Economic Globalization

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Economic globalization and the growth of increasingly dominant transnational corporations have accelerated at an unprecedented rate within the last twenty-five to fifty years. Modem technology has been instrumental in this acceleration, with the advent of computers, the Internet, television, transportation, and the commercialization of ideas.

Concurrently, people internationally are being affected by economic globalization, with an increasingly disproportionate distribution of wealth leaving 1.2 billion people surviving on $1 per day and 2.8 billion people on $2 per day (U.N. Development Report). It has also led to the mass relocation of people in developing countries, who move to cities to find employment, while those in developed nations are left unemployed as companies themselves relocate to developing nations to take advantage of inexpensive labor and increased profitability.

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At the end of World War II, countries strictly controlled and restricted international capital transactions while the World Bank and International Monetary Fund (IMF) facilitated international trade and investments through regulated financial flows. The relatively recent removal of these controls and restrictions has resulted in the free movement of financial capital, which is the salient feature of the globalized financial marketplace. This liberalization of international trade has created results favorable to corporate interests and wealthy nations.

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Under the leadership of Ronald Reagan and Margaret Thatcher, market fundamentalism and the collapse of the Soviet Union caused the financial markets to become truly global. The erosion of controls and restrictions on financial capital and the increasing inability of countries to regulate it have opened the doorway to greater corruption, speculation, and unfair trade practices.

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The Fight for Natural Resources

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With the world’s population doubling within the last fifty years to 6 billion people by 1999  and rising at the rate of 77 million people per year, survival and prosperity are increasingly linked to accessibility to vital resources and the potential transformation of those resources into capital flows. The population explosion and the spread of industrialization have produced an insatiable appetite for goods to accommodate the growing numbers of people.

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At the end of the Cold War, strategies of containment shifted to policies of the pursuit, acquisition, and protection of essential resources as integral to security planning. The role of the military in protecting the international flow of essential materials has become crucial in the state’s primary security functions.

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Global demand for materials is growing at an unsustainable rate as population growth results in the consumption of more natural resources. As countries compete for the limited supply of natural resources, powerful countries are better positioned to ensure the sustainability of their own levels of consumption without regard to the impact it has on others. As the demand for these resources increases, countries where these resources are found become increasingly mired in conflict as competing interests from external as well as internal forces enter into a complex interplay of positioning for dominance and control over potential pools of wealth, as well as survival. While many of the conflicts are characterized as religious and ethnic in nature, it is the politicization of the masses through the emotionally charged fault lines of religion and ethnicity that creates the veil hiding the underlying motivation of those who drive the masses. The masses are infused with terror and fear, often subjected to heinous acts of unspeakable cruelty, pawns on an economic chessboard of power and greed.

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Africa, for example, is one of the world’s wealthiest continents. It has almost every resource that the world covets. It is rich in oil, minerals, gems, and timber. Huge deposits of gold, platinum, diamonds, coltan, copper, and the like are found there. Yet, the world’s wealthiest continent is home to the world’s poorest people, some of the world’s wealthiest leaders, and some of the most prolonged and vicious conflicts.

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Sub-Saharan Africa is the battlefield of two-fifths of the world’s armed conflicts. More than 100 million Africans experience war daily. Sub-Saharan Africa also contains more than a third of the world’s mineral reserves.

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In The Anatomy of Resource Wars, Michel Renner (2002) details the intersections of conflict and resources, looking at the Democratic Republic of Congo, among others.

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“If you purchase a cell phone...you may very well be paying to keep the war going in the Democratic Republic of Congo, where rival armies fight for control over deposits of coltan, a commodity that just over a decade ago had little commercial value, but is now vital for the one billion plus cell phones in use today. The enormous expansion of the global trade, coupled with lax or corrupt customs officials, has made access to key markets relatively easy for warring groups. Companies and rich nations that benefit from cheap raw materials have long turned a blind eye to the destruction at their source, and most consumers don’t know that a number of common purchases bear the invisible imprint of violence.”

