24 Dec, 2006

Nobel Prize Winner Muhammad Yunus asks: Is it globalisation, or financial imperialism?

Imtiaz Muqbil

Originally Published: 24 Dec 2006

In the light of global geopolitical developments of the past year, and economic developments in Thailand in the past week, the words of two Nobel prize winners in the past month will prove extremely insightful in pondering what awaits us all in the year ahead.

On December 10, Muhammad Yunus, founder of the Grameen Bank in Bangladesh, accepted this year’s Nobel Peace Prize at the ceremony in Oslo with these words: “I support globalization and believe it can bring more benefits to the poor than its alternative. But it must be the right kind of globalization…..Globalization must not become financial imperialism.”

That language must resonate loudly with those who remember how, a decade ago, the speculative attack on the Thai baht which triggered the economic contagion was referred to as an act of “financial terrorism”. Indeed, if studied in detail, there is no difference between Yunus’ economic philosophy of helping the poor to help themselves and the self-sufficiency economy principles of His Majesty the King.

Said Yunus in his speech, “To me, globalization is like a hundred-lane highway criss-crossing the world. If it is a free-for-all highway, its lanes will be taken over by the giant trucks from powerful economies. Bangladeshi rickshaw will be thrown off the highway.

“In order to have a win-win globalization we must have traffic rules, traffic police, and traffic authority for this global highway. Rule of “strongest takes it all” must be replaced by rules that ensure that the poorest have a place and piece of the action, without being elbowed out by the strong.”

Mr Yunus called for the creation of “powerful multi-national social businesses to retain the benefit of globalization for the poor people and poor countries.”

“Social businesses will either bring ownership to the poor people, or keep the profit within the poor countries, since taking dividends will not be their objective. Direct foreign investment by foreign social businesses will be exciting news for recipient countries. Building strong economies in the poor countries by protecting their national interest from plundering companies will be a major area of interest for the social businesses.”

But Yunus was given the prize not for economics but for peace. This was so, he said, because “peace is inextricably linked to poverty. Poverty is a threat to peace.”

He said: “The World’s income distribution gives a very telling story. Ninety four percent of the world income goes to 40 percent of the population while sixty percent of people live on only 6 percent of world income. Half of the world population lives on two dollars a day. Over one billion people live on less than a dollar a day. This is no formula for peace.”

Yunus said that the “great global dream” of halving global poverty by the year 2015, as set by the United Nations Millennium Summit in 2000 was “a bold goal.”

“But then came September 11 and the Iraq war, and suddenly the world became derailed from the pursuit of this dream, with the attention of world leaders shifting from the war on poverty to the war on terrorism. Till now over $530 billion has been spent on the war in Iraq by the USA alone.

“I believe terrorism cannot be won over by military action. Terrorism must be condemned in the strongest language. We must stand solidly against it, and find all the means to end it. We must address the root causes of terrorism to end it for all time to come. I believe that putting resources into improving the lives of the poor people is a better strategy than spending it on guns.”

A similar theme was echoed by Kofi Annan in his final speech at the end of a 10-year term as UN Secretary-General. Annan, who shared the Nobel Peace Prize with the UN in 2001, spoke on 11 December, the day after Yunus’ lecture.

He focussed on the issue of leadership, specifically the leadership role played by the US in setting up the UN 60 years ago, and the need for “far-sighted leadership” today.

“You Americans did so much, in the last century, to build an effective multilateral system, with the United Nations at its heart. Do you need it less today, and does it need you less, than 60 years ago? Surely not. More than ever today Americans, like the rest of humanity, need a functioning global system through which the world’s peoples can face global challenges together.”

Annan referred to five lessons that he said he had learned in 10 years at the head of the UN. These, he said, “can be summed up as five principles, which I believe are essential for the future conduct of international relations: collective responsibility, global solidarity, the rule of law, mutual accountability, and multilateralism.”

He structured his speech in a five-step fashion, with each principle a rung leading upwards to the next one.

Firstly, he said, in today’s inter-connected, borderless world, “the security of every one of us is linked to that of everyone else”, a statement which applies as much to threats to safety as much to global issues like climate change.

Next, he said, human security cannot be separated from human welfare. Using almost identical language to Mr Yunus, Mr Annan said, “It is not realistic to think that some people can go on deriving great benefits from globalization while billions of their fellow human beings are left in abject poverty, or even thrown into it.”

Next, both “security and development ultimately depend on respect for human rights and the rule of law.” He said, “States need to play by the rules towards each other, as well as towards their own citizens. That can sometimes be inconvenient, but ultimately what matters is not convenience. It is doing the right thing.”

Next, all three of the above points entail accountability in equal measure. “As things stand, accountability between states is highly skewed. Poor and weak states are easily held to account, because they need foreign assistance. But large and powerful states, whose actions have the greatest impact on others, can be constrained only by their own people, working through their domestic institutions.”

Ultimately, he said, “My fifth and final lesson derives inescapably from those other four. We can only do all these things by working together through a multilateral system, and by making the best possible use of the unique instrument …. the United Nations.

“In fact, it is only through multilateral institutions that states can hold each other to account. And that makes it very important to organize those institutions in a fair and democratic way, giving the poor and the weak some influence over the actions of the rich and the strong.”

Both speeches are early warnings of the inherent dangers in current global political and economic trends. Well worth reading in full:

Annan’s speech: http://news.bbc.co.uk/2/hi/americas/6170089.stm

Yunus’ lecture: http://nobelprize.org/nobel_prizes/peace/laureates/2006/yunus-lecture.html