GLOBALIZATION is a multi-dimension policy framework with a focus on the liberalization of trade and investment regime. An open trading regime is achieved by removing restrictions on imports and exports and by lowering tariffs. This in turn leads to a more efficient use of resources. As tariffs are reduced, industries protected by high tariffs are exposed to greater competition and resources are diverted to sectors, which can develop without the artificial support inherent in high tariffs.

Ultimately, the purpose of structuring open markets and liberalizing investment controls is to remove price distortions in the economy by moving them closer to international prices and creating improved opportunities for the private sector to expand investment and stimulate economic growth.

Another important component of a liberal economic framework is privatization. By reducing the role of the state in economic and industrial activities through privatization, resources are released for activities that governments should undertake, such as infrastructure development and essential social services like health and education.

Historically, empirical research indicates a strong positive correlation between trade openness and economic growth over a long period of time. Sachs and Warner (1995) has presented such evidence by pointing out that open economies have grown about 2.5 per cent faster than closed economies. The difference is larger among developing countries.

But more recent studies, taken up after the Asian Economic Crisis of 1997-99, have challenged some of these findings. Rodrigues and Rodrik (1999) have raised questions about measuring the degree of openness, have identified many other factors that affect growth and concluded that liberalization of trade does not always lead to higher growth.

Pakistan’s experience also supports this conclusion because in the decade of 1990s, significant trade liberalization was accompanied by a steady decline in the GDP growth rate, from 6.1% in the 1980s to 4.5% in the 1990s. Similarly, wide-ranging policy changes and incentives to encourage foreign investment did not lead to any significant increase in investment, apart from larger investment in the private power sector in the mid-1990s in response to a very attractive incentive package. In fact, overall investment declined from about 19% of the GDP in 1989-90 to only 15% in 1999-2000. Even on the export front, the trade performance has not been satisfactory. Despite substantial reduction in tariff rates, removal of virtually all non-tariff barriers and successive devaluations of the currency (leading to an annual depreciation of about 10% in the exchange rate, from Rs 24 in 1990 to Rs 60 per dollar in 2000), the growth in exports in the 1990s was only 4.5% per annum, compared to 19% in the 1970s and 8.5% in the 1980s.

Pakistan’s experience with economic liberalization has thrown up some important lessons and criteria to judge whether or not such liberalization would lead to higher economic growth. These can be summarized as follows:

* Unless the initial conditions and the international economic environment are favourable to attract foreign investment and to utilize the opportunities created by tariff and market reforms, these can become counter-productive. In the case of Pakistan, the reform process, launched in early 1991 coincided with economic sanctions imposed by the US from October 1990 as a result of Pakistan’s unclear policy and by all G7 countries in June 1998, following the nuclear tests. Lower Tariffs weeded out some of the uneconomic industries and slowed down the industrial growth rate, but due to sanctions and recurrent political instability, this loss was not compensated by new investment in value added sectors.

* The speed and sequencing of reforms must be carefully orchestrated. If tariffs are reduced drastically before expanding the tax base and improving tax administration, revenues will fall, thus accentuating the fiscal problems. Similarly, financial sector reforms to raise interest rates for government borrowing should follow and not precede sustained reductions in public sector expenditures because higher cost of borrowing does not automatically lead to lower expenditures.

* All the components of globalization do not move in the same direction. While there is free flow of information and capital, labour movement is restricted. Even in trade, high tech products are traded freely, but simple manufactures like textile and leather goods continue to be protected and agricultural trade is heavily distorted by huge subsidies provided by the US, Europe and Japan ($390 billion in the year 2000). In such an unlevel playing field, countries like Pakistan, which are primarily dependent on agricultural or textile exports, cannot benefit much from globalization. In fact, successive devaluations lead to a progressive depreciation in export prices and therefore lower exports.

* Excessive reliance on demand management, at a time when the process of growth is being adversely affected by several non-economic factors, can further slow down the pace of economic growth. With the reduction of tariffs, revenues from custom duties in Pakistan declined from 6% of GDP in 1989-90 to only 2.2% in 1999-2000. The reduction in tariffs also led to closure of many industrial units, which were previously functioning under heavy protection. This not only slowed down the rate of industrial growth from an average of 8% in the 1980s to 3.9% in the 1990s, but also led to a corresponding decline in revenues from excise duties and sales tax.