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As many as 2.5 million people have died since the current war in the Democratic Republic of Congo (DRC) began in 1998, and over 2 million have been displaced. More than half of them have no access to assistance. The United Nations convened a panel of experts who linked armed conflicts in the DRC with the exploitation of natural resources and foreign interests that aligned themselves with internal actors to exploit the country’s resources. Trade in commodities has boomed since the war started, with the key players amassing fortunes, while millions die from malnutrition and lack the most basic goods and services.

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Many of the conflicts in the DRC that occur in resource-rich areas are often reported in the media as “ethnic” conflicts, especially between the Hema and Lendu clans. What such reports often fail to include, however, is the fact that an elite network of powerful businessmen who benefit from commercial activities in the area often drive the conflict.

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While governments compete with warlords, rebels, and other groups for control over resources, which earned approximately $12 billion in 2001, children, the most vulnerable of the population, suffer the most. They have been mobilized to fight in adult wars, work as laborers in mines, used as sexual slaves, and have endured a host of other abuses that have robbed them of their childhood, deprived them of their education and necessary health care, and separated them from their families and communities.

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Angola, which has one of the world’s poorest populations, has a large resource of diamonds. The country was stripped of approximately $4-4.2 billion in diamonds by UNITA, a rebel group that ultimately collapsed with the assassination of its leader, Jonas Savimbi. Diamonds also fueled the conflict in Sierra Leone that cut a vicious swath through the population, which saw the limbs of babies and adults alike amputated as a special signature of terror inflicted upon hapless victims.

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Monies used from the sale of these resources buy weapons that arm military and paramilitary groups alike. In Africa Betrayed, George B. N. Ayittey (1991: 153) writes, “Military spending by African countries, according to the U.S. Center for Defense Information, reached $16.9 billion in 1983, up 400 percent from $3.8 billion in 1973. Sixteen African countries spent more on arms than they received in aid....Angola, hard hit by drought, spent $525 million on arms, and received $502 million in aid. Nigeria and Mozambique spent $430 million and $260 million, respectively, on arms, and received $48 million and $242 million, respectively, in aid.”

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The Case of Nigeria

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Nigeria is a country rich in petroleum. Multinational oil companies have exploited this country to the detriment of the people, who have been relegated to poverty and have endured the destruction of their environment, especially in the Niger Delta region, which is rich in oil. Anup Shah (2000), in his article, “Conflict in Africa,” citing part of the conclusion of a report, “Oil for Nothing: Multinational Corporations, Environmental Destruction, Death and Impunity in the Niger Delta” notes:

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"While the story told to consumers of Nigerian crude in the United States and the European Union via ad campaigns and other public relations efforts...is that oil companies are a positive force in Nigeria, providing much-needed economic development resources, the reality that confronted our delegation was quite the opposite. Our delegates observed almost every large multinational oil company operating in the Niger Delta employing inadequate environmental standards, public health standards, human rights standards, and relations with affected communities. These corporations’ acts of charity are slaps in the face of those they claim to be helping. Far from being a positive force, these oil companies act as a destabilizing force, pitting one community against another, and acting as a catalyst...together with the military with whom they work closely...to some of the violence racking the region today."

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The impact of the multinational oil operations in the Niger Delta area is central to community protests and conflicts, with the companies often favoring one local community over another, provoking rivalries. The inability of the people to derive benefits from the wealth of oil resources and economic inequalities, rather than ideological and communal differences, results in violence. The characterization of these clashes as “tribal” or “ethnic” creates a negative stereotype of a people’s failure to get along, and belies the underlying causes, which point to the social and economic marginalization and degradation of the people.

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Nigeria has suffered from religious clashes between Muslims and Christians. The population is approximately 50 percent Muslim, 40 percent Christian, and 10 percent “traditionalists.” In its early days of independence, religion was not an issue in mainstream politics even though conflicts between and within regions were severe. Religion was made an issue through the successive militarization of politics and the coups, counter-coups, and assassinations of leaders of one faith by those of another faith.

