September 26, 2002
In a statement issued to the 28-29 September annual IMF and World Bank meetings in Washington, the Global Unions group is calling for a re-examination of the basic premises used by the International Financial Institutions (IFI) in the wake of the recent spate of corporate scandals. The statement, entitled 'Changing the Model: IFI Policies and the Failures of Corporate-Driven Globalisation,' attacks the promotion of "dysfunctional practices of US capitalism" in developing countries by IFIs and condemns the dogmatic "fix it, even if it isn't broken" approach to privatisation.
"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. This is clearly false," stressed Guy Ryder, ICFTU General Secretary.
The ICFTU states that "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'."
As such the ICFTU and the other organisations in the Global Unions group are calling for a re-examination of fundamentally erroneous IFI policies. According to the statement "these policies include dismantling public pension programmes in favour of privatised funds, privatising 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."
Instead the IFIs must adopt alternative policies such as including binding international standards for the prudential regulation of financial markets covering capital reserve requirements and limits to short-term foreign currency exposure, which can promote growth, regulation, and decent employment for women and men world-wide. Another priority must be the rapid establishment of a mechanism allowing for countries close to default to declare a temporary debt payment standstill and for an orderly renegotiation of the debt. "It would certainly not be acceptable to wait three years before putting in place any kind of debt restructuring mechanism, as the IMF alluded to last autumn," stated Guy Ryder. "Permitting other countries to fall into the situation of Argentina would not only cause terrible damage to the country concerned, but would further destablise the entire world economy."
The full range of in-depth proposals from the ICFTU can be found in a new report- Trade Union Proposals for Reforming the International Financial System-also to be released in the run-up to the IFI annual meeting. This document can be found on the ICFTU website at:
http://www.icftu.org/displaydocument.asp?Index=991216512&Language=EN
For further information:
Interview with James Howard, ICFTU Director of Employment and Labour Standards:
http://www.icftu.org/displaydocument.asp?Index=991216511&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
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