By Thalif Deen
UNITED NATIONS, Sep 22 1998 (IPS)

The world’s largest single economic grouping has lost confidence in the ability of existing international institutions to resolve the global economic crisis, according to some of its members.

Indonesian Foreign Minister Ali Alatas – speaking on behalf of the 132 developing countries of the Group of 77 – said the time was ripe for the creation of a new world body to monitor and regulate international money markets effectively.

Alatas told IPS that it would be prudent to consider the creation of a mechanism “to mitigate the unpredictability and dire effects of globalisation.” Such a mechanism, he said, should be able to monitor and carry out surveillance of capital markets and international financial operations.

“We already have a mechanism of this nature in the field of international trade: the World Trade Organisation (WTO),” said Alatas. “And there is no reason why we cannot have a similar mechanism in the field of financial and monetary flows if it means the difference between order and chaos in the global economy.”

The ongoing economic crisis – which began in Southeast Asia last year and has spread to Latin America and Russia – is now threatening to spill over into Europe and the United States.

The crisis, which has devastated the economies of Indonesia, Thailand, South Korea and to a lesser extent Malaysia, has been blamed in part on international currency speculators.

The financial turmoil has forced countries such as Malaysia to reinstitute controls on currencies and capital flows, casting doubts on the much-talked-about benefits of globalisation.

“Globalisation’s promise of greater prosperity and widespread benefits for humankind is increasingly beclouded by uncertainties and exposure of vulnerable economies to risks of devastation,” Alatas said on Friday.

He was speaking at a three-day ministerial meeting held by the 185-member U.N. General Assembly to assess the economic and social impact of globalisation. The meeting ended Friday.

While admitting that globalisation had opened up tremendous opportunities for creating wealth, Alatas pointed out that its rewards seemed reserved for the strongest of economies and those best equipped to avail themselves of the opportunities.

“On the other hand, it could lash out with awesome ferocity at vulnerable developing economies,” he noted, adding that “globalisation is by no means an evil force, but it is a blind one.”

On Monday, Sri Lankan President Chandrika Bandaranaike Kumaratunga concurred with Alatas when she told the U.N. General Assembly that “the international monetary mechanism has proved desperately inadequate in handling the recent crises.”

“We now have to think in terms of a new financial architecture to obtain radical reforms of the international monetary system,” she added. “Effective surveillance devices must be designed to anticipate problems before the demolition squads of speculators move in.”

In an even stronger condemnation of existing institutions, Brazilian Foreign Minister Luiz Felipe Lampreia told the General Assembly that the events of the past few months had revealed “a serious lag between growing financial interdependence and the modest effectiveness of existing international mechanisms for dialogue and coordination.”

“We can no longer accept situations such as the present financial crisis in which, despite the undeniable international nature of the phenomenon, governments and societies simply do not fully trust any of the existing organisations, fora or mechanisms as a source of support, guidance or even interpretation of the problem at hand,” he said Monday.

In an address to Harvard University last week, U.N. Secretary- General Kofi Annan said that throughout much of the developing world, the awakening to globalisation’s downside was one of resistance and resignation, a feeling that globalisation was “a false God foisted on weaker states by the capitalist centres of the West.”

Globalisation is seen, not as a term describing objective reality, but as an ideology of predatory capitalism, he said.

“Whatever reality there is, in this view, the perception of a siege is unmistakable. Millions of people are suffering; savings have been decimated; and decades of hard-won progress in the fight against poverty are imperiled,” Annan said.

“And unless the basic principles of equity and liberty are defined in the political arena and advanced as critical conditions for economic growth, they may suffer rejection,” he added. “Economic despair will be followed by political turmoil and many of the advances for freedom of the last half-century could be lost.”

Annan also described the current Asian economic crisis as “the first major crisis of globalisation.” “If globalisation is to succeed, it must succeed for poor and rich alike,” he said.

The Secretary-General admitted that many developing countries were going through very difficult times this year. “The temptation to retreat into nationalism or populism can be strong,” he added. “But I am encouraged to see that, in almost every developing country, those false solutions are being rejected.”

Ambassador Hasmy Agam of Malaysia said the crisis in Asia had been largely triggered by the boom-and-bust behaviour of short- term lenders and investors. It had caused violent depreciation of currencies, highly volatile exchange rates and rapid increases in interest rates. Asset markets had plunged and banks had ceased lending.

Malaysia, he said, had found itself in its first recession in 13 years. The government had little choice but to take drastic measures, so it had instituted strict foreign-exchange controls. “Those measures had not been taken to isolate the economy, but to insulate it,” he added.

Ambassador Anwarul Karim Chowdhury of Bangladesh called for emergency action programmes to shield the weakest economies from global economic turbulence.

