Give peace a chance

A few days ago, on 16 November, it was announced that Iran had reached agreement with France, Germany and the United Kingdom, "with the support of the High Representative of the European Union", on various matters related to the pursuit of the goal of non-proliferation of nuclear weapons.

Our movement and government welcome this agreement, and believe that it provides the correct basis for the final resolution of the matter that has been at issue, focused on Iran.

In terms of the agreement, the parties reaffirmed their commitment to the Nuclear Non-Proliferation Treaty (NPT). The Western countries and the EU expressed their recognition of the rights of Iran arising from its membership of the NPT, "exercised in conformity with its obligations under the Treaty, without discrimination."

The statement went on to say: "Iran reaffirms that, in accordance with Article II of the NPT, it does not and will not seek to acquire nuclear weapons. It commits itself to full cooperation and transparency with the IAEA (International Atomic Energy Agency). Iran will continue to implement the Additional Protocol voluntarily, pending ratification."

It further said: "To build further confidence, Iran has decided, on a voluntary basis, to continue and extend its suspension to include all enrichment related and reprocessing activities, and specifically: the manufacture and import of gas centrifuges and their components; work to undertake any plutonium separation, or to construct or operate any plutonium separation installation; and all tests or production at any uranium conversion installation."

Accordingly, the IAEA has been invited to verify and monitor the voluntary suspension undertaken by Iran. It has also been agreed that further negotiations will take place "with a view to reaching a mutually acceptable agreement on long term arrangements. The agreement will provide objective guarantees that Iran's nuclear programme is exclusively for peaceful purposes. It will equally provide firm guarantees on nuclear, technological and economic cooperation and firm commitments on security issues." These negotiations will begin during December 2004.

Our government has kept regular contact with all the countries engaged in the discussions that led to the announcements to which we have just referred. We have been very concerned that the dispute relating to Iran should be solved without confrontation. Apart from anything else, we were and are convinced that such a confrontation would further undermine global peace and the possibility of reducing global tension, against the interests of all countries and peoples.

Addressing a September 2004 meeting of the Board of the IAEA, the representative of our government on the Board said: "South Africa is concerned that we should not seek the path of confrontation but that of negotiation. We would call on all involved to co-operate in good faith so that this matter can be resolved in a manner that will contribute to maintaining the solidarity of the Board and the strengthening of the Agency."

The discussions over the Iran matter had to address two important matters, among others. One of these concerned the need for Iran to assure the international community that in keeping with its obligations under the NPT, it does not have any programmes aimed at the production of nuclear weapons. The other concerned the protection of the rights of Iran granted by the same NPT.

With regard to these two matters, our government representative speaking at the same September 2004 IAEA Board meeting to which I have referred, said:

"South Africa has always held the view that States have the responsibility of building confidence with the international community so as to remove any legitimate concerns about nuclear weapons proliferation. This requires transparency and full co-operation with the Agency. In this regard, South Africa welcomes the report by the Director General (of the IAEA) to the effect that the Agency has been able to verify Iran's suspension of enrichment related activities at specific facilities and sites, and has also been able to confirm that it has not observed, to date, any activities at those locations inconsistent with Iran voluntary decision.

"In terms of confidence-building measures, South Africa wishes to reiterate, once again, that it cannot support unwarranted restrictions on the Nuclear Non-Proliferation Treaty (NPT) guaranteed access to such capabilities for peaceful purposes by States that are fully compliant with their obligations under the NPT. The imposition of additional restrictive measures on some NPT States, while allowing others to have access to these capabilities, only serves to exacerbate existing inequalities that are already inherent in the NPT and undermines one of the central bargains that are contained in the Treaty."

The 16 November statement to which we have referred addresses both these issues. The permanent agreement that will be negotiated from next month will also have to respect both these positions. We will also make certain that we follow these negotiations as well.

Some may think these matters should be of distant concern to us, and thus that we should leave them entirely to others to resolve. This would be an entirely mistaken view. Apart from anything else, our government serves on the Board of the IAEA. This body has Treaty obligations to address the Iran affair, and has been doing so. Necessarily, therefore, as Members of the Board with other countries, we have been involved in discussions relating to this matter.

But the issue goes beyond this. For many decades, from the 1950s, our movement has been an active opponent of nuclear and other weapons of mass destruction (WMDs). From those early post-War years, we became part of the global peace movement that demanded complete nuclear disarmament, peaceful coexistence among the nations and the resolution of conflicts through negotiations.

