Monitoring Policy Making at the United Nations |
| ||||||||||||
Global Policy Forum List-Serv GPF List-Serv
February 14-18, 2000Greetings from Global Policy Forum!
Last week, the Commission on Social Development began its work at the United Nations. The Commission considers policy to reduce poverty and to improve social conditions for the world's people. But neoliberal economic policies have stymied its work and have steadily redistributed world wealth and income upwards. A few weeks ago, IMF representative Lorenzo Perez, demanded that the Brazilian government rescind a plan to boost a special anti-poverty fund. Though Brazil is one of the world's most unequal countries, Perez insisted that tax monies should be used to reduce foreign debt, setting off a political explosion in the country.
The IMF has backed down in Brazil, at least temporarily, but over many years it has imposed economic rules that invariably benefit the rich and widen income disparities. A recent UN report concludes that over more than thirty years, there has been a "widening gap between rich and poor, both among and within countries." It continues: "The difference between average per capita incomes in the industrialized and in the developing countries tripled between 1960 and 1993, while the share of global income taken by countries with the richest 20 per cent of the world's population rose from 70 to 85 per cent."
Even the World Bank, usually upbeat about it success in "poverty eradication," has produced a recent study on world income distribution that makes the gaps and trends brutally clear. Authored by economist Branko Milanovic, the report shows that the richest one percent of the world's people receive as much as the bottom fifty-seven percent, even when adjusted for purchasing power parity. On an exchange rate basis, the gap is even larger. The report also looks at trends and finds that the rich grew substantially richer on a worldwide basis, while incomes of the poorest people declined in many countries.
As the Commission got under way at the UN, the New York Times devoted a major story to reports of gigantic year-end windfalls for top executives in the Wall Street investment houses. In the past few weeks, New York City bankers and brokers have pocketed billions of dollars in year-end bonuses. Morgan Stanley, one of the biggest investment houses, rewarded its two top officers $26 million each, while compensating its number three executive $25 million and two other high ranking managers about $18 million each, in base salary, bonus, stock and stock options. Merrill Lynch, another large securities house, gave its top two executives $29 million and $19 million. The Times also reported that Morgan CEO, Philip J. Purcell, has $102 million in unexercised stock options, according to a recent government filing.
The press treats the Wall Street bonuses with admiring fascination, as if there were not the slightest connection to the poverty and political crises around the globe. A story in the Times talked about a buoyant market in large diamonds, as high rollers purchase impressive rocks to give to their latest companions. Buyers are snapping up gems costing $50,000 or more (more than the annual income of 99% of the world's people), while the De Beers diamond cartel announced that to meet soaring demand it has dramatically stepped up buying of rough stones.
The fat salaries show up in the US national accounts as a ballooning share for the finance sector. The other day, we read that investment banks and brokerage houses' portion of gross domestic product grew from 0.4% to 1.1% between 1977 and 1997. Employment in this sector has also grown substantially, as many more people, making far more money than ever, have taken up this lucrative line of work.
But the financial boom may not last forever. This week, the top US securities regulator issued a stern warning at a west coast investment conference. On Saturday, February 12, Arthur Levitt, Chairman of the Securities and Exchange Commission, told a large gathering of traders that margin buying is far too high and contributes to market instability. Margin buying (borrowing against stock value to purchase shares) has grown 700 percent since 1990. Levitt also warned that sky-high stock prices of firms without profits do not make good sense. "Many investors have become much more emotional than intellectual about their investment decisions," he told the New York Times on Thursday. Alan Greenspan, Federal Reserve Chairman, made some of the same points in Congressional testimony, warning that he will continue to hike interest rates to temper the overheated market.
Domestic investors are not the only cause for market madness. Inward flows from rich investors worldwide pump up the US markets and economy and their faith at the moment seems boundless. We were reminded this week, though, that not all those flows are proper and legal. The Bank of New York case, involving Russian money-laundering, sheds light on this aspect of the financial scene in the Big Apple. Two chief witnesses surrendered to the court in Manhattan, offering much new information. They admitted channeling more than $7 billion out of Russia to New York accounts they controlled. The funds apparently included proceeds of asset-stripped Russian companies and ill-gotten gains of the Russian mafia, as well as billions plundered directly from the Russian state treasury by financial oligarchs and high Kremlin officials. Soon, we may learn more about how the huge IMF "rescue" loans to Russia found their way overseas, while the Russian economy slid further into chaos.
At the IMF, no one is talking about such embarrassments. But Michel Camdessus, who probably knows some secrets, made his getaway during the week, stepping down on Valentine's Day after thirteen years as IMF Managing Director. The day before he left office, he delivered a "farewell speech" in Bangkok which included some rather surprising comments. No longer the confident high priest of neoliberal orthodoxy, Camdessus expressed nagging doubts about his religion of sound money, "growth" and deregulation. "Growth alone is not enough," he told his surprised listeners, noting that growth "can even be destructive of the natural environment or precious social goods and cultural values." He also called for a new, more open approach than the G-7 meetings and he referred to the growing gap between rich and poor as "potentially explosive."
