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Develop, Envelop: Globalization

This Assembly's discussion of skewed economic growth world-wide had a new edge to it, as the Asian financial/economic crisis spilled over into Russia and Latin America (Brazil), and threatened even the most powerful. What had originally been foreseen as a consultation on how to direct the benefits of global growth to the neglected poor turned out to be an exploration both of crisis management and of fundamental restructuring of the flow of capital. In these matters, the G.A. at best has some political influence; but without really understanding what is happening that influence can be frittered away. Hard-nosed finance moguls-- "Ministers"-- call the shots at the IMF and dominate the G7. At the same time everyone is in the U.N. which, in celestial theory, should rule; but that isn't the way it works, as you know. All members of the family are supposed to consult and all that, but not everyone gets to sign the cheques. Nevertheless, there has been a lot more consultation between the U.N. and the Bretton Woods Institutions (IMF and the Bank) during recent years, especially at "High Level." Such a consultation was held by ECOSOC in July 1998, attended among others by the heads of IMF (Michel Camdessus), the World Bank (James Wolfensohn) and UNCTAD (Rubens Ricupero).

That globalization was hot-- on the front burner, a quaint image for the Assembly-- was evident from the fact that it was Number One on the G.A. agenda. Quite new was this "high-level dialogue," during the Assembly's first two days, a step toward a "reform" proposed by the Secretary-General (i.e., that the traditional diffuse debate should focus on one or two specific issues). To facilitate serious discussion and discourage posturing, this Dialogue took the form of round-tables spiced by expert panels. Fully elaborated, the subject addressed was "the social and economic impact of globalization and interdependence and their policy implications." I have not noticed any attempt here to define "globalization," and given the circumstances that may be a good thing. It seemed to be taken as an umbrella term for the so-called free market economy, comprising capital and trade. A more precise understanding of globalization is the computerization (networking, etc.) that is revolutionizing (speed, efficiency) management, investment, distribution, marketing-- as well as communications and access to information generally. This revolution has made transnationals runaway powers beyond government control, while theoretically accessible to civilian hackers or just nice NGOs (civil society) to turn them in.

During this Dialogue, the human effects of the Asian glitch in globalization were aired-- the vast increase in unemployment and poverty, especially in Indonesia (15,000 jobs lost every day). The word was that globalization is blind-- certainly Midas was blinded by gold. Deputy Secretary-General Louise Frechette opened the Dialogue with a magisterial address, clear, comprehensive and realistic (reproduced in Annex 2). The G.A. President's summary of the Dialogue pretty much defined the issues.

The general thrust of the two-day discussions may be summarized as follows. First of all, globalization is an irreversible process, not an option. It is a positive and not an evil force, but it is also blind and therefore needs to be carefully harnessed. Secondly, national efforts to meet the challenges of globalization, in particular institution-building, are necessary but not sufficient. Action on a global scale, involving multilateral institutions as well as the world's leading economies is imperative. Thirdly, there is a need to move beyond the status quo, in particular by reviewing the current architecture of the international financial system with a view to enhancing its transparency, accountability and participatory character. Fourthly, globalization is a multifaceted process involving many actors. In order to address effectively the issues of inclusiveness and participation, it is necessary to promote a global civil ethic to shape the rules that will ensure that globalization benefits all, including those who are currently marginalized. Fifthly, the United Nations, owing to its universality, and broad mandate, provides a unique platform for defining the principles and norms necessary to harness the potential of globalization and for promoting a comprehensive dialogue on globalization around the concept of "global housekeeping."

Discussion of globalization continued in the Assembly's Second Committee. Not much substance was added. An Expert Panel warned of an impending depression, not as bad as 1929 because at least some regulating institutions are in place and people are alert to what is happening. Video made possible a joint discussion with UNCTAD eminents (Geneva) and the Second Committee (New York). UNCTAD had assembled savants from the U.N. system and the private sector. They stressed the necessity of good national as well as international institutions-- regulation, supervision, restructuring banks and even corporations. An IMF spokesman on another day said much the same thing: no quick fix, but the IMF seeks a global system that is stable, sound, open, transparent and fair. Who could ask for anything more?

