The search for a New International Economic Order (NIEO) since
1974 has meant that the responsibility for achieving a basic economic
security and freedom, economic domination of any given country is A
that of the people of that country alone. It must be shared by the
international community at large. In one sense, Pakistan’s vision of the
NIECO has been a relatively simple affair. Basically, what we have been
trying to achieve since Bretton Woods, through the UN, UNCTAD,
GATT and the alike, is to translate into international economic relations
the kind of objectives and policies, which have become the accepted norms
for relations between groups within nation-states in all modern societies, I
is high time the questions were raised how for are we likely to proceed in
the new direction in the near future; the record in relation to the various
provisions of NICO provides a dismal picture so far.
The relation between the rich and poor countries fall roughly into
four categories; trade, flow of finance, technology and migration. South-
south cooperation is among the envisaged pillars of the new order.
As for as trade is concerned, the search for economic security has
floundered mainly on the instability of raw material prices. The 11th
special session of the UN General Assembly in 1980, had as its main
theme in question of assuring reasonable prices for primary producers.
Commodity agreements are few and not fool proof. Their is neither any
stabilization fund nor even a yard stick to determine reasonable prices that
could be stabilized.
The term of trade and share of trade are both against the poor
countries. The World Bank has documented that, in Sri Lanka, the loss
due to the terms of trade was so much that it reduced the per capita
income growth by a half. It would have been 2.5 percent but it was
reduced to 1.1 percent per year. And Africa now loses as much due to the
decline in terms of trade as it gets by way of foreign assistance.
There are fundamental reasons for this phenomenon. Protectionis
is rising and unilateral free trade and import liberalization is being forced on the poor countries by the International Monetary Fund (IMF).
When the IMF’s and World Bank’s own executive of Pakistan origin
were placed incharge of the country’s ministries of Finance, Economic
Affairs and Planning, the country’s smooth sailing with IMF was taken for
granted. Such lack of trust between the Fund and Pakistan as had existed
for many months was also expected to become a thing of the past.
That nothing of the kind has happened will be clear from the
announcement that the second tranche of $76 million would be released
after the IMF receives the financial data for the month of December 96,
and finds the data satisfactory after evaluation. This shows that Pakistan is
still a long way from regaining the IMF’s trust.
It was in fact emphasised that the IMF does not give help to
encourage or subsidise bad monitory policy, the cause that created the
problems in the case of Pakistan. Excessive public sector borrowing and
inability to collect revenues had been the main problems.
Pakistan is now perceived as a habitual offender by the IMF. The
general impression was that no matter who was incharge, the some habits,
continued. Even in the time of Moeen Qureshi in 1993, the performance
criteria were not met. Whenever a loan is sanctioned, a disbursement
schedule is prepared.
The demand for restructuring Pakistan’s heavy external debt is
getting stronger as the debt burden and the cast of servicing that debt keep
on rising sharply. Economists, official and non-official are calling for a
moratorium on repayments for three to five years and re-scheduling the
debt servicing in a manner that does not hurt Pakistan’s economic growth.
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Such demands are not new in Pakistan, but the intensity and the
steady rise in the number of person calling or the moratorium are, after
the total debt has risen to 28-60 billion dollars
an increase of $ 1.53
billion within a year – even after the heavy debt servicing payment of $ 2-
10 billion made last year. These sort of demands were rejected by
governments in the past as counter-productive or the cumulative losses to
the country would be greater than the total gains.
In the recent years, while the long-term debts have been rising
slowly, the medium and short terms loans have grown fast. In fact short
terms debts are on the increase as the government negotiates more and
more loans from foreign banks and others by pledging the cotton and rice crops and even the earnings from foreign telephone calls. In addition, it is
coming up with new bonds to raise more funds like the Yen bond.
No doubt the ratio of poorer countries share in the world industrial
production in fact has risen from seven to 10 percent. But their share of
the low income countries and all developing countries has fallen from 27
to 21 percent.
in the
Similarly, inequalities has been increasing in an absence way
last 30 years. With 45 to 47 percent of the world population, the share in
the world income of the low income countries has gone down from eight
to five percent. The difference between the US income and the poor
countries income has risen from 40.1 to 48.1.
In the filed of aid, the failure to achieve even the one percent of
gross national product (GNP) of the developed countries is a grim
reminder of how for we really are from the actual realization of a new
order.
In fact the aid which was 33 percent of the GNP of the developed
countries in 1970 has come down to 06 percent in 1980. There is no
significant trend towards multilateralization of aid. The United States has
blocked the seventh replenishment of IDA, amounting to 9000 million
dollars. The amount proposed by the World Bank was 16000 million
dollars.
In case of economic security the facility to create reserves has
proved to be of marginal use, at least to developing countries. The bias
against flexible exchange rates as well as periodic surveillance of unbrnal
policies of debtor nations, proved important sources of instability to
developing countries. Despite efforts to reform the international monetary
system, there is little evidence that developing countries as a whole will
have read access to international created reserves. The change in any is
that flexible exchange rates have come to stay.
There are many countries to day in Latin America and sub-Sahara
Africa whose debt service is twice their export earnings. The functioning
of the IMF is exposed by the fact that if forced the governments of Tunisia
and Bolivia to raise food prices by 100 to 200 percent leading to riots. All
6000 people had to be shot dead in these countries to comply with the
condition of IMF. At the same time, the rise in the value of dollar has
added three to four billion on their debt burden. While technology is believed to be transferred by the multinational
corporations, the fact is that we pay heavily for the non-transfer of
technology. In fact, one eighth of the export earnings goes to the
multinational as direct or indirect cost of allowing them to operate within
certain territories.
The ratio between the private outflow and the capital inflow that is
what the MNCS take out of a country and what they put in has been 154:
100. In Latin American out flow was and 319 percent of the inflow. In the
sixties it was 300 percent.
The multinational’s export from the poor countries total up to the
extent of 40 percent. What is transferred is bottling, processing and
packaging. Hard technology is almost absent. Real prototypes, real
formulae are seldom transferred except under very strong bargaining
pressure.
Restrictions on migration have been increased during the last
decades, all over Europe and the United States. This is despite the fact that
the density of population is two persons per square Km in Australia and
621 person per square Km in Bangladesh. When Europe was in trouble in
the 19th century, 60 million people moved out to empty continents.
Cooperation among the developing countries and collective action on
their part, have remained a far cry. The producers cartels, except the
OPEC, have not materialized so far. Attempts have been made at
producer’s alliances on the pattern of the OPEC for trade in iron, bauxite
and coffee. Unfortunately, these cartels could not succeed in the
stabilization of their respective prices.
The International Bank for Agricultural Development, which was
supposed to be financed by OPEC countries has not materialized. The
proposed South Bank is also a non-starter.
There is no qualitative difference in the world economic scene of
today from that of fifties. South-South Conference in 1982, have all
proved largely frustrating exercises. More intensive initiatives towards the
goal are called for.