December 24, 2001	Monday	Shawwal 8, 1422

Although much more cataclysmic and horrific events have been witnessed in living memory than those that destroyed the two most visible symbols of US financial and military might last September, their likely impact on the global economic and political landscape may be unparalleled.

With its vast material and human resources, the United States economy is unlikely to cave in any time soon and is likely to show considerable resilience despite the official acknowledgment of the onset of a recession. However, its economic and political ascendancy has now become suspect and its leadership role in world affairs is being sustained largely through its military and financial power, which it has used in a most biased and unprincipled manner.

By waging an open-ended war in Afghanistan and by openly siding withIsrael in its latest aggression against a beleaguered and defenceless Palestinian entity which has been declared terrorist, the United States is in danger of turning off of the reservoir of sympathy and goodwill which flowed freely in the wake of the unforgivable acts of terror last September, even from those who usually criticize its policies. Even its most trusted allies in the current coalition are not willing to give the “unstinted support” for future military adventures which they were impelled to promise in the aftermath of the shocking events of 11 September. The US may have the military might to carry out its jingoist agenda single-handedly, but it will soon lose the moral authority to enlist the support of even its client states in future campaigns.

These costly military operations not only involve collateral damage to life and property of innocent civilians but also divert immense resources which could be better used in solving the underlying causes of terrorism and other social evils. If ever the World Bank or any other development institution were to undertake the cost-benefit analysis of operation Enduring Freedom it would find it to be one of the most wasteful projects ever undertaken, even if the collateral benefits of taking the women out of burqa and restoring a semblance of democracy and normalcy in public life in Afghanistan at least for a while are taken into account. Much more could have been achieved- -on a more enduring basis — and with far fewer resources if timely and alternative policies and strategies had been undertaken to address the underlying causes of the disasters that were virtually waiting to happen.

The world may not have been suddenly transformed into a more dangerous place to live in, in the few hours of 11 September of the first year of the new millennium, but a chain of events has been set in motion that may prove right the worst predictions of doom. At stake in this scenario of doom is globalization — the western world’s favourite project of transformation of the world economy, which is bedevilled by war as much as the inveterate love in the Gabriel Garcia Marquez’s famous novel was haunted by a cholera epidemic. The United States ability to implement its global economic agenda may be seriously hampered by the fall-out from the arrogant display of military might to solve international issues—a posture which is being emulated by Israel and may be adopted by others with impunity.

The present epoch of globalisation, launched under the leadership of the US and the stewardship of multilateral financial institutions that it dominates, has accelerated at a rapid pace since the 1980s spurred on by rapid advances in information technology and financial engineering. The acceleration in the pace of globalisation in the last two decades has been a very mixed blessing for the Third World where it has created more suffering than prosperity. The west - not just the US - has been oblivious to the damaging impact of the process of globalisation on the lives and work of a large proportion of humanity and has never seriously been interested in bridging the yawning gap between the quality of life of the deprived and the depraved, tellingly exemplified by the statistic that just 20 per cent of the world’s population uses 80 per cent of its resources. Global inequality has reached a serious and unsustainable proportion and at least a third of humanity is threatened with permanent exclusion from global prosperity. It is hardly surprising, though by no means condonable, that individuals and groups from the deprived world resort to such desperate and irrational acts as we have witnessed recently.

While, over the past few decades, the prosperity of the developed world has grown as never before, aid to the third world - which was not huge to start with - has gradually declined. The aid actually provided has contributed little to genuine development and has mainly served to prevent defaults on debts incurred in the past or served as a carrot to achieve political objectives. Nothing illustrates this better than the case of Pakistan, whose economic and social development has been at the mercy of its lenders and donors. Ironically, the blame for not being able to keep pace with the globalisation process is put entirely on the shoulders of the developing economies by the international financial institutions who are constantly breathing down their necks and goading them to run when they can barely walk or even stand still.

By itself globalisation is a project which has much to commend itself both to developed and developing countries and can become an engine for both the creation and a more equal distribution of wealth. In the earlier epochs of globalisation, there has been a considerable degree of convergence (i.e. a reduction in the degree of inter-country income inequality) among nation states. Unfortunately, the way that the postwar globalisation paradigm has unfolded itself, a large proportion of the world’s population has been excluded from the participation in this process, both within and across countries. Indeed, the predicament of the poor is worse than exclusion, for they are not only not allowed to partake the fruits of globalisation, they are forced to endure its burdens and negative fallouts.

A brief excursion into the history of globalisation reveals that its impact on reduction of income inequalities across the globe has been limited and it has had a beneficial effect on a relatively few countries. Periods of expansion of transport and trade and flows of capital and migrants have marked the development of a charmed circle of convergent economies, but countries outside the club have fallen behind in relative terms even in eras of strong growth . During the past two decades , however, many countries have fallen behind not just relatively but also in absolute terms in regard to both income levels and structural development. Although many developing countries, especially in East Asia have benefited from globalisation, it is still unclear whether the openness of the economy which is often correlated with other growth-promoting factors omitted from standard cross-country studies, is the key factor.