The Committee-- remember, this is a Committee of the Whole, it is the G.A.-- was treated to some statistics by the Secretariat. It is no secret that most investment capital goes to richer countries (profits) and very little to the poor (they stay poor). Even so, servicing of external debt exceeds export income of the poorest countries; and debt relief (canceling or rescheduling) is not catching up. The level of grant aid (ODA - official development assistance) from rich to poor continues to fall, down another 16% in 1997.

It is hard to see what the G.A. as such could do about all this. One would hope that an enlightened and serious debate in this uniquely inclusive forum would at least expose the what and why of "globalization," its failure to meet basic human needs, its neglect of the poorest countries, its deepening of the gulf between rich and poor, and the consequent political time-bomb, enough to scare King Croesus into action. Indeed, ideas launched in the General Assembly over the years have influenced the Brettons, most recently the human development orientation of the World Bank. Relevant too is the approach taken by the G7 leading industrialized countries-- see Annex 3. For now, the formal outcomes from this Assembly were: to ask the IMF to go about devising a way to regulate short-term flows of capital; to set up a Working Group on finance for development; and to continue discussing major issues (the U.N. role in global interdependence) in the next session. Addressing the Working Group on 9 February 1999, the Secretary-General observed that "the United Nations has a central legitimate interest in questions of international finance" because the new "universe of finance" has an enormous impact on overall development and on peace and security. All players-- international, governments, private business, civil society-- need to be involved in devising a new way to reinforce development world-wide.

Just a word now about international trade. UNCTAD continues as advocate of developing countries, among them the poorest still facing barriers to getting primary products into the more "developed" markets. Along with this issue, WTO (the World Trade Organization, arbiter of disputes over trade agreements) is entangled in conflicting complaints about environmental damage and labour standards. The WTO likes to say that it has no competence in such matters, referring them to the U.N. It will be important for North and South to collaborate at the U.N. in devising solutions to such pathologies in the new global corporation.

Privatize, Publicize

The free-market, the private sector, is supposed to save us all as it blindly produces so much of everything that we will be carried away in the flood. Something like that. Meantime, private and public, commerce and government are locked in curious embrace. The U.N. can hardly ignore the towering commercial giant. For technical reasons alone, private enterprise is much involved with the U.N., for example, in environment treaties (e.g., ozone, forests) and in disarmament (e.g., in elaborating the Chemical Weapons Convention). From the start of his tenure, Secretary-General Kofi Annan has institutionalized regular consultation with business through the International Chamber of Commerce and others. On the suggestion of the Secretary-General, the International Chamber of Commerce is underwriting the preparation of investment guidelines. UNCTAD brought leaders from developing countries and business together to explore investment prospects in a conference on "Partners in Development" at Lyon, France in November 1998. Also on 5 November, Louise Frechette, Deputy Secretary-General, spoke to the World Business Council for Sustainable Development (its slogan: "Solutions through Partnership") about the human tragedies resulting from economic collapse (as in Asia recently) and the long-term mutual benefits, economic and social, of U.N./business partnership (her speech is in Annex 4). On 1 February 1999 at the prestigious World Economic Forum at Davos in Switzerland, Kofi Annan made his third démarche, hob-nobbing with the powers that rock the market. Speaking there, he remarked that globalization, "the spread of markets outpaces the ability of societies and their political systems to adjust to them . . . History teaches us that such an imbalance between the economic, social and political realms cannot be sustained for long." After the Great Depression, industrial countries laid the basis for "liberalization" and growth through social safety nets and related measures limiting volatility and human damage. "Our challenge today," he said, "is to devise a similar compact on a global scale, to underpin the new global economy . . . Specifically, I call on you-- individually and through your firms, and collectively through your business associations-- to embrace, support and enact a set of core values in the areas of human rights, labour standards and environmental practices." Continuing, he said that shared values and social stability are basic to sustaining a global system. All of us-- governments, corporations, non-governmental organizations, international organizations-- have to make the right decisions now. He challenged the gilded elite to show "global vision and leadership."