Are States ‘Prisoners’ of Globalisation?

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By Fluksman N Samuehl There has been a critical debate in academic circles regarding state loss of power as a result of globalisation. A question often asked is what are the impacts of global economic integration and the functioning of international trade and markets and their regulation on states? Some academics suggest we have reached ‘the end of state history’ if we follow the presumption that there was once a golden age when nation-states possessed some kind of absolute control over their territory and movement of resources, people, and cultural influences across their borders. Today, it is highly debatable how sovereignty and state ability of the modern global state have shifted in relation to economic matters. One cannot neatly separate the various dimensions of globalisation; the economic, the political and the social clearly overlap – although the economic is often privileged. Under normal circumstances, it is the state’s primary responsibility to ensure law and order, political stability and to facilitate economic development. The latter is at the centre of my arguments. States are confronted by manifold global issues of great complexity. Does globalisation make states impotent, powerless and irrelevant with regard to economic development? The traditional role of a state appears to be threatened by the unfolding developments of globalisation and we are left with uncertainty. We are approaching mid-2006 and life goes on, the world is reminded regularly about globalisation and what it promises to achieve for mankind. But six billion inhabitants of the global political economy still face numerous challenges in the 21st century. Globalisation started to take shape in earnest in the late 1980s and replaced the previous international system, the cold war system, which had reigned since the end of World War II. The cold way was a drama of states confronting states, balancing states, and aligning with states. And, as a system, the cold war was balanced at the center by two super states, two superpowers: the United States and the Soviet Union. In a post-cold war era we have also seen a shift from inter-state conflicts to intra-state conflicts. What is a state? In international political economy a state is defined as a territorial entity controlled by a government and inhabited by a population. Government answers to no higher authority; it exercises sovereignty over its territory – to make and enforce laws, to collect taxes, and so forth. The sovereignty is an important instrument for the existence of the state, therefore it enjoys political legitimacy and diplomatic recognition from other member states of the United Nations. In formal terms, all states are equally sovereign in the international sphere and therefore formally equal in international law. In practice, I do have serious reservations in accepting this notion. However, to say that the Kingdom of Tonga or Republic of Babalas or any other quasi state is formally equal to the United States of America or the world’s most populous country China is like comparing the incomparable. The reality of power politics is that each nation-state is known for its economic strength and uniqueness in the international political system. I will return to this complex situation later. What is globalisation? This term is used very widely but people often mean different things. But what is really meant by globalisation? And how does this concept shape our world in particular state economic powers? Does it mean that the so-called global village is a myth? What is globalisation driven by? Who benefits most and who ends up as the underdogs? Why is there unequal distribution of benefits in an apparent advanced and informed world of this age? Is globalisation an ideology? Is it a political or business project or both? Or is it perhaps a conspiracy theory? Who is directing its course and where will it all end? Endless legitimate questions around globalisation keep coming up and clear answers are hard to find. But for billions of the world’s people, business-driven globalization means uprooting old ways of life, and threatening livelihoods and cultures and general uncertainty about their future. Few years ago, a prominent African speaker when asked to define globalisation at an international conference in New York had this to say: “In my view globalisation is nothing else than a wild animal.” Most western delegates in attendance did not understand and assumed the man is probably missing the point. Those troubled by his views kindly asked him to elaborate, and he further expressed: “A wild animal keeps crossing national borders without seeking permission from the host state; it may end up destroying your crops and even threaten to attack you.” Guided by his personal experience you could clearly read his perspective of protectionism, and that he is in favour of some kind of order and clearly worried about his daily livelihood in the African context. But the issue whether the wild animal is right or wrong by not respecting colonial African national borders is a huge debate on its own merit. I won’t commit myself to this for now but my primary focus is to examine the role of modern global states which are viewed to be losing control over the economic domain. Globalisation is hard to define as obscenity; it is a term without legal significance. The term globalisation depends entirely on the subjective outlook of the definer. For the purpose of academic reason, I define globalisation as the inexorable integration of markets, transportation systems, and communication systems to a degree never witnessed before – in a way that is enabling corporations, countries, and individuals to reach around the world farther, faster, deeper, and cheaper than ever before, and in a way that is enabling the world to reach into corporations. But interdependence (interconnectedness) does not necessarily mean establishing symmetrical relationships and equal opportunities for all global citizens. The fact of the matter is that we live in a world of constant change, and globalisation has delivered a mixture of triumph and tribulation. Globalisation should be seen more as an eminently political process involving negotiations and struggles for influence and power engineered and institutionalized by players such as governments, transnational corporations and multilateral financial institutions. In reality, it means our lives are increasingly shaped by decisions or events taken at a distance. Under it jurisdiction the state could face declining