With lower revenues from customs, excise and sale tax, the objective of the IMF’s structural adjustment programme to reduce the budget deficit (from 7.8% in the 1980s to below 6% in the 1990s) was achieved only by cutting down public sector development expenditure, from 7% of GDP to 3% of GDP. This decline also contributed to the slow down in GDP growth.

Unlike the manufacturing sector, which was adversely affected by the reform processes, the agriculture sector in Pakistan has continued its robust performance. Spurred by large investments in the water sector and favourable macro-policies, agricultural growth accelerated in the 1990s to 4.5% per annum from 4.2% in the 1980s. This not only assisted efforts to keep inflation under control but also contributed to exports.

In countries where the overall national and international conditions have been more favourable than say in Pakistan, the impact of economic reforms on economic growth has been more positive. This is true of East Asia in the 1970s and South East Asia and some countries in Latin America in the 1980s. However, in terms of poverty reduction, the experience is more widely negative.

A recent report by the Mahbubul Haq Human Development Centre in Islamabad has presented some revealing but grim findings on the impact of globalization on the poor people of South Asia:

1) Half a billion in South Asia or 40% of its population have experienced a decline in their income, despite a 5.4% increase in the South Asian GDP during the 1990s.

2) Under the influence of stabilization policies imposed by the WB/IMF calling for elimination of subsidies and price support measures and the resultant squeeze on the fiscal space, the provision of social safety nets has been weakened in the region.

3) Globalization has not been accompanied by a reduction in poverty or improvement in human development since most South Asian countries have failed to maintain a balance between economic and social development policies. For most South Asians, the outcome of the globalization process has been: higher prices, fewer employment opportunities, increased disparities in income and higher incidence of poverty, currently estimated at 515 million or 40% of the population of South Asia.

4) South Asia suffers from an additional disadvantage in the globalization process because of the worldwide movement creating regional trading blocs. In South Asia, by comparison, SAARC faces serious political obstacles and intra-regional trade, therefore, remains low when compared to such trade in other regional groupings.

These conclusions, in the context of South Asia, fully support the strong consensus at the global level on the negative aspects of globalization and he recognition that the globalization process cannot deal with the problems of poverty and the insecurities that arise from poverty. While echoing this consensus, a recent international conference organized by IFPRI at Bonn, Germany, in the first week of September 2001, also agreed that the ideology of opening of markets had gone too far and the policy options for developing countries were closing because of growing debt burdens, strict IMF conditionalities and unfair WTO rules.

It should not be difficult to comprehend why economic reforms would not automatically benefit the poor. The basic concept of globalization is based on the principles of competition and by definition, poor people and poor countries are at the lowest rung of the competitive ladder. The inherent inadequacies of an unregulated market system and the need to protect the poor are fully understood in the more advanced societies.

That is why they have created laws and institutions against monopolies and malpractices to protect the consumer and small businesses; they have developed an elaborate system of taxation, social security and welfare programmes to meet the basic needs of the poor in their societies. But unfortunately, at the global level, they refuse to recognize the impact of globalization on the poor countries and poor people and agree to similar taxation and social security policies at the global level.

The tyranny of this indifference is further compounded by the new development philosophy that is imposed on the development countries as a part of the globalization process. If this process had been confined to its narrow meaning of liberalizing the economy, to allow free movement of capital and goods in response to forces of the market and each country was given the flexibility to move at a peace that is in line with the institutional structure and regulatory mechanisms, the social and economic costs could have been minimized.

But globalization now carries with it a new development philosophy which greatly restricts the role of the state in economic and social activity and imposes a standard ‘one size fit all’ adjustment policy devised by the IMF/World Bank. The primary emphasis of this policy is to achieve macro-economic stability by reducing government spending, raising utility charges and eliminating all subsidies.

In the process, the growth rate slows down, unemployment goes up, poverty increases and the poor farmers become more vulnerable to the vagaries of a volatile and highly subsidized market. The fiscal squeeze that such a policy creates makes it increasingly difficult for national governments to create social safety nets or fiscal support for employment-intensive programmes.

The rethinking that is required cannot just stop at marginal adjustments that will increase the residual resources, spared by the adjustment process, for social development or for education and health services. What is required is a new development paradigm:

* that recognizes the role of the state in protecting the rights of the weaker and poor segments of the population and in meeting their basic needs;

* that accepts balanced social and human development as a basic and essential pre-requisite for sustainable development that is meaningful for the large majority of the population; and

* that regards the poor as a part of the solution and not just a part of the problem, by recognizing pro-poor growth policies under which overall growth of the economy can be accelerated by raising the productivity and incomes of the poor.