The General Assembly, he said, should consider the following: safety-net measures, including emergency assistance such as food aid; balance-of-payments support to severely affected countries; an immediate increase in the level of official development assistance (ODA); a reduction of the debt burden of least developed countries (LDCs); compensatory measures for income reduction from primary-commodity exports and reductions in remittances; and an immediate lifting of trade barriers affecting LDCs.

Ambassador Ahmad Kamal of Pakistan said the accumulation of the side effects of globalisation would lead to new class divisions. There would be divisions, he said, between those who prospered in the globalised economy and those who did not; between those who shared its values and those who would rather not; and between those who could diversify its risks and those who could not.

“The challenge was to include everyone in the process of managing globalisation, while maximising benefits for everyone, and minimising the negative impacts, particularly on developing countries,” Kamal added.

Excerpt:

By Thalif Deen
UNITED NATIONS, Sep 22 1998 (IPS)

The world’s largest single economic grouping has lost confidence in the ability of existing international institutions to resolve the global economic crisis, according to some of its members.

Indonesian Foreign Minister Ali Alatas – speaking on behalf of the 132 developing countries of the Group of 77 – said the time was ripe for the creation of a new world body to monitor and regulate international money markets effectively.

Alatas told IPS that it would be prudent to consider the creation of a mechanism “to mitigate the unpredictability and dire effects of globalisation.” Such a mechanism, he said, should be able to monitor and carry out surveillance of capital markets and international financial operations.

“We already have a mechanism of this nature in the field of international trade: the World Trade Organisation (WTO),” said Alatas. “And there is no reason why we cannot have a similar mechanism in the field of financial and monetary flows if it means the difference between order and chaos in the global economy.”

The ongoing economic crisis – which began in Southeast Asia last year and has spread to Latin America and Russia – is now threatening to spill over into Europe and the United States.

The crisis, which has devastated the economies of Indonesia, Thailand, South Korea and to a lesser extent Malaysia, has been blamed in part on international currency speculators.

The financial turmoil has forced countries such as Malaysia to reinstitute controls on currencies and capital flows, casting doubts on the much-talked-about benefits of globalisation.

“Globalisation’s promise of greater prosperity and widespread benefits for humankind is increasingly beclouded by uncertainties and exposure of vulnerable economies to risks of devastation,” Alatas said on Friday.

He was speaking at a three-day ministerial meeting held by the 185-member U.N. General Assembly to assess the economic and social impact of globalisation. The meeting ended Friday.

While admitting that globalisation had opened up tremendous opportunities for creating wealth, Alatas pointed out that its rewards seemed reserved for the strongest of economies and those best equipped to avail themselves of the opportunities.

“On the other hand, it could lash out with awesome ferocity at vulnerable developing economies,” he noted, adding that “globalisation is by no means an evil force, but it is a blind one.”

On Monday, Sri Lankan President Chandrika Bandaranaike Kumaratunga concurred with Alatas when she told the U.N. General Assembly that “the international monetary mechanism has proved desperately inadequate in handling the recent crises.”

“We now have to think in terms of a new financial architecture to obtain radical reforms of the international monetary system,” she added. “Effective surveillance devices must be designed to anticipate problems before the demolition squads of speculators move in.”

In an even stronger condemnation of existing institutions, Brazilian Foreign Minister Luiz Felipe Lampreia told the General Assembly that the events of the past few months had revealed “a serious lag between growing financial interdependence and the modest effectiveness of existing international mechanisms for dialogue and coordination.”

“We can no longer accept situations such as the present financial crisis in which, despite the undeniable international nature of the phenomenon, governments and societies simply do not fully trust any of the existing organisations, fora or mechanisms as a source of support, guidance or even interpretation of the problem at hand,” he said Monday.

In an address to Harvard University last week, U.N. Secretary- General Kofi Annan said that throughout much of the developing world, the awakening to globalisation’s downside was one of eloping world, the awakening to globalisation’s downside was

Excerpt:

By Thalif Deen
UNITED NATIONS, Sep 22 1998 (IPS)

The world’s largest single economic grouping has lost confidence in the ability of existing international institutions to resolve the global economic crisis, according to some of its members.

Indonesian Foreign Minister Ali Alatas – speaking on behalf of the 132 developing countries of the Group of 77 – said the time was ripe for the creation of a new world body to monitor and regulate international money markets effectively.

Alatas told IPS that it would be prudent to consider the creation of a mechanism “to mitigate the unpredictability and dire effects of globalisation.” Such a mechanism, he said, should be able to monitor and carry out surveillance of capital markets and international financial operations.

“We already have a mechanism of this nature in the field of international trade: the World Trade Organisation (WTO),” said Alatas. “And there is no reason why we cannot have a similar mechanism in the field of financial and monetary flows if it means the difference between order and chaos in the global economy.”

