-Caveat Lector-
>From Salon,
http://www.salon1999.com/news/feature/1999/12/02/cooperation/index.html
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The three horsemen of globalization
Critics fear increased cooperation between the World Trade Organization,
World Bank and International Monetary Fund will spawn an 800-pound gorilla.
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By Monte Paulsen
Dec. 2, 1999 | SEATTLE -- There's nothing like the smell of tear gas in the
morning. Paired with the sight of riot-ready troops marching from the sickly
yellow fog, the acrid scent evokes Orwellian visions of a New World Order
among even the least paranoid citizens.
Even the most optimistic might raise an eyebrow at one deal that went down
behind the barricades during the Battle of Seattle this week.
As critics besieged the third ministerial meeting of the World Trade
Organization, the leaders of the world's most powerful financial
institutions -- the World Bank and the International Monetary Fund -- took
another small step toward consolidating their global power with that of the
burgeoning WTO.
"We shall build on the strong collaboration between our three organizations
to enhance the capacity of developing countries -- to foster their economic
and social development," a joint statement released Tuesday declared, "and
we will continue to work together closely, under our Cooperation Agreements,
to help them increase the coherence of economic policy-making."
Drafted in the flowery form of understatement that is the lingua franca of
trade negotiators, the Seattle statement obscures its functional
significance. Confidential memoranda distributed within the World Bank and
leaked by the Center for Economic and Policy Research provide a far more
revealing view of the institutions' shared interests.
A 1998 report states: "The globalization of economic activity has made it
useful to put the existing structures of cooperation on a more formal
basis." A 1999 paper concludes: "The intertwining of the development and
trade agendas provides important opportunities to cement our shared
commitment to making the international trade regime an effective path to
development and poverty alleviation."
WTO Director-General Mike Moore flatly denies all accusations that the
organization is forging any world order. The former prime minister of New
Zealand asserted: "The WTO is not a world government, a global policeman, or
an agent for corporate interests."
But critics of the powerful institutions see New World Disorder in the
making.
"The IMF, the World Bank and the World Trade Organization are in the process
of creating an international iron cage," says Walden Bello, an economist who
heads Focus on the Global South, a Bangkok-based think tank. Bello fears the
fund and the bank will become de facto enforcers of WTO policy.
Under current provisions, when two member countries can't settle a trade
dispute, they take their quarrel to a WTO dispute settlement panel in
Geneva. Many of the WTO's 134 member nations complain that the dispute
system is already rigged in favor of big countries, especially the United
States, since it allows the victor to impose trade sanctions against the
other country. While a U.S. trade sanction could smash a small nation's
exports, the same sanction applied by a developing country wouldn't make a
dent in the massive Western economy.
Bello and other critics fear that in the near future, this inequality would
be widened through cooperation among the three institutions. In addition to
punitive sanctions, small nations that dare to defy the U.S. or the European
Union could be denied loans by the World Bank or could become the victims of
endless structural adjustments imposed by the IMF.
IMF spokesman William Murray accused Bello and others of blowing the
so-called "cohesion" agreements out of proportion, saying that coordination
is both benign and necessary.
"You don't want competition among the institutions," Murray said.
"Otherwise, if a country doesn't like what the World Bank or the IMF says,
it would simply go to the other institution -- like a child shopping for
favors between his parents."
Stanford University economics professor Gerald Meier said such collaboration
is inevitable. "The World Bank and IMF are working much more closely
together with the WTO now. Many of their financial problems have a trade
component, so it's only natural," Meier said.
The bank and the fund -- both created at the close of World War II as part
of an effort to rebuild Europe -- have coordinated their efforts for
decades. Developing nations rarely receive loans from the World Bank without
satisfying the fund's strict demands for fiscal discipline. A maze of tariff
and trade agreements was also forged at the 1944 summit at Bretton Woods,
N.H.. But there was no central institution to enforce those deals, and
therefore no organization with which the bank or the fund could coordinate
their policies, until the General Agreement on Trade and Tariffs was
replaced by the WTO in 1995.
The b
