FROM THE LOCAL MEDIA

Suddenly debt relief is all the rage. Everybody is trying to get in on the act, saying that not enough is being done to provide financial help to the poorest nations. From United States President Bill Clinton to International Monetary Fund (IMF) director Michel Camdessus: you name them, they've got a plan.

Make no mistake, this is a famous victory. It is a triumph for morality, a triumph for conscience and a triumph for good. It is a deeply significant moment for grassroots activism and democracy, and the Jubilee 2000 coalition, which includes vocal advocates of debt relief such as Anglican Archbishop Njongonkulu Ndungane (also our patron - ed), has every reason to feel proud of itself for what it has achieved. But this is just the start of the battle. The principle that the heavily indebted poor countries, the bulk of them on our own continent, need to be revamped has been accepted but that is all. What happens next is pivotal.

There is plenty that the West could do to make long-term development a reality. Critical to this is a need for a reform of the World Trade Organisation, the global capital markets and transnational corporations. But most of all there is the need for a reform of the IMF's structural adjustment programmes. The IMF's top-down approach has clearly been an abject failure. For too long the debate has been about what the West is prepared to accept rather than what the poor countries need or can afford to pay.

This is not to say we agree with those who insist that debt relief should be granted without strings attached. We are aware of the problems: the notorious levels of corruption in many African countries; the priority of rulers to spend to consolidate their power bases and arm their militias rather than extend benefits to all their people; and the disintegration of the state which makes spending on long-term development almost non-existent.

But nor should unworkable economic and political scenarios assembled in Washington be foisted on Africa. Within this context, the priority must be to ensure that debt relief is well spent and goes to those who need it most. Support will dwindle fast if money for debt relief is siphoned off to Swiss bank accounts or ends up lining the pockets of arms dealers.

Who Looks After Your Bank? by Michael Metelits, Mail & Guardian,12-18 March 1999

The bad news is that your bank could hit a spot of trouble, run low on cash, find itself with too many people in line to draw funds, and collapse, leaving you with high blood pressure and a chequebook best used for gift-wrapping or reminder notes.

Worse news would be that your bank brought down other banks with it, and that the system was crashing and burning.

Luckily, the South African Reserve Bank has measures in place to make sure banks dont go bust often, and when they do, they dont take the whole system with them.

What about the Russian menace; the Asian flu; the Brazilian flatulence? Could these international crises take your bank down? In short, yes. International currency and loan crises can affect South African banks in two ways. If the banks have substantial loans abroad which become "non-performing", they can lose lots of money. This is what economists call international exposure.

Globalisation by Madeleine Wackernagel at the World Economic Forum in Davos: Business Report, Feb 3 '99

If anyone was still in any doubt bout the inexorability of globalisation, the annual meeting of the World Economic Forum this year soon dispelled such scepticism. The theme of this years conference was globalisation and its implications, and speaker after speaker referred to its inevitable spread.

Countries have to take responsibility for their actions in the face of the new global revolution; nothing less that sound macroeconomics policies and a commitment to open markets will do.

The trouble at Davos, though, is that there is no consensus on how such controls should be implemented - not even that they are necessary.

Does Capitalism have to be so Painful?
Mail & Guardian, Dec 11-17 1998

Master financial speculator George Soros, in his new book, argues that there is an impending crisis of global capitalism. As a successful financial speculator (although he is reported to have lost $2 billion in last year's global financial turmoil - ed) he knows that financial markets are intrinsically unstable because of their core trait: to follow and exacerbate any strong trend upward or downward. They have little natural proclivity to find a point of balance, and thus it is hardly surprising that the international financial system, organised as a market system par excellence, is endemically unstable. 

Unemployed can Bank on Stiglitz.
Mail & Guardian Jan 15 - 21 1999

&Steep cuts in social services like pensions , health care and education - necessary to reduce budget deficits, have followed the implementation of structural adjustment programmes and earned world bankers the reputation of cold hearted architects of world poverty. &But this week an entirely new World Banker visited South Africa: Joseph Stiglitz, chief economist and vice president of the World Bank. He is engaging and non-dogmatic, as comfortable at the Reserve Bank - which he visited - as he was at the meeting of world spiritual leaders he came to address in South Africa.

Stiglitz has unseated many holy cows since the end of 1996 when he was appointed to his new job. He fired one of the first intellectual missiles in the attack against standard macro-economic thinking when he argued "that budget deficits can be okay, that macro-economic stability is the wrong target and that moderate inflation is not harmful" according to a summary of his arguments by author Joe Hanlon.

An Intellectual Cold War is Raging: by Prof Lawrence Schlemmer, Rapport, 24 January 1999 (translated)

After the collapse of communist economic systems the intellectual climate right across the world to a large extent came to rest. The decade of the nineties, for the first time in decades, offered the opportunity to present an honest and independent contribution to world development.

A new consensus on economic processes and policy began to emerge, and with this reconciliation the poorer countries of the world, and poorer groups in the richer countries, possibly for the first time saw their chance to experience the fruits of development thinking.

In 1993 the former chief economist of the World Bank, summarised the new consensus as follows: Governments must withdraw from activities where they cannot perform, and should concentrate on the maintenance of macro-economic stability, investment in health, human resources, infrastructure, the support of appropriate technology and the protection of property and legal structures.

A government's duty is to liberate markets and to offer incentives which will stimulate investments and entrepreneurship. Now, however, this consensus is in tatters. The ruling economic wisdom is being challenged on a scale which is reminiscent of the beginning of this century and the rise of Marxism.

At a recent international conference on "Globalisation, employment and quality of life" in Sydney, Australia delegates from all parts of the world were in fervent agreement that : the "Washington consensus " and the financial forces in world markets had to be fought tooth and nail. My attempts to justify our own courageous Gear policy was rejected out of hand. With all due respect, they said, Mr Trevor Manuel has been totally delivered into the hands of Washington.

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