The ongoing economic crisis – which began in Southeast Asia last year and has spread to Latin America and Russia – is now threatening to spill over into Europe and the United States.

The crisis, which has devastated the economies of Indonesia, Thailand, South Korea and to a lesser extent Malaysia, has been blamed in part on international currency speculators.

The financial turmoil has forced countries such as Malaysia to reinstitute controls on currencies and capital flows, casting doubts on the much-talked-about benefits of globalisation.

“Globalisation’s promise of greater prosperity and widespread benefits for humankind is increasingly beclouded by uncertainties and exposure of vulnerable economies to risks of devastation,” Alatas said on Friday.

He was speaking at a three-day ministerial meeting held by the 185-member U.N. General Assembly to assess the economic and social impact of globalisation. The meeting ended Friday.

While admitting that globalisation had opened up tremendous opportunities for creating wealth, Alatas pointed out that its rewards seemed reserved for the strongest of economies and those best equipped to avail themselves of the opportunities.

“On the other hand, it could lash out with awesome ferocity at vulnerable developing economies,” he noted, adding that “globalisation is by no means an evil force, but it is a blind one.”

On Monday, Sri Lankan President Chandrika Bandaranaike Kumaratunga concurred with Alatas when she told the U.N. General Assembly that “the international monetary mechanism has proved desperately inadequate in handling the recent crises.”

“We now have to think in terms of a new financial architecture to obtain radical reforms of the international monetary system,” she added. “Effective surveillance devices must be designed to anticipate problems before the demolition squads of speculators move in.”

In an even stronger condemnation of existing institutions, Brazilian Foreign Minister Luiz Felipe Lampreia told the General Assembly that the events of the past few months had revealed “a serious lag between growing financial interdependence and the modest effectiveness of existing international mechanisms for dialogue and coordination.”

“We can no longer accept situations such as the present financial crisis in which, despite the undeniable international nature of the phenomenon, governments and societies simply do not fully trust any of the existing organisations, fora or mechanisms as a source of support, guidance or even interpretation of the problem at hand,” he said Monday.

In an address to Harvard University last week, U.N. Secretary- General Kofi Annan said that throughout much of the developing world, the awakening to globalisation’s downside was one of resistance and resignation, a feeling that globalisation was “a false God foisted on weaker states by the capitalist centres of the West.”

Globalisation is seen, not as a term describing objective reality, but as an ideology of predatory capitalism, he said.

“Whatever reality there is, in this view, the perception of a siege is unmistakable. Millions of people are suffering; savings have been decimated; and decades of hard-won progress in the fight against poverty are imperiled,” Annan said.

“And unless the basic principles of equity and liberty are defined in the political arena and advanced as critical conditions for economic growth, they may suffer rejection,” he added. “Economic despair will be followed by political turmoil and many of the advances for freedom of the last half-century could be lost.”

Annan also described the current Asian economic crisis as “the first major crisis of globalisation.” “If globalisation is to succeed, it must succeed for poor and rich alike,” he said.

The Secretary-General admitted that many developing countries were going through very difficult times this year. “The temptation to retreat into nationalism or populism can be strong,” he added. “But I am encouraged to see that, in almost every developing country, those false solutions are being rejected.”

Ambassador Hasmy Agam of Malaysia said the crisis in Asia had been largely triggered by the boom-and-bust behaviour of short- term lenders and investors. It had caused violent depreciation of currencies, highly volatile exchange rates and rapid increases in interest rates. Asset markets had plunged and banks had ceased lending.

Malaysia, he said, had found itself in its first recession in 13 years. The government had little choice but to take drastic measures, so it had instituted strict foreign-exchange controls. “Those measures had not been taken to isolate the economy, but to insulate it,” he added.

Ambassador Anwarul Karim Chowdhury of Bangladesh called for emergency action programmes to shield the weakest economies from global economic turbulence.

The General Assembly, he said, should consider the following: safety-net measures, including emergency assistance such as food aid; balance-of-payments support to severely affected countries; an immediate increase in the level of official development assistance (ODA); a reduction of the debt burden of least developed countries (LDCs); compensatory measures for income reduction from primary-commodity exports and reductions in remittances; and an immediate lifting of trade barriers affecting LDCs.

Ambassador Ahmad Kamal of Pakistan said the accumulation of the side effects of globalisation would lead to new class divisions. There would be divisions, he said, between those who prospered in the globalised economy and those who did not; between those who shared its values and those who would rather not; and between those who could diversify its risks and those who could not.

“The challenge was to include everyone in the process of managing globalisation, while maximising benefits for everyone, and minimising the negative impacts, particularly on developing countries,” Kamal added.

Excerpt: