President Rafael Correa Delgado of Ecuador does not mince words when it comes to development. ”Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour,” he told a crowded auditorium at the 15th Raul Prebitsch Lecture.

The Raul Prebitsch Lectures, which are named after the first Secretary-General of the U.N. Conference on Trade and Development (UNCTAD) when it was set up in 1964, allow prominent personalities to speak to a wide audience on burning trade and development topics.

This year, President Correa took the floor on Oct. 24 with a lecture on ‘Ecuador: Development as a Political Process’, which covered efforts by his country to build a model of equitable and sustainable development, “Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour” – President Rafael Correa Delgado of Ecuador

Development, he told his audience, “is a political process and not a technical equation that can be solved with capital” and he offered a developmental paradigm that seeks to build on “people-oriented” socio-economic and cultural policies to improve the welfare of millions of poor people instead of catering to the “elites of the empire of capital”.

Proposing a “new regional financial architecture”, he said that “the time has come to pool our resources for establishing a bank and a reserve fund for South American countries to pursue people-oriented developmental policies in our region” and reverse the “elite-based”, “capital-dominated”, “neoliberal” economic order that has wrought havoc over the past three decades.

“We need to reverse the dollarisation of our economies and stop the transfer of our wealth to finance Treasury bills in the United States,” Correa said. “South American economies have transferred over 800 billion dollars to the United States for sustaining U.S. Treasury bills and this is unacceptable.”

According to Correa, people-centric policies in the fields of education, health and employment in Ecuador have improved the country’s Human Development Index (HDI) since 2007. The HDI is published annually by the U.N. Development Programme (UNDP) is a composite statistic of life expectancy, education and income indices used to rank countries into tiers of human development.

Ecuador’s HDI value for 2012 is 0.724 – in the high human development tier – positioning the country at 89 out of 187 countries and territories, according to UNDP’s Human Development Report (HDR) for 2013.

Explaining his country’s achievement, Correa said that public investments involving the creation of roads, bridges, power grids, telecommunications, water works, educational institutions, hospitals and judiciary have all helped the private sector to reap benefits from overall development.

“At a time when Hooverian depression policies based on austerity measures are continuing to impoverish people while the banks which created the world’s worst economic crisis in 2008 are reaping benefits because of the rule of capital,  Ecuador has successfully overcome many hurdles because of its people-oriented policies,”  he said.

Correa argued that by investing public funds in education, which is the “cornerstone of democracy”, particularly in higher education or the “Socrates of education”, including special education projects for indigenous and Afro-Ecuadorian people, it has been shown that society can put an end to capital-dominated policies.

“We need to change international power relations to overcome neocolonial dependency,” Correa told the diplomats present at the lecture.  “Globalisation is the quest for global consumers and it does not serve global citizens.”

The Ecuadorian president argued that developing countries have secured a raw deal from the current international trading system which has helped the industrialised nations to pursue imbalanced policies while selectively maintaining barriers.

He urged developing countries to implement autonomous industrialisation strategies, just as the United States had done over two centuries ago.

Developing countries, he said, must pursue ”protectionist policies as the United States had implemented under the leadership of Alexander Hamilton [U.S Secretary of the Treasury under first president George Washington] when it closed its economy to imports from the United Kingdom.”

Citing the research findings of Cambridge-based economist Ha-Joon Chang in his book ‘Bad Samaritans:  The Myth of Free Trade and the Secret History of Capitalism’, Correa said that protectionist policies are essential for the development of developing countries.

He stressed that developing countries, which are at a comparable of stage of economic development as the United States was in Hamilton’s time, must devise policies that would push their economies into the global economic order.

The strategy of “import-substitution-industrialisation [ISI]” and nascent industry development is needed for developing countries, he said. “However, the developing countries must ensure proper implementation of ISI strategies because governments had committed mistakes in the past while implementing these policies.”

“Free trade and unfettered trade,” continued Correa, is a “fallacy” based on the Washington Consensus and neoliberal economic policies. In fact, while the United States and other countries preach free trade, they have continued to impose barriers on exports from developing countries.

Turning to the global intellectual property rights regime, which he said is not helpful for the development of all countries, Correa said that these rights must serve the greater public good, suggesting that the current rules do not allow equitable development in the sharing of genetic resources, for example.

In this context, he said that governments must not allow faceless international arbitrators to issue rulings that would severely undermine their “sovereignty” in disputes launched by transnational corporations.

President Correa also called for the free movement of labour on a par with capital. “While capital can move without any controls and cause huge volatility and damage to the international economy, movement of labour is criminalised. This is unacceptable and it is absurd that the movement of labour is met with punitive measures while governments have to welcome capital without any barriers.”

He was also severe in his criticism of the financialisation of the global economy which cannot be subjected to the Tobin tax. “Nobel Laureate James Tobin had proposed a tax on financial transactions in 1981 to curb the volatile movement of currencies but it was never implemented because of the power of the financial industry,” he argued.

