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John Feffer

John Feffer

Posted: July 21, 2008 06:37 PM

World Economic Hangover


Reposted from Foreign Policy In Focus

I feel like I have a hangover when I'm reading the proceedings of international economic organizations. My hands start to tremble when I open a document from the G8 or the World Trade Organization. I start to read and my head hurts. My mouth is dry. I have an upset stomach. The language of the documents is either boring or technical or obscure or all three. I feel like I'm reading a text by that novelist - in Martin Amis's The Information - whose pretentiously experimental prose sends all potential literary agents to the hospital with migraine.

Consider this brief excerpt from the recent G8 summit in Hokkaido, Japan. "A successful conclusion of an ambitious, balanced and comprehensive WTO Doha agreement is critical to economic growth and development," reads the Summit Leaders Declaration. "Given the crucial stage of negotiations, we reiterate our determination to work as a matter of urgency toward the conclusion of the negotiations and call on all WTO Members to make substantial contributions with a view to establishing modalities for Agriculture and NAMA (Non-Agricultural Market Access) and achieving positive and tangible results on Services."

Establishing modalities? What does that mean? By the time I figure out what the documents are saying, I feel even worse: their content is considerably more disturbing than their language.

Fortunately, Walden Bello has a strong stomach. He unscrambles the prose of these obscure documents and explains just what the political leaders and their trade negotiators are up to. At the recent G8 summit in Japan, for instance, Bello explains that what might seem a step forward in addressing global warming - endorsing a reduction of at least 50% of global carbon emissions by 2050 - is in fact a step backward. According to an international consensus of scientists and environmentalists, an 80-90% cut in emissions by 2050 is necessary to keep global temperatures from exceeding the point of no return. The G8 leaders refuse even to make their insufficient reductions binding.

Bello also notes that the solution put forward to the climate crisis is that old hangover cure: the hair of the dog. In other words, if vodka got you into the mess you're in, a quick shot of the stuff in the morning will repair the damage. That morning shot of vodka is, as they say, the hair of the dog that bit you. According to this approach, economic growth has brought the world to a climate crisis and a little bit more economic growth will bring us out of the crisis (albeit a more technologically efficient variety). "Like the United States and Japan, the European governments continue to hang on to the position that economic growth can be 'decoupled' from energy use," Bello writes in The Anti-Climate Summit. "In other words, they think they can maintain current European consumption levels and only have to achieve the more efficient use of energy and replace oil with other energy sources." But what is dubious as a hangover cure is even more so as a solution to the current climate crisis.

When he turns to the upcoming WTO meeting, Bello discovers more hair of the dog. Financial deregulation has caused havoc all over the world - from the banking and housing crises in the United States to the financial crisis in Asia in the late 1990s. So, how does the WTO propose to address the increasingly unregulated flow of financial capital around the world? It is pushing for a General Agreement on Trade in Services (GATS) - referenced in the last line of the G8 excerpt above - that would further deregulate financial service, this time at a global level.

"While financial services are just one of many services covered by GATS, the United States and EU have made a liberalized financial sector their main demand on developing countries," Bello writes in The WTO's Raw Deal on Services. "It has been revealed, for instance, that the EU has demanded that some developing countries eliminate regulations that cover the activities of hedge funds, the financial groupings that are said to have triggered the collapse of the baht in 1997. The EU has also demanded that Mexico open up its market to trade in derivatives, the slippery financial instruments that have played such a key role in the current financial chaos."

The worst aspect of these scenarios - with climate, with financial services - is that the partying and the hangovers have somehow been separated from one another. The rich get to enjoy themselves, and the rest of us have to deal with the morning after.

Read the rest here.