Let the South in on globalisation, say Third World leaders

Pointing to the imbalances in the international economic system, both the Malaysian and Algerian leaders, in their respective speeches at the South Summit, called for the voice of the South countries to be heard in shaping a globalisation process for the benefit of all.

Martin Khor

IT would be a mistake to exclude the weak and poor from formulating globalisation as they have a great deal of experience on its good and bad aspects, said the Malaysian Prime Minister at the South Summit of the G77 here.

'Our experience can help shape a globalization that benefits all. So let us in,' said Dr Mahathir Mohamad during the plenary debate. He was one of 20 heads of state and government who made their statements on 12 April. The highlights of the morning session were speeches by Mahathir and the Algerian President Abdelaziz Bouteflika.

Mahathir attacked the rich nations' interpretation of globalisation as the right of capital to cross borders at will. 'Capital is the new gunship of the rich,' forcing developing countries to submit to foreign dictates, he said.

Mahathir began by congratulating Cuban President Fidel Castro for a 'most revealing dissertation on the disparity between the rich and poor of the world'. He said that while it was easy for the South's leaders to meet at the Summit, 'it is not so easy to act together, and therein lies our weakness.'

The rich are apparently more united, being only a small group of seven countries, and they close ranks rapidly if their dominance is challenged. 'Their approach is very simple. Should there be any new ideas in the social, economic or political field, they quickly come up with their own interpretations designed to benefit them. Thus we see them foisting on the world their moral values, political systems and economic globalisation. The South has no choice but to react to their interpretations, and reacting limits the choice and is less beneficial.'

Mahathir criticised how, in the globalisation discussion, the rich countries used 'technological advances' as the excuse for doing away with independence of nations, replacing it with Ôinterdependent nations.' Their propaganda machine promoted the idea that resistance to globalisation would be futile.

'New gunship of the rich'

'We had welcomed globalisation believing it could help our economies grow,' he added. But in East Asia, rogue currency traders devalued the currencies, throwing millions out of work. The international institutions moved in 'ostensibly to help with loans but in reality to facilitate the takeover of the countries' economy and even politics.'

All these are made possible because the rich interpret globalisation as the right of capital to cross and re-cross borders at will.

'Capital is the new gunship of the rich. By coming in with short-term investments, they create an illusion of wealth. Once that has happened, they merely have to pull out their capital in order to impoverish and weaken their victims and force them to submit to foreign dictates.'

Mahathir added that if globalisation implies economic integration of all countries, why should it mean only the free flow of capital but not workers? If money is capital for the rich, labour is the capital of poor countries. Their workers should be allowed to migrate to rich countries to compete for jobs there, just as the powerful corporations of the rich are allowed to compete with their tiny counterparts in poorer countries.

'If it is right for big corporations of the rich to displace small weak corporations of the poor, why is it so wrong for poor workers to displace rich workers in the rich countries?'

Mahathir said the economic turmoil in East Asia has resulted in the rich taking what belongs to the poor. As banks and businesses collapsed and share prices plunged, the rich moved in to buy the devalued shares and acquire the companies.

'They could have bought at normal prices during normal times but they preferred to emasculate us before they take over at a fraction of the cost. Backing this move are the international institutions which insist we open up so that the predators can move in and take over everything. Governments must not protect local businesses. Market forces must prevail and those with money will dominate.'

The market forces have had no noticeable success but have made fortunes by their manipulations and now by acquiring banks, industries and businesses.

Results, not dogma

Mahathir suggested that globalisation should stress results rather than methods. ÔPresently we are told globalisation must be espoused and practised even if it destroys us. We are falling into the old trap of believing that systems on their own can solve human problems... Unfortunately, once a system is accepted, it becomes so sacred that even if the results are worse than the situation it was supposed to remedy, it must still be upheld and practised. If anyone goes against the system, he is regarded as a heretic and condemned.'

Mahathir added that globalisation has shown signs of becoming a religion that tolerates no heresy, which is unfortunate as globalisation, if properly interpreted and regulated, can benefit both rich and poor. 'The important thing is to focus on results rather than dogma. If the results are good, then implement it as currently interpreted, but if the results are bad for anyone, it must be reinterpreted and modified until the expected results are achieved.'