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For example, in January 1966, Ahmadu Bello, Muslim premier of the Northern Region was assassinated by Major General Johnson T.U. Ironsi, a Christian Igbo. Bello was part of the first civilian and democratic government that was overthrown in a violent coup. Ironsi led a military government and suspended regional and national constitutions. The north reacted violently, and in July 1966, Ironsi was killed in a coup led by Muslim Hausa officers.

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Ironsi was succeeded by another Christian, Lt. Colonel Yakubu Gowan, who headed a military government, and was eventually overthrown by General Murtala Ramat Mohammed, a Northern Muslim. The Christians accused Mohammed of an agenda to Islamize the country. In a bloody coup d’etat, Lt. General Olusegun Obasanjo, a Christian, was appointed head of state and commander in chief of the armed forces. After three years, Obasanjo turned over the country to civilian Alhaji Shegu Shagari for a return to civilian rule. However, Muslim Mohammed Buhari ousted Shagari after having held office for almost four years, and named himself head of the Supreme Military Council, and remilitarized politics.

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Two years later, he was replaced by Major General Ibrahim Babangida, a Muslim, who promised a return to civilian rule. During his eight years as a military dictator, the country experienced its greatest frequency of religious conflicts. Babangida played the Muslims against the Christians, and kept the populace distracted with religious conflict as a way to divert attention away from the real problems confronting them. After eight years in office, Babangida stepped down and was succeeded by civilian Ernest Shonekan, who, within three months, was replaced in a coup by General Sani Abacha, a Muslim, who became the next military dictator for the next five years until his sudden death from a heart attack. His successor, General Abdulsalami Abubakar, a Muslim, promised to return the country to a democratically elected government. After one year, Abubakar stepped down, and Obasanjo took over as the first democratically elected president, ending a nearly thirty-year military rule by Northern Muslims.

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Central to the politics of dominance was the political, social, and economic privileges and patronage controlled by the group in power. Religious and ethnic differences were used as justification for conflict, but in reality, they were tools of manipulation to marginalize the have-nots and protect the needs and interests of the haves. Unfortunately, those in power were corrupt, and diverted billions of dollars of oil revenue and public funds into their private bank accounts.

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During Nigeria’s oil boom of the 1970s wealth was easy to obtain by those who were well placed. Favorable market conditions yielded oil revenues of $39 billion per year. Government contracts, kickbacks, purchases, and loans were all managed to divert funds into the hands of the elite and politically well connected. In 1986, a government investigation estimated that approximately $25 million a day was being transferred abroad at the height of the oil boom in 1978.

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Simultaneously, Nigeria incurred a $32 billion foreign debt while $33 billion was held by Nigerians in foreign bank accounts. Corruption permeated the public sector. The power elites shamelessly dipped their hands into the public coffers and treated it as their own private funds. This crippled Nigeria’s economy and fueled turmoil and conflict between the different religious and ethnic groups.

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Even though Nigeria returned to civilian rule in 1999, the impact of globalization has fostered years of corruption, the politicization of religion and ethnicity, the rise of militarism, and the growing disparity between the rich and the poor. Since 1999, approximately 10,000 people have died in regional, ethnic, and religious fighting, and the people continue to live in the throes of violence and poverty (Project Ploughshares 2003).

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The Need for Reform

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Financial markets are amoral, and allow people and companies to act in their own interests. Financial markets are designed to create wealth and the accumulation of profit. They are not designed to take care of social needs. Markets deal with the exchange of goods and services and do not deal with issues of morality and social justice. Historically, the realm of legislating morality has been left to the arena of politics and states. When these arenas themselves, however, become the tools that enable and perpetrate some of the worst human rights violations, environmental degradation, corruption, and expenditures of obscene sums on the machineries and mechanisms of war, which lead to the polarization of the masses in destructive ways, economic globalization as it exists in its current state is in need of reform.

