Global Policy Forum

By John Morris

Indonesian President Abdurraman Wahid agreed with Malaysia's Prime Minister Mahathir Mohamadon that new international rules were needed to ensure a more equitable distribution of the fruits of global growth. "Mahathir Mohamad is not alone. He voices our voices as well", Wahid told the U.N. Conference on Trade and Development (UNCTAD) at Bangkok last February.

Malaysian Prime Minister Mahathir Mohamadon on Saturday attacked the global trend toward mega-mergers and said developing countries could suffer a new financial crisis unless the international monetary system was overhauled.

In a speech to the opening session of a week-long summit of the U.N. Conference on Trade and Development (UNCTAD), Mahathir said developing nations were failing to reap the rewards of globalisation, which was benefiting mainly rich countries. "The current belief by the global community, that countries must embrace liberalisation and adopt global rules and development would follow, has not been proved correct. It would seem that the current practices in trade and investments are not capable of distributing wealth equitably," he said.

Mahathir is a tireless advocate of the need for checks and balances to temper the excesses of global capitalism. He practised what he preaches by imposing capital controls and ignoring the advice of the International Monetary Fund after Malaysia was caught up in the financial crisis that swept Asia in 1997, plunging the region into deep recession.

Widening his criticism on Saturday, Mahathir said he was "worried and frightened...by the speed at which companies were merging to seek domination of some global industries". "Now many of these corporations are financially more powerful than medium-sized countries. While we welcome their collaboration with our local companies, we fear that if they are allowed into our countries unconditionally they may swallow up all our businesses," he said.

This year has already seen the world's two biggest mergers -- a $151.8 billion link-up between AOL and Time Warner in the United States, which was trumped when Vodafone Airtouch of Britain took over German company Mannesmann in a deal worth $176.5 billion. "A situation of worldwide oligopoly seems already to be emerging. If market forces are allowed free play then oligo-polies may end up as monopolies," Mahathir said.

He repeated his call for measures to reduce the volatility of footloose global capital, particularly by regulating hedge funds -- aggressive investment funds that make big speculative bets in markets round the world. Until new rules are in place, the global economy will be inherently unstable, Mahathir said. "Developing countries continue to remain vulnerable to another crisis unless reforms to the international financial system are undertaken," he said.

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