The UN and WORLD TRADE
Northern Colorado United Nations Association, Fort Collins, Colorado, 15 January 2005
Front Range Forum, Fort Collins, Colorado, 23 March 2005
 
James Roth
Department of Sociology
Regis University

 

Introduction: The Problem

      In the aftermath of 9/11/01, especially during the lead-up to the U.S. war in Iraq, newspaper editorialists, TV pundits, and many politicians opened a barrage of attacks against the United Nations.  With the Bush administration at the forefront, the UN was accused of being incompetent, too cautious, too bureaucratic, and possibly corrupt.  Among the worst criticisms was George W. Bush’s charge that if the UN did not form a coalition to force “regime change” in Iraq, it would “become irrelevant,” implying a short trip to the dustbin of history.  The assault on the UN has only become more belligerent in the two years since the U.S. invasion of Iraq, culminating in the scurrilous charges of corruption in the handling of the Iraq sanctions, particularly the Oil for Food program.  (The charges are scurrilous—meaning “grossly abusive and derisive, insulting, and offensive”—because it was the U.S. and the UK, with help from France and Russia, that approved the deviations from the sanctions that are now under attack by right-wing members of the U.S. Congress.)

      The antipathy of the right wing in the U.S. is so great that the Bush administration tried to marginalize the UN in the response to the Indian Ocean tsunami disaster on the very thing the UN does best: disaster relief.  Now the city of New York is throwing a roadblock in the way of the UN’s plans to construct a 30-story office building to be used while the current building is being detoxified and thereafter to be used to house agencies that are currently scattered through­out the city.  A New York Times editorial calls the city’s obstructionism “tantamount to an eviction notice” (6 January 2005).

      The Bush administration’s antipathy to the UN could hardly have been better expressed than by the nomination of John Bolton to be U.S. ambassador to the UN.  Bolton has made many dis­paraging remarks about the UN during his career as a civil servant in various Republican admini­strations.  This nomination came immediately on the heels of Bush’s attempt to mend fences with “old Europe” during a tour of those nations.  Bush’s trip was reported positively in much of the U.S. press, but a review of the European news media gives a rather different picture of Bush’s prowess as a mender of fences.  Bolton’s nomination is an indication that Bush (or more likely, decision-makers in his administration) realized the political leaders in Europe did not like what Bush had to say about the UN or cooperation between the U.S. and its allies in Europe.

      Perhaps there are elements of validity in some of the criticisms of the UN.  However, almost all of the rational observers who know how to evaluate information and logic recognize that the criticisms are distorted, overblown, and driven by ideological malice.  That is particularly revealed in the attempt to make Kofi Annan responsible for the putative corruption of the Oil for Food program, which, as I have previously noted, were the result of decisions primarily by the U.S. and the UK.  The attempt to make Kofi Annan the scapegoat is unscrupulous and vicious.  It is, whatever the faults of Annan, an attack on the UN as a whole, an attempt to make the UN seem ineffective and/or corrupt.

      Unfortunately, we do have to take these criticisms seriously, at least on a political level.  The most serious challenge is the one leveled by the Bush administration: that the UN is – or is becoming – irrelevant.  The reason it is the most serious is that the U.S. can make it come true unless the rest of the world vigorously resists – the self-fulfilling prophecy.  It is also a serious criticism because there is an element of truth in it, particularly with respect to peacemaking.

      I will argue that for the UN to recover its role as the world’s primary peacemaker it must become centrally involved in the negotiation and regulation of international trade.  Nothing matters as much to nations today – be they rich or poor – as their domestic economic development and their relations with other nations.  The major medium for international relations today is trade – not ideology, religion, ethnicity, language, or even geography.  The success of a nation’s international relations and domestic development depends almost entirely on how it organizes its foreign trade and regulates foreign investment in its domestic economy.

