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More than a dilemma, the trilemma of globalizacion

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Alainet 2007-10-05

More than a dilemma, the trilemma of globalizacion

Eduardo Gudynas

While the defenders of conventional globalization proclaim its benefits, economic as much as political, in Latin America the conflicts generated by openness to trade and international finance are mounting concerning democracy and national autonomy. Participating in globalization means giving up certain things, and while these aren’t mentioned very often, amongst the most painful losses are the weakening of the state and of democracy.

Close observation reveals several examples: in Peru, promotion of national production is shrinking under the Free Trade Agreement with the United States, Brazilian agricultural policy is being eviscerated in favour of export-oriented agro-business before hunger is effectively eradicated, while at the same time an international arbitration tribunal notifies Argentina that it will have to compensate the French consortium Vivendi for its previous operations as a drinking water supplier.

The premises for the tension between international goals and national sacrifices have been recently recalled by Dany Rodrik, an outstanding economist from the University of Harvard. When one examines three objectives: globalization of trade, protection of national sovereignty and democracy, one arrives at inevitable contradictions given that emphasizing any one of these aims requires downplaying the others. Rodrik presents this problem as more than a dilemma: it’s a "trilemma" which makes it practically impossible to achieve the three goals simultaneously.

Almost every Latin American government, with variable emphasis, insists on participating in the global economy, which inevitably demands the elimination of regulations, costs and restrictions to the trade of goods and the flow of capital. Along this path one winds up redefining the role of the nation-state and instituting measures to attract investors and promote exports. But these actions come along with consequences, one of most obvious being the stepping down of the State from several areas, such as the protection of national productive sectors. But the process is a bit more complicated since, concurrently, governments strengthen their presence in other facets in order to assure the flow of merchandise and capital. For example, as governments abandon support for agricultural production, they increase protections, including militarily, for oil and mining company investments.

This new global framework is based on rules and agreements that go much further than the conventional trade of goods, extending into areas as disparate as services or capital flows. In addition, the nation-state signs up for or accepts international commitments under which it yields part of its regulatory functions and to which it ties its operations to the global economy. In constant competition with other countries to attract investors, environmental demands are relaxed, labor standards are reduced and land use planning is left aside. Sooner or later, global agents assume control of the majority of the benefits while local communities must deal with the social impacts and environmental drawbacks. Citizen reactions are ignored, and in some cases fought against since they obstruct the flow of capital, which results in the deterioration of democracy.

In addition, globalization is creating its own institutions. ICSID (International Center for Settlement of Investment Disputes) is an excellent example. Many countries have signed agreements that transfer jurisdiction over conflicts that have taken place within their territories to this center, which functions under the World Bank. The center has just determined that Argentina must pay compensation to the French corporation Vivendi. A few days ago, this same organization rejected preventative measures claimed against Ecuador by Occidental Oil (Oxy). Weeks before that, ICSID also turned down another action brought against Ecuador, in this case by the MCI Power Group of the United States. The key question doesn’t concern the success or failure of these resolutions, rather the understanding that the ongoing operations of an instrument of this sort always implies sacrifice. One has given up the efficiency and justice with which to resolve trade disputes, in order to fulfill the demands of global economic agents which rely upon such a mechanism floating in international space, founded upon entrepreneurial practices, and where decisions are made by international referees.

Rodrik’s "trilemma" flags this problem. If global trade integration is deepened, the demands of a nation’s citizens cannot be addressed in order to reverse its negative consequences, thereby diminishing democracy. Despite this, such diverse political regimes as those of Alan Garcia in Peru or Tabaré Vázquez in Uruguay are competing for investors, and exemplify how nation-states aren’t confronting globalization, but instead facilitating and encouraging global market insertion. These governments are engrossed in assuring a "friendly", "reliable" and "secure" open market for international capital. Public policies are set back in favour of market measures, and national identity disappears in the process of becoming compatible with the needs of global markets. Political decisions are reduced to the costs of strengthening economic relationships; active pursuit of development fades away as it is assumed to be an automatic outcome of economic growth. This political regression results in the isolation of institutions and mechanisms for political decision making, and limits citizen participation.

The close links between these tensions and the dream of globalization don’t receive the attention that they deserve, and, in many cases, Rodrick’s "trilemma" is altogether ignored. As a result, in making their economic proposals, governments don’t debate the negative implications of globalization, although they suffer from their consequences. The regional integration processes within South America don’t recognize their potential to allow for a different form of international engagement, that recover autonomy in the face of globalization. On the contrary, they insist on continuing as intergovernmental agreements reliant upon presidential initiative. They wind up as springboards from which to plunge deeper into globalization, when in fact they could be the frameworks by which to strengthen the state and democracy in the search for development committed to national and regional needs.

E. Gudynas is a researcher in D3E (Development, Economy, Ecology, Equity - Latin America), in Montevideo (Uruguay).

 source: Alainet