Unless more effective steps are taken to reduce poverty and deprivation in the world, the unprecedented public uproar about the impact of globalization on the poor, that has plagued all international meetings since Seattle in November 1999, will continue to grow louder.

The writer is a former finance and foreign minister of Pakistan.

IN THE history of a political party, there comes a moment which it believes is momentous. More often it is not. The action it takes under the misconception has often resulted in the withering of the party. I am afraid the BJP is misreading the present situation in the country. This also happened when the Bharatiya Jana Sangh walked out of the Janata Party in 1979.

As the Jana Sangh, which merged with the Janata in the wake of the emergency in 1977, it never reached the two-digit figure in the Lok Sabha. When it was in the Janata, it won 80 seats. The success was because of the Jayaprakash Narayan (JP) movement and Mrs Indira Gandhi’s excesses.

Even when the BJP left the Janata, its aura of credibility, which JP had bestowed on them by making them a part of the secular combination, lingered for a time. That helped the BJP confuse the Hindus. The liberals had shunned it and its fountainhead, the RSS, after Mahatma Gandhi’s assassination. The disgust and suspicion against it lasted for almost four decades.

The Hindu card that the BJP played in 1990 paid dividends, primarily because of VP Singh’s acceptance of the Mandal Commission’s recommendations, which made the upper strata of the Hindus feel insecure. Some Hindus at that time accepted the BJP because reservations for the backward classes, in addition to those for the scheduled castes and the scheduled tribes hit the middle class most. Atal Behari Vajpayee also said at that time that had there been no Mandal, there would not have been kamandal (water vessel for sadhus). What he meant was that if the Janata government led by VP Singh had not tried to implement the Mandal Commission report, there would have been no Ram mandir movement.

The Ram Janmabhoomi-Babri masjid dispute was a shot in the arm of the BJP. LK Advani really believed that the entire northern India lay at his feet. His rathyatra created a wedge between the Hindus and the Muslims. Never had communal riots taken place on such a wide scale since partition as they did during Advani’s yatra. Where he went wrong was that he mistook the simulated Hindu feelings as the real ones. The BJP came to grief when after the demolition of the Babri masjid, its graph of support dipped abruptly. The party was defeated in state elections in UP, Madhya Pradesh and Himachal Pradesh and just managed to scrape through in Rajasthan.

The BJP also saw that no political party was willing to join hands with it until it kept apart its ‘Hindu’ agenda: the construction of a temple on the Babri masjid site and the abolition of Article 370 which gave special status to Jammu and Kashmir. So the party put these two issues on the back burner and formed the government at the centre. But after having stayed in power at the centre for nearly four years, it has begun feeling as if it is the BJP’s pro- Hindutva policy which has brought it dividends.

In reality, it was the fear of the Congress coming to power at the centre that made some of the once-upon-a-time secular parties to join hands with the BJP. Because they felt that a Congress government at the centre would make the party stronger in the states and capture power. The Telugu Desam from Andhra Pradesh also put its weight behind the BJP for the same reason. The predicament of the Telugu Desam is that it cannot afford to break away from the BJP- led combination at the centre because then the Congress will stage a comeback in the state.

I do not know how the BJP can construe the Telugu Desam’s negative support as something in its favour or, for that matter, in favour of Hindutva. The reason why the Telugu Desam has decided not to accept the speakership, which has been lying vacant after the death of Balayogi, is this: It has already registered its protest over the Gujarat happenings under the BJP-led government at the centre. It is difficult for the party to accept speakership after that.

The polarization of Indian society after Gujarat is a figment of the BJP’s imagination. Even though Gujarat has been polarized by the BJP in the state, Narendra Modi will not be returned if there is an election. People are too conscious of the economic problems. In the 546-member Lok Sabha, Gujarat has only a handful of seats. Even if all of them go to the BJP, it does not help the party. The killings and the atrocities in Gujarat have spread such a wave of revulsion and disgust in the country that the party would face a straight defeat. See what the intelligentsia did in the Delhi election after the Gujarat happenings. The party was pulverized.

There is an attempt at polarization in the sense that the RSS parivar is trying to destroy the pluralistic character of the country. It is not the consolidation of Hindu votes but of those few who want the fundamentalists to establish a theocratic state.

The south, which I toured recently, would rather be another country if the future face of India is Gujarat, where even Mahatma Gandhi’s Sabarmati Ashram is not a safe place to hold a peace meeting and where peace-makers face the threat of death. Famous danseuse Mallika Sarabhai has taken refuge in another house since last week after her house was stoned because she was doing some relief work in Muslim refugee camps.

