[Debate] (Fwd) Unctad tied in knots by the rich (Vijay Prashad)

[Patrick Bond]

*Red ink holds UN trade challenge at bay*

By Vijay Prashad

The United Nations Conference on Trade and Development (UNCTAD) started 
its 13th conference at the weekend in Doha, Qatar. Delegates walking 
around the convention center had to negotiate a 10-meter Louise 
Bourgeois statue of a spider, a fitting image for a meeting where 
powerful countries have begun to spin their webs into which will tumble 
the unwitting.

While panels on investment opportunities took place in the open spaces 
of the conference, in the back rooms negotiations continued apace. Red 
pens scrawled over the "President's suggested distilled negotiation 
text", continuing the fights that began in Geneva. A leaked draft of the 
text gives us a good sense of the stakes at Doha.

Since it would be inefficient for the 194 member states to negotiate a 
document such as this individually, the UNCTAD body is divided into a 
series of negotiating blocs. The largest group is the Group of 77 (G-77) 
+ China, which represents 132 countries. By sheer heft, the G-77 + China 
should be the most powerful bloc, but it is not.

The most powerful is Group B, which represents the states of the North 
Atlantic and its allies. In the negotiating process, Group B divides 
into two sections: the European Union (EU) and the JUSSCANNZ group 
(which comprises Japan, the United States, Switzerland, Canada, 
Australia, Norway and New Zealand). At UNCTAD, the JUSSCANNZ Group 
(abbreviated as JZ) is the most engaged grouping. Switzerland's 
ambassador to the UNCTAD seems to have taken on the role of group leader.

The most common comment on the leaked text is the following phrase "JZ 
delete". The red pen of the JZ delegation flashed across the "consensus" 
document, mainly fighting back against the G-77's attempt to bring 
matters of finance, commodity prices and hunger onto the agenda.

One of the special sentences deleted by the JZ group is this, "Securing 
access to food - one of the most basic human needs - is a priority (JZ 
delete)." Another that the European Union deleted after the G-77 + China 
added it in was that people have the right to "medicine at affordable 
prices (G-77) {EU delete}".

The main differences between the G-77 + China and the JZ/EU groupings is 
evident in two areas: (1) the role of the state in development, (2) the 
question of financial regulation.

The State. Buried in the Accra Accord (the final document of UNCTAD XII 
in 2008) is an indication of the philosophical difference between the 
South and the North on state policy and development. The North prefers 
the "market" as the conductor of social affairs. The South is keen on 
State intervention to frame the market's operations.

"Developing countries," the Accra Accord noted,"should pursue 
development strategies that are compatible with their specific 
conditions within the framework of an enabling State." This "enabling 
state" is to deploy "its administrative and political means for the task 
of economic development, efficiently focusing human and financial 
resources".

At Doha, the negotiators are at work debating the adjective to qualify 
the state: the G-77 + China and the UNCTAD chair prefer the Accra term, 
"enabling", while the JZ and EU want "effective". From the JZ we get, 
"An effective State, working with private, non-profit and other 
stakeholders, can help forge a coherent development strategy and provide 
the right enabling environment for productive economic activity."

The "effective state" is one that follows the World Bank's dictum of 
"Good Governance" - a bureaucratic entity with a legal foundation that 
is compatible with the "business civilization" of our era. When the G-77 
+ China added the fragment, "The State has an important role to play," 
we got the red ink, "JZ delete". The state could not enable or play an 
important role. It was to be a conduit for the "stakeholders", not 
citizens or workers, but the "private" sector (with "private" a polite 
word for "corporate").

/*Finance*/. The JZ group clears the first paragraph of the statement, 
which is essentially verbiage, and then cuts the next five paragraphs. 
The red line runs through any consideration of finance, hunger, energy 
and climate change. The finance paragraph suggests that no 
development-centered globalization can take place unless we "reconnect 
finance with the real economy". This is heresy to the advocates of 
finance-driven globalization.