Because, from the very beginning, our struggle was about saving lives, an objective that has found its place in our national Constitution, which includes the right to life, our movement was appalled by the threat to human existence posed by the use of nuclear weapons of mass destruction. Like the rest of humanity, our people had also witnessed the carnage caused by these weapons when the United States dropped them on Hiroshima and Nagasaki in Japan towards the end of the Second World War.

We attended the Afro-Asian Bandung Conference of 1955, which gave birth to the non-aligned movement. As we all know, this movement defined the countries of the South as non-aligned between the Western and Eastern power blocks, both of which had nuclear weapons. It called for nuclear disarmament and the redirection of the resources that would thus be saved to the task of defeating poverty and underdevelopment.

The apartheid regime opposed these positions. Determined to perpetuate the apartheid system at all costs, it engaged in an extensive programme to equip itself with the whole spectrum of weapons of mass destruction - nuclear, chemical and biological. As the democratic revolution was approaching its victory, the regime was still working hard to develop the missiles that would be needed to deliver these weapons to their targets - the African countries that were united in the opposition to the apartheid system and their support for our movement and struggle.

As it became ever clearer that our national liberation movement would emerge victorious, the apartheid regime and those in the rest of the world who had assisted it to develop the weapons of mass destruction, decided that the democratic government should not inherit these weapons. The regime therefore felt obliged to carry out the programme of complete disarmament for which our movement had campaigned for many decades.

Despite the obviously racist impulse that drove this decision, our movement nevertheless supported the complete destruction of the weapons of mass destruction that the apartheid regime had manufactured and accumulated. We supported the accession to the NPT and the Conventions governing the control and elimination of chemical and biological weapons.

Before our liberation in 1994, the US Government engaged our movement in discussions aimed at persuading us to discontinue the programme for the production of the missiles the apartheid regime had intended to use for the delivery of the WMDs.

We agreed to this and kept our side of the bargain. The US Government had undertaken to provide the new democratic government in our country with the resources we would need to ensure the redeployment to other high-tech projects of the scientists, engineers and technicians who had been involved in the missile development programme. Sadly and regrettably, the US Government never gave us a single cent of the money it had promised, which necessarily impacted negatively on the development of science and technology in our country.

Because of our unwavering commitment to the objective of the elimination of WMDs, and our constant pursuit of the objective of the resolution of conflicts by peaceful means, we also intervened to help find a peaceful solution to the crisis that finally led to the 2003 Iraq war. Our government dispatched to Baghdad the team of experts who had handled the disarmament programme in our country, including the discontinuation of the missile programme.

Over a number of days this team interacted with the Iraqi team working with the UN Weapons Inspectors and the IAEA. Our people advised their Iraqi counterparts of the work they would have to do to satisfy the Inspectors, the UN Security Council and the rest of the world that they were cooperating fully and unreservedly with the Inspectors in a manner that would enable these Inspectors accurately to verify whether Iraq had WMDs or not.

Subsequently we sent a report to the UN Secretary General indicating the extent of the work that had been done by our team and our conviction that Iraq was ready to cooperate unreservedly with the UN Weapons Inspectors, hopefully to their satisfaction. Unfortunately this advice was ignored. Had it been respected, it would not have required a war to establish that there were no WMDs in Iraq.

This time round, the Government of Iran has also given an undertaking that it has no intention to produce nuclear weapons, and has committed itself to cooperate with the IAEA to enable this Agency to monitor compliance with this undertaking.

As early as 1997, the Foreign Minister of Iran, Kamal Kharrazi, had said: "We are certainly not developing an atomic bomb, because we do not believe in nuclear weapons.We believe in and promote the idea of the Middle East as a region free of nuclear weapons and other weapons of mass destruction. But why are we interested to develop nuclear technology? We need to diversify our energy sources. In a matter of a few decades, our oil and gas reserves would be finished and therefore we need access to other sources of energy. Furthermore, nuclear technology has many other utilities in medicine and agriculture."