Camdessus was in Bangkok for the tenth UN Conference on Trade and Development. UNCTAD's background papers noted that the share of the poorest countries in world trade fell by 40% during the 1990s. A number of speakers had harsh things to say about how the rich countries practice trade protection while forcing poor countries to open up their markets. Many saw Seattle as a turning point, when the poor countries finally decided to say "no" to trade liberalization that harmed their economies. Among the many eminent speakers was International Labour Organisation chief Juan Somavia, who talked caustically about the "casino economy" and said that the lack of social protection in the globalized system "can bring the whole house down."
UNCTAD circulated data at the conference showing that global investment flows grew sharply in 1999, spurred by torrid mergers and acquisitions. US companies increased their overseas investments to a record rate, and the UK replaced the United States as the largest outward investor for the first time since 1988. It should be no surprise that the US and the UK are the primary international investors, since they are home base for the biggest multinational corporations, home of the world's two leading money centers and headquarters for the world's biggest petroleum corporations.
When it comes to oil, the dynamic duo usually act as a very tight partnership, so their unity on Iraq sanctions policy (and the vehemence with which they pursue it) is virtually a fact of life in international politics. For months, the two governments have been pressing for the resignation of Hans von Sponeck, UN Humanitarian Coordinator in Iraq, who dared to speak out against the humanitarian crisis caused by the general trade sanctions and to investigate the human consequences of the US-UK bombing campaigns. Finally, the duo got their way, but with good deal of embarrassing attention and outrage.
On Sunday, February 13, Secretary General Kofi Annan announced von Sponeck's resignation in a terse statement, regretting the departure of an official who had served the UN for 36 years. (Von Sponeck's predecessor, Denis Halliday, had also resigned in protest a year and a half previously, after more than thirty years with the UN.) Jutta Burghardt, head of the UN World Food Program operation in Baghdad, resigned just two days later. "The stunted children will never recover," she had told a delegation last summer. "The monthly food basket lasts only about 21 days. Many families have no other income, and so are living in a situation of complete deprivation."
The two resignations stirred up a momentary storm in the press and lent urgency to a teach-in and demonstration in New York, where 86 protesters were arrested outside the US Mission. At the UN Security Council, several delegations asked for a Council briefing by von Sponeck, who is expected shortly in New York, but the US and the UK blocked this proposal, in spite of the fact that von Sponeck remains in his post until the end of March and had briefed the Council previously. Washington and London blithely dismiss von Sponeck as an apologist for Saddam.
The British government is especially keen to quash dissent on its Iraq policy, in the wake of a serious political setback in the House of Commons. On January 27, the House Select Committee on International Development issued a scathing report on the humanitarian consequences of the government's sanctions policy, particularly with respect to Iraq. Among its conclusions: "sanctions, unless carefully targeted, have the capacity to kill more children than armed warfare."
The Committee doubted that "there will be a case in the future where the UN would be justified in imposing comprehensive economic sanctions on a country." It went on: "However carefully exemptions are planned, the fact is that comprehensive economic sanctions only further concentrate power in the hands of the ruling elite. The UN will lose credibility if it advocates the rights of the poor whilst at the same time causing, if only indirectly, their further impoverishment."
The report proposed some excellent recommendations on policy, including targeted sanctions, no more general trade sanctions, the need for assessment of sanctions' impact and more. It also criticized the UK government for failing to consult with concerned NGOs in making its policy decisions. The committee also sharply criticized other sanctions, including the EU sanctions against Yugoslavia.
The Blair government was extremely unhappy about this report and angry at its own rebellious backbenchers. It immediately announced a new policy paper defending its own approach to Iraq, which blames Saddam Hussein for the humanitarian crisis. But according to reliable sources, the government is privately trying to head off future political embarrassment by pressing its US partner for more "flexible" policy options. Some think the rising price of oil will soften Washington's intransigence, but so far there is little sign of change in the US capital.
Tectonic shifts in the House of Commons were met with transatlantic reverberations in the Congress, where members released a letter on February 16, signed by seventy House members, calling on the Clinton administration to lift the sanctions. At a press conference, Congressman David Bonior called the sanctions "infanticide masquerading as policy." The next day, the office of Congressman Tony Hall released a letter to Secretary of State Madeleine Albright, protesting the "vitriol" directed against von Sponeck and Burghardt by State Department press spokesman James Rubin.
Members of Congress may want to look into another humanitarian scandal that has implications for Washington policy. Last week, Australian television presented a documentary report with evidence that funding for the Indonesian-backed militias that ransacked and killed in East Timor came in part from monies lent by the World Bank. The Bank is said to have discovered this diversion of its funds and registered a private protest. But it never made the incident public, thus entering into secret collusion with the Indonesian government and compounding its own responsibility for these terrible events. We will be interested to learn what Bank president James Wolfensohn eventually has to say about this episode and how it reflects on his policy of "transparency" and "good governance."
FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C ß 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.
