STWR - Share The World's Resources

Venezuelan President Hugo Chavez and his Brazilian and Argentine counterparts held a one-day summit in Sao Paulo Wednesday to discuss various topics relating to the integration of South America, while Bolivia’s President Evo Morales announced that he will be signing a People’s Trade Agreement with Cuba and Venezuela in Havana on Saturday.

IMF wins mandate for ‘multilateral surveillance’

The news that the IMF has been given the remit to extend its powers from its present bilateral surveillance of individual country economies to a ‘multilateral surveillance’ of the global economy as a whole, is unlikely to be welcomed by anyone hoping for progress towards more democratic and effective world governance.

The move is explicitly designed to broaden the scope and influence of the Fund, and rectify the ever widening trade imbalance between the United States and the Asian economies. In the words of the UK Chancellor Gordon Brown, Chair of the Fund’s International Monetary and Financial Committee (IFMC), ‘In future the IMF should be more able to address global questions with multilateral surveillance, like current account imbalances, the impact of oil prices and financial sector questions, and monitoring in future more deeply not just country policies but the linkages and spillover effects of one country’s policies on others in the global economy.’

‘Specifically’, he added, ‘we agreed that the IMF must ‘focus more on crisis prevention, as well as crisis resolution, that multilateral as well as bilateral surveillance would become of increasing and central importance, and that we would agree an annual surveillance remit built on multilateral and bilateral surveillance of monetary, fiscal, exchange rate policy frameworks and financial sector issues’.[1]

Is the United States a superpower? I think not. Consider these facts:

The financial position of the US has declined dramatically. The US is heavily indebted, both government and consumers. The US trade deficit both in absolute size and as a percentage of GDP is unprecedented, reaching more than $800 billion in 2005 and accumulating to $4.5 trillion since 1990. With US job growth falling behind population growth and with no growth in consumer real incomes, the US economy is driven by expanding consumer debt. Saving rates are low or negative.

The federal budget is deep in the red, adding to America's dependency on debt. The US cannot even go to war unless foreigners are willing to finance it.

Our biggest bankers are China and Japan, both of whom could cause the US serious financial problems if they wished. A country whose financial affairs are in the hands of foreigners is not a superpower.

The US is heavily dependent on imports for manufactured goods, including advanced technology products. In 2005 US dependency (in dollar amounts) on imported manufactured goods was twice as large as US dependency on imported oil. In the 21st century the US has experienced a rapid increase in dependency on imports of advanced technology products. A country dependent on foreigners for manufactures and advanced technology products is not a superpower.

Developing nations left the weekend's joint meetings of the World Bank and International Monetary Fund (IMF) with few gains, while the rich countries that dominate the boards of the two lenders managed to shape the agenda almost entirely to serve their own interests, say analysts here.

The focal points of this semi-annual meeting were the proposed reforms for the IMF, an anti-corruption drive led by World Bank president Paul Wolfowitz and a new global energy investment plan.

Issues centred on developing countries, like debt cancellation and aid -- a feature of past meetings -- had limited airing during this gathering.

"Compared to the momentum last year and the real changes in terms of increase in aid and debt cancellation, the spring meetings were a real disappointment," said Max Lawson, policy adviser at Oxfam International, a confederation of anti-poverty organisations.

The International Monetary and Financial Committee (IMFC), the steering body of the IMF, approved the "Medium-Term Strategy", a plan that grants the Fund further authority to carry out "multilateral surveillance".

Some retrospective entertainment about World Water Day, the U.N.-mandated aqua-celebration each March, read Rule 12 of the World Bank's "Principled Pragmatism & Rules for Reformers." It goes: "Reforms must provide returns for the politicians who are willing to make changes." And the Bank report gives us proof that water reforms "can be good politics." It holds up two Indian politicians it sees as highly successful with water reforms. Chandrababu Naidu and Digvijay Singh.

Note that this report comes more than a year after Mr. Naidu suffered one of the worst defeats in the electoral history of Andhra Pradesh. And after Digvijay Singh, once a highly popular Chief Minister of Madhya Pradesh, was trounced at the hustings there. Both in 2004. Well after such "reforms" were unleashed on the public.

Still the Bank report India's Water Economy asserts that these reforms have proved to be good politics. "There is evidence that this was indeed the case for Mr. Singh in Madhya Pradesh. And the intensive formation of WUAs [water users associations] in Andhra Pradesh was certainly politically useful to Mr. Chandrababu Naidu, because farmers perceived this to be a reform which moved in the right direction. The bottom line is that ... it must be viewed as a `good thing' by sufficient numbers of people that they will consider voting for the politician who championed the reform."