10 - 16 January 2002
Issue No.568
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Al-Ahram Weekly Online 10 - 16 January 2002 Issue No.568 |
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Coming in from the cold
The alternative World Social Forum 2002 meeting in Porto Alegre, Brazil, later this month has an unusual ally, writes Faiza Rady
If the G-8 can colonise the chic Swiss alpine ski resort of Davos for its annual meeting of the world's richest countries, it is only appropriate that the anti- globalisation movement should choose an alternative, southern, venue. The World Social Forum (WSF) 2002 is, therefore, holding its second annual meeting in Porto Alegre, Brazil, from 31 January to 4 February. Alongside analyses of capitalism and global poverty, much of the talk at the conference is likely to centre on the anti- globalisation movement's newest recruit: a former star of the World Bank (WB).
Preparations for WSF 2002 are already in full swing. The Web site boasts an impressive list of conference papers that address a wide range of topics, including wealth production and access to wealth, sustainability, capitalism, and whether a world without wars is possible.
Porto Alegre is a pertinent choice as host. For the past 13 years, the city has been governed by a leftist coalition led by the Brazilian Workers' Party, which has successfully experimented with a democratic system of grassroots power- sharing. The system allows people's committees in different districts to take part in decision-making at all levels, including choosing how municipal money is spent.
By advertising Porto Alegre as an alternative to the urban sprawl of the corporate world's anonymous and dehumanised mega-cities, the anti- globalisation movement is signalling that there are other choices for our world than neo-liberal corporate globalisation and its "dark Satanic mills."
Though it already boasts an impressive number of leftist intellectuals and theoreticians of the calibre of Noam Chomsky, Samir Amin, Susan George and Naomi Klein, the WSF has recently rallied a luminary of a different stamp to its cause: Joseph Stiglitz, Nobel laureate in economic sciences for 2001 and professor of economics at Columbia University.
Stiglitz was also chief economist and vice-president of the World Bank from 1997 to 2000. From 1993 to 1997 Stiglitz served as chairman of the Council of Economic Advisers to President Bill Clinton, a US cabinet-level position.
An establishment insider graced with just the right credentials (he has taught at Oxford, Yale, Princeton and Stanford), Stiglitz reached the summit of the academic and corporate ladders. At the bank, Stiglitz helped engineer and shape the neo-liberal world order.
But disillusionment increasingly set in. Stiglitz, a World Bank ideologue, grew disturbed at the resounding failure of the International Monetary Fund's (IMF) programmes in South-East Asia and in the emerging East European market economies and began to express mild reservations about the soundness of neo-liberal dogma and the financial agencies' globalisation policies. This was too much for the bank, which refuses to countenance criticism of its policies. In 2000, Stiglitz was fired.
The former chief economist then turned against the Bretton Woods agencies. Striding over to the opposing camp, Stiglitz went public about the WB's and the IMF's secret internal strategies. In a series of interviews with Greg Palast, reporting for the Austrian branch of a Paris-based globalisation watchdog, Stiglitz denounced the agencies' three-step formula for imposing structural adjustment programmes (SAPs) on countries around the -- whatever the cost.
That inflexible formula starts with the Country Assistance Strategy. When the IMF decides to assist a country, it dispatches a 'mission' of economists, says Stiglitz. "Unfortunately, these economists are more likely to have first-hand knowledge of the country's five-star hotels than of the villages that dot its countryside." But WB/IMF experts admit no impediment. Within days of arrival, or at best, weeks, the mission announces a country strategy to revamp the economy along more "efficient" neo-liberal lines. Never mind whether restructuring is beneficial, adequate or even feasible -- the process simply blunders along, propelled by an internal dynamic of its own.
The fuel for all this comes from the SAPs. Stiglitz points to the Country Assistance Strategy documents, which essentially duplicate an original text, regardless of the specific needs of the country visited, with a few cosmetic touch-ups. "Teams have been known to compose drafts before visiting," recounts Stiglitz. Sometimes, they get lazy, dispense with the touch-ups and transfer drafts wholesale from one country to the next. This was discovered when the "search" and "replace" function of a word processor did not work, occasionally leaving the original country name in another country's document.
The first cure prescribed by the Country Assistance Strategy is invariably "privatisation." This, though, is a misnomer, says Stiglitz. It would be more appropriate to term it the "corruptisation" of officials at the highest level of government, he says. Instead of protecting their national industries, state ministers happily flog their country's water and electricity enterprises on the cheap, in exchange for hefty pay- offs amounting on average to 10 per cent of the sale price. "Their eyes would literally bulge at the prospect of vast sums safely deposited into Swiss bank accounts," reminisces Stiglitz. As a result, billions of dollars, would simply vanish from state coffers. Pocketing their bonuses, politicians would closely follow the agencies' instructions and snuff out domestic criticism and dissent.
The country which suffered the worst devastation under "corruptisation" or phase one, recalls Stiglitz, was Russia. Supported by the agencies and the US government, the Russian ruling oligarchy undersold and robbed approximately half of the country's manufacturing and service base. This had deadly consequences for the Russian people -- massive bankruptcy and widespread famine followed. "While only two per cent of the population lived in poverty at the end of the Soviet period, 'reform' saw poverty soar to almost 50 per cent, with more than half of Russians living below the poverty line," comments Stiglitz.
Following "corruptisation," the WB/ IMF's phase two prescribes the liberalisation of financial and capital markets. Theoretically, liberalisation should invigorate the markets and encourage capital movement and hence much needed foreign investment into the South. Unfortunately, the trend is for rapid capital flight at the slightest sign of trouble. Mostly invested in speculative and overvalued real estate ventures, the sudden flight of speculative capital, or in Stiglitz's words "hot money," can deplete a country's reserves within hours.
But never fear. When this happens, the IMF is on hand to help. Always on the ball, the agencies provide for a rescue plan. Winsome capital is wooed back by tarting up the investment environment. The usual flirt is to raise interest rates, which leap by 30, 50 or even 80 per cent.
But like the white lead medieval women daubed on their faces to charm kings, more often than not, poor countries find these plutocratic policies to be deadly poison. Take the Asian crisis, and the sufferings of Thailand and Indonesia in 1997/ 8, or Mexico in 1994. Soaring interest rates and lower real estate and property values undermined the manufacturing base and left state treasuries bankrupt.
This leads to the inevitable: phase three of the plan. The time has come for the IMF to dictate austerity measures and "market prices" for basic commodities -- a euphemism for soaring food, water and gas prices. "When a country is on the ground and gasping for air, the IMF exploits its condition to bleed it dry," says Stiglitz. "They increase the pressure until the whole thing explodes" -- just as in Indonesia in 1998 and in Argentina in the past few weeks.
Stiglitz's testimony may not reveal ground breaking news to activists. But his position as an establishment insider gives him a uniquely informed perspective. Having come in from the cold, the voice of the former WB chief economist will add a powerful dimension to the the anti- globalisation movement's assets.
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