The BJP will rue the day when it put Narendra Modi, an RSS pracharak as the state chief minister. Gujarat has aroused all forces which want the country to stay pluralistic and democratic. They are marshalling themselves in different ways. On April 17, Delhi will see thousands of people in the streets of the capital, demonstrating against those faces which are trying to kill the open and tolerant society that India is.

I am surprised over the absence of action against religious terrorism. Members of the Vishwa Hindu Parishad and the Bajrang Dal are no different from the Taliban. The world woke up to their obscurantism and violence after their attacks in the US. India is waking up to their barbarism after their massacre in Gujarat. The Taliban disfigured Islam, the RSS parivar Hinduism.

Gujarat may well be a laboratory for the parivar. It is also a laboratory for others. They can draw the lesson that by effecting killings in the minority community the BJP will only lessen its strength or sway. Fanatics who control the RSS should realize that democracy does not go well with theocracy.

India needs economic development that could give two meals to lakhs of people who go hungry every night. As Maulana Abul Kalam Azad said long before independence, “the most vital and urgent of India’s problems is how to remove the curse of poverty and raise the standards of the masses. It is to the well being and progress of these masses that the national struggle has directed its special attention and its constructive activities. And it will be judged by the well being and advancement that people make. Anything that comes in the way of the good of the masses of our country must be removed.”

The Hindutva representatives - the VHP and the Bajrang Dal - are destroying the lofty aims of the independence struggle. Not only that. They are also demolishing the country’s ethos of pluralism.

The writer is a free-lance columnist based in New Delhi.

ANYONE with any connection at all to Palestine is today in a state of stunned outrage and shock. While almost a repeat of what happened in 1982, the current Israeli all-out colonial assault on the Palestinian people (with George Bush’s astoundingly ignorant and grotesque support) is indeed worse than Sharon’s two previous mass forays in 1971 and 1982 against the Palestinian people.

The political and moral climate today is a good deal cruder and reductive, the media’s destructive role (which has played the part almost entirely of singling out Palestinian suicide attacks and isolating them from their context in Israel’s 35 year old illegal occupation of the Palestinian territories) greater in favouring the Israeli view of things, the US’s power more unchallenged, the war against terrorism has more completely taken over the global agenda and, so far as the Arab environment is concerned, there is greater incoherence and fragmentation than ever before.

Sharon’s homicidal instincts have been enhanced (if that’s the right word) by all of the above, and magnified to boot. This in effect means that he can do more damage with more impunity than before, although he is also more deeply undermined than before in all his efforts as well as in his entire career by the failure that comes with single-minded negation and hate, which in the end nourish neither political nor even military success.

Conflicts between peoples such as this contain more elements than can be eliminated by tanks and air power, and a war against unarmed civilians — no matter how many times Sharon lumberingly and mindlessly trumpets his stupid mantras about terror - can never bring a really lasting political result of the sort his dreams tells him he can have.

Palestinians will not go away. Besides, Sharon will almost certainly end up disgraced and rejected by his people. He has no plan, except to destroy everything about Palestine and the Palestinians. Even in his enraged fixation on Arafat and terror he is failing to do much more than raise the man’s prestige, while essentially drawing attention to the blind monomania of his own position.

In the end he is Israel’s problem to deal with. For us, our main consideration now is morally to do everything in our power to make certain that despite the enormous suffering and destruction imposed on us by a criminal war we must go on.

When a renowned and respected retired politician like Zbigniew Brzezinski says explicitly on national television that Israel has been behaving like the white supremacist regime of apartheid South Africa, one can be certain that he is not alone in this view, and that an increasing number of Americans and others are slowly growing not only disenchanted but also disgusted with Israel as a hugely expensive and draining ward of the United States, costing far too much, increasing American isolation, and seriously damaging the country’s reputation with its allies and its citizens.

The question is what in this most difficult of moments can we rationally learn about the present crisis that we need to include in our plans for the future?

What I have to say now is highly selective, but it is the modest fruit of many years working on behalf of the Palestinian cause as someone who is from both Arab and western worlds. I neither know nor can say everything, but here are some of the handful of thoughts I can contribute at this very difficult hour. Each of the four points that follow here is related to the other.