      In order for the UN to play a role in peacemaking it must be first and foremost a development agency.  Development programs sponsored by the UN cannot succeed unless the UN has the economic clout to regulate international trade.  To that end, it is essential that current multilateral development and trade institutions become housed in the UN itself.

      There is currently a major discussion of how to reform and reorganize the UN.  On Monday (21 March 2005), Kofi Annan put forward a number of recommendations about restructuring the Security Council and the Commission on Human Rights, among other reforms.  In his remarks, Annan noted, “We will not enjoy development without security, we will not enjoy security without development, and we will not enjoy either without respect for human rights (Lederer, 2005).”

      He was exactly right.  Does he understand what that would require?  I’m not sure.

      It is perhaps discouraging that “security” has become the substitute for “peace.”

The History of Multilateral Development Institutions

As World War II came to a close, the European Allies met at Bretton Woods, a tiny resort town in New Hampshire, to map out the post-war economy.  Two major institutions emerged from that conference: the Inter­national Bank for Reconstruction and Development (World Bank) and the International Monetary Fund (IMF).  The World Bank was supposed to provide loans and some grants for development projects, mostly to boost Europe’s almost completely demolished infrastructure.  The IMF was supposed to regulate currencies, mostly by providing loans to countries to build up their foreign currency reserves.

 

With the help of the Marshall Plan, the World Bank and IMF accomplished their mission in Europe by the mid-1960s.   What to do?  Like any established bureaucracy, the Bank and IMF looked around for other tasks.  By that time, of course, there was something else to do.  The anti-colonial movements had succeeded in establishing politically independent nation states through­out Africa and Asia.  Furthermore, the burgeoning economies of Europe and the U.S. needed investment opportunities beyond their national borders.  And finally, technological advances made development an expensive capital-intensive proposition, especially when the price of oil escalated dramatically in the early 1970s.  Opportunities for development and the need for currency regulation were never greater.

 

Third world countries, whether long the victims of neocolonial exploitation or newly born, clamored for development loans and advice from the U.S. and the reconstructed economies of Europe.  They didn’t mind playing off the “West” against the “East,” either, but the West held most of the development cards.  It was an optimistic era fed by nationalist zeal and relatively free-flowing development money.

 

In the 1970s a lending spree by private European and U.S. banks loaded poor countries with unserviceable debts.  The lending spree was the consequence of bloated accounts from oil-rich countries, mostly in the Middle East.  When the danger of national bankruptcy became apparent, particularly among the biggest borrowers in Latin America, the World Bank and IMF were called upon as lenders of last resort.  They made loans to poor countries so that private banks could continue to get their loans serviced and to fill the void when the private banks found further loans too risky.

 

But it didn’t stop there.  The North needed to secure its control over more than international finances.  It needed to maintain its dominance in the world economy.  Increasingly, it needed to expand investment opportunities and markets.  It needed to secure cheaper labor and access to raw materials for its major corporations.  The World Bank and IMF became levers by which investment opportunities, markets, cheap labor, and raw materials could be pried loose.  The specific mechanism was “structural adjustment,” a set of conditions attached to their loans.

 

That would not be enough.  There would also have to be ground rules for trade itself.  To this end, the countries of the North set up the General Agreement on Tariffs and Trade (GATT) and invited aspiring poor countries to join.  GATT eventually spawned the World Trade Organization.  In 1995 the WTO replaced GATT and has now grown to more than 140 member countries.

 

In addition, countries were encouraged to set up regional trade agreements – NAFTA, MERCOSUR, etc.  The premise behind all of these trade agreements was “free trade,” i.e., the elimination of all kinds of trade barriers, such as tariffs, quotas, product standards, etc.

 

The UN and Development

Where was the UN in all of this?

 

The UN began operations in 1946.  It was intended as a barrier against another world war.  It was, as Jonathan Schell (2003) notes, conceived in one era and born in another.  By the time it was up and running, the problem it was supposed to prevent was being driven and controlled by events and conditions over which it had little power.

