $2.4 billion ends up paying almost the same amount. Farm subsidies of more than $300 billion per year allow food crops exported by farmers in the OECD countries to be sold at prices, which are 20 to 50 per cent below the cost of production, thereby undermining farmers in developing nations.
The United States provides a cash subsidy to each rice farm household amounting to $75,000 a year. European citizens are supporting the dairy industry with subsidies of 16 billion euros a year. This is equivalent to more than $2 per cow per day whereas half the world’s population lives on less than this amount. EU surpluses of milk and milk products are dumped on world markets using costly export subsidies, which destroy people’s livelihoods in some of the world’s poorest countries.”
Hegemony, in other words, has two pillars, one substantive, and the other procedural.
The US dilemma in multilateral organisations such as the UN, the IMF and the World Bank, is that US intervention to strengthen the substantive pillar—the idea of mutual benefits from free markets—may come at the expense of the procedural pillar, by breaking, collectively legitimated rules of the international trading system through political control of multilateral organisations. All these US levers of control are bound to have a profound effect on the economic and political security of moderate Muslim LDCs like Bangladesh as we just witnessed in the collapse of world trade negotiations in Cancun.
Transition, dependent development and the new road to serfdom
Transition means privatisation, price liberalisation and a balanced budget, plus free trade and a fully convertible currency. The virtues of this stereotype in a frictionless, zero-transaction-cost world are beyond dispute. In 1976, the celebrated monetarist, Professor Milton Friedman of the University of Chicago, delivered a lecture in London entitled “Curing the British Disease” which put forward the idea of distributing free shares in nationalised industries to the general public as a method of “de-nationalisation.” That experience was studied by the governments across the world and soon put to practice by the Margaret Thatcher government in the UK through privatisation of the British Petroleum, and subsequently, by other governments in other parts of the world, through privatisation of many other government owned firms across the globe. The “enterprise” of “privatisation” was thus launched, prompting a worldwide “gold-rush” of sorts to capture the surpluses or rents from this structural innovation.
The following decade proved the political value of this innovation as privatisation replaced dirigisme as the general interest rationale for special interest and factional rent-seeking and political competition. Market economies worldwide experienced greater economic freedom, which translated into economic gains, not only for factions, but often economy-wide gains as well. The success of such structural changes in so-called capitalist countries no doubt played a significant role in the sudden failure of non-market, or minimal-market, economic systems by the decade’s end.
First and foremost, that major, and unprecedented, event was widely seen as a failure of an ideology—the ideology that government should own and/or control the means of production. That is, capitalism was seen as “winning” over communism, though, of course, in fact, neither ideology was well represented by any real world economy. However, this systemic cataclysm opened a new role for privatisation; namely, transforming predominantly bureaucratised economic systems into predominantly market-oriented economic systems.
Transition creates rent-seeking opportunities. The transition to a market-based democracy from a military dictatorship or socialism creates the opportunity to rewrite the rules of the polity and the economy. Therefore the process of privatisation can be viewed as a process of rent creation. The ultimate aim of the process of privatisation understood in the narrow sense of the word is to transfer the assets previously owned by the state into private hands, which would presumably prove to be economically efficient. The chances for successful transition depend critically on the public-choice equilibria prevailing at the beginning of the transition process, and on the sources of legitimacy. Bangladesh is still an arbitrary state. An arbitrary state is no better than the mafia and the mafia-like arbitrary state of Bangladesh has privatised its transition process.
Privatisation was repeatedly scrutinised once it became evident to those involved, i.e. politicians, bureaucrats and the business community, that it was crucial for the future distribution of power in society who would become rich. Privatisation is to be the quickest and simplest way for the concentration of wealth and through it the power in the right, i.e. their hands. A new rent-seeking coalition, the transition industry, emerged early in the 1990s in post-socialist countries as a response to the collapse of communism and in Bangladesh and other third world countries in response to the end of a decade long military dictatorship.
The transition industry is an umbrella for the latter-day socialists (such as Soviet trained economists who now run leftist think-tanks in Bangladesh and other places), the so-called civil society organisations, retired and current bureaucrats regrouped as civil society touts, reformed and non-reformed communists, policy makers from the World Bank, IMF, Asian Development Bank, and others. The common denominator of this diverse group of rent-seekers, who prefer public policy to spontaneous changes and favour restricting the right of ownership, is the culture of collectivism. And their survival trait is to be able to use the strong hand of the donor-funded civil society organisations to (under)develop Bangladesh.
