February 11, 2002	Monday	Ziqa’ad 27, 1422

GLOBALIZATION is perhaps the most widely discussed, sometime contested phenomenon of our time. There are those who believe that globalization is a panacea for all the ‘ills of underdevelopment’.

The rising tide will benefit everyone. In their view, poverty and inequality are falsely attributed to the very economic integration that is lifting the majority of the developing world’s people out of poverty. Developing countries that are integrated with world markets have seen their average incomes rise. Those countries open to international trade have achieved double the average annual growth of developing countries that are not.

There are those who think globalization is a curse. It has actually aggravated economic disparities, worsening conditions for the poor. The fact of the matter is that the market-driven process of globalization, integrating national economies into the world economy, is an asymmetric one, with some winners but many losers. Growth and development have not and cannot automatically bring about reduction in inequality. The growing size of the pie does not ensure that everyone will get his or her piece of pie.

In a recent speech on social justice, British Chancellor of the Exchequer Gordon Brown had rightly observed that the issue is not whether we should have globalization or not. It is how well or badly, fairly or unfairly we manage globalization. He also acknowledged that globalization can be for the people or against the people.

The question remains if globalization was working well then why are there so many poor people in the world at a time of such abundance of wealth. Why is the number of least developed countries increasing? But there is a tendency to oversimplify the whole issue by saying that there is no alternative. Is there really no alternative? If it is so, then one is to believe that income disparities would continue to aggravate and poor will continue to become poorer and rich, richer. Poverty curtain will keep the world divided in two unequal halves, one embarrassingly rich and the other desperately poor. Bridging this woeful divide and reducing poverty is today’s most daunting challenge. The UN is seeking to meet this challenge by evolving new norms of global economic cooperation based on partnership and interdependence as well as participatory role for all in global economic matters.

Without going into the details of the debate on globalization, one can make one conclusion with some degree of certainty that it creates aspirations for consumption patterns and life styles that cannot be sustained socially, culturally, politically or environmentally unless the process is appropriately managed. It is also apparent that mismanagement could lead to serious consequences for the global economy and humanity. To better understand the consequences of further marginalization in the process of globalization, one does not have to go far in the archives of economic history.

The first phase of globalization began in 1820s and lasted until the First World War. At that time, the world was more global than it is today and people had the same sense of inevitability of globalization. Norman Angell even wrote a book in 1911, ‘The Great Illusion”, which argued that war was now impossible because economic integration meant that people were too dependent on each other to bother with such archaic evils. Unfortunately, the next two decades witnessed two world wars, the spread of protectionism, the contraction of the world economy, and the rise of fascism and communism.

The costs of globalization, in the form of social disruption, rising income inequality, and domination by foreign elites, became unacceptable. The political and intellectual underpinnings of globalization, which had once seemed so secure, were exposed as fragile and the popular counterattack against the logic of globalization grew irresistible.

Today, we see many of the same things although not identical. The technology sector is in shambles, popular sentiment has turned strongly against many of the tenets of globalization. Lending to emerging markets has all but dried up. Debt default is becoming a reality. Argentina’s case could unleash a series of sovereign defaults. Unemployment is on the rise and global economy is in recession. In addition, globalization continues to exert its destabilizing and often unequalizing effects.

Will the international consensus that supports globalization last when it is failing the large part of humanity? The outlook is not very positive. While there is strong support in many circles for free trade, economic liberalization, technological advances and free capital flows, we already are witnessing a strong political reaction against globalization. This backlash was evident in the return of populist movements and street clashes in Seattle, Geneva, Washington D.C., Prague, Davos, Quebec, Goteborg and Genoa.

The annual meeting of the World Economic Forum, shifted to New York this year, also drew thousands of anti-globalist protesters. There has been growing disenchantment with the disruptions and uncertainties that follow in the wake of globalization. This disenchantment is being exploited by extremist elements in many societies.