Ironically, it was Iran under the Shah that was interested in developing nuclear weapons. As part of this, Anthony H. Cordesman of the US Centre for Strategic and International Studies has reported that "in 1976, Iran signed a secret contract to buy $700 million worth of yellow cake from South Africa, and appears to have reached an agreement to buy up to 1,000 metric tons a year. It is unclear how much of this ore South Africa shipped before it agreed to adopt IAEA export restrictions in 1984, and whether South Africa really honoured such export restrictions. Some sources indicate that South Africa still made major deliveries as late as 1988-1989. Iran also tried to purchase 26.2 kilograms of highly enriched uranium; the application to the US for this purchase was pending when the Shah fell."

The Foreign Minister of Iran, Kamal Kharrazi, pointed to an important element in the consideration of the matter of non-proliferation of WMDs in the Persian and Arabian Gulfs when he said, "We believe in and promote the idea of the Middle East as a region free of nuclear weapons and other weapons of mass destruction."

Israel has developed nuclear weapons, at one stage in collaboration with apartheid South Africa, arguing that it needs these weapons to deter attacks by the Arab countries. Its determination to maintain a monopoly in this regard was confirmed by its destruction of the Iraqi Osiraq nuclear reactor in 1981. The suggestion is made constantly that other countries in the region will always consider it necessary to develop their own nuclear weapons, to achieve a strategic balance relative to Israel. Fears and allegations about Iranian intentions to develop nuclear weapons arise from this proposition.

Scepticism about Iran's commitment not to produce nuclear weapons was stated as recently as Thursday, 18 November. An editorial in the 'International Herald Tribune' said: "Nobody knows whether Iran is really ready to give up its ambitions to have nuclear weapons.For now, there is no real assurance that Iran is not secretly moving ahead with enrichment experiments at a still secret location."

It is precisely this kind of speculation, driven by one strategic goal or another, whether stated or not, that led to the 2003 Iraq war. What is required is that the December negotiations on Iran should commence, based on the framework contained in the 16 November statement, which includes Iran's right to peaceful uses of nuclear technology. It is also necessary that these negotiations should respect the critically important principle and practice of multilateralism, in this case represented by the IAEA.

It is also vital that the fundamental cause of the conflict in the Middle East should be removed. This is the denial to the Palestinians of their right to an independent state of Palestine, as well as the final settlement of the conflicts between Israel and other Arab countries. As part of this process, Israel must also be guaranteed its existence and safety, within internationally recognised and secure borders. With the removal of these sources of conflict, there would be no need for any country in the region to arm itself with WMDs.

The 16 November statement also says: "Irrespective of progress on the nuclear issue, the European3/EU and Iran confirm their determination to combat terrorism, including the activities of Al Qa'ida and other terrorist groups such as the MeK. They also confirm their continued support for the political process in Iraq aimed at establishing a constitutionally elected government."

These commitments indicate the complex interconnections among the various issues facing the peoples of the Persian Gulf and the Middle East. They emphasise the importance of working for inclusive negotiated agreements that respect the legitimate sovereign interests of all the countries concerned, as well as the imperative to reduce regional and global conflicts and tensions.

Next year the international community will convene once again at the five-yearly Review Conference of the NPT. Important as the issue on non-proliferation of nuclear weapons is, it will be necessary that the world community should once again focus on the challenge of nuclear disarmament.

The situation should not be allowed to continue that the Nuclear Weapons States oblige everybody merely to focus on the issue of non-proliferation, while completely ignoring the demand of the overwhelming majority of humanity for the complete abolition of WMDs, an objective which our country has already achieved.

Approaches to Poverty Eradication and Economic Development VI

Despair and the Washington Consensus

The 2003 UNDP Human Development Report said: "For many countries the 1990s were a decade of despair.In the 1990s average per capita growth was less than 3% in 125 developing and transition countries, and in 54 of them average per capita income fell. These include many priority countries but also some countries with medium human development."

Susan George, then associate director of the Transnational Institute, gave one of the reasons for this despair as what had happened during the 1980s. In an article, "How the Poor Develop the Rich", she said: "According to the OECD, between 1982 and 1990 total resource flows to developing countries amounted to $927 billion. During the same 1982-90 period, developing countries remitted in debt service alone $1,345 billion (interest and principal) to the creditor countries.In spite of total debt service, including amortisation, of more than $1.3 trillion from 1982 to 1990, the debtor countries as a group began the 1990s fully 61 percent more in debt than they were in 1982."

