Governments have accepted too many demands from the financial community Jessica Nadeau

Are our financial markets putting democracy at risk? Ann Pettifor, director of Jubilee Research, provides this proof: "They're threatening to pull out their investments if Brazil votes in a left-wing government at their next election." Are international organizations serving citizens or financial institutions? When 40,000 multinationals govern the planet.

Every day, US$1,800 billion is traded on the world exchange market, an amount equal to 17 times Canada's annual budget. The growth of the economy since the collapse of the Bretton Woods agreements in 1973 naturally favoured the countries of the North to the detriment of developing countries. Similarly, transnational companies are mostly from the industrialized countries and they exploit the natural and human resources in the countries of the South at low cost.

The role of the Nation-state

Neo-liberalism is more than a free trade economic policy: it is a school of thought.... "Today, the markets decide whether we will have health or transportation services. It is time for governments to take back the power in order to give civil society the fundamental rights that have been taken away from it," says Pettifor. She is not alone in her cry for justice.

Kristin Dawkins, at the Institute for Agriculture and Trade Policy (IATP), also believes that the government must reclaim its role as regulator. "When a corporation can sue a government because its environmental or public health laws are affecting its profits, as stated in Article 11 of NAFTA, it's clear that we need to take action." According to her, the government still has the power, but it simply does not know how to use it. "The government has set up these structures; it has allowed financial institutions and multinationals to set the rules of the game. It could easily regain control, but most politicians expect to be eventually employed in private business so they use their power to facilitate increased profits in this sector."

Sovereign bankruptcy

Pettifor's main concern is establishing an international bankruptcy structure. When a business goes bankrupt, it is protected from its creditors by the law. It must then open its books and become accountable. Civil society, shareholders, suppliers and employees can learn what went wrong so that they can prevent similar situations at other companies. When a country such as Argentina suffers a serious economic crisis, it has no recourse. A sovereign bankruptcy framework would also allow precautions and constraints to be applied to politicians, so that such a crisis would not be reproduced.

Africa, which must pay back approximately US$15 billion each year, could also ask for an exemption. "The African countries could at last attack the AIDS problem since the Court would recognize that their debt can only be repaid to the detriment of human rights."

This idea is championed by the Bank of Canada and the Bank of England, which showed their colours at the G7 Finance Ministers Summit last year in Toronto. "It's an idea that seems to be close to being accepted by the international community since even the IMF is actively promoting it," Pettifor announced. The IMF would like to control the establishment of an international bankruptcy framework, but Jubilee Research in London does not approve of this solution since the IMF is itself a creditor.

Nadeau, J. (2002, September 28). Governments have accepted too many demands from the financial community.Le Devoir, p. 14. (Les tats ont trop accd aux demandes des milieux financiers)

The article states: "When a corporation can sue a government because its environmental or public-health laws are affecting its profits, as stated in Article11 of NAFTA, it's clear that we need to take action."

A)

1. The excerpt refers to NAFTA. Explain what NAFTA is.
2. What connection can you make between this article and the Ethyl Corporation case?

B) The article mentions the countries of the North. It is understood that this term includes several countries, especially the United States, the European Union and Japan.

Describe the economic situation of each of these entities during the 1990s.

C) The article makes reference to developing countries.

1. Define what is meant in economics by "developing".
2. W.W. Rostow was influential in establishing the economic theory of development. Briefly explain his theory.

D) In the article, the sometimes negative effects of a free trade policy for a developing country are mentioned.

1. Give two economic reasons to justify limiting free trade or being protectionist.
2. Describe three kinds of protectionist measures a country could apply.
3. In terms of international trade, do economic theories tend to encourage protectionist ideas or, to the contrary, free trade? Support your viewpoint with two appropriate examples.
4. Which does the WTO defend, free trade or protectionism? why?

E) For one of the following countries: Thailand, Indonesia, Ivory Coast or Congo-Kinshasa

1. Explain how this developing country approaches the different possible development strategies.
2. For the country you chose, evaluate the results of implementing development strategies.