 

After the UN had been drawn up but before it began to operate, the Cold War split the Allies.  The world was again divided into camps, this time more ideologically irreconcilable than the gap between the Allies and the Axis.  Soon thereafter, the world descended into the nuclear arms race.  Mutually assured destruction, or MAD, rather than reason and negotiation, became the logic for the prevention of world war.  But MAD did not prevent war.  It merely shifted the locus of war from the major capitalist nations to the periphery of poor countries, which became the pawns of the superpowers. 

 

The UN was powerless to prevent this slaughter, often becoming an instrument of the economically and militarily most powerful nations.  With respect to war, the role of the UN became known by the euphemism “peace-keeping,” meaning the deployment of armed forces to try to separate hostile armies and paramilitaries.  Meanwhile, the Cold War superpowers developed military coalitions for the “defense” of their territories and those of their (sometimes unwilling) coalition partners.  The overarching purpose of the UN – the prevention of another world war – had been made superfluous by the creation of major power camps, each on a permanent war footing.

 

So the UN turned to other important tasks.  As the ranks of UN members grew, especially when more than 40 new countries were created in Africa in the 1960s by the end of outright colonialism, it became the social worker to the world.  It created agencies to provide services in education, human rights, health and medicine, nutrition, environmental protection, aid to refugees, disaster relief, and a host of other helping professions.  But as a keeper of the peace, it was relegated to the sidelines.  There was no peace to keep.  The world was constantly and nearly everywhere at war.

 

In the 1950s and '60s, as countries from the global South swelled its ranks, the UN did try to take on the task of stimulating and guiding economic development.  The UN recruited some of the world’s best academic minds to advise struggling new nations in the path of progress.  But these efforts were fitful and insignificant, marked by the indifference and occasional interference of the economically dominant member nations (Mendez, n.d.).  By the time the UN Development Programme (UNDP) was established in 1966, the U.S., Europe, and Japan had assumed full control of development policy in the global South.  They did so by a direct infusion of capital at a level greatly superior to anything the UN could provide, and they instituted development policies that contradicted the model proposed by the UN.

 

It is important to emphasize that the major institutions for economic development were never part of the UN.  The World Bank and IMF had been established prior to the UN, and there was never a thought of folding them into the UN tent. The Marshall Plan was a “gift” by the U.S. to Europe, completely separate from UN aegis.  GATT and its successor, the WTO, were set up by the major capitalist powers without even consulting the UN. 

 

This did not happen by accident or disingenuous oversight.  It occurred because the great powers regarded the UN as a welfare agency, responsible for cleaning up after the tragedies of great-power (mis)adventures or merely providing legitimacy for their interventions – having already nullified the purpose for the UN’s creation by entering upon a Cold War and nuclear arms race.  It also occurred because the dominant economic powers had no intention of allowing a relatively democratic global institution to participate in shaping the global economy.  They were thoroughly committed to seeing to it that they would dominate such an economy and would be the primary beneficiaries (Bello, 1994; George, 1990).

 

Reforming the UN

 

The importance of the UN cannot now be underestimated.  It has stepped into the breach in the aftermath of the Indian Ocean tsunami despite attempts to shunt it aside and the volatile politics of the countries most affected.

 

But this action has a downside as well.  It only confirms the UN’s position as social worker.  And the calls for reform at the UN do not include any measure that would genuinely address the most important factor in retrieving the UN’s role as peacemaker: giving it a central role in structuring and regulating international trade.

 

There are two reasons I believe this role is essential to making peace.  First, as I have already mentioned, nations care about their economic wellbeing more than anything else.  Economic hardship is the source of almost all domestic conflict and not a little international strife.  The conflict may be magnified by ethnic or religious differences when the hardships fall (or are perceived to fall) along those social divisions, but it is ultimately driven by a sense of exploitation, inequality, or some other economic injustice.  As the old saying goes, “If you want peace, work for justice.”  Nothing would do as much for world peace as economic development undertaken in a manner perceived as fair.

