Costs of globalisation

A broad alliance of public interest groups was out in Washington protesting against the unholy trinity'' of the World Bank, the Internat...

A broad alliance of public interest groups was out in Washington protesting against the 8220;unholy trinity8221; of the World Bank, the International Monetary Fund and the World Trade Organisation. It is a mixed bunch of people with a mixed bunch of causes. Many are well-focused and articulate, some wishy-washy and ill-informed.

There are conflicting interests as well, for example, between US labour unions and activists speaking for developing countries in Africa and Asia. In Seattle a couple of months ago the predominant theme of protests was fear and loathing of multinational corporations and their increasing power over the lives of people in the process of globalisation. This time, although the attack on globalisation persists, the emphasis appears to be on poverty around the world and the failure of the Bretton Woods institutions to design and implement effective policies to reduce poverty. In Washington as in Seattle there are strong attacks on 8220;undemocratic8221;, anti-people decision-making at the Fund-Bank and the WTO.

What will come of the airing of these complaints in the long run is hard to say. The battle in Seattle brought the WTO session to an abrupt end, its agenda unfinished. In Washington there have been timely reminders from the street to the Fund-Bank and G-7 finance ministers meeting simultaneously about the delay in promised debt relief to the poorest countries. If that does, in fact, prevent further dilatoriness on the part of the world8217;s richest countries, some good will have been achieved.

There is bound to be a degree of political sensitivity in developed country capitals to the demands of the protesters not only because many well respected and influential environmental and other activist groups are involved, not only because of the numbers of young people who feel compelled to support one or more of the causes. Apart from the size and organised effort behind them, what is striking about the demonstrations is the anti-establishment flavour.

Political leaders no less than the Fund-Bank are going to have to figure out the strength of such feeling, from where it originates and where it is leading.

It cannot be contested that globalisation leads to gains and losses. Fund-Bank interventions can make the difference between maximising the first and minimising the second. But their scores are low so far, witness East Asia8217;s last financial crisis, the political costs of meeting IMF conditionalities and so on. The World Bank8217;s anti-poverty, promotion of good governance policies are not seen as successful as could be wished in the countries where they have been applied. They would do well to listen to what the serious anti-poverty groups are saying and improve their policies.

The latest US data on inflation has been read as heralding interest rate hikes again and slower economic growth and the stock markets have taken fright. This too will concentrate minds at the IMF and the World Bank. Slower growth in the US economy will impact on economies all over the world.

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Many developing countries that have built their hopes and growth and trade strategies on continuing expansion of the US economy may be in for a serious disappointment. If the impact on them is not managed well, globalisation could acquire many more adversaries than were out on Washington8217;s streets last week.