It was thus a mistake to exclude the weak and poor from participating in the formulation of globalisation, as they have a great deal of experience. In the East, foreign direct investment (FDI), technology transfers and opening of the markets of the rich had resulted in enriching poor countries. But nations can also be made poor suddenly. 'Our experience can help shape a globalisation that benefits all. So let us in.'

Mahathir said most of the South believe that globalisation can contribute to rapid growth through free flows, 'but we also know that the best-run economies can run into deep trouble.'

'We the poorer countries,' Mahathir added, 'cannot afford the recessions. We believe we can contribute towards avoiding recessions. Therefore our views should be taken seriously in the formulation of the international financial and economic systems.'

Troubled times

Algerian President and current chairman of the Organisation of African Unity (OAU), Abdelaziz Bouteflika, first paid tribute to Castro, calling him a 'glorious freedom fighter who has left an imprint on the past half century, and whose country highlights courage and solidarity.'

He remarked that the Summit was taking place in a deeply troubled context when the landmarks of international relations of the past half-century have disappeared and new concepts have emerged and new technologies introduced, posing new challenges. Yet the world was more than ever characterised by inequality, with South countries excluded from international decision-making processes.

This, he said, has resulted in perpetuating inequality, whilst in the new order the fading role of states is also taking place in international relations, the rich-poor gap has widened and the new unipolar configuration of the world carries new threats to people's sovereignty and options.

Under the effect of upheavals, the terms of development in South countries have changed, taking them into a globalization imposed on all. If this evolution appears to offer new opportunities to the South and if it has been proclaimed in the North as balanced, reality shows it is an unbalanced process, giving rise to negative effects with dramatic consequences for those marginalised.

There is a need for consultation and efforts to rectify the present system set up at world level so there will be greater equality, effective integration for all and better balance of advantages.

Obviously, he said, it is an illusion to rely on market forces to achieve balanced development in the world. Thus, FDI, liberalisation of which was used to justify the reduction of official development assistance (ODA) and was said to have counterbalanced the effects of the removal of tariff barriers in the South, is really of little value and insignificant for the overwhelming majority of developing countries, especially in Africa. These countries find themselves deprived of investment flows because of weaknesses of internal demand, further reduced by structural adjustment. They are also marginalised by inadequate infrastructure due to debt.

Herein lies the vicious circle that must be broken to give meaning to globalisation. The debt issue must be addressed independently of the international financial institutions' policies which are guided by short-term interests of creditors. There is also a paradoxical situation where middle-income developing countries are net capital exporters, and rich countries are being financed by the poor.

Bouteflika also criticised the results of the functioning of markets. Markets are characterised by different capacities of North and South. The South is dependent on raw-material exports that are subjected to price fluctuations and a downward trend. The hegemony of financial markets has thwarted production, as shown by the Asian crisis.

The OAU chairman also spoke of the deep inequality in negotiating power which is detrimental to the South. The WTO's Seattle conference is a case in point - it has excluded South countries from the consultation process and shown how the most powerful members are excluding from free trade the goods (especially in agriculture and textiles) for which the comparative advantage lies with the South. Various protectionist measures, disguised and artificial, add to conditions inimical to exports from the South, whilst the North on the other hand opens up Southern markets for Northern products to enter without restrictions.

The negotiating power of the South has been reduced by the end of the Cold War. The unipolar world is also leading to new theories, like the right to interfere in other countries in the guise of humanitarian concerns. 'How can we not dread the excesses that can derive from this and have already affected some countries that were unfairly sanctioned under this new unchallenged concept or power?' Bouteflika asked.

He said that naturally the international community must intervene when facing tragic situations, but this must be done with democratically elaborated rules following agreed modalities, not through unilateral action where the strong can impose their sole truth on weaker ones.

Despite some differences among the South, it is imperative for South countries to combine their efforts to democratise the international system and institutions so that 80% of mankind can be better heard. -May 2000

About the writer: Martin Khor is Director of the Third World Network.