 

Second, as long as economic development and trade are perceived by the global South to be directed and controlled by the wealthy nations, the resentment in the South will grow.  Moreover, it isn’t just the perception that will generate this resentment; the practice of trade dominated by the wealthy will exacerbate inequalities, both international and domestic.  Even before the elevation of neoliberalism to dogma, the development strategies forced upon the South by the wealthy nations created massive starvation and spawned numerous civil wars.  It also led to the environmental degradation and resource depletion of vast regions, making it doubly difficult for poor countries to climb out of their poverty.  Only a few countries – e.g., the Asian Tigers, South Korea, Taiwan, Singapore – experienced real economic growth, and they did so by doing the opposite of what experts provided by the rich countries told them to do.

 

Incorporating the WTO, World Bank, and IMF into the UN would address major parts of these two chronic problems.  These development and trade institutions would necessarily become more transparent (i.e., less secretive) than they are now and their organizational structure would be revamped to allow more third-world input, ideological and practical, into their policies.  Furthermore, the sense of “ownership” would switch from the global North to a more encompassing swath of the globe.  Most importantly, it would put the UN itself in the driver’s seat, giving it the clout to play a larger role in peacemaking.

 

UN leaders have implicitly understood the necessity of taking a more prominent role in global economics.  They have not dared to state it explicitly, but they have tried to intervene from the sidelines.

 

For example, Kofi Annan tried to make the UN a major player in the global economic scene by inviting major corporations, which many regard as the true progenitors of globalization, to cooperate with the UN on projects of humane development.  In the summer of 2000, he initiated the Global Compact by which transnational corporations could establish “partnerships” with the UN if they voluntarily agreed to a variety of labor, environmental, and human rights principles.  In exchange for signing on to the principles and a small fee, they would be able to put the UN logo on their letterhead and products, essentially absorbing UN prestige for themselves.  It didn’t work in the way Annan and other UN officials had hoped.  The problem was that the partnership had no accountability measures.  The corporations could simply say they agreed with the principles and then practice their business in the same old way.  Kenny Bruno and Joshua Karliner (2002), borrowing from Friends of the Earth, refer to the effect of the Compact as “bluewashing” – “The flagrant misuse of the social and human rights legitimacy of the United Nations by corporations who do not in fact adhere to the core principles of the various UN declarations” (78).

 

The Global Compact was ill conceived for another reason.  The UN’s membership is of countries, not corporations or other nongovernmental organizations.  Even if it monitored corporate behavior – which it in fact does through various agencies – it has even less enforce­ment capability over corporations than it does over its members.  But the main point here is that governments, despite popular rhetoric, are still much more central to the process of globalization than corporations are.  As Domhoff (2002), Kuttner (1997), Stiglitz (2003) and many other analysts have pointed out, corporations could do nothing internationally but for the agreements between nations and the legal and coercive power of the state.

 

In other words, nothing short of taking a leading role in regulating commerce between nations will give the UN sufficient clout in the process of globalization.  And nothing short of infusing issues of fundamental justice into the globalization process will enable the UN to retrieve its role as global peacemaker.

 

The Rub

 

Okay, you say, that sounds good.  But how could this be done?  After all, the economic power­houses of the North assiduously avoided allowing the UN to play any role in formulating world trade policies and regulating trade practices.  They would be unlikely to say, “That sounds great! Let’s do it.”  They benefit from the current arrangement.  It is a pretty lucrative scam they are running, robbing the poor to enrich the rich.  Their interest is in domination, not peace and certainly not justice.

 

Furthermore, the political and economic elite in the global South also benefits – albeit to a much lesser degree – from current arrangements.  Many of the elite, trained in the universities of the North or taught by northern experts in their own nations’ universities, have been indoctrinated into neoliberal dogma, so they believe it.  Although it is on the rise, democracy is not widespread in the global South (or anywhere else to a significant degree), so there is little chance that popular sentiment or the common good would cause the elites to adopt policies that might systematically reduce their grip on power.

 

Nevertheless, if the UN is to resume its original role as peacemaker, it must find a way to exercise a greater role in world trade and economic policy generally.  To do that, the global South would have to take the lead in pushing for the incorporation of the major multilateral trade and development institutions into the UN.

 

It is not inconceivable that the global South would do so.  The collapse of the WTO meetings in Cancún last year was the result of southern hemisphere countries, led by Brazil, saying no to proposals floated by the rich countries and demanding a more democratic procedure for negotiating between competing interests.  The UN could provide an arena for such negotiations.  Martin Khor (2000) presents a long list of third-world complaints against the WTO, World Bank, and IMF, most of which involve the lack of transparency in decision-making but also include ideological disputes and straightforward charges of injustice.  The elites of poor countries, even when the elites are not sympathetic to domestic democracy, usually look upon the UN with respect and affection.  They just might insist that the UN take on a more central role in international economic affairs.

 

We have also seen movements towards more progressive governments in various parts of the world, especially in Latin America, where Chile, Argentina, Venezuela, Brazil, and now Uruguay have joined Cuba in adopting development models at least somewhat at odds with World Bank and IMF structural adjustment programs.  A few years ago, a popular rebellion in Bolivia led to the resignation of a president much favored by the multilateral economic institutions. These countries have not attempted to use the UN in their resistance to the North’s development model, but they might.

 

But I would not want to raise hopes too high.  The fact is that the rich countries have a pretty good deal with things as they stand.  They know that there are the top dogs.  They won’t surrender their position unless they are forced to do so.  Meanwhile, many poor countries have domestic or regional conflicts that occupy their attention, making it difficult to focus on cooperation with other countries in a concerted push for mutually more beneficial dealings with the North.

 

One scenario for an adjustment in development policy focuses on the increasing economic competition among countries and regions in the North and among large swiftly developing countries, such as China and India.  The EU and Japan did not join the U.S.-led “coalition” that invaded Iraq two years ago.  The individual members of the EU that did participate (except for the UK) are slowly but steadily withdrawing their military and other personnel from Iraq.  It is likely that all such forces, even the Italians, will be out of Iraq by the end of this year.

 

There were undoubtedly many reasons why the North did not cooperate with the U.S. in this military project, including a belief that it would be ineffective and intolerably expensive, or that it was immoral to fight such a war.  In addition, the Bush administration’s heavy-handed and arrogant diplomacy undoubtedly alienated some potential allies.

 

But the deciding factor was most likely the recognition on the part of European and Asian leaders that the motivation for the U.S. attack was to gain control over Middle East oil.  The U.S. claimed that removing Saddam Hussein (regime change) was the danger he posed to his neighbors and to countries far away through the development of weapons of mass destruction (WMD) and his association with terrorism.  Hardly anyone outside of the United States took that rationale seriously.  They recognized that if the U.S. led a military invasion of Iraq, it would remain there and would gain control over the second largest oil reserve in the world (Klare, 2004).  All the other coalition members would be doing is carving out a small claim to the portion of that reserve the U.S. would be willing apportion to them.  Most of them chose to stay away.

 

I raise this case to suggest that the competition for oil supplies is a point of enormous friction among the major economies.  The supply of oil is likely to decline relative to demand in less than a decade.  Indeed, old oil fields in the Middle East are likely to decrease production after 2020, by which time some oil reserves in other parts of the world will have been depleted (Klare, 2004).  Whichever country controls the flow of oil, from the Middle East or anywhere else, will have enormous power over the economic health and development of nearly every other country.

 

Because of this, some analysts predict that the rift between the U.S. and the EU, which is dependent on oil imports, will grow in the years to come.  Since the EU sees the danger of U.S. control over oil, it will be less willing to cooperate with the U.S. not merely militarily but economically.  EU discomfort over the nomination of Paul Wolfowitz to be president of the World Bank is closely related to this point, not merely to Wolfowitz’s association with the war in Iraq.

 

Some claim that this split between the EU and the U.S. will give the global South its chance to raise its demands for a fairer development system.  With the fall of the Soviet Union, the South had to deal with a fairly united North.  If the North is split, the South can once again play one sector against others.  Even China has recently increased its foreign aid to countries and regions with proven oil reserves.

 

But I do not believe the split between Europe and the U.S. will give the South much of an opening.  For one thing, despite a number of books and articles on the growing economic power of the EU, the EU is not as politically united as appearances might suggest.  Furthermore, there are serious dislocations in its economy.  For example, the German economy, the biggest in the EU, is quite shaky, and the second biggest, France, has run up budget deficits and borrowing levels beyond those permitted under EU guidelines.  Therefore, my guess is that the EU is a long way from posing a serious challenge to U.S. economic and military designs.

 

And so, once again, I have to say that I would not like to offer too much encouragement that things will get more peaceful during the next quarter century, or that poverty will decrease significantly in most of the global South any time soon.

 


Conclusion

 

The best chance for the UN to become a crucial player in the economic affairs of the world, and thereby to resume its role as peacemaker, is to do so through institutions whose members are also nation-states.  That means bringing the major multilateral trade and financial institutions under its umbrella.

 

I didn’t say it would be easy.  I have only said that it is necessary.  Social workers don’t make peace.  They deal with problems where peace and justice have failed.  They offer help to those who have been hurt.  What they do is terribly important, but rarely do they devise social structures for the prevention of injustice.  That is, they don’t make social change, and fundamental social change is what is required.  It makes no sense to mis­understand the problem and, therefore, to undertake programs that cannot work.  The problem of peace in the 21st century is rooted in economic injustice.  The major injustice is the exploitation of the South by the North.  That is where the focus of peacemaking must be. 

 

Solutions that really work are never easily done.

 

My argument is twofold.  First, the UN’s recovery of its peacemaking function is essential to its continued existence.  Second, to recover its peacemaking function the UN must become the world’s major broker of economic trade and development—and it must do so in a manner that is perceived as fair by the overwhelming majority of nations.  The alternative is a rapid descent into more inequality, poverty, starvation, environmental degradation, and violence.  The UN is every­one’s best hope for a just and peaceful world future.  Unfortunately, the outlook is for more stormy weather.

 

(Revised 23 March 2005)
References

Bello, Walden. 1994. “Global Economic Counterrevolution: How Northern Economic Warfare Devastates the South.” In Kevin Danaher, ed., 50 Years Is Enough. Boston: South End Press.

 

Bruno, Kenny, and Joshua Karliner. 2002. Earthsummit.biz: The Corporate Takeover of Sustainable Development. Oakland: Food First Books.

 

Domhoff, William. 2002. Who Rules America? 4th Edition. Mountain View: Mayfield Publishing Company.

 

George, Susan. 1990. A Fate Worse than Debt. New York: Grove Weidenfeld.

 

Khor, Martin. 2000. “How the South Is Getting a Raw Deal at the WTO.” In Sarah Anderson, ed., Views from the South: The Effects of Globalization and the WTO on Third World Countries. Oakland: Food First Books.

 

Klare, Michael T.  2004.  Blood and Oil.  New York: Henry Holt and Company.

 

Kuttner, Robert. 1997. “The Limits of Markets.” The American Prospect. Issue 31, March-April.

 

Lederer, Edith M.  2005.  “U.N. chief seeks bold changes amid scandals.” The Denver Post (Associated Press). March 21, p. 2A.

 

Mendez, Ruben. n.d. “United Nations Development Programme.” United Nations Studies at Yale. Retrieved 20 December 2004: http://www.yale.edu/unsy/UNPDhist.htm.

 

Schell, Jonathan. 2003. The Unconquerable World. New York: Henry Holt and Company.

 

Stiglitz, Joseph. 2003. Globalization and Its Discontents. New York: W.W. Norton and Co.