labour conditions, major job losses or damage to the environment as results of industrialization. The question is whether a modern nation-state is still in the advantaged position to intervene and have the last say in the market if things turn out to be working against its national interests? If yes, to what extent? And if no why? With globalisation fast gaining momentum, the modern nation-state faces a number of constraints and serious obstacles more than ever before. It would appear as if most developing states find it very difficult to keep up with the momentum of global changes, but few global modern nation-states (G8) have come to celebrate the birth of the globalisation theory. Sadly, most global modern states (the developing world) are trapped in the game of globalisation. Strangely, non-state actors are becoming increasingly influential and powerful in the area of international political economy. The actions of non-state actors affect vast global constituencies but the absence of clear accountable systems make things more complicated in the ‘new world order’ dominated by liberal democracy and capitalism. The recent controversial publication of cartoons of the prophet Mohammed that has offended Muslims, sparked violence, cost lives and polarized emotions worldwide. Those responsible for this did so in defense of apparent ‘free speech’ .The distance from domestic provocation to global outrage is short. The forces of globalisation are responsible not only for the spread of capitalism, but also create problems for the modern nation-state. But is the state still able to exercise its traditional authority ? The events of 9/11 in the U.S did not happen in a vacuum. They happened in the context of a new international system, “the new world order” – globalization. Clearly globalisation has brought a power shift, we learned the hard realities from the 9/11 events that non-state actors could use the power of globalisation at its disposal to launch devastating attacks on the soil of the most powerful nation-state (U.S.A.) on planet earth. In contemporary international political economy, the traditional states’ powers seem to have shifted ‘unnoticed’ in exchange for liberal democracy, free markets, and global capitalism. Mercantilism was a doctrine of political economy that governed the actions of many states until the emergence of dominant liberal revolution. A state was directing the national economy and thereby determined its desired outcomes. Economic activity was designed to increase the wealth, national development and the consolidation of the power of particular nation-states and economic barriers were created to keep out contact with other states. In clear terms mercantilism means a nation-state directs the economy and therefore determines the final outcomes. The question is how many modern nation-states are able to exercise mercantilism in this modern age. It would appear that this is no longer the case in most nation-states with power evaporated in the air of globalisation. Has a line been drawn with regard to how far states can go? In most young democracies in developing countries where so much social problems exist needing external support to complement limited domestic efforts, there are worrying trends which undermine nation-states to determine their own economic destiny. Attempts by powerful nations to help small, low or middle-income countries to compete from a position of strength are far from being realised. The big institutions of the capitalist metropolises have proclaimed their generous intentions: from Tony Blair’s Commission for Africa to Bush’s Millennium Challenge Account; the Africa Growth and Opportunity Act (AGOA); from the World Bank under the leadership of Paul Wolfowitz to the G8 meeting at Gleneagles; from the UN Millennium Development Goals to the Japanese commitment at the Asia-Africa Summit (April 2005, Djakarta). The most publicized manifestation of this generosity was the announcement of the writing off of 40 billion dollars of multilateral debt for 18 of the world’s poorest countries, nearly all of them African. All these initiatives cannot be separated from the dynamics of globalisation. The international organizations, such as the World Trade Organization, the World Bank and the IMF are making it their mission to open the world to the influence of transnational corporations. The IMF rules make it hard for nations to legislate to stop currency speculators from attacking their economy. The World Bank insists that nations to which it makes structural adjustment loans privatize government enterprises, often handing them to transnationals. The World Trade Organization’s efforts to break down trade barriers are designed to open markets to transnational corporations. What are the contemporary global dynamics? The dynamics of globalisation lead to the pursuit of material interests by dominant states and multinational companies that exploit new technologies to shape a world in which they can flourish according to rules they set. Globalisation spares nobody, neither organizations. Religious groups fear that the materialism and rationalism that underlie globalisation pose mortal threats to their faith. In such an interconnected globe, both good and bad intentions shape the domestic character of a nation and its consequent relationship with the rest of the world. It is thus the result of the intertwined operation of many factors. It has no single driving force; and rich countries, that are primary beneficiaries, also confront loss of some markets when global trends favour sourcing of imports of cheaper suppliers abroad. By the same token, they also face loss of manufacturing jobs when some of their industries migrate to countries where labour is relatively cheaper and readily available. However it is the economically weaker nation-states and companies that have to scramble harder to remain competitive and avoid further marginalisation. Globalisation has not been as successful as had been hoped and a number of legitimate issues remain outstanding. On skills migration in a ‘global village’, do for instance a doctor, a nurse, an accountant, or a software engineer trained in Afghanistan or China or Malawi have equivalent qualifications from Canada or the United Kingdom? The global division of labour suggests differential participation in global production according to social standing and not necessarily geographic location and historical consideration. The impacts of globalisation on strong states and weak states are not the same. Strong nation-states are those which shape the rules and institutions which have