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There must be greater transparency on the inner workings of the international financial institutions, and changes to their organizational structures of governance and accountability, as well as to their policies and practices. These policies have favored transnational corporations and wealthy countries, and created tremendous debts for developing countries, often compelling these countries to adopt policies and practices that have not always served them well.

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The lack of transparency of the International Monetary Fund and the World Bank makes it difficult for anyone not privy to the inner workings of the institutions to find or interpret many of the documents produced, or to know what decisions are being made, and by whom. There is a significant lack of information about the activities of the executive boards. Decisions are taken by consensus, and information is not released as to who supported or opposed decisions taken.

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Formal voting power is determined by a formula weighted to economic strength with developed countries accounting for 61 and 62 percent of voting strength in the World Bank, and IMF, respectively. The United States also has the power of block voting over the principle decisions of these institutions. This structure works to the detriment of developing countries because the developed countries have the power to promote policies and practices that serve their own interests.

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Joseph Stiglitz (2003:18), former chief economist and senior vice president of the World Bank wrote:

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"...the policies of the international economic institutions are all too often closely aligned with the commercial and financial interests of those in the advanced industrial countries...the Washington Consensus has all too often been to benefit the few at the expense of the many, the well-off at the expense of the poor. In many cases commercial interests and values have superseded concern for the environment, democracy, human rights and social justice."

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The Washington Consensus promoted market fundamentalism, which was, in turn, imposed without adequate consideration of the stage of political and economic structures and development of the country. This, in turn, opened the doorway to instability and economic crises.

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The changing missions and roles of the IMF and the World Bank also led to duplicative actions and conflicting functions. The ultimate result has been a decrease in the effectiveness of the institutions, and an exacerbation of the difficulties that they are supposed to remedy. In the beginning, the mission of the IMF was to maintain stability for monetary exchange rates, and the World Bank was to provide capital to help rebuild Europe, and spur development in less developed countries.

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With the demise of the system of fixed exchange rates, the IMF sought a new purpose. It began to move into development and structural adjustment lending, and began to expand in a careless way. The World Bank began to move into economic policy and developmental areas such as environment and labor. The changes in the roles and missions of the institutions brought them into conflict with each other wherever their policy recommendations diverged. The financial crises in Asia, Russia, Argentina, and Brazil indicate that the international financial institutions, now far from their original missions, could not adequately deal with the challenges of the modem economy.

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While market fundamentalism abhors regulation, banking regulations in developing and developed countries need to be improved. Sound banking systems are crucial to stability. Further, the debt of developing countries should be written off. IMF and World Bank loans and credits are key components of the massive debt burdens of developing countries. The IMF should return to the spirit of its original mission by restricting lending to short-term liquidity, and ending its current practice of extending long-term loans. The World Bank should likewise restrict its loans and grants to the poorest of the developing countries that do not have access to private markets, and curb the majority of its loans that now go to middle-income developing countries that have abundant access to private markets.

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The international financial institutions should further exercise greater responsibility in loaning money to countries plagued with corruption and governments that fail to account for the funds received. Much of the money provided to governments with high levels of corruption do not go to help the countries’ poor people, but have served to enrich the corrupt leaders who wasted, squandered, or stole the funds for their own enrichment.

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The World Trade Organization needs a more balanced trade agenda. Developed countries have succeeded in opening the markets of the developing countries to their products, while restricting and closing their markets to the products of the developing countries. Developed countries’ heavily subsidized farmers and industries make it impossible for developing countries to compete. Because of the unfair trade agenda, the poorer countries have not received their fair share of benefits. In fact, Sub-Sahara Africa has suffered greater decline because of current trade practices and policies, and the constant conflicts that have arisen over its vast reserves of mineral deposits.

