Financial Mail (South Africa)
Ethel Hazelhurst, Davos
WORLD ECONOMIC FORUM
Developing nations caught in crossfire of globalisation war
The most visible casualties of the weekend demonstrations in Davos the winter holiday resort in Switzerland which plays host to the World Economic Forum (WEF) every year at about this time were two police officers, injured in the fracas, and a window of the localMcDonalds broken by protesters.
But the more serious casualty in the increasingly heated debate between those riding the globalisation wave and the anti-globalisation lobby is Reason.
Opponents of globalisation who sabotaged the World Trade Organisation (WTO) meeting in Seattle in December and attempted to do the same in Davos, see themselves as defenders of the underdog and protectors of the poor. But the policies they propose do little to help the worlds underdogs or feed the worlds poor.
The first beneficiaries of the WTO Seattle debacle were the rich farmers of the European Union (EU), who flourish behind a battery of subsidies and trade barriers built to keep the produce of the developing world at bay. SA was close to a deal for its exports to, and imports from, the EU. But negotiations ground to a halt as anti-trade demonstrators took control of Seattle.
The controversy surfaced again in Davos and not just with the handful of protesters in the streets. Globalisation is not working for the working person, said Philip Jennings, general secretary of Union Network International in Switzerland, and one of the participants at the meeting.
Perhaps in Europe, where an unemployment rate of more than 10% constitutes a national crisis, trade unions cant visualise the problems of the workless classes in a country like SA where unemployment of nearly 40% is the norm. The anti-trade lobby may or may not know it, but its policies are providing social welfare for the rich. But the big business lobby represented in Davos by conference participants, too, is guilty of bad advocacy and poor public relations. Moreover, the WEF, founded in 1970 , is insensitive at best and arrogant at worst.
The meeting, which drew 3000 business people, academics and journalists to Davos this year, is a closed event. The press is confined to a colour-coded hierarchy (reminiscent of the former SAs dompas system) designed to keep much of the debate from the public. What could be worse for an organisation regularly accused of elitism, especially one that makes a virtue of transparency? Yet, many participants at Davos understand the need to communicate. The one who most clearly enunciated the underlying problems was US President Bill Clinton.
Many of the people who have questioned the wisdom of open trade are genuinely concerned about the fate of the poor and the disadvantaged, he said in the keynote address at the weekend. But they should ask themselves what will happen to a Bangladeshi textile worker or a migrant from the Mexican countryside, without the prospect of jobs and industry that can sell to foreign, as well as domestic consumers. What happens to farmers in Uruguay or Zimbabwe, in Australia, Europe, and the US, if protectionism makes it impossible to market products beyond their borders? How can working conditions be improved and poverty reduced in developing countries if they are denied opportunities to grow?
On the other hand, those who have benefited from globalisation cannot afford to ignore those who have not. The common thread that drew together the protesters at Seattle was that they all felt they had no voice in a world that is changing rapidly, said Clinton. Developing countries will reap the benefits of integration in the world economy only if the industrialised countries are able to garner enough domestic support for policies that are often controversial at home.
The situation is fraught with ironies. If US trade agreements with Africa and the Caribbean Basin are passed, he explained, the impact on the US economy will be very small, while for the African and Caribbean nations it will be very large. Yet there is substantial resistance to the agreements within the US. One of the most ironic and disappointing consequences of our unprecedented prosperity which has given us over 20m new jobs in the past seven years, said Clinton, is that it seems protectionist sentiment is greater now than it was seven years ago.
In time, the benefits of change will spread through the economy for all, Clinton said. But to persuade the disadvantaged of the credibility and long-term benefits of change, formal channels of communication must be created to allow opponents to participate properly. We have a well developed WTO for dealing with the trade issues. But we dont have well developed institutions for dealing with social, environmental and labour issues. Thats why people are in the streets.
The Davos participants discussed ways to cushion the poor from the first impact of technological advance. The remedies they suggested ranged from debt relief to micro loans for small business and health education for remote villages.
But ultimately there is only one way to spread the benefits of technology and globalisation : each country must provide its citizens with the right kind of training for the 21st Century. If they cant afford it, the developed world can assist which it is willing to do. Governments and people who dont grasp the opportunities of the technological revolution will have to be content with alms.:
