Manipal, India — It must be wonderful to believe that the rest of the world shares one's own self-perceptions of omniscience. Weeks after Western financial institutions and instruments cleaned out thousands of clients in the Middle East, China and Russia, French President Nicholas Sarkozy and British Prime Minister Gordon Brown, at last weekend’s Asia-Europe Meeting in Beijing, offered Asia a simple prescription: Trust us and follow our lead unquestioningly, so that the non-Western part of the world can earn the tag of being "responsible (to the West) stakeholders."
It is unlikely that Asian governments will
follow this advice and pour billions of dollars of their capital into two
institutions controlled by North America and Europe – the World Bank and the
International Monetary Fund. After the recent banking meltdown in the United
States and the European Union, it is not only small children in the rest of the
world who can see that the emperor has no clothes.
What has astonished many in Asia is the way
in which Western governments are acting as accomplices to what looks like the
perfect crime: the stealing of trillions of dollars in value from pockets
across the world. This was done not simply by getting the unwary to invest in
assets known to be dubious, but by gerrymandering increases in the prices of
commodities, notably petroleum, which has gouged economies such as China and
India.
This columnist would like to repeat his
advice to the oil economies to install gold statues of U.S. Vice President Dick
Cheney in prominent locations, for it is the policy pushed by that
distinguished international statesman that caused oil prices to rise far above
what market fundamentals dictated.
In 2002, the George W. Bush regime inspired a coup attempt against President Hugo Chavez in Venezuela, thus affecting the country's oil industry. In 2003 came the invasion of Iraq, whose oil economy has not recovered even to the pathetic level caused by sanctions in the 1990s. Next, it was the turn of Iran to be taunted, and finally Russia.
Had the economic crisis not supervened,
this year might have seen an attack on Iran and next year the introduction of
oil-restricting sanctions against Russia. These actions would have pushed oil prices
to new levels, and put paid to the ambitions of India and China to catch up
with Europe.
Even a pickpocket gets a jail term, but not
apparently those friends of U.S. Treasury Secretary Hank Paulson who presided
over the biggest bust in financial history. Neither the United States nor the
European Union appears ready to hold accountable those responsible for this
disaster.
Indeed, the subject has been totally
avoided in the eagerness to find "solutions," which in the main are
funneling vast sums of taxpayer dollars to the care of the very individuals who
were part of the core team of the guilty. Bush, Cheney, Sarkozy, Brown and
German Chancellor Angela Merkel apparently believe that the reduction in annual
bonuses from an average of US$60 million to a mere $20 million is punishment
enough.
The rest of the world disagrees, and until
the perpetrators of the meltdown are identified and punished, few governments
or investors in Asia would be willing to risk their funds being parked in New
York, London or Frankfurt. The chances are that intra-Asian investment will
rise as a result of the crisis, rather than a perpetuation of the dominance of
Western financial institutions.
Although the international economy has
changed in the 64 years since the World Bank and the IMF were set up, these
institutions have not. Both are run by and for the United States and the
European Union, although they have a sprinkling of other nations, almost all of
whom subscribe to the doctrine of the International Bank for Reconstruction and
Development and the IMF: "West knows best."
Changing the basic structure of these
behemoths to better fit current reality would be far more difficult than the
countries of Asia – and perhaps Africa and South America – setting up
institutions of their own, with countries such as Russia entering the mix. A
multiplicity of institutions, and competition between them, is preferable to
the monochrome texture of the international institutions set up in 1944 and
1945.
In the largest of these, the United Nations,
unsurprisingly there are two European countries (besides Russia) in the list of
just five veto-wielding Security Council members, with China and the United
States being the other two. A structure in which India and Brazil have no
place, while Britain and France do, cannot be deemed representative of anything
other than nostalgia.
The financial collapse of the past weeks
has exposed the greed and absence of ethical restraints of institutions in the
West, and it is ironic that Bush, the individual summoning the world's leaders
to a conference on solutions next month, is the very person under whose watch
the calamity occurred.
If Nicholas Sarkozy and Gordon Brown are
serious about wanting the rest of the world to trust them once again with their
savings, they will need to inflict severe punishment on the many within their
own councils and relationship networks who have so selfishly brought the
international economy to the edge of disaster, rather than allowing them to
escape to their tax and other havens.
-(Professor M.D. Nalapat is
vice-chair of the Manipal Advanced Research Group, UNESCO Peace Chair, and
professor of geopolitics at Manipal University. ©Copyright M.D. Nalapat.)
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