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Governments must take responsibility for implementing governmental transparency and accountability to stem corruption and abuse, and be willing to take decisions that will best serve their people.

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Governments and business enterprises must adhere to international human rights and humanitarian and environmental standards. While voluntary initiatives for businesses serve as useful guidelines, they lack the power of enforcement, accountability, and monitoring mechanisms.

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Finally, the ultimate consumers of these resources must also be willing to reform their daily habits, consumption patterns, and purchasing choices to stem the bloodletting and misery that their voracious and indiscriminate appetites create.

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Conclusion

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Economic globalization has brought benefits and disadvantages. It has enlivened societies to work at retaining their unique cultural, religious, and ethnic identities as markets increasingly bring uniformity and sameness everywhere. It has simultaneously sharpened cultural, religious, and ethnic differences as groups compete for resources, accessibility to goods, services, jobs, and a host of other necessities. It has also polarized groups toward heightened conflict and violence as they become increasingly politicized and manipulated by complex internal and external forces that seek greater consolidation of power and wealth into fewer hands.

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As we study ways in which institutional, governmental, business, and individual reforms must take place, we must also work together to develop and cultivate cultures of peace and dialogue. Each person must feel it to be his/her duty to live by those values, ethics, and principles that speak for compassion, caring, and respect for others. To step into the shoes of global citizenship means that we must not abdicate our responsibilities to be aware of what is on the global landscape that adversely impacts our fellow human beings. It also means that we must be willing to actively undertake those steps that will redress those adversities.

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We live in an interconnected world, and the degradation of one human being is the degradation of us all. Wherever human rights abuses occur, wherever humanitarian relief is needed wherever human suffering exists we must not turn a blind eye. We should tell the stories of truth that we may learn the ways of truth, and grow in the wisdom of humility, which would turn the suffering that arrogance, greed, and self-interest have wrought into lessons of equity and justice.

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References

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Ayittey, George B. N. 1991. Africa Betrayed. New York: St. Martin’s Press.

Chua, Amy. 2003. World on Fire. New York: Doubleday.

Klare, Michael T. 2001. Resource Wars: The New Landscape of Global Conflict, New York: Metropolitan Books, Henry Holt.

Kretzmann, Steve. 2003. “Oil, Security, War: The Geopolitics of US Energy Planning.” Multinational Monitor 24 (1/2).

Machel, Graca. 2001. The Impact of War on Children. New York: Palgrave.

Maier, Karl. 2000. This House Has Fallen. Cambridge, MA: Westview Press.

Mofid, Kamran. 2002. Globalization for the Common Good. London: Shepherd-Walwyn Ltd.

Project Ploughshares. 2003. Armed Conflicts Report. Online. Available at: http:// www.ploughshares.ca/CONTENT/ACR/ ACROO/ACROO.html.

Renner, Michael. 2002. The Anatomy of Resource Wars. Worldwatch paper #162. Available at: http://www.worldwatch.org

Schwab, Peter. 2001. Africa, a Continent Self Destructs. New York: Palgrave Press.

Shah, Anup. 2000. Nigeria and Oil. Global Issues. Online. Available at: http:// www.globalissues.org/Geopolitics/Africa/Nigeria.asp.

Soros, George. 2002. George Soros on Globalization. New York: Public Affairs.

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Stiglitz, Joseph E. 2003. Globalization and Its Discontents. New York: W.W. Norton & Co. United Nations Development Programme. 2001. UN Human Development Report. New York: Oxford University Press.

United Nations Development Programme. 2003. UN Human Development Report. New York: Oxford University Press.

United Nations Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of Congo. 2002. Final Report of the Panel of Experts on the Illegal Exploitation of Natural Resources and Other Forms of Wealth of the Democratic Republic of Congo. Accessed online at: http://www.natural-resources.org/miner- als/CD/docs/other/565e.pdf.

* The views and opinions expressed in this article are strictly those of the author, and do not express the views or opinions of the United Nations or any other organization.

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