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Review Thursday, 21 December, 2000, 16:43 GMT
Globalisation and its discontents

By BBC News Online's Steve Schifferes

This was the year that globalisation ceased to be an academic issue and took to the streets.

The mass anti-globalisation demonstrations - which began in Seattle at the end of 1999 but intensifed at the meetings of the IMF and World Bank in Washington and Prague - reflected a growing disquiet over who was benefiting from the increasing integration of the world economy.

Demonstrators in Washington form a human chain
Activists surround Congress in Washington
Global leaders, from Bill Clinton to Horst Köhler, head of the International Monetary Fund (IMF), rushed to defend the benefits of global integration - but also acknowledged that the poor needed to be incorporated in the process.

But in practical terms, the momentum for global integration - particularly in relation to trade talks - had been slowed.

There was little enthusiasm for trying to restart a new global trade round after the fiasco of Seattle, and activitists were already organising against further more limited talks about liberalising trade in services.

Arguments about the poor

Even the World Bank and the IMF began to change their tune, acknowledging that the slowdown in economic growth in developing countries, especially in Africa, had meant that world poverty was little changed over the last decade outside of East Asia.

Campaigns grew against child labour
And the World Bank published a remarkable report outlining just how big the costs of adjustment to capitalism had been for the former Soviet Union, with poverty rates rising ten-fold to around one in five of the population of Russia in the last ten years.

The IMF and the World Bank renamed their programmes they agreed with poor countries "Poverty Reduction and Growth Strategies", but critics claimed they were little different from the previous version, called Structural Adjustment Programmes, which led to massive cuts in public spending.

The Bank and the IMF also finally agreed to introduce debt relief for at least half of the 40 highly indebted countries by the end of 2000 after a highly publicised campaign by aid groups.

At the end of the year, the UK government published a White Paper on development, arguing that globalisation needed to be harnessed to the needs of the poor.

It also called for the end of aid tied to the purchase of goods, and opening up Western markets to poor countries.

Democratic deficit

In some ways the critique of the international institutions that struck the most resonance was the complaint that they were undemocratic, making decisions behind closed doors under the influence of business lobby groups.

Trade wars between rich countries intensified
Trade wars between rich countries intensified
The World Bank and the IMF tried to meet this complaint by opening their doors to non-governmental organisations, who enjoyed unprecedented access to their meetings. They also tried to publish more information about their policy arrangements, by revamping their websites.

But the fundamental issue - that the voting rights in these organisations are weighted towards the rich countries, with the US enjoying a blocking majority - was not addressed.

Indeed, a proposal published but not endorsed by the IMF, suggested that the US and Japan should get more power, reflecting their weight in the world economy, compared to the UK and France.

The World Trade Organisation had a different problem. It works only by consensus, with trade deals reached with the agreement of all 140 members.

But in practice it does this by negotiating behind closed doors, with a selective group of key countries.

That system broke down in Seattle, in a negotiation the UK's House of Commons select committe called "disgraceful" and "shambolic."

Now the WTO needs to rebuild its legitimacy - but it faces increasing attacks from the US, where environmental activists and right-wing critics both object to its powers to over-ride US trade laws.

Role of multinationals

In some ways the critique of globalisation has been less focused on governments than on multinationals.

Critics like Naomi Klein, author of the best-selling book No Logo, say that multinationals exploit workers around the world by shifting production to the cheapest locations.

And they claim that the big companies try and exploit trends in popular culture for their own ends, creating brands which falsely expropriate the values of youth culture.

They say that new international rules are needed to curb their excesses, and that new global organisations of students, workers, and consumers must work together to resist their dominance.

But attempts to regulate the activities of multinationals ran into difficulties.

The International Labour Organisation Codes of Conduct on issues like child labour were seen as widely ignored, and in the US unions organised "sweatshop campaigns" on college campuses.

Presidential candidate Al Gore pledged to incorporate labour standards into any future trade negotiations, and President-elect Bush may come under pressure to take a similar stance.

Third World countries strongly objected to this proposal, which they see as thinly disguised protectionism.

Meanwhile multinationals continued to extend their global reach by mergers and acquisitions, with a record year for cross-border takeovers, especially by European companies buying into the USA in the fast-growing telecoms, media, and financial services sectors.

Attempts to regulate takeovers also fell on stony ground, with the EU Parliament attempting to pass rules which would make hostile takeovers more difficult.

The EU has also proposed that rules regarding competition and investment be negotiated in the context of global trade talks, after the collapse of talks aimed at a Multilateral Agreement on Investment (MAI) at the OECD.

But with world trade talks stalled, there was little chance that such a proposal would emerge.

And with a newly protectionist US adminstration in power, there is every likelihood that trade wars and mass demonstrations will continue to be a feature of 2001.

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The IMF and World Bank meet in Prague amid global protests

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See also:

25 Sep 00 | Business
20 Sep 00 | Business
29 Nov 00 | Business
10 Nov 00 | Business
10 May 00 | Business
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