The way our Government is opening up all the sectors of our economy to foreign “participation”, one wonders whether we are on the brink of falling into the quagmire of “globalization”, or whether we have already taken the plunge, and it is only a matter of time before the country is sucked into that quicksand. I would like to crave the indulgence of the concerned citizens to place before them a thumb-nail sketch of what this globalization is about, its genesis, its modus operandi, the Institutions and Organizations through which it operates and the fate which has befallen its victims.

Throughout history, empires were built largely through military force or the threat of it. With the end of World War II, the emergence of the Soviet Union, and the specter of nuclear holocaust, the military solution became too risky for every Super Power!

The 1930s represented a major watershed in International Economy and in the way it was studied, analyzed and perceived. That decade opened the door to Keynesian economics and to the idea that government should play a major role in managing markets and providing services such as health, unemployment compensation, and other forms of welfare measures—a movement away from the assumptions that markets were self– regulating, and the State’s intervention should be minimal. The Depression (in the U.S.A.) resulted in the New Deal and in policies, which promoted economic regulation, governmental financial manipulation, and the extensive application of fiscal policy. The Depression and the World War II led to the creation of organizations like the World Bank, the International Monetary Fund (I.M.F.), and the General Agreement on Tariffs and Trade (GATT).

The modern international financial system was created (towards the end of World War II) at a meeting of leaders from many countries. The meeting was held in Bretton Woods, New Hampshire, U.S.A. The World Bank and the I.M.F. were formed, in order to reconstruct war-ravaged Europe; and they achieved remarkable success. The system expanded rapidly and was hailed as a panacea for all ills affecting the economies of the less developed and underdeveloped countries (L.D.C.s and U.D.C.s). The decisive moment occurred in 1951, when Iran rebelled against a British Oil Company that was exploiting Iranian natural resources and its people. In response, the highly popular and democratically elected Iranian Prime Minister Mohammed Mossadeq, nationalized all Iranian Petroleum assets. Outraged England sought the help of the U.S. However, both countries feared that military intervention might provoke the Soviet Union into taking action on behalf of Iran. Therefore, Washington dispatched C I A agent Kermit Roosevelt (Theodore’s grandson!). He performed his task brilliantly! He won people over through payoffs and threats. He enlisted their service to organize a series of street riots and violent demonstrations, which created the impression that Mossadeq was unpopular and inept. In the end, Mossadeq was brought down and was placed under house–arrest for life! The pro–American Mohammed Reza Shah became the unchallenged dictator.

Roosevelt’s gambit reshaped the history of the Middle East – and rendered obsolete all the old strategies for empire building! It became clear that, if the U.S. wanted to realize its dream of a global empire (as envisioned by men like Presidents Johnson and Nixon), it would have to employ strategies modeled on Roosevelt’s Iranian example. With the collapse of the Soviet Union and the world Communist movement, it became apparent to the Western countries that deterring Communism was not their goal: It was obvious to them that the global empire, which was rooted in Capitalism would have free reign.

With the empowerment of International Corporations and of multinational organizations such as the World Bank and the I.M.F., which were financed primarily by the U.S. and its sister empire-builders in Europe, a symbiotic relationship blossomed between governments, Corporations and multinational organizations! Let us examine, in a little more detail, how these Institutions go about their “missions of mercy” for enriching the U.S. and the multinational Corporations; I am sorry, I should have said – for the economic uplift and “development" of the L.D.C.s and the U.D.C.s. How is the system made to work under this globalization? Shocking, but true! U.S. Intelligence agencies would identify Professionals, who would be hired by International Corporations. They would draw salaries from the private sector. Their job would be to forecast the effects of investing billions of dollars in a Country – and justify huge international loans that would funnel money back to the U.S. Companies through massive engineering and construction projects. Secondly, the Projects, while creating huge profits for the Contractors, would be designed to make a handful of wealthy and influential families in the receiving countries very happy, while assuring the long–term financial dependence and the political loyalty of the governments, around the world.

