Aid, Trade , Debt, Ecological Crisis-Itâ

Climate Camp

Written by Dearbhaile Kitt

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Feeling ever so slightly like the prize winner of a dunce hat throughout my time at Climate Camp, for my under education in climate change matters. It was with some relief that I found myself actually understanding (even if I did get lost with all the acronyms) Matt Carmicheal’s workshop. Entitled Aid, Trade , Debt, Ecological Crisis-It’s All One Problem, Carmicheal included a rather complete history lesson of the last 50 years to bring in the greater context of how ecological crisis has been shaped by the past. For anyone who thinks Climate Camp is full of hippy wasters, an eavesdropping on one of the many work shops would blow away that viewpoint.

The concept of ‘free markets‘ (a deregulated market with little or no trade restrictions) is by no means a new one but its effect on global ecological matters are only beginning to be truly realised. It is in 1944 were Carmicheal picks up his historical tale at Bretton Woods, here delegates from 44 Allied nations gathered for the United Nations Monetary and Financial Conference. As the name suggests the overwhelming theme was economics. The seminal idea of Bretton Woods were those two words above: ‘free markets‘. It was agreed to link all currencies to a fixed value in terms of gold, the US promised to fix the price of gold to $35 an ounce. Thus other currencies were pegged to the US dollar and as the principle fixed currency the US dollar became extremely powerful.

The agreements signed at Bretton Woods also led to the establishment of three organisations, playing a significant role in future developments between aid, trade, debt and ecological crisis. The International Bank for Reconstructive Development (IBRD) later becoming the World Bank which lends money to governments at a relatively low interest. The International Monetary Fund (IMF) was introduced to stabilise exchange rates and supervise reconstruction. Finally it was through the General Agreement on Trades and Tariffs (GATT) that the reduction of barriers to global trade was implanted (I told you there were lots of acronyms).

The IBRD began lending money to developing countries termed ‘soft loans‘. Problems arose with this lending of money with a short sighted view of both the IBRD and the developing country. Unstructured support for spending and corrupt regimes led to some highly dubious decisions. In Kenya 20 million dollars was loaned to build a huge super shiny high rise tower in Mombassa . But, technology hadn’t quite caught up with the lofty aspirations; the top floors would be without water as the water pressure in the area was not strong enough to reach them and there were not adequate electrics to sufficiently work the lifts. Money supposedly loaned to improve a countries development and help repay back that loan, was squandered away in ill-advised schemes and failed to reach those who needed it most.

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In 1973, running a trade deficit and with the financial strain of the Vietnam war, Nixon pulled out of Bretton Woods agreement. De-linking the dollar from gold, resulted in the devaluation of the dollar (reducing US debt) and the hiking of interest rates (other countries debts rise). Developing countries with already hefty debts, all of a sudden had the debt hiked up despite not having borrowed any more money. Between 1973-82 there was a five fold debt increase for non-oil producing third world countries. So great was this gain in interest for Latin American countries, that the entire 1980′s is often referred to the ‘lost decade’, as new loans simply paid off old interest.

In order to help developing countries pay back these ever increasing loan, the IMF drew up yet another plan this time Structural Adjustment Plans (SAP). Within a SAP conditions are placed on how loan money can be spent, which the IMF believe promotes economic growth. The conditions must be met by the borrower even if not in their best interest, and subject to severe financial punishment for failing to meet this conditions. Carmicheal argues these financial threats amount to little more than blackmail.

These conditions typically implement the ‘free market’ idea, and with it the privatisation and deregulation of previously run government services. As a consequence spending on education and health is typically cut, and taxes are raised in order to meet this deficit in spending. Increasingly crops become the main currency for a developing nation in exportation, creating a drain on food resources of that given country which in turn leads to a previously sustainable country becoming unsustainable.

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Despite this when GATT was replaced by the World Trade Organisation (WTO), the WTO still decided the concept of a laissez-faire free market was the number one solution for developing nations with no thought to ecological development. In India, Special Economic Zones were introduced in 2000 which were deemed to be foreign territory for the purposes of trade operations, duties and tariffs, leading to some rather negative consequencesp. Corporations are effectively allowed free range of a piece of land with no challenges to any unsavoury principles.

In recent years the anti-globalisation movement has been growing in direct opposition to global ‘free-markets’. Protests at the WTO Ministerial Conference of 1999, held in Seattle to usher in a new era of trade negotiations, overshadowed the actual conference, it was here that Starbucks literally took quite a bashing. Protestors made up NGO’s, student groups, labour unions and anarchists who were united in their concerns over labour issues, the environment and consumer protection.

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The most recent trade round of WTO called the Doha Development Round commenced in 2001 and on the face of it looked like a step forward ensuring against exploitation of developing countries and ecological errors that have plagued former rounds. Again pushing the lowering of trade barriers around the world to increase trade globally, the Doha Rounds also sought to allow developing countries input into what they would like out of trade relationships. However, no mutual agreements have been agreed upon and talks have stalled on a number of issues, such as agriculture and industrial tariffs.

Talks of the Doha Rounds are due to resume in 2009 but I wonder will any agreements be reached. It seems highly unlikely developed nations will agree to the sanctions they impose on developing nations being used on themselves. But if nothing is done instigate change in global policies that will and do effect us all the future will not be so bright.

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2 Responses to “Aid, Trade , Debt, Ecological Crisis-Itâ”

  1. Ludos Tresquattro says:

    It’s all one problem in the sense that aid, trade, debt, ecological problems all constitute problems for our collective world. However, they are, in my opinion, all distinct problems. Sure, there’s some overlap, though I don’t see it very clearly in the article. History is important, and while it is worth talking about WTO I think you’re confusing readers when you talk of free markets. You point out Seattle, 1999. After 2001-2002, the scale and reasons behind the protests have changed. Why do you think this is?

  2. Pretty thought-invoking post – raises some interesting points for debate. I just stumbled upon your blog this morning and wanted to say that I have really liked browsing some of the posts. Anyways, I’ll be subscribing to your feed and I hope to read more very soon!

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