From the standpoint of ordinary people in Bangladesh, the transition process has substituted one set of institutions for another set, neither of which they chose for themselves. That is why the development of stable and credible property rights has been a critical issue in Bangladesh. Stable and credible rights have two important effects. First, they create incentives for resources to seek their best uses. Second, they reduce transaction costs of making decisions that have future consequences. However, stable and credible property rights are a threat to the transition industry, whose members derive benefits from having discretionary powers to choose what to do with resources. It is the conflict between the transition industry’s demand for discretionary powers, and the community’s need for stable property rights that makes the discretionary activities of the transition industry unethical.
The transition industry’s attempts to justify its power to enact (and modify) a set of fixed rules about governance structures by saying that those rules reflect the evolving trend, is plain wrong. Industrial democracy is the transition industry’s favourite institutional arrangement. It is an umbrella for all the different forms of labour participation in the governance of private sector. Evidence shows that industrial democracy has not emerged voluntarily on any significant scale and has failed to perform successfully whenever and wherever imposed by fiat. Yet, the demand for labour participation in the governance of business organisations continues to be relatively strong. The reason is quite simple: industrial democracy offers too many rent-seeking opportunities, and satisfies too many ideological preferences to be discarded on account of its poor performance.
Whatever the facade of words, terms such as industrial democracy, stakeholding, or labour participation are code words for wealth transfers. In such an environment, politicians confront strong incentives to forsake reforms that would raise aggregate social welfare in favour of rent-seeking strategies that channel benefits to narrowly defined interest groups at the expense of society as a whole. To illuminate the rent seeking opportunities created by the transition from military authoritarianism and communism, economist Joel Hellman presented the partial reform equilibrium model. The common dilemma of the politics of economic reform was thought to be how to prevent the reversal of comprehensive reforms by the short-term losers in society that would suffer a decline in their standard of living. Although comprehensive reforms did impose hardships on the majority of the people in Bangladesh, they did not demand their reversal and moreover they suffered much less than their counterparts in countries that had opted for gradual reforms.
The challenge of the post-autocratic transition in Bangladesh is instead to protect the momentum of reform from the short-term winners of partial reform. Partial reform generates rents arising from price differentials between the liberalised sectors of the economy and those still coordinated by non-market mechanisms. Arbitrage opportunities for those in a position to mediate between the reformed and unreformed sectors of the economy include the liberalisation of foreign trade with incomplete price liberalisation, the liberalisation of prices without market competition, and the privatisation of companies without new controls on state credits and subsidies for production. The transition of a highly nationalised economy under prolong military rule necessarily creates some arbitrage opportunities because not all aspects of a fully functioning market economy can be put in place all at once. The winners of partial reform, however, would seek to stall the implementation of comprehensive reform for as long as possible. “Instead of forming a constituency in support of advancing reforms,” Hellmann argued, “the short-term winners have often sought to stall the economy in a partial reform equilibrium that generates concentrated rents for themselves, while imposing high costs on the rest of society.” The central challenge of reform, therefore, is to prevent rent-seeking.
Transition as a structural change entails a reassignment of property rights. Such a reassignment emerges and is legitimised through a political—that is, a public choice—process that depends, in part, on the preceding equilibria concerning rights assignment. Reassignment involves redistribution of income, wealth, and power. Factions and interest groups will compete—or rent-seek—in an attempt to gain, or avoid losing, in that redistribution. A public-choice equilibrium might involve deadlock, without a legitimate reassignment. Political deadlock might allow alternative, albeit an “illegitimate,” reassignment—that is, there might be a de facto privatisation of property-right reassignment. The potential efficiency gains from privatisation may not be fully realised if the reassignment of property-rights does not entail the full marketability of such rights, if the reassignment does not take place because of political deadlock, and/or if it takes place through illegitimate means that preclude full marketability. These are important, indeed crucial, points that may be ignored, or even denied as relevant, by those analysing the transition process.
Regardless of the initial reassignment of property-rights, if such reassigned, or even newly created, rights are fully marketable, their original owners will eventually find it in their interest to sell these rights to those who can make the best use of them, or better use than the original owners; thus, efficient privatisation will eventually prevail as a simple matter of unconstrained market incentives. Once efficient property rights are created and assigned, or reassigned, market-processes essentially privatise the process of efficient privatisation.