A recent (post-September 11) report by the World Bank, Globalization, Growth and Poverty: Building an Inclusive World Economy, claims that globalization has helped reduce poverty in a large number of developing countries while acknowledging that the world’s poorest, most marginalized countries have been left behind reeling under the wheels of its bandwagon . The study shows that 24 developing countries that increased their integration into the world economy over two decades ending in the late 1990s achieved higher growth in incomes, longer life expectancy and better schooling. These countries, home to some 3 billion people, enjoyed an average 5 percent growth rate in income per capita in the 1990s compared to 2 percent in rich countries. However, the recently released report by the Mahbubul Haq Human Development Center shows that globalisation has had an adverse impact on South Asia . According to the report, during the recent globalisation phase about half a billion people in South Asia have experienced a decline in their incomes. The benefits of economic growth that did accrue were limited to a small minority of educated urban population.

The future of globalization

The hardening of attitudes and deepening of suspicions in the west towards the world outside, particularly the Muslim world, where religious fanaticism has been nurtured by increasing social and economic inequalities and repressive political regimes - often supported by the west, bodes ill for the future course of globalisation. A little over a decade after the end of the cold war, we are seeing a return to belligerent rhetoric which harks back to the crusades and the wild west. There are calls for closing the ranks in the civilised world, and anyone who doesn’t follow the call of the world’s sheriff and the self-appointed sheriff’s deputy across the Atlantic is threatened with being ostracised as a pariah state and denied the money to buy the wherewithal to don the peacock feathers of a civilised nation. This is hardly an environment in which globalisation “with a human face “ has any chance of succeeding.

The west shows zero to infinite levels of tolerance for terrorism on a selective basis. Its own electronic media and entertainment industry have been in the forefront in promoting a culture of violence. The dissemination of this culture is an integral part of the current globalisation paradigm and is partly responsible for the growth of crimes of violence among the youth in both the developed and the developing world. This selective attitude towards the sources of terror entirely negates the west’s proclaimed love for the liberal values of tolerance, pluralism and democracy in whose name the war in Afghanistan has been fought. Its love for these values is only skin deep and evaporates in the face of the visibility of anti-western sentiments anywhere on the globe. The will of the people is invoked and repudiated almost whimsically to suit the interests of the Western nations.

In most discourses on the subject, globalisation is used as a euphemism for westernisation. The changes in other societies are gauged by the way in which their economic and cultural life has imbibed western values and traditions. Integration into the world system is not treated as a two-way street in which the meaning of tolerance and pluralism is appreciated by both sides and the “clash of civilisations” is avoided through mutual respect, rather than through forced cultural homogenization as has been recently advocated in Britain, which had until now a better record of cultural diversity. Neither is the sensitivity to the serious structural problems of the developing world, such as poverty, indebtedness, market access and the exploitation of monopoly profits by drug companies, much apparent in the policies of the developed world. Any concessions are grudgingly given with plenty of caveats and subject to unilateral abrogation. On the other hand, access to developing countries’ natural resources and global diversity is extracted and acquiescence to global alignments (such as in the Gulf and Afghan wars), which serve primarily the interests of the rich countries, obtained almost at gun-point from insecure rulers in the Third World. A major source of the leveling effects of globalisation in earlier epochs was mass migration (sometimes forced) from overpopulated, low-income countries to under-populated, resource-rich countries . In Europe a century ago, demographic pressure provided the main impetus to emigration and was accompanied by strong economic growth in low-wage emigrant regions. Thus emigration served to bring about both convergence in incomes and stimulate growth in the New , as well as the Old World. In a limited sense nineteenth century globalisation was a more equitable and virtuous phenomenon as the gaps between nations participating in globalization (mainly Europe and America) were not widened.

The effect of globalization on income inequalities within countries has varied among sending and recipient countries of migration. World income inequality has been rising since the sixteenth century but has become especially pronounced since the industrial revolution. Most of that increased world inequality took the form of a rise in income gaps between nations, not of a rise in within-country inequality. Before World War I, globalization raised inequality within the United States and other New World countries, but it had the opposite effect in those European countries that were participating in the globalization process through emigration and trade liberalization. After World War II, globalization once again widened inequality within the United States and perhaps other OECD countries. Globalization may also have raised inequality in the newly trading and industrializing countries, such as the Asian tigers, China, Mexico, and Brazil.

In the wake of recent events, there is an increasing tendency among the rich nations, especially of the US and Europe to fence off the islands of democracy and prosperity in the world and to keep out the “barbarism” that is perceived to dominate the rest. The rules of the game or the terms of endearment between the developed and developing world, which were already asymmetric to begin with, are likely to become even more unfair and iniquitous. The western world is likely to pursue its goal of fighting terrorism not only outside its own borders but also by building a fortress around its borders and building an iron curtain, albeit with the purpose of preventing entry rather than exit, which was the aim of the one built by the Soviets during the cold war.

The end to the current phase of the globalisation saga may not be too different from that of Gabriel Marquez’s novel where the two lovers are reunited towards the end of their lives after having gone through a series of largely self-inflicted trials and tribulations which they could have done without if they had dared to grasp the opportunity in their youth. In the same way, the rich and the poor nations of today may have to continue to go their separate ways and live their agonized lives in exclusion until they realize their complementarity to each other, if their perceptions of each other remain frozen in the past. Fear of terror will continue to haunt the rich as long as distress, poverty and indignity plague the poor. The present edifice of globalization could crumble as disastrously as the twin towers in New York if new and more equitable measures are not put in place soon.