Vol. 10 - No. 7




Globalization in the Reverse Gear



Citizens all over the world are now being confronted with a series of hammering news releases by WikiLeaks' revelations on how U.S. diplomats see the world and how the financial capital speculates about the weaknesses of states from Italy to Germany.

While developed countries have been carrying out massive cuts to their national budgets with sweeping layoffs, governments of the world had declared -- even before COP 16 ended -- that not much will be accomplished at the climate change meeting in Cancun, Mexico.

In light of these facts, we should start reflecting on three topics that are by and large absent from daily media. Is this absence due to the lack of capacity in the news system? Or is it because these topics are not part of the political debate, therefore they are not considered news?

Today we know that the increasingly commercialized system dealing with information -- which is either sellable or useless, especially due to the media crisis -- is progressively directed towards events and not processes, which are being increasingly left out of the information flow. It's becoming too complex to examine the world, and the analysis is progressively restricted to a local level.

In other words, newspapers won't write about what is not an 'event'. And if a certain topic is not part of the political agenda, this new journalism won't cover it.

Nevertheless, we should start reflecting on three topics that guide us through the reading of events: the U.S. hangover of post-unilateralism; social deficit versus fiscal deficit; and the reverting of globalization.

Let's start with the easiest topic, the U.S.

It is clearer by the day, even for the American elite, that the United States is a country in decline. Until now, the majority of citizens have escaped from this reality by coming up with popular movements like the Tea Party, composed of white citizens that on the one hand want to reduce the role of the state so that the citizens can assume control of their own lives, and on the other, want the return of their country to a position of world leadership.

As Roger Cohen wrote in the New York Times, this cause is in the interest of the American people and is for the good of humanity. Obama will pay a high price for his role as modern mediator in the readjustment of the U.S. to this new reality. For example, his attempts to initiate dialogue with Russia or China have been received with great resistance.

The U.S. delegation went to Cancun without any support from Congress on environmental issues and through a tactical twirl, it goes from a constructive approach to a major controversy with China, an issue which will paralyze the real debate. Besides, the Republican Party will do whatever it takes to block the Obama administration in the next two years. The message is clear: Obama must not win the 2012 elections.


Meanwhile, the WikiLeaks revelations do not disclose anything new to specialists. They demonstrate two things: that the U.S. continues to be convinced that it must govern the world, even if George W. Bush is out of the picture, and that those who speak with diplomats tell them whatever they want to hear.

Secretary of State Hillary Clinton made a written petition to gather all kinds of private data about the political class of several countries, from their bank accounts to their private activities. No American government official would ever dream about requesting such information from American citizens, and the CIA has formal restrictions in this domain, from none other than the American Congress.

At the same time, not a single document, within the thousands released, reports any kind of criticism or disagreement with U.S. diplomats from the representatives of those countries.

Like it or not, the vast majority of U.S. citizens are still living, if not in inebriation, then at least in the hangover of the unilateral world in which they have been living since World War II. We are currently living in an increasingly multilateral world, where not only China and India but also a series of countries considered in the past as Third World, from Brazil to Indonesia, begin to have their own voice and line of action in the world's governance.

If one is not aware of this hangover, it will be extremely difficult to understand and process relations with the U.S.

When China becomes the most industrialized country in the world, around 2025, the U.S. process of conversion to reality should have been concluded. The path that this process will take is largely unpredictable. Today, it's following surreal characters like Sarah Palin, who has considerably increased her popularity in the public opinion polls, surpassing Obama.

The second topic is more complex, but easier to summarize, since it's obvious to everyone. Today, the primary preoccupation of governments is to react against speculative capital, which is stronger than the protective measures they can apply. The general opinion is that capital speculation will continue to persist in countries where the financial system has structural weaknesses.

Therefore, the conclusion is that the fiscal deficit must be reduced by cutting the government budget at any cost. Within this pattern, massive layoffs, cuts on social services, education and health, increasing the age of retirement and using pension funds to save financial institutions are seen as modernizing measures and acts of political wisdom.

Nobody, except German Chancellor Angela Merkel in a timid manner, has mentioned the unprecedented paradox in which we find ourselves today: speculators who play against countries will charge them if they win and will be compensated by them if they lose.

The last calculations show that a worldwide investment of $12 trillion was made to save the financial system. As part of the emergency plan, the U.S. Federal Reserve alone distributed more than $9 trillion in short-term securities, which accounts for more than the entire American economy. Citigroup received $1.8 trillion, Merry Lynch $1.3 trillion, Morgan Stanley $1.4 trillion and Bear Sterns $960 billion.

During the month of December, Wall Street will distribute $179 billion in bonuses and prizes. The Federal Reserve, which is printing $600 billion to defend its economic manoeuvring, declared that it would create almost 700.000 new jobs. According to this logic, if creating a job costs about $1 million, which financial institution will provide the capital to eliminate unemployment?

The logic of capitalism considers the very idea of eliminating the risks of a market system as a dramatic mistake. This has always been the argument used against leftist economic thought. But now, these policies are not being carried out by the left, but by whole political establishments. The fiscal deficit has priority over the social deficit, which should normally be the first political concern.

The number of jobless is rising, and some theorize a new economy where unemployment becomes the norm. Since the fall of the Berlin Wall, we are unarguably witnessing an increase in wealth that is being distributed extremely disproportionately, concentrated in the hands of the richest 2% of the world's population.

This process does not know ideological or political differences. Last year, China received 37 times more private investment than Brazil. Today, China has 89 billionaires, against India's 20.Two decades ago, neither of these countries even had billionaires. Are we facing a new legitimization of the financial system or the incapacity of the political system?


We arrive to the third topic: reversed globalization. It's not a mystery that economic globalization was set up by the north to continue their gains through finance and trade.

Henry Kissinger designed globalization to be the new stage of U.S. supremacy. Washington took the steering wheel of globalization from the UN system, which was restricted to the areas of assisting development, providing humanitarian aid, and supplying social and technical services such as health and education -- all things that do not turn a profit.

Trade is not part of the UN as it belongs to the World Trade Organization (WTO). Finance simply does not have governance organs and it goes where grow this without any ideological consideration.

The globalization of transport has made markets accessible to the South, something unthinkable in the past. WTO director Pascal Lamy observes that sending a container 100 Km, from Marseille to Avignon, costs the same as sending it from Bangkok to Marseille, a 9,400 Km transfer from the other side of the world.

Lamy also points out that talking about a product in terms of nation is consistently more improbable. Telephones, TVs, cars, are almost always assemblies of several factories all over the world with different trade licenses and non-local technologies. The European Union discovered this when trying to block China's imports, concluding that the majority of their products were in fact products of relocated European companies.

It is not a coincidence that we hear more about these new "emergent economies", recently admitted into the G20, whose weight matters for international processes. They are not only China, India and Brazil, but also Indonesia and South Africa.

In the 15th century, countries in the North represented 20% of the world's gross product (WGP), against 80% of what were later called underdeveloped countries, China alone holding about half of this figure. During colonialism the North's share jumped to 30% of the WGP in 1820, and 60% in 1913 with imperialism. Since 1950, it decreased to 40% while countries in the South grew to 60% of the WGP.

In other words, without access to cheap primary sources and privileged trade agreements with the South, inhabited by more than 5 billon people, can the one billon inhabitants of the North maintain their lifestyle and their privileged use of the planet?

Aren't we entering a new era of reversed globalization that will end the privileges of the North? It is time to ask this question.

[Source: IDN-InDepthNews | Analysis That Matters]

Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News [http://other-news.info] in which this Viewpoint first appeared.

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