Concluding with a hint that his government’s social and economic policies are paving the way for the creation of a healthy society, Correa quipped: “The Pope is an Argentinian, God may be a Brazilian, but ‘Paradise’ is in Ecuador.”

(Edited by Phil Harris)

Greeks protesting against austerity measures. Credit: Apostolis Fotiadis/IPS

By Mario Soares
LISBON, May 27 2013 (IPS)

The economic crisis began in the United States under the administration of then-President George W. Bush, following the collapse of the Lehman Brothers Bank. It came as a result of unregulated globalisation and a neoliberal ideology that places usurious markets, offshore bank accounts, and money for the sake of money, above state power. It is an ideology that ignores citizens, even as they starve.

At the time – between 2007 and 2009 – I wrote some books: “A Changing World”, “In Praise of Politics”, “Fighting for a Better World” and “Inside the Hurricane”, addressing in all of them my concerns about the risk of a neoliberal contagion of the euro and the European Union (EU) itself.

Mário Soares, former president and prime minister of Portugal. Credit: IPS

U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher championed these disastrous neoliberal politics – which were later continued by the pseudo-labourite Tony Blair – whose negative consequences are now evident to all.

In view of the profound links between Europe and the United States, the spread of U.S. neoliberalism to the EU and particularly to the eurozone was inevitable. When the EU crisis began, chancellor Angela Merkel already headed Germany. In spite of being a Lutheran, Merkel was also a former militant of the East German Communist Party. After the fall of the Berlin Wall she stood in opposition to the German reunification to which European states contributed.

As is well known, the first victim of the crisis was Greece, the cradle of our civilization and thus a country that deserved better treatment. It got the opposite.

The German chancellor, a longtime ally of ultra-conservative liberals, heeded market demands. The situation in Greece, where German banks occupied a privileged position, deteriorated until the country was able to pay the exorbitant sum demanded by the Troika, a body comprised of Greece’s major creditors: the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Commission (EC).

In the meantime, in the absence of financial assistance, the so-called peripheral states of the eurozone plunged into crisis. Ireland, Portugal, Spain, Italy (Europe’s third largest economy) and Cyprus were followed by the recent and surprising Dutch collapse. France is the latest addition to the list.

It all boils down to the criminal policy of austerity imposed by Germany, the IMF, the European Commission under the presidency of Jose Manuel Durão Barroso and, with greater discretion, Mario Draghi’s European Central Bank.

It has become more than evident that austerity favours merely usurious markets and those behind them. Austerity obliterates states and their respective populations, not only in the so-called “peripheral”, southern states, as was recklessly claimed. Take a look at the Netherlands, France and Germany. The crisis was bound to hit Germany as many economists, including Nobel Prize-winners Joseph Stiglitz and Paul Krugman, had predicted.

Currently Germany is struggling due to a policy of austerity that has shrunk many of its markets in the European states, which account for 50 percent of its exports. If austerity is maintained, Germany itself will enter a recession.

European public opinion has understood both the necessity and urgency of a break not only with current policy, but also with a political class that has proven incompetent.

The current ruling parties within the EU are mostly ultra-conservative and incapable of grasping the critical situation. Truth be told, the parties that built the EU – the socialists, the social democrats, the Labourites, and the Christian democrats, are no longer in power.

The sole exceptions are France and now Italy, where President Giorgio Napolitano was re-elected in spite of his age, and where we find a new prime minister in the figure of Enrico Letta. Both Letta and French President Francois Hollande have openly declared their opposition to austerity and their intention to restore the role of states in controlling markets, and not the other way around.

Hence, the citizens of all European countries have vociferously expressed their opposition to Troikas, the markets, pseudo-politicians and those governments committed to austerity.

It should be noted that the welfare state (a product of the postwar era), democracy as we conceived it, as well as the rule of law are all being jeopardised, creating the need for a profound and immediate political shift.

We face a straightforward dilemma: either we fight against unemployment, widespread poverty, recession and in defense of the welfare state in its broader sense, or, if we wait too long, the EU will fall into the abyss.

And not only would it be tragic for the U.S. to lose its only faithful ally, but many nations of the world would suffer: China, Russia, Japan, Brazil, India, Mexico and so on.

I am hopeful this won’t be the case. The world surely does not wish the disappearance of the European Union, the most original political project of all times and the one that brought so many benefits to its peoples. Its collapse could open the door to a global conflict. Its demise would represent an unacceptable regression of civilization, one that would set us more than a century back. May common sense and courage prevail.

(END/COPYRIGHT IPS)

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By Mario Queiroz
LISBON, Feb 19 2013 (IPS)

Thousands of people marched through the streets of cities across Portugal “against exploitation and impoverishment” caused by the government’s austerity cuts, in a protest organised by the General Confederation of Portuguese Workers (CGTP), the country’s largest trade union.