However, failure to create efficient property rights, which is essentially a political failure, may tend to doom restructuring via privatisation, and may set the stage for further political competition over reassigning property-rights. Restoring the public-private balance, and economic efficiency, via privatisation is inevitably a costly political process. Ignoring those political, or rent-seeking costs, and the need to pay them, may allow or lead to privatisation approaches that are excessively costly. Also, ignoring the true objective of privatisation—putting defined, defended, and divestible property-rights in private hands so that the market can proceed efficiently to allocate and reallocate them—may lead supposed privatisation to be inefficient. Creating inefficient and ambiguous property-rights and entitlements only ensures that they remain contestable, hence subject to ongoing, costly political competition.
Jurisdictional incompetence and compromised sovereignty
Jurisdiction refers to particular aspects of the general legal competence of states often referred to as “sovereignty.” Jurisdiction is an aspect of sovereignty and refers to judicial, legislative, and administrative competence. The formal boundaries of states are sanctioned internationally, so the competition for commanding the means of coercion for control over capital and territory is essentially internal. Inversely the competition to control capital is largely about controlling international (or better put, transnational) capital flows and much less focused on the development of national taxation.
The combination of these shifts towards external state building has meant that the stakes and strategies involved in controlling coercion and capital have more to do with bargaining with local strongmen (the bureaucrats, politicians, military, business community and civil society leaders in countries like Bangladesh) to pursue a public policy of privatisation and decentralisation than with a monopolisation of control at the level of the central state.
First, for most developing countries like Bangladesh, controlling capital has for a long time meant controlling access to international financial sources. Recent developments have compounded this with a trend to decentralise the control over capital. As a consequence of increased importance of financial relations (debt and portfolio investments) and of the debt crisis, most governments have become far more sensitive to the preferred policies of international financial players. Even if this sensitivity is epitomised by the IMF and the World Bank conditionality, it is important to recall that it runs far deeper and is a reflection of the direct and structural power of international financial players. Arguably the IMF and the World Bank conditionality is vaguely transparent and subject to negotiation, which is more than one can say about private conditionality.
Privatisation, de-regulation and reduced budget deficits are central to these policy preferences. In theory (and in the minds of blueprint stand-by-agreements), it is possible to imagine that these policies were pursued without effects on the capacity of the state to centralise the control over financial resources. But practically, that tends to be an illusion. Rather the policy translates as a reduced capacity of the central state to buy support, for example by offering positions in the state bureaucracy, by offering under-priced goods from state industries and by channelling money to local administrators. The reverse side of the coin is growth in the capacity of local power holders to control privatised assets, impoverished bureaucracies and subject populations.
In a context where access to international capital is fundamental, it comes as no surprise that local power holders in Bangladesh use relative weakness of state structures (and possibly their own growing strength) to establish relations of their own with wielders of international capital. Depending on the situation, they might cajole foreign investors, trading companies and aid organisations into paying them some form of tax and/or protection money through local and international NGOs.
This is made easier by the fact that these foreign organisations will often find it more important to deal with the local (real) authorities than the central (state) ones. Local power holders use “innovative strategies” to link up with transnational business networks to buttress their power. For the central state, this means, at a minimum, a need to bargain with the local authorities. And concretely, it often means accepting high degrees of decentralisation of the control over financial means. Some writers see this as a sui generis state-building process. And this might be. However, it certainly is not one where centralised control over financial resources figures prominently.
The strategies of controlling capital through privatisation and decentralisation have profound effects on the development of administrations. For one thing, it renders unnecessary the administrative expansion to manage the concentration and/or monopolisation of financial resources and means of coercion. For another, the prevailing decentralised and largely private form of control over financial resources and means of coercion entail that any such expansion would depend on the support of local power-wielders. Yet these groups have no reason to support increased administrative intrusiveness by central authorities, even if it is justified in terms of an external threat. Finally, extending the administration under these conditions might well mean lessening control, since it will come at the price of making concessions to local power holders. This is so much evident from the loss of grip of every government in Bangladesh over local criminals-turned-politicians and local businessmen-turned-politicians destabilising Bangladesh since her independence.
In addition to this, the “neo-utilitarian” view on the role of the state in the economy, which has underpinned the IMF and the World Bank conditionality, as well as worldview of many policy-makers, has been ominous for the fate of civil administrations. In this account, state involvement in the economy is the source of more harm than good, and bureaucrats do more rent-seeking than provide services for society. Departing from these premises, it is not surprising that the IMF blueprint writers and the World Bank policy-makers do their best to reduce the resources granted to the development of the public administration and certainly do not wish to see any expansion.
The result is a self-fulfilling prophecy: an under-paid or unpaid administration produces incompetence and rent-seeking as those who have a choice leave, while those who do not have a choice, develop survival strategies of self-preservation. Political rather than economic principles begin to stipulate the rationale of human resources management in civil administration. The agents of external state building such as the IMF, World Bank and the Asian Development Bank often fail to understand that the construction of the reward structure in the civil administration of Bangladesh is not precisely linked to changing economic conditions in society and the private sector at large. It lacks the application of rational principles. The consumer price index is not always taken into account when constructing and modifying salary structures. The nature of work of the civil administrators is not adjudged as an important criterion; neither does the quality of individual job performance impact upon salary increments. There are no salary differentials within or between occupational groups in civil administrations. All this is due to the non-usage of job evaluation techniques in establishing pay plans as well as the peculiarities of the rank classification system, which does not do justice to merit or performance vis-à-vis career progression and salary increases.
As a consequence, civil administrations have themselves become increasingly imbricated in the criminalisation of economic activities. As the resources available to pay administrators is reduced, and their work de-legitimised, there is a strong incentive for these civil administrators to draw income from sources available to them. Any document, permit or certificate (or its falsification) will cost a bribe. Moreover, the push to privatise state assets has opened new opportunities.
“Spontaneous privatisations” and other forms of administrative take-overs of state property such as grabbing the land of the government by the railroad and building a private house on it are not at all uncommon in Bangladesh. Finally, there is evidence that in certain parts of Bangladesh, civil administrators are increasingly being dragged into the networks and activities of organised crime. Sometimes these networks also include the heads of governments, their sons and wives, brothers and sisters, and even members of their cabinet. The civil administrators are no longer merely paid to close their eyes on various illegal activities and trades (in e.g. dirty money, arms, oil and gas, drugs, organs or people), but take active part in them.
Nation-states like Bangladesh are increasingly controlled externally by international aid players like the IMF, the World Bank, ADB, etc. The reliance on external sources of finance (foreign aid, debt, the sale of illegal and legal services and commodities, and customs) is mirrored by an externalisation of economic management and political accountability. The state is accountable for its economic activities to players who are actually outside the boundaries of the state. These players are not under the legislation of the states that are accountable to them for most of their activities. Therefore, the lack of governance and the shift of power and authority in these states are not the prime concern of foreign aid players. It is far more likely that the smooth operation of the part of the economy, which is of direct concern to them, is the only chosen matter of their interest.
In fact, most studies of regions with poor governance and shrinking state authority indicate that these international aid players and their sister donor organisations tend to compensate for the lack of central authority of the state by dealing with local strong men: politicians, bureaucrats, businessmen, military, and other so-called civil society touts. These organisations of foreign aid rely on para-statal systems of property rights protection in the absence of state structures. That is, rather than contributing to the “civilianisation,” the grip of external players on the state tends to work towards further fragmentation of state structures. The second important shift is that the strategies of decentralising the control of capital and coercion has left states “brokering” between different groups, rather than ruling them from a nationalised or specialised centre. And in this, the side favouring an expansion of the central state is weakening. On the one hand, there is no cohesive group (like a growing body of civil servants and members of national armies) that has an obvious interest in the expansion of the state or can advance claims for the civilianisation of the state. On the other hand, the groups with which the state is bargaining are concerned above all with defending special privileges against the expansion of central state authority.
Limiting central state expansion is not necessarily bad. Where the state is the key source of violence, oppression and injustice, it might seem very attractive. Weakening central authority is hence welcomed as opening new spaces for political and social action, in particular through the development of issue-oriented movements and groups with ties to international NGOs. The underlying contention is that it might strengthen “civil societies” and increase pressures for democratisation and civilianisation. Unfortunately, this is a sadly inadequate description of actual developments, particularly in places where both coercion and administration have escaped state control.
The flourishing of civil society and social movements requires a relatively strong state capable of protecting civil society and enforcing rights. This is certainly not the present condition of the state in Bangladesh. The groups that do get into a position to bargain with the state often bargain for things less noble than democratisation and civilianisation. The real drama is that there are groups that are not linked to any power wielder (local strong man or central state) and who have no one to defend their interests. Increasing chunks of population are not useful to anyone. They can offer nothing in exchange and hence are not worth extending protection to or organising administration for.
