[stop-imf] ICFTU spotlight interview: James Howard, ICFTU Director of Employment and Labour Standards

[Robert Weissman]

INTERNATIONAL CONFEDERATION OF FREE TRADE UNIONS (ICFTU)
 
ICFTU OnLine...
 
162/260902/JL 
 
Spotlight on James Howard, ICFTU Director of Employment and Labour
Standards
 
Brussels, 26 September 2002, (ICFTU online): In a 'spotlight' interview
on the eve of the 28-29 September annual IMF and World Bank meeting in
Washington, James Howard, ICFTU Director of Employment and Labour
Standards, states his case on the International Financial Institutions
(IFIs) and the failures of corporate-driven globalization. The interview
coincides with the release of a new ICFTU report mapping out proposals
for a restructuring of the international financial architecture.
 
 

What should the International Financial Institutions (IFIs) have learned
from the recent spate of corporate scandals?
 

IFI policies to promote privatization, market-friendly deregulation, and
openness to foreign investment were carried out on the premise that
these corporations were inherently more efficient and immune to
corruption than any developing country public authority. But what is the
reality? The spate of corporate collapses have brought to light
incidences of company executives extracting huge personal gains from
failing corporations, large financial institutions acting in connivance
with corrupt corporate practices, massive accounting fraud and laughably
weak regulatory control. These private sector abuses in the world's most
powerful economy dwarf the level of corruption in many emerging
economies and give new meaning to the term "crony capitalism". 
 
This should lead the IFIs to re-examine some of their basic premises, as
well as many of the policies and practices derived from them. These
include dismantling public pension programmes in favour of privatized
funds, privatizing basic services without ensuring adequate regulatory
control, and applying macroeconomic austerity programmes that may be
advantageous for the financial sector, but detrimental to the vast
majority of the population. 
 
 

What damage have policies of the IFIs (such as dogmatic free trade)
wrought on national and global economies over the past decade? 
 

The evidence is now clear-cut that the uniform model of structural
adjustment imposed on developing countries during the 1980s and 1990s
destroyed far more economies than it assisted. Severe reductions in
spending on health and education were socially destabilising and
economically detrimental by reducing countries' long-term human resource
potential.  All that was achieved was the preservation of a veneer of
debt repayment that benefited a handful of the world's most profitable
commercial banks.   While the IFIs have made a rhetorical commitment to
important goals such as poverty reduction and the promotion of core
labour standards, and have provided partial debt relief for two dozen
countries, there are yet to be any significant changes in lending
conditions or country-level policy advice. 
 
Recent studies, including some carried out by the World Bank,  have
documented how several government privatisation programmes, adopted at
the behest of the Bank and the Fund, have resulted in massive
retrenchments, decreased services -often affecting women particularly
badly- and increased prices, and have failed in improving overall
economic efficiency.  Such failures are particularly frequent when the
country lacks an appropriate legal and institutional environment,
properly functioning financial institutions and an adequate regulatory
framework.  Yet both the Bank and the Fund continue to promote an
ideologically-driven agenda in favour of unconditional privatisation and
market liberalisation, despite the numerous failures of their policy
prescriptions. Bank and Fund financial support for developing key
services is often contingent upon handing these sectors over to private
hands.  
 
The same level of commitment is shown by the international financial
institutions in their determination to force countries to adopt
completely liberalised trade and investment regimes and to embrace
export-oriented development strategies. Conversely, development
strategies based on preoccupations of achieving food security or
rebuilding economies for the domestic market are actively discouraged.  
 
World Bank resources to social protection have often been provided on
condition that governments accept to scale back existing public
programmes. The IMF has frequently counselled governments to reduce
public spending for social protection or to refrain from establishing
new public programmes.  The World Bank's social protection sector
strategy, entitled From Safety Net to Springboard, explicitly recommends
against publicly-owned and administered programmes such as comprehensive
old-age pensions, unemployment insurance and vocational training. 
 
In short, it is clear that the degree of change in the IMF and World
Bank is minimal up to the present time. The coherence of these
anti-social policy prescriptions with the poverty-reducing mandate of
the ILO and the United Nations system in general is virtually
non-existent.  It is clear that urgent steps are required to try to
restore some sort of legitimacy to the functioning of the world's
multilateral decision-making institutions.  
 

 
In the light of the ICFTU publication- Trade Union Proposals for
Reforming the International Financial System- released on the eve of the
IMF/World bank annual meeting on September 28-29, what changes should be
made to the international financial architecture?
 

The potential for global financial instability has increased
considerably with the prospect of a continued economic slowdown and the
potential for crisis situations in Argentina and some other South
American countries spreading to others.  We have urged the IMF and World
Bank to take steps to combat recession and move towards a newly
regulated international financial system. Among others, the necessary
measures must include binding international standards for the prudential
regulation of financial markets covering capital reserve requirements,
limits to short-term foreign currency exposure, and controls and
certification of derivatives trading and other forms of highly leveraged
investment.
 
In addition the development of an effective early warning system based
on adequate information on currency flows, private debts and reserves is
vital, as is the establishment of a currency transactions tax to reduce
speculative currency flows and to raise resources for the support of
poverty alleviation.
 
Other measures such as recognition of the rights of governments to
control foreign capital flows in the interest of domestic macro-economic
and social stability, and ensuring that banking systems are transparent
and bound by effective disclosure criteria must also be on the agenda.
 
 

Big promises and commitments on all the key international issues have
been made at a succession of major international summits - have these
been undermined by the IFIs? 
 

Major international development initiatives have recently been agreed at
the International Conference on Financing for Development (Monterrey,
Mexico, March 2002), through the New Partnership for African Development
(NEPAD) and the UN Earth Summit II in Johannesburg. But all too often,
IFI policies are lagging behind or even running contrary to a world-wide
consensus for the adoption of socially-oriented policies that advance
effectively basic human rights and core labour standards and can achieve
higher living standards for working women and men. The present crisis in
the model of corporate-driven globalization that the IFIs have extolled
for so long must be the occasion for those institutions to reconsider
their current policy recommendations and adopt instead an alternative
policy framework that can respond to the imperatives of social
development.
 
For further information: 

Unabridged version of this interview
http://www.icftu.org/displaydocument.asp?Index=991216511&Language=EN 
 
New ICFTU report- Trade Union Proposals for Reforming the International
Financial System 
http://www.icftu.org/displaydocument.asp?Index=991216512&Language=EN 
 
ICFTU statement to IFI meeting- 'Changing the Model: IFI Policies and
the Failures of Corporate-Driven Globalisation'
http://www.icftu.org/displaydocument.asp?Index=991216493&Language=EN
 
James Lorenz
 
 
The ICFTU represents 157 million workers in 225 affiliated organisations
in 148 countries and territories. ICFTU is also a member of Global
Unions: http://www.global-unions.org 
 
For more information, please contact the ICFTU Press Department on +32 2
224 0232 or +32 476 62 10 18.