9:06 AM Jun 3, 1996

GLOBALISATION A THREAT TO SOUTH AND NORTH

Biel, Switzerland, 31 May (TWN) -- Speakers at an NGO organized seminar here agreed about threats and challenges from globalization, but disagreed sharply, along North-South lines, about the causes and effects.

The one-day seminar, attended by some 200 participants, on "Expectations from the South" was organised by the Swiss Coalition of Development Organisations, an umbrella body of major Swiss NGO aid agencies, to celebrate their 25th anniversary.

Globalization has increased the power of the big corporations, but has eroded the authority of political masters, Swiss Finance Minister, Kaspar Villiger said in an opening address at the seminar. Villiger saw globalisation as posing a threat to Northern countries like Switzerland whilst providing opportunities for poor countries.

However, these views were challenged by speakers from the South who stressed that globalisation and liberalisation was at the expense of most developing countries that are unable to compete in the world market.

Villiger told the Seminar that globalisation of the economy was continuing at an ever increasing speed, and "the pressure to increase companies' efficiency through growth and corporate mergers is also constantly increasing."

Citing the example of the Swiss chemical industry, Villiger said 25 years ago, the two companies Ciba and Geigy in Basel had merged. Recently, Ciba-Geigy and Sandoz had merged to create the new company Novartis.

[NGO participants at the seminar understood Villiger's statement to imply that these big corporate mergers had adverse social repercussions because the Ciba-Geigy/Sandoz merger will lead to a shedding of jobs -- between 3,500 estimated by the company and 10,000 in several public estimates. The merger of the chemical giants is thus widely used in public discussions in Switzerland as an example of the adverse effects of corporate mergers and concentration of capital.]

Villiger added: "There is not only increased competition between companies but also merciless competition triggered off between economic locations. Capital, technological know-how and jobs can be shifted across continents at any time. As has been said, we may have reached the end of geography. This process is placing limits to the power of political authority, as politics loses its influence over economic activities."

Villiger said this process had generated great pressures on the balance and well-being of Switzerland.

"For the rich countries this process is a threat, whereas for poor countries, this is an opportunity. We belong to those countries whose well-being might be threatened in the long run. There is no point in closing our eyes to these developments. Yet there is no reason to panic. We still have good cards to play, such as political stability, low unemployment, social peace, low interest rates and inflation. We have proved many times that we can meet new challenges."

Martin Khor, director of the Third World Network, said he was interested to note that the Swiss Finance Minister had raised concerns over the growing power of corporations, the reduced authority of governments to control their behaviour and the social problems caused by globalisation.

This admission was in contrast to statements of many other political leaders and heads of international agencies who keep claiming that globalisation has only positive results and that there are no losers.

Khor however disagreed that globalisation posed a threat to the North whilst giving opportunities to poor countries to develop. He said it was true that some people in the North may also suffer adverse effects of liberalisation, for instance those who lose their jobs or have social security taken away.

"But this is not because the benefits of globalisation are going to the South. It is true that a few stronger developing countries may be able to take advantage of export markets. But a large number of developing countries are still unable to compete and yet have to increasingly open their markets to cheaper foreign goods and to foreign investors that could run local firms and farms out of business."

Khor added that the economic sovereignty of many developing countries has been eroded by the trend of national policies being made by the World Bank and IMF, and also recently through the WTO.

Khor said that there were adverse effects of such liberalisation policies, such as job loss and reduced health and education services. Moreover, those countries whose economic units were unable to compete were threatened by liberalisation of imports and investments.

But globalisation, Khor said, was not inevitable and NGOs in the North and South should together impress upon their governments the need to control and regulate the behaviour of companies, and the liberalisation and globalisation processes.

Gamani Corea, board member of the South Centre and former Secretary-General of UNCTAD, said the North-South dialogue and the drive for international development cooperation was losing momentum.

Outside of the WTO, there are now few world fora focusing on North-South issues. Development problems had been allowed to recede. This was because after the Cold War the North was preoccupied with the transition in Eastern Europe and instability in their own societies.

In the South, many countries were too dependent on international financial institutions and donors.

"Their concerns are with internal reforms and domestic policies and participation in multilateral negotiations are a distant concern. The South has lost the leverage it had during the Cold War and also there is increased differentiation among Southern countries, and this has weakened its position in multilateral fora."

Corea said the new concepts of globalisation and liberalisation had been formulated to dispense with the need for development cooperation and for dealing with development problems.

"Globalisation and liberalisation are like a fast express train. Countries that get onto it are said to be able to reach new heights, whilst those that fail to get on board will be marginalised.

"Countries have to privatise, liberalise and balance their budgets. Globalisation is thus like a self-help kit for developing countries. The implication is there is no need for North-South dialogue, development cooperation or even South-South cooperation." This thesis, Corea said, cannot be accepted.

Corea agreed that developing countries should seek to take advantage of changes in the world economy. "But they have to be discriminating in the way they engage with the world economy. They must liberalise their trade regime, but this does not mean they should not leave room for protecting their domestic economy.

"They must go for export-led growth, but this does not mean there is no space for producing for their own markets. They need foreign direct investment, but this does not mean they should not build up their indigenous capability. There is need to modify the policy prescriptions for developing countries." Corea added that many developing countries were facing problems in trying to implement their Uruguay Round commitments. Many of them are still concerned with protectionist trends in the North, with low commodity prices, with the loss of momentum on development aid and the failure of the North to reach their aid targets.

"These are not yesterday's problems but today's problems. There is a crying need to revive the North-South dialogue and for a new compact," he said. "The South itself needs to do its own homework, to put forward a joint platform of development goals to be presented as a basis for negotiations with the North."

Former Haiti President, Jean-Bertrand Aristide, spoke of the paradox of the widening rich-poor gap despite the expansion of democracy in the South. "Never has democracy been so much on the agenda for developing countries, yet never before have they faced so many economic problems."

Aristide said that even though dictatorships in Latin America were falling one by one, poverty was also on the rise. In 1980, 120 million Latin Americans lived in poverty, in 1985 this rose to 160-170 million and by the end of the 1980s it had grown to an alarming 240 million.

"Democracy is undoubtedly on the rise but it is paradoxical that it is coupled with economic and social impoverishment. Democracy runs the risk of remaining a mere formality if we do not undertake to exert all efforts to give it substance. What purpose doe it serve an ordinary citizen to vote freely if that does not potentially give him the opportunity to improve his living conditions?"

"In the face of globalisation," Aristide concluded, "our future is at stake. At a time when the key phrases liberalisation, globalisation, sanctity of the market place and free trade have gained prominence, 80% of the world population share 15% of its riches. In Haiti one percent of the population absorbs close to one half of all income."

Oxfam International representative, Veena Siddharth, said that Southern NGOs would like Northern NGOs to bring to the attention of Northern governments and international institutions the need to change the framework of the policies imposed on their countries.

"They are also interested in opening up space for dialogue within their own countries and regions on economic policies, legal and regulatory issues."

Advocacy had thus become an important activity with both Southern and Northern NGOs, recounting as an example the campaign of the NGOs for debt relief, the Oxfam representative added.