There is a rollback of the state from certain areas or groups. The issue is not people “exiting” from state structure. It is that “rulers abandon people who could contribute little to a political alliance and would make demands on scarce political resources.” State building is increasingly Swiss-cheese-like. Globalisation has accentuated the “drift towards external state building.” Controlling finance and capital is a decreasingly decentralised business, which does not go hand in hand with an expansion of central administrations and the two things produce a state, which is brokering between competing groups rather than ruling them from a centre.
There is a strong tendency on our part to underscore the importance of a basic insight we all share but ignore when we turn arguments into folklore. There is no predetermined path of development (of states, democracies, economies or anything else). Many roads can be taken and they do not necessarily end up in the same place. Some might even lead backwards. Hence, (neo)classical arguments are useful. They tell us what processes to look at. But they cannot tell us what outcome the processes have.
Conclusion
Neo-liberals promote market fundamentalism as the sole, indispensable path for economic development, despite the fact that trade tends to distort balanced development in a way that hurts not only the less developed, but the developed economies as well. It has become obvious to many in both developed and emerging markets that the undervaluation of labour is indispensable for the creation of surplus value that economists call capital. This capital then must seek new investment opportunities in less developed economies where labour is even cheaper. The investment opportunities of this adventure capital point not to the beneficial development of the less developed economies like that of Bangladesh. This capital seeks higher return than it could get at home for the benefit of its owners by exploiting even cheaper labour overseas. Capital has acquired enormous market power for the suppression of the value of labour both at home and abroad.
Neo-liberals rationalise that globalisation, while undeniably exploitative, nevertheless produces tangible collateral benefits, even to the exploited. This neo-liberal approach was certainly the same argument presented by the defenders of the “White Man’s Burden” of the 19th century imperialism in which moral rationalisation was used to justify economic exploitation.
Neo-liberal values, namely capitalistic democracy and market fundamentalism, have become the new smiling mask for economic exploitation not different from the times of Rudyard Kipling. This new smiling mask of globalisation is best expressed by none other than the former chief economist of the World Bank and the current president of Harvard University, Lawrence Summers. According to Lawrence Summers, “the export of pollution to poor countries represented immaculate economic logic because third world lives were worth less.”
Chowdhury Irad Ahmed Siddiky is author of the book, The Compromised Republic: An Inquiry into the Development of Underdevelopment, ISBN 984-32-783-0; Dhaka: Oriental KAS Publishers, 2003.
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Paying the price of globalisation
Saira Rahman
In Western economies the practice of globalisation is, to many, a good thing. However, if it is so good an idea, why has globalisation come under the hammer of so many dissenting countries, peoples and groups? One may argue that opening up trade has helped countries develop far quicker than they could have ever done otherwise. One may also argue that international trade helps a country to develop, as the country’s exports drive economic growth. Unfortunately, the hard truth needs to be told here. The balloon must burst. Globalisation has, in fact, brought many less developed countries to their knees, while more developed countries literally dance on their graves. According to Joseph E. Stiglitz, ‘Despite repeated promises of poverty reduction made over the last decade of the twentieth century, the number of people living in poverty has actually increased by almost 100 million. This occurred at the same time that the total world income increased by an average of 2.5 per cent annually.’ Poverty and all that is associated with it — disease, hunger, malnutrition, illiteracy, violence and more — is a gross violation of human rights and globalisation seems to be one of the curses that causes it.
The globalisation of trade under the WTO and GATT regimes has created havoc in human rights, causing migrations, women-headed households, fragile eco-systems and more problems around the world. Ten years ago, it was stated that 80% of the world’s resources were in the hands of 20% of the world’s population (all located in the West). Unfortunately, now the percentage has increased to 86%. As in all crises, the worst groups to suffer are the women and the children. It is true that women may benefit from economic globalisation by working in factories that produce goods for international trade — as long as they receive a living wage, which is hardly the case in Bangladesh, and if their employer (a multinational corporation) remains in their area. On the other hand, women in Africa, Latin America and parts of Asia who run small enterprises or earn a living through agriculture, have found themselves forced out of business by cheaper imports. Agriculture has also suffered due to the ‘synthetic’ crops of genetically modified vegetables and fruits. Again, when Western or ‘developed’ countries switch their trade preferences, or relocate to another region, they leave behind a huge, helpless, largely female workforce. The impact on these women is disproportionately high. Needless to say, whole families suffer due to this. Furthermore, global control of information technology is in the hands of a few centres in developed countries. It is said that with this technology, farmers in Africa and Asia can find wider market access. These farmers barely survive by earning a minimum livelihood. Where will they find ready, sophisticated technology?
