For half a millenium, the West-first Spain and Portugal, then England and lastly the US-ruled the world. This position is now seriously put in question by the newcomers.. Officially the International Monetary Fund and the World Bank represent global interests and bear worldwide responsibility. In reality, they are dominated by the US.. The left has not yet adjusted to the imminent upheavals.
IMPERIAL MULTILATERALISM IN CRISIS
On the Decline of the IMF, the WTO and the G8
By Peter Wahl
[This article published in: Fantomas 4/25/2007 is translated from the German on the World Wide Web,
http://www.linksnet.de/artikel.php?id=2993.]
In the course of economic globalization, the big multilateral institutions – IMF, World Bank, WTO, OECD, BIZ [Bank for International Currency Equalization] and NATO – were integrated in a system that flanked the neoliberal project on the political plane. Like the crackpots on the net, the G8 should act as an informal coordinating authority. The system was not perfect. But it approximated concrete global governance, a wickerwork supporting domination and structured hierarchically with an imperial character that seemingly defined the fate of the planet.
The UN was marginalized again and again in this world order. Where it adjusted to this strategic design of the empire, the Security Council was instrumentalized as in the case of the war in Afghanistan. Apart from this, it was responsible for sensitive themes like development and combating poverty. Given its concrete political powerlessness, it largely had to restrict itself to rhetoric.
The signs that imperial multilateralism is falling into increasing difficulties are multiplying. The question is whether this is a temporary problem or a deeper structural upheaval. Is the crisis of institutions the herald of a new epoch in which the cards of power politics are reshuffled?
THE WTO SINKS
Since Seattle, the World Trade organization (WTO) has obviously been in crisis. The Doha round and the attempt at further liberalization failed. With the former flagship of neoliberal globalization, the slogan of the protest movement “Shrink or Sink” seems fulfilled in the direction of sinking. The big players in trade policy all back bilateral trade and investment agreements.
Several factors contributed to the breakdown of the WTO:
1. The rivalries between the trading giants EU and the US led to blockades in Seattle. These rivalries have increased more than decreased whether in agricultural policy, industrial subsidies or liberalization in the audio-visual sector. Trade policy is the only terrain on which the EU is on a par with the US.
2. The emerging markets, above all China, India and Brazil, have risen to trade heavyweights. They have organized collectively and have not only single-mindedly pursued their own interests. The establishment of the informal group of 20 [G20] at the conference in Cancun is a manifestation of this phenomenon.
3. Since Seattle, the other developing countries have begun to self-confidently represent their interests. The African states have joined together in one group. Even if their trade negotiating power is limited, they can contribute at least in agricultural policy so industrial countries cannot carry through their agenda.
4. Finally, the worldwide protests and the de-legitimation of the WTO in the world public have contributed to the crisis of neoliberalism’s acceptance in general and the crisis of neoliberal institutions in particular. Beyond the WTO, these factors affect the other institutions and the course of world history altogether.
IMF ATTACKED
The International Monetary Fund (IMF) has serious problems. After the Asian crisis, Malaysia and several other Asian emerging markets bid farewell to the pure theory of the Washington Consensus. China and India did not first agree to this. A budget crisis along with an identity crisis erupted at the Washington headquarters of the Fund when Brazil and Argentina paid back their debts to the fund early and thereby avoided dependence and the resulting structural adjustment conditions. Without interests and fees from big debtors, the IMF budget shriveled painfully. Even Indonesia, the last big debtor, has announced it will meet its obligations within two years. In 2006, IMF revenues fell more than one-half to $1.39 billion. Revenues are calculated at only $635 million for 2009. For two decades, the fund played a major role in the world economy. Now it risks becoming a bit player or small-part actor.
Criticism of the IMF extends far into the mainstream. A 2006 report on the International Monetary Fund ordered by the European Parliament committee for the economy and currency declared the fund had largely failed in the last 20 years. The structures are antiquated and encrusted. The commission urged a strict limitation to its core mandate, stabilizing fluctuations of exchange rates and granting temporary assistance to countries with serious balance of payments problems. At the same time, changes in voting conditions were emphasized, above all increasing the European weight. Even the IMF-head Rodrigo Rato, successor of Horst Kohler, speaks of the necessity of reforms.
The World Bank that was always subordinate to the fund in the large-scale guidelines of policy is affected. If the crisis stage is not at hand, the present course is strategically diffuse. On one side, the neoliberal model is affirmed with some rhetorical concessions. On the other side, the catastrophic results from 15 years of the Washington Consensus are too obvious to simply allow business as usual.
The problems of the Bretton Woods twins, first of all, are the problems of the US. Zbigniew Brzezinski’s assessment is still true: “Officially, the International Monetary Fund and the World Bank represent global interests and bear worldwide responsibility. In reality, they are dominated by the US.”