made global economy possible. Weak nation-states are merely drawn into globalisa-tion knowingly or unknowingly – where the entire process is going to lead them. Power then becomes the only route to wealth. The challenge of globalisation and the threat to state sovereignty appears to be real. Not all nation-states are equally important for transforming global governance. The impacts of globalisation on strong states and weak states are not the same. In practice, developed or wealthy states are the most significant because they can veto changes or coerce other states to follow particular sets of policies. America holds almost all top positions in the World Trade Organization (WTO), World Bank (WB) and International Monetary Fund (IMF), why? Because of its unchallenged military, economic and IT pre-eminence. Take for instance a tiny country like Rwanda which was once at war with itself; it became a victim of the international community in 1994, when it urgently needed an expanded and well equipped U.N. peacekeeping presence on the ground to prepare her from an intra-conflict to a democratic transformation. What did the major powers do? They assessed and evaluated Rwanda and found the nation-state on nobody’s radar as a place of strategic interest. It had no natural resources and no geographical significance. It was already dependent on foreign aid just to sustain itself, and on international funding to avoid bankruptcy. The end result was humanitarian catastrophy, 800 000 Tutsis and moderate Hutus known to have died in the worst genocide in the twenty first century. Each nation-state’s social international standing is what matters. Other nation-states in the system are important for different reasons. In the case of China, it is important because it has the largest constituency, representing a quarter of the world’s population. In military terms it is a force to be considered because of its large army and nuclear weapons. In economic terms, the China state controls access to what is potentially the largest markets when it reaches a sufficient stage of development. Thus, corporations and states treat it more lightly when they deal with China than with small, less powerful nation-states. Another worrying trend is the secrecy surrounding the decision-making processes at WTO, IMF and WB. It makes them bodies for keeping the rest of the world at arm’s length. Secondly, both the WTO and IMF have effective mechanisms for the enforcement of obligations particularly those of the developing countries: the WTO through the threat of retaliation against their export of goods, and the IMF through loan conditions, which are imposed ruthlessly. The US uses these mechanisms to keep the developing nation-states in line, and to smooth the progress of its own multinational companies by removing obstacles and giving positive encouragement. By American-imposed convention, the top jobs at the WTO, IMF and World Bank are shared by the US and Europe. When the first person from a developing country, Supachai Panitchpakdi of Thailand, emerged as a viable candidate to head the WTO, ‘all hell broke loose’. The then U.S. President, Bill Clinton, threatened permanent gridlock at the WTO unless America’s chosen candidate was accepted. “In evaluating the candidates”, he explained, he had “focussed on their positions on issues of importance to us” – meaning the U.S.; this consideration not only confirms the myth of global village but also exposes the fact that not all global citizens are appreciated equally according to their qualifications, experience, skills and competence. According to President Clinton, his evaluation was synonymous with ‘what we believe would best serve the needs of the WTO’. Not surprising at all, a United Nations-appointed study team has labelled the World Trade Organisation a “nightmare” for developing countries’. There is no doubt that the Fund and Bank have become a more explicit tool of western, and particularly American, foreign policy. What all this means is that the world’s economy functions largely for the benefit of the US and the US-led Group of Seven (G7) countries, Russia the newest member of this group, making it G8 (Canada, France, Germany, Italy, Japan, UK, US and Russian Federation), but there are still doubts about Russia’s membership to the global elite nation-states of the G8. Do all states have the economic ability to achieve Millennium Development Goals by 2015? Let me first say this is a significant project for our country. It was quite a historical moment and honour bestowed on Namibia to preside over this high profile occasion, our able Theo-Ben Gurirab, the then President of the U.N. General Assembly proudly holding a gavel in New York as a symbol of authority, calling all present to order. Dr Theo-Ben Gurirab did not know for certain he would one day hold another gavel in his own country and to call his colleagues to order when circumstances dictate. The United Nations Millennium Development Goals (MDG’s) call for 50% global poverty reduction in each nation-state by the year 2015. The MDG’s (UN, 2000) state that: “We will spare no effort to free our fellow men, women and children from the abject and dehumanising conditions of extreme poverty.” In effective terms this translates into the provision of basic necessities such as adequate foodstuffs, clean water, electricity, shelter, improved transportation, and better sanitation. These include quality education and health care. I have serious doubts on how individual states are to achieve this. I am of the view that the MDG project is under attack as one of the dynamics of globalisation is that it widens the gab between rich and poor, whereas MDG’s aim to achieve the opposite. Sadly some developing states are already showing signs of panic as 2015 near. Most developing nation-states have little power to protect their domestic economic agenda against the dynamics of globalisation. Whether MDG targets are realistic and practically achievable for all nation-states or merely an encouragement for nation-states to do well, it remains to be seen. In practice, the UN member states’ collective response is being undermined by the impacts of globalization. Does globalisation imprison states? I would argue that it is not the case. Nation-states would still continue to constitute an important player in the international political economy although not in the traditional fashion. There are issues related to the challenge of legitimacy: whether or not the people living in a state think that its government has a right to govern determines the regime’s legitimacy and, therefore, its capacit