Later in the text, the squabbles persist. The G-77 + China propose 
mechanisms to regulate and supervise financial markets and to allow 
"fiscal space" for states to "respond to the global recession with 
countercyclical policies". All this is cut by the JZ. All that is to 
remain is this, "UNCTAD's activities should be delivered within its core 
mandate, within its existing capacities and resources, and without 
prejudice to the work of other international organizations." Mentioning 
the "other international organizations", the JZ must have in mind the 
International Monetary Fund (IMF).

The IMF's current World Economic Outlook ("Growth Resumes, Dangers 
Remain", April 2012) offers an empirical assessment of the overleveraged 
and toxic financial system but stops short of any call for regulation.

"In many large economies," the IMF notes (p 21), "financial sectors 
became bloated and overleveraged during the decade before the financial 
crisis. Over time, shrinkage and deleveraging are necessary steps to 
improving system stability."

European banks will have to conduct deleveraging operations for US$2.6 
trillion over the next few years, with governments and multilateral 
organizations willing to provide all kinds of mechanisms to enable banks 
to restore their balances. The enabling can take place to help banks, 
but there will be no regulation of the banks going forward (apart from 
the likelihood of anemic leverage ratios). The UNCTAD draft does not 
mention Europe.

The IMF report points out that one of the great threats to the 
developing world is the "volatile capital inflows", the hot money that 
darts in and out of countries in search of quick profits rather than 
with any concern for investment toward development.

Certain countries protected themselves from the worst effects of the 
financial crisis by using "macro-prudential measures designed to manage 
capital inflows, such as taxes on certain inflows, minimum holding 
periods, and currency-specific requirements" (p 26). The IMF does not 
take an adverse position on these policies and frameworks, but sees them 
as playing "an important role in ameliorating the impact of volatile 
capital flows on financial stability".

Nothing of the kind is being permitted in the UNCTAD draft. The JZ Group 
struck down this common-sense statement, "Adequate regulation and 
supervision of financial markets, and debt management, can play 
important roles with regard to crisis prevention and resolution." An IMF 
subservient to the North is allowed latitude to praise macro-prudential 
tools, but these are not to be championed by UNCTAD.

The IMF report notes that over the past decade commodity prices have 
risen by about three-fold. Food and raw material prices have reached 
near the peaks attained in the 1970s. The IMF blames this rise on the 
entry of the "emerging market economies", namely the BRICS (Brazil, 
Russia, India, China, South Africa) and their allied states over the 
past decade.

It is likely that commodity prices will fall precipitously as a result 
of slack demand over the next few years. To curtail the volatility of 
commodity prices, the IMF recommends countercyclical policies (save 
during booms, spend during downswings), reduction of public debt and 
flexibility of exchange rates.

There is no talk of the role of speculators in the commodity markets. 
The UNCTAD statement entered this discussion in a very muted way, "It is 
important for policymakers to identify and implement innovative and 
coherent policies at national, regional and international levels to 
reduce the volatility of commodity prices." The red pen came out, and JZ 
deleted the sentence. There is to be no link between hunger and 
financial domination of commodity markets.

At the opening plenary, UN deputy secretary general Asha-Rose Migiro 
read out a statement from secretary general Ban Ki-moon, who called upon 
UNCTAD XIII to set the "foundations of the post-crisis development 
consensus." "Much is at stake," Ban said.

Indeed this is true, but there is a long way to go before a "consensus" 
can be reached with "JZ delete" throwing red ink at the UNCTAD document. 
No wonder that, on April 22, Sanya Reid-Smith of the Third World Network 
took the JZ and EU delegates to task for retreating from their prior 
commitments. And no wonder that Ambassador Omar Hilale of Morocco 
promised that the G-77 would stand firm and produce a strong outcome by 
April 25, despite the shenanigans of the JZ group.

/*Vijay Prashad *is Professor and Director of International Studies at 
Trinity College, Hartford, United States. This spring he will publish 
two books: /Arab Spring, Libyan Winter /(AK Press) and /Uncle Swami: 
South Asians in America Today /(New Press). He is the author of /Darker 
Nations: A People's History of the Third World /(New Press), which won 
the 2009 Muzaffar Ahmed Book Prize./
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