G8 – A DISCONTINUED MODEL
With the G8, the question is raised whether the working model still has a right to exist. Before the 2006 summit in Russia, Tony Blair rejected the proposal to make a G12 out of a G8, accepting China, India, Brazil and South Africa. At present the G8 represents only 13% of the world’s population. A G12 would bring it to 50% so a certain arithmetic representation would arise.
However the problem of the G8 is not only its democracy deficit. In the mix of cooperation and conflict, the centrifugal tendencies have strongly intensified since the end of the Cold War. Block discipline was unnecessary since the Europeans strongly defended their own interests. On the other side, the unilateralism of the Bush administration and its crusade against terrorism deepened the divergence. The peak in this development was the Iraq war.
Russia’s inclusion has proven to be a burden in the last years. While Boris Yeltzin was a compliant vassal of the West, Vladimir Putin attempts Russia’s comeback as an independent superpower. He relies on Russia’s status as a nuclear superpower and the strategic use of Russia’s wealth in oil and natural gas. Clear differences are also striking in dealing with Iran, in the latest Lebanon war and in the so-called security policy. Putin emphasized this in his controversial address at the most recent Munich security conference.
RISE OF THE BRICS
Angela Merkel (Germany’s current chancellor) rejects Blair’s proposal for a G12. The four candidates were guests at Heiligendamm. The heterogeneity of the group would drastically increase with full membership of the new countries. It is very dubious whether the summit could still set the framework since the West’s interests are neutralized.
The global power configuration has basically shifted even if the hysteria over China’s rapid economic, political and military ascent, the renaissance of Russian superpower politics and India’s prominent role as a world power is restrained. It seems the epoch after the Cold War was very brief. Not even two decades after the end of history was announced, we witness an enormous acceleration of history. A profound historical turning point is on its way. For a half millennium, the West – first Spain and Portugal, then England and lastly the US – dominated the world. The newcomers now seriously put in question this dominant position.
More may be behind the problems of multilateral institutions than a crisis of form. Ideas of a new block like the project of a transatlantic partnership are gaining ground again. A transatlantic free trade zone supplemented by closer political cooperation is one possible reaction. NATO still exists. Whether the idea of cooperation is realistic can be left open. The left has not yet adjusted to the imminent upheavals. How should the left respond to the new developments? Simple answers according to the logic “The enemy of my enemy is my friend” are prohibited. Neither Chinese state capitalism nor Putin’s authoritarian regime are emancipatory processes. The western “value community” about which the German chancellor raves cannot be the alternative. A profound debate is on the agenda.
On the Decline of the IMF, the WTO and the G8
By Peter Wahl
[This article published in: Fantomas 4/25/2007 is translated from the German on the World Wide Web,
http://www.linksnet.de/artikel.php?id=2993.] In the course of economic globalization, the big multilateral institutions – IMF, World Bank, WTO, OECD, BIZ [Bank for International Currency Equalization] and NATO – were integrated in a system that flanked the neoliberal project on the political plane. Like the crackpots on the net, the G8 should act as an informal coordinating authority. The system was not perfect. But it approximated concrete global governance, a wickerwork supporting domination and structured hierarchically with an imperial character that seemingly defined the fate of the planet.
The UN was marginalized again and again in this world order. Where it adjusted to this strategic design of the empire, the Security Council was instrumentalized as in the case of the war in Afghanistan. Apart from this, it was responsible for sensitive themes like development and combating poverty. Given its concrete political powerlessness, it largely had to restrict itself to rhetoric.
The signs that imperial multilateralism is falling into increasing difficulties are multiplying. The question is whether this is a temporary problem or a deeper structural upheaval. Is the crisis of institutions the herald of a new epoch in which the cards of power politics are reshuffled?
THE WTO SINKS
Since Seattle, the World Trade organization (WTO) has obviously been in crisis. The Doha round and the attempt at further liberalization failed. With the former flagship of neoliberal globalization, the slogan of the protest movement “Shrink or Sink” seems fulfilled in the direction of sinking. The big players in trade policy all back bilateral trade and investment agreements.
Several factors contributed to the breakdown of the WTO:
1. The rivalries between the trading giants EU and the US led to blockades in Seattle. These rivalries have increased more than decreased whether in agricultural policy, industrial subsidies or liberalization in the audio-visual sector. Trade policy is the only terrain on which the EU is on a par with the US.
2. The emerging markets, above all China, India and Brazil, have risen to trade heavyweights. They have organized collectively and have not only single-mindedly pursued their own interests. The establishment of the informal group of 20 [G20] at the conference in Cancun is a manifestation of this phenomenon.
3. Since Seattle, the other developing countries have begun to self-confidently represent their interests. The African states have joined together in one group. Even if their trade negotiating power is limited, they can contribute at least in agricultural policy so industrial countries cannot carry through their agenda.