In a background paper to the 2003 UNDP Report, the economist Richard Jolly wrote: "The Bretton Woods Institutions, BWI, (the IMF and the World Bank) have been keen to negotiate with individual countries time dated, quantitative economic targets as part of the conditionalities of adjustment programmes. These targets have typically focused on such variables as the public sector deficit, the balance of payments and the inflation rate - each of which are, of course, means to improving economic performance rather than ends of development, let alone goals of human development. More serious, the single-minded focus of the BWI on economic variables has been driven by a narrow view of structural adjustment which in turn has led, especially in the 1980s, to policies and actions which often diverted attention from the social dimensions of adjustment, set back progress in the social sectors, and worked against the achievement of global goals in education, health and nutrition."

What Jolly was referring to as "a narrow view of structural adjustment" is what is called "the Washington Consensus". The former Chief Economist of the World Bank and Nobel Prize winner, Joseph Stiglitz, has described this "consensus" as "consensus between the IMF, the World Bank, and the U.S. Treasury about the 'right' policies for developing countries - that signalled a radically different approach to economic development and stabilisation."

Confronted by the fact of the further impoverishment of the poor as a result of these policies, the Administrator of the UNDP, Mark Malloch-Brown, spoke out at the launch of the 2003 Human Development Report (HDR) and said there was need to launch a "guerrilla assault" against the "Washington Consensus."

He added: "The IMF and the World Bank should no longer set these kinds of ceilings on spending. These measures were introduced at a time when finances were leaking red ink all over the place and there was an urgent need to stabilize. The strategy had its time and place. The Washington Consensus did some good things, but people stuck with it too long - and it wasn't enough."

Obviously conscious of the successful development interventions to which we have referred, the principal author of the 2003 HDR, Sakiko Fukuda-Parr, said, "Public interventions are necessary to set the preconditions for market-led economic growth."

Accordingly, as we would expect, the 2003 HDR argues for bigger volumes of development assistance, as promised at the UN Monterrey Summit on Financing for Development, to enable the "public interventions" that Fukuda-Parr was talking about to take place.

In this context, in April 2004, Peter McCawley, Dean of the Asian Development Bank Institute said:

"Global ODA [Overseas Development Assistance] is roughly $60 billion. It sounds like a large amount but there has been a question emerging in the last four to five years of why has aid failed and why are so many countries still in a terrible mess. This problem is particularly acute in the case of Africa and it has led to a very large concern in the international community over the effectiveness of aid.

"Concerning the $60 billion, there is a misunderstanding about the magnitude. What is interesting about this figure is how small it is. The $60 billion goes to four billion people, including those in India and China. That equals $15 per person per year, or roughly $1 per person per month in developing countries. Hence, I suggest to you that one of the reasons aid has been ineffective is that it has barely ever been tried. A transfer of $1 per person per month is hardly a significant transfer and it is a tiny transfer compared to those that we are used to inside rich countries. When we have a problem with the agriculture sector, it is not at all unusual for governments in rich countries to provide transfers of $20,000 or $30,000, or even $100,000, per farm.

"Twenty or 30 years ago, multilateral development banks (MDBs) talked much about investment and focused to a considerable degree on projects like infrastructure. We do not hear as much about the accumulation of capital, the levels of investment. The topic has tended to move aside and now we hear much more about the need for good governance and anti-corruption programs than the investment/GDP ratio. It is said that, to some extent, developing countries themselves are responsible for the levels of investment and they need to do more to improve the domestic investment climate.

"The views of poor countries tend to be somewhat different. On economic growth, poor countries tend to place more emphasis on the quantity of economic growth."

Wisely, Peter McCawley also said: "The philosophy of development changes as time goes by, partly as a result of facts and new experiences as well as events."

The "Washington Consensus" represented such a change in the philosophy of development, resulting in the "narrow view of structural adjustment" that Richard Jolly complained about.

