Globalization Needs Peace to Thrive


by Fahed Fanek *

Daily Star
January 2003

The anti-globalization movement, which accuses the globalized world of making the rich richer and the poor poorer, grew up and is largely concentrated in the industrialized nations of the West. Those who travel the world in pursuit of WTO and IMF conferences to disrupt are mainly well-off Americans and Europeans, with scarcely a poor Asian or African among them.

It is a foregone conclusion that the fruits of globalization would not be divided equally among all nations; the freer and more open a political system is, the more benefit it would gain from globalization.

At a certain time, countries with closed political systems, such as Albania and North Korea, believing that advanced countries were growing at the expense of the poor Third World, tried to cut themselves off from the global economy. The results to them were catastrophic.

Globalization was also accused of favoring richer countries by pushing up prices of their manufactured products while driving down prices of raw materials exported by Third World countries. This theory was proved to be not strictly true either. In other words, there is an old, traditional, reactionary and isolationist school of thought that confirmed its bankruptcy in practice (as has been demonstrated by some less successful Third World economies), and another successful, progressive and globalized school epitomized by such countries as China, India, and the "tiger economies" of Southeast Asia.

In Jordan, for example, there is a strong reactionary current calling for customs protection, government control of the economy and a quest for self-sufficiency such that the country only imports essential goods, and does not rely on tourism and exports, which are directly affected by external factors. In fact, this current sees the size of foreign trade as a measure of weakness rather than strength.

The intellectual battle between the reactionaries and progressives has not been settled yet. The Old Guard is still fighting their corner. Fortunately, though, the government has already come down on the side of globalization. As a country, we in Jordan are determined to be part of the global economy and to join the march of progress and technology in the fields of production, communications and services. If there are arguments about which path to take in some countries, then the issue should be clear in nations that are not rich in natural resources. Unlike most oil-rich Arab states, Jordan's major resource is its people.

However, globalization that was imposed on the Third World by the American-led "Washington Consensus" is being obstructed by the US itself. Instead of more freedom and encouragement, Washington is creating obstacles to the growth of free trade. Globalization is nothing new; some of its features have been known since the industrial revolution. It reached its climax in the 1990s, and seems to be declining since. It does not appear that it will last long. The event that caused the globalization movement we know today to really take off was the fall of the Berlin Wall in November 1989. It continued to grow until Sept. 11 with the fall of another edifice: the Twin Towers of New York's World Trade Center.

The rise of globalization, which occurred in the last decade of the 20th century, was reversed in the first year of the 21st before the process had reached its full potential. In 1989, the US did not win; rather it was the Soviet Union that was defeated; the events surrounding the fall of the Berlin Wall did not prove the superiority of capitalism only the inferiority of socialism. America, which led the march of globalization in the 1990s, was the same America that destroyed it 10 years later.

Globalization needs peace and an absence of threats to thrive. This was achieved with the abolition of the Cold War. Now, however, America is waging war, which bodes ill for globalization. The free movement of goods and people is a prerequisite for globalization. Yet the United States has made the movement of people so difficult that it now needs weeks for a US visa to come through if it comes through at all. The transfer of funds, meanwhile, has become a fraught business because of fears that the money might be used to fund terrorism.

Even the modern forms of communication that transformed the world into a small village have been subjected to strict monitoring. It is enough for a person to utter a specific word for his/her entire conversation to be recorded by satellite for analysis and scrutiny. Needless to say, that person is considered guilty until proven otherwise.

There has been a severe downturn in the performance of globalization recently. The volume of world trade, which grew at a rate of 15 percent in 2000, shrank by 4 percent in 2001. Foreign direct investment, which stood at $1.27 trillion in 2000, tumbled to less than half that figure in 2001, as did the value of mergers. The value of equity trading on world stock markets tumbled from $50 trillion in 2000 to a third that figure the following year.

America promoted globalization when it felt it was to its advantage to do so; it dealt it a mortal blow, however, when it discovered that globalization was a two-edged sword that could also be used by terrorists.

It is not clear yet whether the current crisis facing globalization is a passing phase that would be defeated by the movement of history or that the entire globalization experiment was nothing more than a blip after which humanity would return to isolationism once again, thus proving that national security always takes precedence over economic prosperity.

Fahed Fanek is a Jordanian economic and media consultant. He wrote this commentary for The Daily Star

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