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11 January 2001 Edition

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Challenging the global economic order


The year 2000 saw a rise in mobilisations against the globalisation policies of the international financial institutions. The World Bank, the World Trade Organisation (WTO) and the International Monetary Fund (IMF) were targeted by thousands of concerned citizens around the world, aware of the damage that globalisation policies are causing to already shattered economies of developing countries.

Decades of promises that just a little more ``short-term'' pain will bring long-term gain have exposed the IMF and World Bank as false prophets whose mission is to protect those who already control too much wealth and power

Founded in 1944 and housed in Washington, DC, the IMF and World Bank are the architects of the global economy. The policies they impose on indebted countries back a corporate agenda at the expense of people and the environment. The World Trade Organisation enforces and expands the powers that corporations have won over developing countries through IMF/World Bank programmes.

During the recent European Union summit in Nice, France, the prime ministers of the 15 EU member states were deciding on increasing the powers of the European Commission, so it could negotiate in behalf of all members on trade issues. This increase in power affects the areas of investment and services and intellectual property.

Third World Countries are the most vulnerable in those three specific areas. For example, take Basmati rice. People from India and Pakistan, who developed that breed of rice over the space of centuries, will have to start paying royalties to an American Company called Rice Tech because this company patented the gene of the Basmati rice grain. It is registered in the U.S. patent offices and anyone who wants to grow the rice in the future will have to pay royalty to that company in America. This is protected under the intellectual property regulations of the World Trade Organisation.

On 16 April 2000, finance ministers and central bankers from some 25 countries, as well as officials of the IMF, World Bank, and WTO - a veritable board of directors of the Global Economy - met in Washington, where they were greeted by huge demonstrations that united trade unionists, environmentalists, left wing organisations and NGOs.

The next meeting took place in Prague in September. The Czech Republic dealt with the impending global finance protests by turning back at the border hundreds of demonstrators with arrest records from Seattle and from anti-globalisation protests that have bird-dogged finance meetings in Washington; Davos, Switzerland; Melbourne, Australia; and Okinawa, Japan.

Demonstrators arrived anyway, and about 10,000 of them defied Czech police lines to try to march on the Congress Centre, where delegates to the joint annual meeting of the World Bank and the International Monetary Fund arrived in special sealed subway cars.

Obviously, dark shadows move beneath the dazzling Czech surface. The country hosting the IMF and World Bank is also a distinct symbol for everything that's wrong with corporate globalisation.

The respective fates of the Czech Republic and Slovakia seven years after their separation are symbolic of the growing inequality taking root even on the Social Democratic soil of Europe. In the poorer Slovakia, unemployment runs at 20 percent - twice the level of its neighbour. Inflation there is 14 percent, compared with 2.5 percent in the Czech Republic.

Yet Slovakia is a raging success story compared with many of the other transitional countries of Central and Eastern Europe. According to a little-noted report released by the World Bank just one week before the Prague conference, ``there is little doubt that poverty has increased dramatically'' in the former Eastern bloc since it entered the global system. ``Moreover, the increase in poverty is much larger and more persistent than many would have expected at the start of this process.''

As Jeremy Brecher and Brendan Smith note in a new book, ``Globalisation From Below,'' 89 countries are worse off than they were 10 years ago. In Africa, where per capita income grew by 34.3 percent from 1960 to 1980, per capita income subsequently fell by about 20 percent from 1980 to 1997. At the same time, they point out, the world's 200 richest people have doubled their wealth in the past four years. Decades of promises that just a little more ``short-term'' pain will bring long-term gain have exposed the IMF and World Bank as false prophets whose mission is to protect those who already control too much wealth and power.

On 12 December, Jubilee 2000 - the worldwide campaign for the cancellation of unpayable debt - argued that rich creditors have failed the world poorest countries. The campaign group's final report, The World Will Never Be The Same Again, analyses figures from the World Bank and IMF to show that the nine countries currently awaiting debt relief will see debt payments fall by less than a third.

In Cologne in 1999, the G7 leaders declared that by the end of 2000, 25 countries would have begun to receive debt relief under the `Heavily Indebted Poor Countries' (HIPC) scheme. A year later, in Okinawa, Japan, they scaled this target down to 20. By the end of 2000, only 13 countries had started to benefit.

The first 13 states to receive debt relief have had an average 37% reduction in annual debt payments, leaving all but two still spending more on debt than on health. Mauritania, for example, the first country through in 2000, will be paying $63 million on debt repayments, but spends only $51 million on education and $17 million on health. Zambia, the latest country to enter the scheme, also illustrates its failures. Despite the IMF's best efforts to `front-load' payments to avoid an embarrassing immediate rise, Zambia is set to see debt service payments rise above 2000 levels in just four years. From 2001-2004, Zambia will be spending on average $168 million a year on debt. Zambia is one of the world's poorest countries, where one in five adults has AIDS, and the disability-adjusted life expectancy is now 30.3 years.

Yet the next nine countries to complete the HIPC obstacle course will fare even worse. The nine, seven of whom creditors have promised debt relief this year, are projected to see debt payments fall by only 29% on average. Niger, for example, will be left spending $40 million a year on debt, compared with only $27 million on health, though 70% of the population have no access to health services.

``We know that the big creditors like the G7, the IMF and the World Bank are probably hoping that they get rid of the stubborn Jubilee 2000 campaign'', said Jean Sommers, from the Debt and Development Coalition - Ireland, in December. ``Now that we are coming towards the end of the Jubilee year they are probably thinking that we'll be packing our backs, thinking we have done our bit and that we will call it a day... But the Jubilee Campaign will be continuing. So I want to put the G7 on notice that when they first meet in 2001 in Genoa, we'll be there.''

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