Vol. 37, No. 3
UNCTAD: Battle over global economics
At a time of desperate need for more public debate about global economic policies, the United States, European Union and other countries in the global North are trying to silence one of the very few official voices that analyzes reality from the lens of the global South and offers policy alternatives to the Washington Consensus model favored by most international institutions.
The rich countries are trying to take advantage of a routine quadrennial planning meeting of the UN Conference on Trade and Development (UNCTAD) to weaken its mandate and shift its focus away from the impact of international economics on the global South to less controversial (and less essential) topics. Assessing economic impact, these countries believe, should be left to the IMF and World Bank which have a worldview more similar to governments in the North. Around the world, civil society organizations have reacted vigorously to defend UNCTAD, while the response of governments in the global South shows that the dominance of the Washington Consensus may be coming to an end.
Two voting blocs are the main players in this controversy. The G77+China bloc represents 132 of the 194 countries in the UN, and so should be the most powerful alliance. But in reality, a smaller coalition of countries from the global North (Japan, the United States, Switzerland, Canada, Australia, Norway and New Zealand, called the JZ group) is more influential.
The JZ group doesn't want UNCTAD to investigate the effects of finances, energy and climate change on hunger as its findings are likely to conflict with the free market analysis of the IMF and World Bank. The group has removed positive statements from UNCTAD's planning document such as "Securing access to food - one of the most basic human needs - is a priority" and "Adequate regulation and supervision of financial markets, and debt management, can play important roles with regard to crisis prevention and resolution."
In the view of Rubens Ricupero, UNCTAD secretary general from 1995-2004, "The rich countries don't like an organization that is outside their control, and has the capacity for independent analysis, giving advice to African countries, for instance, against the neocolonialist intentions of France and of European countries in general."
UNCTAD's research has been incredibly perceptive in naming significant economic problems before they reach crisis stage. In a letter warning about this current offensive against UNCTAD, current and former employees point out, "UNCTAD was ahead of the curve in its warnings of how global finance was trumping the real economy, both nationally and internationally. It forecast the Mexican tequila crisis of 1994-95. It warned of the East Asian crisis of 1997 and the Argentinian crisis of 2001. It has consistently sounded the alarm of the dangers of excessive deregulation of financial markets," warning for many years about the global imbalances that led to the financial crisis of 2008. If more of UNCTAD's recommendations were followed, many of these crises and untold human suffering could have been avoided.
Instead, IMF and World Bank dictates have reigned with negative results in many parts of the world. As the current UNCTAD Secretary-General Dr. Supachai Panitchpakdi said about Africa, "The combination of macroeconomic austerity, rapid liberalisation, privatisation, and deregulation not only failed to produce a supply-side revolution but, instead, set the region back economically; productivity growth stalled in most sectors, and the informal economy had grown rapidly" in countries that followed their prescriptions.
The possibility of losing such an important institution sparked a rapid response from hundreds of civil society organizations around the world who wrote letters in protest, calling for the continued mandate of UNCTAD. The G77 + China also responded firmly:
"While we have always held firmly to our principles, the Group of 77 and China has tried to be as flexible as possible on how we have articulated them in our various negotiations in UNCTAD … [We believe] that the global economic and financial crisis marks for once and for all the end of the bad old days, and perhaps the dawn of an international regime of global economic governance based on the highest principles and ideals of the UN, including sovereignty, equality, and mutual respect. [Yet] we see behaviour that seems to indicate a desire for the dawn of a new neocolonialism. We cannot, we will not, accept this… Perhaps, in our desire for consensus, we have accommodated too much and this good faith was misunderstood, and abused. Perhaps this should end now."
The strongly worded response is indicative of a more fundamental change that is occurring not just within UNCTAD, but all around the world, especially since the 2008 financial crisis. People and governments of the global South are moving beyond the stronghold of the Washington Consensus free trade model, are developing workable alternative models of their own and leaving behind those who continue to cling to failed ideologies. §