The first person to spell out the goals of the "Washington Consensus" was the economist John Williamson. In remarks at the U.S. Centre for Strategic and International Studies in November 2002, thirteen years after he first announced the programme of the "Washington Consensus", he said:

"Let me remind you of the ten reforms that I originally presented as a summary of what most people in Washington believed Latin America (not all countries) ought to be undertaking as of 1989 (not at all times):

1. " Fiscal Discipline. This was in the context of a region where almost all the countries had run large deficits that led to balance of payments crises and high inflation that hit mainly the poor because the rich could park their money abroad.
2. " Reordering Public Expenditure Priorities. This suggested switching expenditure in a pro-poor way, from things like indiscriminate subsidies to basic health and education.
3. " Tax reform. Constructing a tax system that would combine a broad tax base with moderate marginal tax rates.
4. " Liberalizing Interest Rates. In retrospect I wish I had formulated this in a broader way as financial liberalization, and stressed that views differed on how fast it should be achieved.
5. " A Competitive Exchange Rate. I fear I indulged in wishful thinking in asserting that there was a consensus in favor of ensuring that the exchange rate would be competitive, which implies an intermediate regime; in fact Washington was already beginning to subscribe to the two-corner doctrine.
6. " Trade Liberalization. I stated that there was a difference of view about how fast trade should be liberalized.
7. " Liberalization of Inward Foreign Direct Investment. I specifically did not include comprehensive capital account liberalization, because that did not command a consensus in Washington.
8. " Privatization. This was the one area in which what originated as a neoliberal idea had won broad acceptance. We have since been made very conscious that it matters a lot how privatization is done: it can be a highly corrupt process that transfers assets to a privileged elite for a fraction of their true value, but the evidence is that it brings benefits when done properly.
9. " Deregulation. This focused specifically on easing barriers to entry and exit, not on abolishing regulations designed for safety or environmental reasons.
10. " Property Rights. This was primarily about providing the informal sector with the ability to gain property rights at acceptable cost.

"The three big ideas here are macroeconomic discipline, a market economy, and openness to the world (at least in respect of trade and FDI [Foreign Direct Investment]). These are ideas that had long been regarded as orthodox so far as OECD countries are concerned, but there used to be a sort of global apartheid which claimed that developing countries came from a different universe which enabled them to benefit from (a) inflation (so as to reap the inflation tax and boost investment); (b) a leading role for the state in initiating industrialization; and (c) import substitution. The Washington Consensus said that this era of apartheid was over."

Regardless of what John Williamson's intentions were in 1989, the fact of the matter is that the Bretton Woods institutions and the developed world began using the prescriptions contained in the "Washington Consensus" as the alpha and the omega of a development model that all developing countries had to implement.

In February 2003, the U.S. Global Policy Forum published an article written by Xavier Cano Tamayo entitled "Burying the 'Washington Consensus".

To explain the real origins and effects of this Consensus as he understood it, he said:

"Communism, having been disarmed and extinguished in combat; capitalism put on a brave face and in the death throws of the eighties formulated economic policy directives with mandatory effect; a process leading towards the final consequences of economic liberalism as formulated at the end of the eighteenth century and the beginning of the nineteenth.

"The 'Consensus' prescribed budgetary discipline (a passion for eliminating deficits), fiscal reform (favouring those who own most), trade liberalisation (removal of tariff barriers by less developed countries without any compensation from the rich), opening up to foreign investment (without rules or controls), privatisation (public patrimony within the grasp of the powerful), deregulation (weakening or removal of labour guarantees, social and environmental controls), absolute guarantee of right to property and management of lesser affairs (excepting police involvement)."

He went further to report that: "Latin America, the principal victim of this 'Consensus', is a prime example of the disaster it has caused. In 1980 there were 120 million poor; in 1999 the number had increased to 220 million, 45% of the population; the richest 20% is almost 19 times richer than the poorest 20%, when the world average is that the rich are only 7 times richer than the poorest. After a decade of blindly devoted application of the Washington Consensus guidelines, Latin America stands on the edge of a precipice. Debt grew from US$492,000 million in 1991 to US$787,000 million in 2001. Railways, telecommunications, airlines, drinking water supplies and energy supplies were virtually wound up and handed over to giant US and European corporations. Public spending on education, health, housing and social benefits was reduced, price control was abolished, wages were frozen and millions of workers were dismissed by the new masters of the now-privatised public undertakings."

He reported that in the light of all these negative outcomes of the "Washington Consensus" policies, "James Wolfensohn, President of the World Bank, declared in November 2002 at a Latin American Meeting in preparation for the Davos World Economic Forum; 'the Washington Consensus is dead'."