Arménio Carlos: “Hunger is back in Portugal”. Credit: Mario Quiroz/IPS

“The European Union should not be an accomplice to neoliberal economic policies that treat people as objects and attack basic social benefits, to the point of negating the United Nations Universal Declaration of Human Rights,” CGTP Secretary-General Arménio Carlos told IPS, while finalising details for the Jornada Nacional de Acçao e Luta (National Day of Action and Struggle) held Saturday.

The CGTP announced on Friday Feb. 15 that it would present a complaint against the Portuguese state before the International Labour Organisations (ILO) for violation of several conventions for the protection of collective bargaining and freedom of association.

Excerpts from the interview with Carlos follow.

Q: Are we seeing a substantive change in the system that used to guarantee what is known as “Social Europe”?

A: What is being called into question is a set of assumptions and principles upholding decent work, as defined by the ILO. One cannot play with people’s lives; they are not “guinea pigs” for neoliberal laboratories to test how far one can go, whether in Portugal, Greece, Spain or Ireland.

Our countries were viewed as of lesser importance, because of their economic and financial problems, but now it is becoming evident that the problems do not only apply to Portuguese, Greek or Irish people. They also affect Germany, the “engine” of Europe, which has entered a phase of economic stagnation. This ought to give those responsible for the EU pause for reflection.

Q: How will Portugal be able to pay its debt of 78 billion euros (equivalent to 110 billion dollars) owed to the EU-International Monetary Fund (IMF)-European Central Bank (ECB) troika?

A: Unless the loan is renegotiated, Portugal will not be able to pay and will become a financial colony.

Renegotiation does not mean evading repayment, it means negotiating suitable conditions in order to do so. But the lenders themselves are hampering the development of economic policies to allow repayment of the debt.

For example, the ECB is helping the financial sector by lending money at 0.7 percent interest and, in turn, banks are making credit available at eight percent to the state and to companies. This means the ECB is presently fomenting financial speculation.

Unemployment is still growing in Portugal and we have almost one million people without work, equivalent to a record figure of 16.9 percent, the third highest jobless rate in the EU, after Greece and Spain. The economic recession is going to continue this year. Tens of thousands of companies are going to close down or go bankrupt.

Q: Does this disheartening future mean that poverty will also increase?

A: Poverty and social exclusion are becoming generalised throughout Portugal, and we are also seeing the return of hunger in this country.

Thousands of children are hungry, and naturally that also means that their parents have also been hungry for some time, due to the neoliberal policy that is bleeding Portuguese people dry.

In addition to the widespread suffering it has caused, the country’s future is being called into question. It is a policy that does not solve problems, but exacerbates them.

Q: The two general strikes and various protest demonstrations in 2012 achieved enormous turnouts. Is that because the demands of the CGTP now go far beyond strictly trade union matters?

A: Reduction of purchasing power is affecting millions of people, and it can be seen at two levels.

First, because of inflation without adjustments in wages, on average over the last two years private sector workers have lost more than 10 percent of their purchasing power, while public sector workers have lost 25 percent or even 30 percent in some cases.

Second, the general state budget for 2013 will impose further income reductions through taxes, which will cause a fall of between six and seven percent in family incomes, so that one can only conclude that the purchasing power of workers will continue in free fall.

Meanwhile, enormous tax benefits are being granted to large economic and financial corporations, without any real effort to combat fraud and tax evasion. It is interesting to know, too, that these crimes cost about 25 percent of GDP.

That is where the problem should begin to be attacked, but it does not happen, because those economic and financial powers are practically untouchable.

The two general strikes and the big demonstrations in 2012, as well as Saturday’s protest, represent a snowballing movement, an unprecedented moment in which the vast majority of Portuguese people can express their discontent and indignation and demand an end to the policies imposed by the troika.

Q: What about labour rights?

A: The balance of labour laws between workers and employers has been further tipped in favour of the bosses, for instance, by reduction in overtime pay, easier dismissal, lower compensation payments and erosion of social protection, as well as an unprecedented attack on collective bargaining.

We are seeing deregulation of labour laws in favour of employers.

At present, miserable levels of compensation are being debated, that would put a Portuguese worker at the level of only 12 percent of an Irish or German worker and between 25 and 30 percent compared to a Spaniard. In addition to the recessionary spiral, in Portugal we have a declining spiral of civilisation.

Q: How far can this go?

A: For a government with a neoliberal viewpoint, there is no limit. They do not see people, they only see numbers and goals. At the end of the day, it is a settling of scores with the April Revolution (or Carnation Revolution, when army captains democratised Portugal in 1974), which brought in a collection of rights that gave value to work and dignity to people.

The government (of Prime Minister Pedro Passos Coelho) remains stone-hearted in the presence of parents who have lost their jobs, children who are denied their right to work, parents whose social protections are withdrawn, children who are forced to emigrate, and elderly people who cannot afford to buy the medicines they need to survive.

Q: What does the CGTP propose?

A: We think that it is not enough to talk about growth. Growth is only possible with investments, more production, better income distribution and higher spending power. To us, these components are essential to solve the fundamental problem.

(END)

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