To elaborate a little, an elite group of men and women belonging to the U.S.A. and other advanced countries utilize international financial organizations to foment conditions that make other nations subservient to a “corporatocracy”, comprising the big Corporations, the Governments and the Banks. They provide favors in the form of Loans to develop “ infrastructure” – electric generating plants, highways, ports, airports, or industrial parks. A condition for grant of such loans is that engineering and construction companies from their countries must build all these projects. In essence, most of the money never leaves the U.S.; it is transferred from the Banking Offices in Washington to engineering offices in New York, Houston or San Francisco! Nevertheless, the recipient country is required to pay it all back – principal plus interest. The Loans, in many cases are so large that the debtor country is forced to default after a few years. Then the creditor country demands its pound of flesh – control over the U.N. Votes the installation of military bases, or access to precious resources such as oil, etc.

The ‘globalization’ system is based on a concept that has come to be accepted as a gospel truth, namely, that all economic growth benefits humankind, and that the greater the growth, the more widespread are the benefits. The concept, it is needless to point out, is erroneous. We know that, in many countries, economic growth benefits only a small portion of the population and may, on the other hand, lead to increasingly desperate circumstances for the majority. In their drive to advance their empire, corporations, banks and governments use their financial and political clout to ensure that their schools, businesses and media support this fallacious concept. We see the results of this system running amok. Executives of the most ‘respected’ companies hire people at near slave wages, to toil under inhuman conditions in Asian sweat–shops. Oil companies wantonly pump toxins into rain forest rivers, killing people, animals and plants, and committing genocide among ancient cultures. The pharmaceutical industry denies life–saving medicines to millions of HIV infected Africans. The energy industry creates an Enron; the accounting industry creates an Andersen. If we are still not convinced, let us hear what Joseph Stiglitz, former Chief Economist of the World Bank and winner of the Nobel Prize in Economics has to say: “Globalization, as it has been advocated, often seems to replace the old dictatorships of national elites with new dictatorships of international finance…To make its (the IMF’s) programmes seem to work, to make the numbers add up, economic forecasts have to be adjusted…GDP forecasts are not based on a sophisticated statistical model, or even on the best estimates of those who know the economy well, but are merely the numbers that have been negotiated as part of an IMF programme.” Prof. Stiglitz has stated further that India should continue to maintain its programmers for the weaker sections and the poor, health and education projects, and rural development measures. The unfair Uruguay round of trade negotiations, the insistence on liberal flow of capital across countries, the banking sector “reforms” imposed on developing countries, the lack of progress in the climate negotiations, Trade–Related Aspects of Intellectual Property Rights designed to ensure higher priced medicines; and lack of will on the part of the G–8 countries to address core problems such as those relating to the increasing debt burden of most poor countries, were among the issues that symbolized the fact that globalization has not worked well for most countries. The experience of Mexico offered crucial evidence that opening up of the banking sector did not work well for developing countries. Foreign banks, which took over local banks, were not interested in lending to small and medium enterprises. They preferred to lend to multinational corporations. Countries in Latin America had recorded growth in 1950s, 1960s and the 1970s, “before they were taught to grow”! But, the economies crumpled in the 1990s, when they followed the models, which were dictated by the international financial institutions. Globalization has impeded the ability of nations to confront problems posed by globalization. The metaphor of the rising trade lifting all boats did not hold good when it came to the effect globalization had on countries: the tide had ended up knocking over some of the smaller boats! It had increased the divide between the rich and the poor countries, and widened the gap between the rich and the poor in the Third World Countries. The number of poor in Africa doubled. James Henry, former economist for McKinsey & Co., and Vice President for IBM & Lotus says: “The 1970s had been the heyday of the ‘big project’ paradigm for economic development. Officials from Institutions like the World Bank, the Inter–American Development, the Asian Development Bank (ADB), and the USAID roamed the globe, making huge project loans, and preaching the virtues of sophisticated development–planning techniques… By 1990, developing countries had accumulated more than $ 1.3 trillion in foreign debt…In 2,000, 86% oh the US EXIMs Bank’s $ 7.7 billion in new foreign export credits and guarantees had been cornered by just ten politically influential U.S. Companies, including Enron, Halliburton, G.E., Boeing, Bechtel, Raytheon, etc.”