The World Bank also issued a statement on the results of a seminar it had convened in Paris to discuss the "Washington Consensus". It said: "The so-called Washington Consensus on market-oriented policy measures and macro economic balance either failed to achieve expected results in terms of growth and poverty reduction or was interpreted from an ideological point of view in many developing countries, a group of experts and analysts agreed at an international roundtable hosted by the World Bank last week in Paris. The gathered experts sought a new approach that would include investment in social development, environmental responsibility, and a strong regulatory role for the state, as well as international cooperation through multi- and bilateral development institutions. They also agreed that people's needs must be at the center, when formulating an economic policy."

It has also been reported that when he addressed the Foreign Correspondents Club in Tokyo in January 1999, in the aftermath of 1997-98 Asian crisis, Japan's vice-finance minister for international affairs, Eisuke Sakakibara, criticised the IMF's handling of the Asian crisis, and said the Fund's philosophy reflected the "Washington consensus" of "free markets and sound money", which had been blindly applied as a universal model on emerging economies.

He went on to say: "Since I was personally involved in the process and agreed, although reluctantly, in the end to what was recommended, I am in no position to criticise others for what has happened. But unlike the (IMF) managing director Michel Camdessus I can only say that if I am confronted with similar situations in the future I will probably handle them differently."

At the time still the Managing Director of the IMF, Michel Camdessus participated in UNCTAD X in Bangkok, Thailand in 2000. During an interactive session with the public, among other things he said:

"It is recognised that the market can have major failures, that growth alone is not enough or can even be destructive of the natural environment or precious social goods and cultural values. Only the pursuit of high quality growth is worth the effort - growth that can be sustained over time... growth that has the human person at its centre.... growth based on continuous effort for more equity, poverty alleviation, and empowerment of poor people.

"Systematically dismantling the state is not the way to respond to the problems of modern economies; rather, we must aim for a slimmer yet more effective state.

"The new emerging paradigm, rooted in fundamental human values, taken together with a better ability to prevent and manage the crises, is a distinct and positive chance of our times... A new perception of globalisation is emerging a call for common action to transform globalisation into an effective instrument for development."

The Managing Director of the IMF also made the comment, "I don't know what the Washington Consensus was. I never signed it."

In 2001, Mark Weisbrot delivered a paper entitled "The Need to Rethink Development Economics", at a conference in Cape Town organised by the United Nations Research Institute for Social Development. Among other things he said:

"Most of the neo-liberal principles that have replaced the discipline of development economics - most importantly, the idea that simply opening up to international trade and investment constitutes a development strategy -enjoy widespread acceptance in educated circles.

"This is true in spite of the fact that the last 20 years of the experiment in applying these principles, during which most low and middle income countries significantly opened their economies and followed Washington's economic advice, have been an unquestionable economic failure. In Latin America, GDP per capita has grown by about 7 percent over the last two decades; from 1960-1980 it grew by 75 percent. In Africa, income per capita grew by about 34 percent from 1960-80; it has since declined by more than 15 percent. This decline in growth has occurred throughout the vast majority of developing countries. The major exceptions are China and India, but neither can be pointed to as an example of success in adopting neo-liberal policies. China, which recorded some the highest growth rates in world history over the last 20 years, maintains strict currency controls, considerable protection of its domestic consumer markets, and its financial system is dominated by state-owned banks.

"If we group countries by their starting level of per capita income, rather than by region, the growth slowdown is very pronounced. The lowest quintile went from a per capita GDP growth rate of 1.9 percent annually in 1960-80, to a decline of 0.5 percent per year (1980-2000). For the middle quintile (which includes mostly poor countries), there was a sharp decline from an annual per capita growth rate of 3.6 percent to just less than 1 percent. These declines in growth represent an enormous difference in living standards as compared to what was considered normal and feasible in the past, and there were declines across all groups of countries.

"The failure of the last two decades also shows up in a substantial decline in the major social indicators (again dividing the countries into quintiles according to their initial level at the beginning of the period). For almost all groups of countries, there was considerably reduced progress in life expectancy, infant and child mortality, measures of education, and literacy in the past two decades, as compared with the period from 1960-1980.

"If these basic facts were well known - especially the failure regarding economic growth - there would be a much different public debate about the last 20 years. The main question would be: what has gone wrong? What are the structural and policy changes that have led to this wide-ranging failure?

