Masthead graphic based on a painting by Gudrun Thriemer.

Tuesday, January 09, 2007

"Agenda 2007," January 8, 2007.

What to expect from 2007? This morning, World Report looks at slowing globalization and responses to it in Latin America and Africa--with a short afterward on the election coming this year in Pakistan.

Last week, World Report moved temporarily to the Tuesday morning "Nelson Before Nine" where we discussed prospects for 2007 in an interview format with Donna MacDonald. We touched on the execution of Saddam Hussein, climate change, upcoming elections in France, Pakistan, and possibly Canada. And we waxed philosophical about the benefits of minority government and the possible end, for the time being, of unilateralism in American foreign policy.

The world may be shrinking, but it’s still a big place to cover in 12 minutes. So this week we pick up where we left off. Nothing in depth or fine-grained, just a brief consideration of the big chunks on what looks like the agenda for 2007 so far.

The economy is likely to continue to be characterized by increasing geopolitical instability, increasing energy prices (not just oil), declining home prices and rising inflation.

The Doha round of WTO talks has fizzled. Although there will almost certainly be some attempt to reignite them, the WTO and the neoliberal model of globalization have been exposed as a model with limited success in some countries and disastrous consequences in many others. Opposition continues to grow worldwide.

This is significant beyond the implications for global trade. Some analysts are saying that the FTAA is all but dead in Latin America. There will be some bilateral trade agreements negotiated, but the real impact will be that so-called economic freedom (for the rich and middle-rich), privatization, deregulation, capital account liberalization, and the design of economic policy to optimize foreign investment are becoming pieces of a puzzle to be debated on their merits in each individual case rather than unquestioned articles of faith and economic dogma that everyone takes for granted. That is a big change.

Latin America

In Venezuela, Hugo Chávez was re-elected on December 3. While the American political class and its supporters in the Canadian media try to portray him as a tyrant-in-waiting, Chavistas are fond of pointing out that this was their 11th electoral victory in Venezuela. Possibly more important, he won more than 60 percent of the vote, his widest margin of victory to date.

With the victories of Daniel Ortega and Rafael Correa, Nicaragua and Ecuador join Bolivia, Venezuela, Chile and Brazil as governments committed to improving the lives of the majority.

Argentina and Venezuela are breaking the IMF's control over credit. Not long ago, a country looking for a loan had to agree to the IMF's so-called "conditionalities," such as the curtailment of their own preferred development strategies, restrictive social budgets, wholesale privatization, high interest rates, and the deregulation of foreign trade, investment and ownership.

It was either that or face being denied credit altogether not only from the IMF but from the World Bank, the Inter-American Development Bank, G-7 governments and even the private sector.

After the financial disaster of 2001, Argentina began to lead the way out of this morass, followed by Brazil and Venezuela.

Argentina’s Kirschner sought to keep inflation, interest rates and exchange rates down. Brazil's Lula da Silva, who was re-elected toward the end of 2006, followed a more neoliberal path but has also forged close ties with Argentina and Venezuela that aim to replace Washington's Free Trade Area of the Americas with increased regional economic integration.

Since defaulting on its debt in December 2001, Argentina's economy has grown at a rate of more than 8 percent a year and has lifted more than 20 percent of its people out of poverty.

After a growth rate of 17.8 percent in 2004, Venezuela has sustained a 10 percent growth rate for two years in a row now. Chávez has greatly increased social programs for the poor, including free health care, subsidized food and increased access to education.

Mark Weisbrot, a co-director of the Washington-based Center for Economic and Policy Research, calls this challenge to IMF's "creditors' cartel" the most important change to the structure of international finance since the collapse of the Bretton Woods system of fixed exchange rates in 1973.

Meahwhile, Ecuador's new president is planning to restructure his counrty's foreign debt and expects to use the money to increase social spending.

As a sign of the radical changes in the region, Bolivia’s Evo Morales marked May 1 by nationalizing the country’s oil and gas resources. “After today,” he declared, “the hydrocarbons will belong to all Bolivians. Never again will they be in the hands of transnational corporations. Today the country--la patria--stands up.”


In early November, The Guardian called the three-day China-Africa Forum in Beijing “the most lavish party that China has thrown in more than 50 years.” (Watts Guardian Nov 10-16 06).