1) For better or for worse, Palestine is not just an Arab and Islamic cause, it is important to many different, contradictory, and yet intersecting worlds. To work for Palestine is necessarily to be aware of these many dimensions and constantly to educate oneself in them. For that we need a highly educated, vigilant and sophisticated leadership and democratic support for it. Above all we must, as Mandela never tired of saying about his struggle, be aware that Palestine is one of the great moral causes of our time. Therefore, we need to treat it as such. It’s not a matter of trade, or bartering negotiations, or making a career. It is a just cause which should allow Palestinians to capture the high moral ground and keep it.

2) There are different kinds of power, military of course being the most obvious. What has enabled Israel to do what it has been doing to the Palestinians for the past 54 years is the result of a carefully and scientifically planned campaign to validate Israeli actions and, simultaneously, devalue and efface Palestinian actions. This is not just a matter of maintaining a powerful military but of organizing opinion, especially in the United States and Western Europe, and is a power derived from slow, methodical work where Israel’s position is seen as one to be easily identified with, whereas the Palestinians are thought of as Israel’s enemies, hence repugnant, dangerous, against “us.”

Since the end of the cold war, Europe has faded into near-insignificance so far as the organization of opinion, images and thought are concerned. America (outside of Palestine itself) is the main arena of battle. We have simply never learned the importance of systematically organizing our political work in this country on a mass level, so that for instance the average American will not immediately think of “terrorism” when the word “Palestinian” is pronounced. That kind of work quite literally protects whatever gains we might have made through our on-the-ground resistance to Israel’s occupation.

What has enabled Israel to deal with us with impunity therefore has been that we are unprotected by any body of opinion that would deter Sharon from practising his war crimes and saying that what he has done is to fight terrorism.

Given the immense diffusionary, insistent, and repetitive power of the images broadcast by CNN, for example, in which the phrase “suicide bomb” is numbingly repeated a hundred times an hour for the American consumer and taxpayer, it is the grossest negligence not to have had a team of people like Hanan Ashrawi, Leila Shahid, Ghassan Khatib, Afif Safie — to mention just a few — sitting in Washington ready to go on CNN or any of the other channels just to tell the Palestinian story, provide context and understanding, give us a moral and narrative presence that has positive, rather than merely negative, value. We need a future leadership that understands this as one of the basic lessons of modern politics in an age of electronic communication. Not to have understood this is part of the tragedy of today.

3) There is simply no use operating politically and responsibly in a world dominated by one superpower without a profound familiarity and knowledge of that superpower, America, its history, its institutions, its currents and counter-currents, its politics and culture. And above all, a perfect working knowledge of its language. To hear our spokesmen, as well as the other Arabs, saying the most ridiculous things about America, throwing themselves on its mercy, cursing it in one breath, asking for its help in another, all in a miserably inadequate fractured English, shows a state of such primitive incompetence as to make one cry.

America is not monolithic. We have friends and we have possible friends. We can cultivate, mobilize, and use our communities and their affiliated communities here as an integral part of our politics of liberation just as the South Africans did, or as the Algerians did in France during their struggle for liberation. Planning, discipline, coordination. We have not at all understood the politics of non-violence. Moreover, neither have we understood the power of trying to address Israelis directly, the way the ANC addressed the white South Africans, as part of a politics of inclusion and mutual respect. Co-existence is our answer to Israeli exclusivism and belligerence. This is not conceding: it is creating solidarity, and therefore isolating the exclusivists, the racists, the fundamentalists.

4) The most important lesson of all for us to understand about ourselves is manifest in the terrible tragedies of what Israel is now doing in the occupied territories. The fact is that we are a people and a society, and despite Israel’s ferocious attack against the Authority, our society still functions. We are a people because we have a functioning society which goes on — and has gone on for the past 54 years — despite every sort of abuse, every cruel turn of history, every misfortune we have suffered, every tragedy we have gone through as a people.

Our greatest victory over Israel is that people like Sharon and his kind do not have the capacity to see that, and this is why they are doomed despite their great power and their awful, inhuman cruelty. We have surmounted the tragedies and memories of our past, whereas such Israelis as Sharon have not. He will go to his grave only as an Arab-killer, and a failed politician who brought more unrest and insecurity to his people. It must surely be the legacy of a leader that he should leave something behind upon which future generations will build. Sharon, Mofaz, and all the others associated with them in this bullying, sadistic campaign of death and carnage will have left nothing except gravestones. Negation breeds negation.

As Palestinians, I think we can say that we left a vision and a society that has survived every attempt to kill it. And that is something. It is for the generation of my children and yours, to go on from there, critically, rationally, with hope and forbearance.—Copyright 2002, Edward W. Said