"A change in the debate of this nature would help to create political space for a renewed practice of development economics. There are many paths to development, as Keith Griffin has argued, but the problem is that almost all of them are currently blocked by the reigning neo-liberal orthodoxy. And now we have the WTO [World Trade Organisation] throwing further obstacles in the way, for example, through its TRIPS (Trade Related Aspects of Intellectual Property Rights).

"By tightening the enforcement of patents and copyrights, the TRIPS agreement will make it much more difficult, if not impossible, for developing countries to industrialize in the way that countries such as South Korea and Taiwan did, on the basis of borrowed technology; while at the same time draining tens of billions of dollars of scarce capital from South to North, for royalties and other intellectual property payments.

"Economists and policy analysts from throughout the world can play an important role in changing the public debate, and making it more honest. In the last year or two the World Bank has for the first time begun to respond to its critics on the economic arguments."

We should draw a few conclusions from the foregoing:

• The "Washington Consensus" constitutes a development model based on the ideology of "market fundamentalism".
• It has obliged the developing countries to depend on "the market" for the investment and other interventions that would enable them to reach their takeoff point, contrary to what happened to post-war Western Europe and the Asian Far East, and is happening within the EU.
• Private capital, however, is inherently driven by the profit motive and is incapable, on its own, of addressing the challenge of poverty and underdevelopment.
• Consequently, with regard to the majority of developing countries, in the context of weak supportive intervention by the governments of the developed countries because they do not feel threatened by the poverty in these countries, the pursuit of profit by global private capital has worked against the goal of people centred development.
• Contrary to its own development experience with regard to the Marshall Plan and its Regional Policy, the EU persuaded the ACP countries to adopt the Cotonou Agreement, which is based on the precepts of the "Washington Consensus", to which the EU Green Paper on its cooperation with the ACP countries referred when it said, "development thinking itself has moved on".
• The members of the OECD and the multilateral development institutions have taken the same position, in favour of the "Washington Consensus" positions. Accordingly, with regard to the developing countries, they are unwilling to adopt the position of the EU with respect to its Regional Policy, that this must entail the necessarily substantial resource transfers from the rich to the poor.
• Globally, the vast bulk of capital is in the hands of the private sector. The strategic posture represented by the "Washington Consensus", to rely on this sector to achieve development, means that the governments of the developed countries will resist all efforts to transfer a portion of global private capital to the public sector, which would give this sector the possibility to make the "public interventions" mentioned by Fukuda-Parr.
• Whereas, today, the "Washington Consensus" has few overt supporters among the global decision makers, it has not been replaced by any serious programmes that seek to replicate the successful Marshall Plan and the related development models.
• Freed of any challenge equivalent to the perceived threat posed by "communism", the developed capitalist countries will devote only such resources to meet the needs of the poor billions in the world as would ensure that these billions do not act in a manner that threatens their survival as prosperous capitalist countries.
• Conscious of the absence of such a threat, these countries are ready to argue against substantial resource transfers to the poor, on the basis that their constituencies suffer from "donor fatigue". In any case, they have a responsibility to address the serious challenge of poverty within their own societies.
• These positions have become the dominant ideology of contemporary society, and are therefore sustained by a veritable army of prophets in academia, the media and decision makers in many countries, regions and the multilateral organisations.
• The infinitely elastic determinations of this dominant ideology of what constitutes the basis for successful social and economic development inevitably lead to the realisation of the self-fulfilling prophecies of these prophets - there will be failure until success is achieved, in circumstances in which the pursuit of success prescribes continuing failure!

South Africa is fully integrated within the global economy. It is therefore open to the pressures imposed on all medium-sized middle-income countries of the South by the objective process of globalisation and the attendant subjective ideology of market fundamentalism. At the same time, a large part of our population is caught in an underdeveloped sector, the Second Economy, which cannot escape the trap of poverty and underdevelopment through reliance on "the market".

The question that arises is whether we have an autonomous domestic possibility to achieve what Sakiko Fukuda-Parr spoke about with regard to "public interventions (that are) are necessary to set the preconditions for market-led economic growth".

** This is part six in a special series of articles about global approaches to poverty eradication and economic development. Next week: 'Transform the Second Economy'.

More Information:

• Part One: Beware of the Natives!
• Part Two: Rescued by the Marshall Plan
• Part Three: The Truth & the Asian Miracle
• Part Four: Bridging the EU development gap
• Part Five: The ACP and the philosophy of development

More Information

• Socialist International Council resolutions

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