The G-8 (the U.S., U.K., Canada, France, Germany, Italy, Japan and Russia), the World Bank, and the I. M. F. are once again exploiting these Third World nations; and they are calling it “debt forgiveness”! They are insisting on conditionalities, which are cloaked in phrases like “good governance", “sound economics" and “trade liberalization". The language may be enticing; but it is terribly deceptive.

The countries which agree to them are called upon to privatize their health, education, electric, water and other public services—in other words, sell them to the voracious Corporations. They are forced to drop subsidies and trade restrictions, which support local businesses, while at the same time accepting that U.S. and other G8 countries can continue to subsidize certain G-8 businesses and erect trade barriers on imports which threaten G-8 industries.

When globalization is such a monster vis-à-vis Third World countries, why is our Government pushing the country into its tentacles, taking advantage of lack of opposition from any political parties, except for a few pro forma noises made by some of the parties, for the consumption of their vote banks? When we have had our banking and insurance organizations functioning for decades, what is the sense in throwing open these sectors to the marauding foreign companies? Apparently, the raison d’etre for the Government’s action in opening all Sectors to the so–called Foreign Direct Investment is that we require to strengthen our infra structure on several fronts, for which we have to massive resources, including from foreign sources – Q.E.D. But, this reasoning is totally flawed. In my article titled “Coping with Oil Prices”, which appeared in the ‘Views’ Section of Lok Raj Sangathan web-page, dt. 19.8.2006, I had pointed out that our country’s ‘Foreign Exchange Reserves’ were of the order of $ 150 billions, representing the requirement for the country’s imports for a period about 13 months – and exceeding the total external debt of the country! I had humbly suggested that these Reserves could be kept at at a reasonable level (to meet, say, 7 or 8 months’ requirements), and the balance, which would be a substantial amount, could be put to very good use—for covering the losses suffered by the Oil Companies due to the spurt in the international prices of petroleum products, for outlay on Infrastructure Projects, Poverty alleviation schemes, etc. The Foreign Exchange (F.E.) Reserves should also be used for discharging some of the country’s foreign debts, thereby reducing the sum required for servicing the debt. One feels heartened that these suggestions have had the weighty support of Prof. Stiglitz who suggested, while delivering a lecture on “Making globalization work” in Chennai, that India use part of its F.E. reserves to fund infrastructure development. He observed: “There have been some discussions about investing some of the F.E. reserves in infrastructure…. it makes a whole lot of sense.” The autonomy of a country, said he, came under pressure when it borrowed extensively from abroad and, in the process, became dependent, particularly when the borrowings were of short–term nature. He cautioned India against going in for capital account convertibility and allowing short–term capital into the country; the move could create instability. Jobs could not be created with money that came in and went out: while long–term capital resulted in growth, short–term did not.

The country has had its own banking and insurance sectors functioning for decades, and has taken gigantic strides in multifarious fields, including nuclear energy, space technology, etc., in a spirit of self–confidence, self–respect, and self- pride. There is no need to expose these sectors to the destructive proclivities of the Foreign and Multi national Corporations, backed by their Governments.

Surveying the scenario against this backdrop, one is left with a sinking feeling that the country is being governed, on the economic front, by the World Bank, I.M.F., etc., (whose highly dubious role has been described above), by proxy! Seeing our Government’s efforts to take the country into the vortex of Globalization (a domain which Angels fear to tread!), one is reminded of what Arjuna said with great trepidation, on witnessing the Glorious but Forbidding Universal Form (which was Brighter Than A Thousand Suns) of Lord Krishna:

“Just as the winged moths, with accelerated motion, rush towards the luminous candle, for their own destruction, so do all these warriors rush into your fearsome mouths Lord, to be swallowed up therein.” In this case, the casualties may not be the warriors (!) in our Government, but it is the country and the vast majority of the poor people who will be the casualties.

I hope the concerned citizens will ponder over the perilous situation facing the country, and find ways to rouse the people to say a NO, to this globalization, loud and clear, before it is too late. (The writer is indebted to Mr. John Perkins, from whose book “Confessions of an Economic Hit Man” , a Plume Book 2006, many of the details are taken).

by C. A. Balasubramanian

[The author is Additional Controller General of Accounts, Government of India (retired)]

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