Volume 2: Number 1                 November 1, 1998

In this Issue...
Gail Omvedt and Liberalization Natarajan, Faolain and Philip
Vanaik Book Review Vijay Prashad
Taxi Strike Biju Mathew
Foil Announcements


(It's the Whole World Being Taken Over)

by Basav Sen

The Organization of Economic Cooperation and Development (OECD) is a multilateral economic policymaking body comprising the 29 wealthiest countries in the world: the United States, Canada, Japan, and assorted members of the European Union. The OECD is now in the process of negotiating a treaty called the Multilateral Agreement on Investment (MAI), a set of rules governing foreign investment. The MAI negotiations are being conducted secretly, with hardly any media coverage. Any time a group of the wealthy and powerful discuss something in secret, we need to be concerned. And in this case, we should be very especially concerned; MAI will have immense consequences for developing countries, and for humanity in general.

MAI may be understood as an extension of the "free market" and "free trade" principles that are fashionable in economic policy circles today, collectively called "neoliberalism" by some. Neoliberalism sees the market as the only legitimate actor in the economy, and sees any form of government intervention in the economy as undesirable, if it has the direct or indirect effect of curtailing investors' profits. Government withdrawal from the world economy, through cuts in regulations, taxes, and tariffs, is thought by neoliberals to encourage investment, which in turn leads to economic growth, and benefits for everyone. Factual evidence of neoliberal economics leading to precisely the opposite result - impoverishment of millions - is conveniently ignored. Multilateral lending agencies such as the IMF and World Bank are foisting neoliberal policies upon developing countries as a condition for lending. "Free trade" treaties and institutions such as the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) are also central to codifying and upholding neoliberalism.

MAI will have immense
consequences for
developing countries, and
for humanity in general.

Since transnational business, in particular, wants MAI to be extended to developing countries, it follows that there will be intense pressure on developing countries on this issue. The policies of wealthy counties (and many not-so-wealthy countries as well) are made by politicians who represent the business interests who contribute to their campaigns. Multilateral financial and trade agencies such as IMF, World Bank and WTO are, in turn, controlled by governments of wealthy countries. Thus, directly or indirectly, transnational business exerts a powerful influence on global economic policy. It follows that if business wants developing countries on board the MAI, they will make every effort - directly, and through OECD governments and multilateral agencies - to ensure that it happens. They can do so directly by refusing to invest in countries which do not sign the MAI. OECD governments can negotiate on behalf of their client corporations, sometimes using threats of reprisals, such as U.S. Super and Special 301 laws. IMF and World Bank on their part likely to threaten withdrawal of loans from countries who do not accede to MAI.

There are several reasons why many developing countries, on their part, desire foreign investment. Two of these reasons are:

It is worrisome enough that developing countries are being excluded from drafting a treaty that they will then be arm-twisted into signing. Worse, the MAI will have serious adverse effects on the economies of developing countries, which directly follow from conditions in the treaty. Some of these are:

Most importantly, these economic abstractions translate into serious consequences for people. Quantitative forecasts of the impact of MAI do not exist (or I am not aware of them). But the devastating impact of SAPs are very well known, and there is considerable evidence that MAI will amplify these ill effects. The human impacts of MAI will include:

The key to successful action
agains MAI in particular and
neoliberalism in general lies
in creative grassroots political action outside
of the established political structure.

It is clearly imperative to start building resistance to the MAI. In the U.S. in particular, such resistance often takes the form of "lobbying" public officials. While this method may produce short-term benefits, it has serious limitations. This is because the powers-that-be are both ideologically predisposed towards neoliberalism, and dependent on TNCs for financing their electoral campaigns. All major political parties in India have accepted the logic of neoliberalism already - why would they not accept MAI? Both parties in the U.S. also support neoliberal policies. In this ideological climate, the standard government response to anti- MAI petitions will be that the state has limited power to act in the age of "globalized" capital. Within existing political/legal structures, that's partly true. What governments do not admit, though, is that they have no political will to alter these structures, precisely because they do not truly represent masses of people who elect them; instead, they represent businesses who fund them. [The nature of their plea of helplessness amounts to a depoliticization of the entire arena of economic policy. Government techno/bureaucrats, media "pundits", business spokespersons and corporate-funded academics worldwide have joined in a chorus proclaiming the "inevitability" of what they term "globalization", as if it were an inexorable natural process that humans and their social and political institutions allegedly have no control over. Under this fig-leaf, they set up elaborate institutional arrangements and regulations - such as MAI, NAFTA and the WTO - to facilitate this same "inevitable" process. If the process were indeed so inevitable and governed by the "invisible hand" of "market forces", then why are these arrangements even required? The *ideological* content of neoliberal institutions is sought to be covered up by this talk of inevitability. Indeed, the very choice of the word "globalization" rather than *neoliberalism* masks the fact that the processes being referred to are the manifestations of a conscious political ideology and are not occurring without directed human intervention.]

Given the strength of the institutions in favor of MAI, and the extent of business control over them, the key to successful action against MAI in particular and neoliberalism in general lies in creative grassroots political action outside of the established political

structure. For example,

On these lines, what we need on the MAI is a globally linked mass movement. As South Asians in the U.S., we are in a unique position to form a global link, between anti-MAI and anti-neoliberal movements in South Asia and in North America.

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