Can we simply disregard these protesters by labelling them as ‘anarchist protesters’ who are out there to ‘hijack’ the important gatherings of world leaders? No. Their calls should be heeded to. No doubt, we cannot allow them make ‘the whole principle of democracy stand on its head.’ The democratically elected leaders of the world are the legitimate and duly elected representatives of their people. But the voices of civil society can only be ignored at great peril to the process of global economic integration. The challenge for the international community and for the world leaders is, therefore, to ensure that the perils and promise of globalization are managed to benefit the large majority of people living in poverty and misery.

They have to ensure that the political consensus that was necessary to support the broad and sometimes disruptive social changes that accompany globalization is not reversed. How do we stop de-globalization? Or how do we promote global integration that benefits all and leads to minimum disruption or is least costly in terms of human sufferings. How do we avoid the disruptive consequences that followed earlier periods of globalization?

Owing to the deepening global economic crisis and growing dissatisfaction with the rising cost of economic integration, the situation might appear similar to the earlier endings of globalization periods. But, unfortunately, we have different tools to deal with this situation. We have a whole system of multilateral institutions to deal with global economic, financial and social crises. We have the World Trade Organization to ensure that countries do not withdraw behind the walls of protectionism, which could lead to increase in hunger and poverty.

These institutions, however, need to bring greater coherence and consistency in their policies through coordination and close cooperation. But enhanced cooperation will not achieve the desired ends as long as the asymmetries and bias against the poor and under-privileged persist in the global system. The regimes governing trade, technology and finance are not responsive to the needs of developing countries. The rules of the game for globalization are unequal in construct, and inequitable in outcomes. The process of integration should be carefully managed. This can be achieved only through tailoring the process of integration to the level of economic development in a country, capacity of its existing institutions and industries. The policy efforts of developing countries should be accompanied by an accommodating global environment.

The case for a holistic, coherent, democratic and participatory multilateral economic framework for equitable global economic integration is compelling.

The time has come to think of a new paradigm whereby countries that are part of the WTO systems should have same rights, but their obligations will vary and will be a function of the stage of their development. To some extent, this has been recognized during the WTO meeting in Doha. The declaration on TRIPS Agreement and Public Health is one such step. Many more such steps are required to restore the confidence in the potential of globalization.

Similarly, the time has also come for changing the orientation of the Bretton Woods Institutions. The burdens and blessings of globalization should be shared and managed through open, democratic, transparent and participatory multilateralism.

United Nations, a democratic institution with universal membership, could provide a central forum for the management of global economic integration. In March this year, an International Conference on Financing for Development will be held in Monterrey, Mexico, to deliberate on the challenges of financing development in an era of increasing global integration and marketization. The Conference will address the most formidable challenge of financing development when the public spending is shrinking. Despite the adoption of a series of development goals, which were reaffirmed at the Millennium Summit held in September 2000, development has remained elusive. There is a generally shared perception that these goals cannot be achieved without the adoption of supportive policies in the areas of technology, trade, finance and investment. The Monterrey Conference is meant to bring coherence and consistency in the policy frameworks of various institutions that govern these areas.

What makes this process really unique is the engagement of all relevant actors with the process and active participation of the Bretton Woods Institutions. In addition to the issues of domestic resource mobilization, external debt, investment flows, ODA and trade, the issue of democratic deficit in the global financial governance is likely to be discussed at the Conference. This Conference is expected to orient the global economic system around the principles of equity, participation, ownership, transparency and accountability.

After marathon negotiations at the UN last month, an agreed text of the ‘Monterrey Consensus’ has been finalized. This consensus, not an end in itself, will be only the first building block of a long and continuing process aimed at building synergies, evolving mutually supportive economic norms, creating a genuine enabling international environment, enhancing cooperation and sharing benefits of globalization in pursuit of development.

If globalization is not made to work for everyone then it might not work for anyone. The challenge is to manage globalization for the benefit of all. Either we all win or we all lose. Choice is ours to make.

(The writer is presently Pakistan’s Permanent Representative to the United Nations and the co-chairman of the preparatory committee for the International