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© Hazel Henderson, March 2002
BEYOND THE MONTERREY CONSENSUS
by Hazel Henderson
Monterrey, Mexico’s center of high-tech, home of the famed Instituto Technologia hosted over 50 heads of state at the UN Conference on Financing for Development. High hopes of many NGOs were disappointed as their participation in the year-long preparatory meetings turned into the toothless rhetoric of the final “Monterrey Consensus.” US obstructionism had gutted the document, led by UN Ambassador John Negroponte (formerly US Ambassador to Honduras) hewing to the “unilateralist overdrive” and free market dogma resented in Europe, Central and Latin America and worldwide.
Many sensible reforms to the global financial architecture promoted since the 1997 Asian crises by enlightened central bankers and finance ministers, as well as NGOs, had disappeared. These included reforming and democratizing the World Bank, the IMF; the Jubilee proposals for debt cancellation; allowing countries to seek bankruptcy protection under rules similar to Chapter 9 of US Municipal bankruptcy laws (which allows continuation of all public services and social welfare). Measures to tame today’s $1.5 trillion daily “global casino” of currency trading via currency transaction taxes (e.g., the “Tobin” tax) were banished to the NGO forums around town. These proposals gained official recognition by legislative bodies in over 100 countries since Geneva 2000, the 5-year review of the UN Summit on Social Development in Copenhagen 1995.
Even the viable, ingenious proposal offered by financier George Soros to earmark $10 billion of the IMF’s new issue of Special Drawing Rights (SDRs) for several trust funds for the provision of such global public goods as health and education were pooh-poohed by Alan Larson of the US delegation. President George W. Bush proposed increasing $5 billion in US international aid over the next 3 budget years, adding “We fight poverty because hope is an answer to terror. . . . because faith requires it and conscience demands it.” Many dismissed this as a drop in the bucket, along with Larson’s assertions that US assistance was through its market (i.e., the role of private investment, US imports of $450 billion from developing countries, remittances and private philanthropy).
The clash of development paradigms was clearly evident. The European Union’s Poul Nielson noted that the total level of aid from its 15 member states was $25 billion compared with $9.6 billion from the USA. President Hugo Chavez Frias of Venezuela, representing the G-77 and China, stressed that the type of development should be defined, and the the development model of the North very often caused the underdevelopment of the South. Chavez added that the South had paid $800 billion to the North in interest plus capital of another $800 billion. “Yet, the debt – like a strange monster – grew and grew.” Joy Kennedy of the World Council of Churches Ecumenical Team said, “That a free market system would effectively address society’s woes was pure science fiction.”
The new views of development, articulated at the World Social Forum in Porto Alegre were well represented in Monterrey. But as is often the case at UN summits they were relegated to the dozens of forums, college auditoriums and the Global Forum hosted by Mexico’s NGOs. Their theme “Another World is Possible” is becoming ever more mainstream – in spite of the officials still guarding the old order and the “suits” running the global Enron economy. Malaysia has demonstrated that capital controls are workable in dealing with “hot money”. Other countries also cited the need to reform the global financial architecture.
The Monterrey delegates were trapped in the realpolitk of the post-cold war, with the USA the world’s single superpower – even as alliances have shifted. Since 9/11 and Bush’s reactivation of Ronald Reagan’s earlier war on terrorism, Star Wars and military buildups (with many of the same cabinet members), US unilateralism dominates international affairs. With a domestic US population disenfranchised by money politics and public opinion manipulated by jingoistic commercial media and polls, the world looks for countervailing forces. The EU and China have the necessary clout to challenge the US economically. Latin America still is too divided. Russia is busy cozying up to the US. India, another potential powerhouse is preoccupied with the US’ new ally, Pakistan.
The hopes of the developing world for breakthroughs at Monterrey foundered on these realities. Yet, the USA cannot long remain the global hegemon. Many delegates stressed that the new realities of globalization require cooperation between states since all are now linked economically – whether or not they benefit or are hurt by globalization. Vulnerabilities of the US go beyond terrorism. They include reliance on fossil fuels by a still energy-wasteful, obsolete industrial structure – kept in place by overgrown sectors controlling Washington: oil, coal, nuclear power, military contractors, automobiles, steel, chemicals, agribusiness, and their lobbyists, accountants and lawyers.
As in Japan, these special interests prevent an orderly restructuring of the US economy toward energy-efficiency, and the emergence of a cleaner, greener more equitable society. These goals, along with halving poverty by 2015 were widely-shared in Monterrey, and are desired by millions of US citizens and many millions more worldwide – as global polls show. Paradoxically, the fundamentals of the US economy are less sound than those of the EU, with unprecedented levels of corporate and consumer debt, unsustainable trade deficits and financial markets kept afloat as the world’s flight capital haven. The US dollar cannot continue to serve as the world’s de facto reserve currency – as many economists agree. The dollar is widely expected to fall – since its current level is unsustainable and hurts US exports as much as those countries that compete to buy up dollars for their currency reserves – thus pushing its price up further. The world economy is still in recession.
These realities were only discussed frankly in Monterrey by NGOs. If developing countries want to help themselves, they can begin by diversifying their currency reserves from dollars into euros – for more balanced portfolios, as two powerful countries, China and Venezuela, now leading the G-77 have already done. EU companies accounted for nearly 70% of world investment in developing countries by 2000. As the euro and the dollar move closer to parity, the G-8 could peg them together in a trading band. Such a balanced, dual currency reserve system, together with the IMF’s new issue of SDRs could create a new, more stable system for the global economy.
Other self-help moves by developing countries could follow some OPEC members that successfully barter their oil for commodities going begging in world markets. These win-win counter-trades save precious hard currencies in developing countries, while clearing underpriced commodity inventories. To further a euro-dollar parity currency regime, OPEC members could switch to more euro currency reserves and decide to denominate their oil in euros. The “Washington Consensus” recipe for GNP growth was still in evidence in Monterrey – but the new recipe of sustainable human development is going mainstream.
Hazel Henderson, author of Beyond Globalization and other books, is a partner with The Calvert Group (USA) in The Calvert-Henderson Quality of Life Indicators (updates on www.calvert-henderson.com).