By Marina Carman
When thousands of people shut down the World Trade Organisation (WTO) summit in Seattle for three days last November, it was proof that people are increasingly angry about the blatant inequality and powerful corporate influence enforced by institutions such as the WTO, the World Bank and the International Monetary Fund (IMF).
Capitalist economists, media magnates, business people and politicians tell us that we are moving towards a more "globalised" world where investment and capital can move easily around the world, allowing the Third World to compete in a "free" international market. In reality, we are seeing the globalisation of poverty and the globalisation of the power of huge corporations, backed by the governments of the advanced capitalist countries.
Globalisation?
The vast majority of owners, sales and production of the transnational corporations remain in the rich capitalist countries. According to the United Nations' World Investment Report 1993, there were 37,000 transnational corporations, which had 170,000 subsidiaries abroad. Ninety per cent had their headquarters in the developed capitalist countries.
The vast majority of investment and trade is also confined to the First World. In 1992, 60% of international investment and 84% of world trade flowed between North America, western Europe and Japan.
Inequality between the First and Third Worlds is growing, not decreasing. The average per capita income of the richest countries was 11 times that of the poorest countries in 1870, 38 times in 1965 and 58 times in 1985.
According to the UN Human Development Report 1997, the combined wealth of the 225 richest people in the world was more than $1.7 trillion, which is equal to the annual income of some 2.5 billion people, or 47% of the world's population. The wealth of just one man, Bill Gates, is enough to achieve and maintain universal access to basic education and health care, safe water and sanitation for the entire world.
In the First World, government policies driven by business interests — cutting welfare, health and education funding, and shifting the tax burden onto ordinary people — are creating increasing inequality. In the Third World, direct colonial subjugation has given way to other methods of keeping the people poor and extracting greater and greater profits.
IMF and World Bank
The debt owed by Third World countries to the IMF, World Bank and major First World banks is more than US$2030 billion (not including debts incurred by eastern European countries), an increase from $567 billion in 1980 and $1400 billion in 1992. Servicing this debt cripples Third World economies.
The poor countries' debt keeps growing. In 1997, the rich countries lent $8 billion to the poorest countries, while the latter repaid $8.2 billion. In return for loans, the IMF and World Bank demand that "structural adjustment programs" be implemented. These involve large-scale privatisation of public assets and cutting state expenditure.
Huge debts promote an emphasis on export industries rather than those that meet local needs. They also encourage unsustainable exploitation of natural resources, producing hunger and environmental devastation.
The IMF, World Bank and WTO impose economic policies that are agreed upon among the major First World countries which control these institutions. In the IMF and World Bank, the countries that contribute the most to these institutions' coffers are in control because decisions are made on a vote-per-dollar basis. The WTO has a one-member, one-vote constitution, but key decisions are made in informal meetings among the key countries.
The WTO
The WTO replaced the General Agreement on Tariffs and Trade (GATT) in 1995 as the world body to police trade "liberalisation" — the removal of barriers to the import of goods and foreign investment, as well as measures to protect domestic industries and jobs.
A mutual opening of markets always hurts the weakest economies. The historical subjugation of Third World economies has left them struggling with lower productivity rates and outdated technology, problems they cannot overcome because of the domination of the First World.
The WTO now covers services, as well as an extended range of industries, such as textiles and clothing, and agriculture. It can rule that environmental regulations are a barrier to trade. Its control over intellectual property is currently under discussion (that is, the extent to which it should allow private ownership of commercially valuable knowledge like software, agricultural innovations and even plants, animals and genetically modified organisms).
Countries not participating in the WTO are denied access to markets. Punitive economic sanctions can be imposed on those countries that do not comply with agreements. Only the most powerful players — like the United States — can ignore or bend the rules.
Resistance
The Seattle summit failed to agree on a new round of WTO negotiations.
First World countries, particularly the US, want to push trade "liberalisation" further, but in a way that furthers their own interests. But there is resistance. The poorer countries blocked the last round of GATT negotiations for more than a decade.
The Seattle protests helped to bring the issues of poverty and corporate power into the spotlight. Struggles against ravenous multinational companies and the policies of the IMF and World Bank continue in the Third World.
Given the role that Australian companies play in ripping off workers and resources in the poor countries of the Asia Pacific region, and given the support that Australian governments give to governments that repress dissent, it is vital that we in Australia give solidarity to people's struggles such as that in Indonesia against IMF-enforced cuts to price subsidies on fuel, electricity and education. This will be one of the issues raised by Resistance at protests against the World Economic Forum summit to be held in Melbourne in September (see article below).