So much aid and trade was on offer—deals in oil, copper, telecommunications, transport, and nuclear power—that China—that China will soon eclipse the US and Europe as the largest foreign player in Africa.

China’s trade with Africa has multiplied by a factor of five since 2000 and is expected to double again by 2010. China is also poised to become Africa’s biggest lender.

Africa's interest in trading with China is driven in part by the failure of Africa's traditional development partners to deliver on promises of aid. It has some Africans wondering if China’s growing influence will advance or undermine the African agenda? What are the challenges and implications that these new developments hold for African governments, the private sector and the international community?

Some Africans are asking if they are at risk of being colonized again under the flag of ‘economic partnerships with China’. Concerns centre around China’s weak social and environmental requirements, disregard for human rights protections, lack of transparency and policy of non-interference in government affairs.

Increasing international demand for commodities has resulted in a shift from a buyer’s market to a seller’s market. This is likely to continue for the foreseeable future, driven principally by the Asian boom under the leadership of China as well as India. Essentially, the emergence of new players provides an opportunity for resource endowed countries since they are now in a position of strength.

Wenran Jiang, a political scientist at the University of Alberta comments: “We are talking about an emerging worldpower that has the mobilizing power to gather 48 out of the 53 heads of state in Africa....The US never did this, nor did Russia” (Watts Guardian Nov 10-16 06).

The Guardian points out that China isn’t just buying resources, but is also selling a model of development. “While West focuses on political freedoms and human rights, Beijing says the priority should be on improving lifing standards and national independence.”


Let's turn to look for a moment at the elections due in Pakistan this coming November. NATO commanders and political analysts commonly believe that the Taliban uses Pakistan as a safe haven for training, planning, and recuperation.

On one occasion last fall, Canadian Defence Minister Gordon O’Connor expressed the view that he wanted our troops to be able to chase Taliban militants into Pakistan territory. As with remarks by a number of other cabinet ministers, that particular line of public discourse was never heard again, probably cut off by the PMO. But the idea that Pakistan under Musharraf provides aid, comfort and direct support to the enemy persists even though the highest troop commitments and casualty rates, and the largest number of suspects turned over to the Afghans come from Pakistan.

The big irony is that the heavy lifting in what we are to believe is a war to create a liberal democracy in Afghanistan is being done by a country with no tradition of institutionalised democratic succession, and a constitution that can be altered by presidential decree. (Rashid BBC Jan 7 07).

As Dr Subhash Kapila, an analyst with the South Asia Analysis Group, puts it, General Musharraf "will rig these elections like he did the 2002 elections to perpetuate himself in power. Only the United States can stop him from doing so" (Kapila SAAG Jun 12 06).

BBC correspondent Ahmed Rashid passes along the scenario described to him by leaders of the ruling Pakistan Muslim League (PML) who believe that next autumn Gen Musharraf will likely go for an endorsement from the present National Assembly and provincial assemblies to confirm him as president for the next five years. That will be the “election.”

Most members of the PML expect him to continue as both chief of the army and as president.

Rashid beieves that in order to move the country toward full and genuine civilian rule, the best option would be for Gen Musharraf to announce that he would stand as a civilian president, that genuinely free and fair elections would be held and that the future government would be determined by the election outcome.

"To gain public confidence he would also need to pledge that the elections would genuinely empower parliament and the next prime minister and that he and the army would take a back seat."

There have recently been rumours that the army has cut a deal with Benazir Bhutto and the Pakistan People's Party.

A deal with the PPP would mean that the military would break off its alliance with the Islamic parties that presently rule the provinces of Balochistan and the North West Frontier, something that many NATO countries would applaud.

But Musharraf himself has ruled out the return of either Bhutto or Nawaz Sharif, the prime minister he deposed in a bloodless coup in 1999.

As Rashid puts it, "Islamic extremist groups, the mainstream Islamic parties and exiled national leaders are more interested in a showdown with Gen Musharraf to curtail his powers, or remove him from office, than an election" (Ahmed Rashid, BBC Jan 7 07).

That World Report for this week. I used to include a list of the publications I used in this space, but in 2006 I developed a basic website and blog where you can find links to all that information and more if you are interested. Point your browser to You can send email to earthling at cjly dot net or snail mail to box 767, nelson, british columbia, canada, V1L 5R4.

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