4. Finally, the worldwide protests and the de-legitimation of the WTO in the world public have contributed to the crisis of neoliberalism’s acceptance in general and the crisis of neoliberal institutions in particular. Beyond the WTO, these factors affect the other institutions and the course of world history altogether.
IMF ATTACKED
The International Monetary Fund (IMF) has serious problems. After the Asian crisis, Malaysia and several other Asian emerging markets bid farewell to the pure theory of the Washington Consensus. China and India did not first agree to this. A budget crisis along with an identity crisis erupted at the Washington headquarters of the Fund when Brazil and Argentina paid back their debts to the fund early and thereby avoided dependence and the resulting structural adjustment conditions. Without interests and fees from big debtors, the IMF budget shriveled painfully. Even Indonesia, the last big debtor, has announced it will meet its obligations within two years. In 2006, IMF revenues fell more than one-half to $1.39 billion. Revenues are calculated at only $635 million for 2009. For two decades, the fund played a major role in the world economy. Now it risks becoming a bit player or small-part actor.
Criticism of the IMF extends far into the mainstream. A 2006 report on the International Monetary Fund ordered by the European Parliament committee for the economy and currency declared the fund had largely failed in the last 20 years. The structures are antiquated and encrusted. The commission urged a strict limitation to its core mandate, stabilizing fluctuations of exchange rates and granting temporary assistance to countries with serious balance of payments problems. At the same time, changes in voting conditions were emphasized, above all increasing the European weight. Even the IMF-head Rodrigo Rato, successor of Horst Kohler, speaks of the necessity of reforms.
The World Bank that was always subordinate to the fund in the large-scale guidelines of policy is affected. If the crisis stage is not at hand, the present course is strategically diffuse. On one side, the neoliberal model is affirmed with some rhetorical concessions. On the other side, the catastrophic results from 15 years of the Washington Consensus are too obvious to simply allow business as usual.
The problems of the Bretton Woods twins, first of all, are the problems of the US. Zbigniew Brzezinski’s assessment is still true: “Officially, the International Monetary Fund and the World Bank represent global interests and bear worldwide responsibility. In reality, they are dominated by the US.”
G8 – A DISCONTINUED MODEL
With the G8, the question is raised whether the working model still has a right to exist. Before the 2006 summit in Russia, Tony Blair rejected the proposal to make a G12 out of a G8, accepting China, India, Brazil and South Africa. At present the G8 represents only 13% of the world’s population. A G12 would bring it to 50% so a certain arithmetic representation would arise.
However the problem of the G8 is not only its democracy deficit. In the mix of cooperation and conflict, the centrifugal tendencies have strongly intensified since the end of the Cold War. Block discipline was unnecessary since the Europeans strongly defended their own interests. On the other side, the unilateralism of the Bush administration and its crusade against terrorism deepened the divergence. The peak in this development was the Iraq war.
Russia’s inclusion has proven to be a burden in the last years. While Boris Yeltzin was a compliant vassal of the West, Vladimir Putin attempts Russia’s comeback as an independent superpower. He relies on Russia’s status as a nuclear superpower and the strategic use of Russia’s wealth in oil and natural gas. Clear differences are also striking in dealing with Iran, in the latest Lebanon war and in the so-called security policy. Putin emphasized this in his controversial address at the most recent Munich security conference.
RISE OF THE BRICS
Angela Merkel (Germany’s current chancellor) rejects Blair’s proposal for a G12. The four candidates were guests at Heiligendamm. The heterogeneity of the group would drastically increase with full membership of the new countries. It is very dubious whether the summit could still set the framework since the West’s interests are neutralized.
The global power configuration has basically shifted even if the hysteria over China’s rapid economic, political and military ascent, the renaissance of Russian superpower politics and India’s prominent role as a world power is restrained. It seems the epoch after the Cold War was very brief. Not even two decades after the end of history was announced, we witness an enormous acceleration of history. A profound historical turning point is on its way. For a half millennium, the West – first Spain and Portugal, then England and lastly the US – dominated the world. The newcomers now seriously put in question this dominant position.
More may be behind the problems of multilateral institutions than a crisis of form. Ideas of a new block like the project of a transatlantic partnership are gaining ground again. A transatlantic free trade zone supplemented by closer political cooperation is one possible reaction. NATO still exists. Whether the idea of cooperation is realistic can be left open. The left has not yet adjusted to the imminent upheavals. How should the left respond to the new developments? Simple answers according to the logic “The enemy of my enemy is my friend” are prohibited. Neither Chinese state capitalism nor Putin’s authoritarian regime are emancipatory processes. The western “value community” about which the German chancellor raves cannot be the alternative. A profound debate is on the agenda.
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