Financial globalisation does not merely involve foreign direct investment by MNC’s. It also involves international loans, shares, the buying and selling of stocks, international aid and links between multi-national banks and micro-finance organisations. As conditions for loans, the IMF and World Bank resort to the good old method of ‘structural adjustment policies’ — a euphemism for ‘arm-twisting’ — which require countries seeking loans to open their borders to foreign trade and investment, deregulation and privatisation of state-owned industries. They also pressure governments to reduce the budget deficits by cutting government employment and/or by reducing expenditure on social services. Here, too, women are victimised as they struggle to maintain the standard of living for the whole family — jobs, education, food and health included — despite decreased government expenditures on housing, health, education and food subsidies. Women take on the burden of extra jobs plus added household responsibilities, especially when the rest of the family is also away trying to earn a living. Across cultures, women have always been associated with ‘housework’ — unacknowledged and unpaid. Such obligations have caused women to absorb the costs of the shrinking state supports with larger workloads, higher stress levels and work-related health hazards. Furthermore, over the last 25-30 years, increasing numbers of women have become sex workers and illegal immigrants in search of work, as a result of the restructured global economy. These are extremely hazardous and life-risking professions for women and have led to imprisonment and even their murder.
Another section of people that are affected due to the encroachment of globalisation are the indigenous groups around the world. National efforts to meet World Bank standards and the structural adjustment policies it demands and efforts by countries to do whatever they can to enter the international market, have caused the indigenous people to lose their land, have marginalised them further and damaged their environment and the eco-system they live in and help to maintain. Natural resources are being privatised and brought under the exclusive control of the market, only to be exploited. Vast numbers of people are displaced from their traditional lands and way of life and denied access when the resources are transferred to corporate businesses. With no other choice, they flood the cities looking for jobs, creating another economic and social crisis.
Globalisation has also created a situation of false security in the West, encouraging racism and xenophobia — mainly targeted at Islam. In the post-Cold War era, Islam has become the most oppressed religion in the world. Related to this is the new threat to the developing world, namely, the ‘globalisation’ of terror. What makes a person a terrorist? The current trend shows that in the eyes of the dominant political actors Muslims are, generally, perceived as terrorists unless they are proved otherwise. Unfortunately, most of the countries that come under attack as ‘potential threats’ are in the South or less developed half of the hemisphere.
After September 11, 2001, war and militarisation have become the new goods to trade, whether the receiving country asked for them or not. The production of arms and sophisticated weapons lies in factories and laboratories in the West. Laws and policies have been enacted by the United States and its allies to, supposedly, thwart terrorism around the world. Instead, these have merely added to the burden of less developed countries and have robbed the security and human rights of people therein. War and militarisation have become the ways and means to deal with the political, social and cultural problems brought on by a corporate globalisation that benefits the few who own the weapons and sophisticated war machines. What happened to the pleas of democracy and world peace that were uttered by the same countries less than a decade ago? What happened to the UN? The UN Security Council further alienated the vast majority of the world population from its forum and has been encouraged by the vetoes of the USA, which has been used again and again to support Zionist Israel, while regarding Palestine, this is being used to thwart the creation of Palestine. As a result, the people of the South are questioning the relevance of the role of the United Nations.
All in all, globalisation has caused a lot of human rights violations to occur. While capital and commodity can move easily through political boundaries and national territories, the people are denied free movement, their rights are taken away by laws, they are labelled ‘terrorists’ by paranoid groups of people who are blind to the reasons behind the creation of such a fear, they undergo strict immigration rules and are stripped of dignity and freedom. We cannot afford to map the world in terms of profits, gains and exploitation of labour. We need to divide the world on the lines of rights and those who take away such rights, in order to maintain global diversity and unity — and sanity.
I leave you with a parting quote, again from Stiglitz, ‘With interdependence comes a need for collective action, for people around the world to work together to solve the problems that we face, whether they are global risks to health, the environment or economic or political stability. But democratic globalisation means that these decisions must be made with the full participation of all the peoples of the world. Our system of global governance without global government can only work if there is an acceptance of multilaterism. Unfortunately, the past year has seen an increase in unilaterism by the government of the world’s richest and most powerful country. If globalisation is to work, this too must change.’
The writer is Programme Director of the Acid Survivors Foundation.
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