Siena Declaration: Crisis of the Global Economy

THE SIENA DECLARATION
On the Crisis of Economic Globalization

Siena, Italy, September, 1998
_______________________________________________

In the midst of the rapidly growing global financial crisis that has
already reached unprecedented proportions, the following statement was
prepared by the Board of Directors of the International Forum on
Globalization (IFG), an alliance of leading scholars, activists,
economists, researchers, and writers representing over 40 organizations in
20 countries. The meeting was held in Siena, Italy, in September 1998.
The document is now being circulated for additional signatories, and will
soon be publicly released. Also in preparation is a longer background paper
which will provide a complete historical analysis of the current global
economic crisis, prepared by John Cavanagh, committee chair of the IFG's
Committee on Global Finance.

* * *

1. The undersigned have long predicted that corporate-led economic
globalization, as expressed and encouraged by the rules of global trade and
investment, would lead to an extreme volatility in global financial markets
and great vulnerability for all nations and people. These rules have been
created and are enforced by the World Trade Organization (WTO), the
International Monetary Fund (IMF), the General Agreement on Tariffs and
Trade (GATT), the North American Free Trade Agreement (NAFTA), the
Maastricht Agreement, the World Bank and other global bureaucracies that
currently discipline governments in the area of trade and financial
investment. This volatility is bringing massive economic breakdown in some
nations, insecurity in all nations, unprecedented hardships for millions of
people, growing unemployment and dislocation in all regions, direct
assaults on environmental and labor conditions, loss of wilderness and
biodiversity, massive population shifts, increased ethnic and racial
tensions, and other disastrous results. Such dire outcomes are now
becoming manifest throughout the world, and are increasing daily.

2. The solutions to the crises that are currently being offered by the
leadership of the above-named trade bureaucracies, and the leaders of most
western industrialized states, as well as bankers, security analysts,
corporate CEO's and economists - the main theoreticians, designers and
promoters of the activities that have led us to this point - are little
more than repetitions, even expansions, of the very formulas that have
already proven socially, economically and environmentally disastrous. The
experts who now propose solutions to the financial meltdown are the very
ones who, only months ago, were celebrating Indonesia, Thailand, South
Korea and other "Asian Tigers" as poster-children for the success of their
designs. They later stated that the Asian crisis was fully contained.
Notably, these experts have been wrong in nearly every predicted outcome of
their policies.

Now these "leaders" advocate that we solve the problem by further
opening markets, further opening and liberalizing the rules of investment
(as they promote such draconian formulas as the Multilateral Agreement on
Investment, and expanded IMF powers), further suppressing the options of
nation-states and communities to regulate commerce for the good of their
own publics and environments, further discouragement of such models as
"import substitution" that have the chance to enable nations to feed and
care for themselves, and further centralization of control within the same
governing bodies as at present. In other words, more of the same.

According to these architects of globalization, it is only a matter
of "fine tuning" or "first aid" while on the way to continued expansion of
the same failed dream of theirs. They cite "cronyism" among the Third
World's nations as contributing to the problem, but say nothing of the
cronyism exhibited by the U.S. Treasury-Wall Street-IMF collaborations by
which western bankers bail out other western bankers for their disastrous
policies.

Clearly, the architects of the present crisis have not understood
what they have wrought, or, if they have understood it, cannot afford to
admit it.

3. As for the tens of millions of people who now suffer from this
experiment, the expert solutions include no bailouts. Many of these
people, formerly self-sufficient in food, are now dependent on the
absentee-ownership system of the global economy. Now abandoned, they are
left to seek solutions outside the system, from foraging in the (fast
disappearing) forests, to barter systems, to social upheaval as means of
expression. Many are finding that their attempts to return to prior means
of livelihood - such as small scale local farming - are impossible, as
their former lands have been converted to industrial corporate agricultural
models for export production. Land on which people formerly grew food to
eat has been converted to corporate production of luxury commodities - e.g.
coffee, beef, flowers, prawns - to be exported to the wealthy nations.
Poverty, hunger, landlessness, homelessness, and migration are the
immediate outcome of this. Insecure food supplies, lower food quality, and
often dangerous contaminated foods are a secondary outcome. The situation
is unsustainable.

4. Its creators like to describe the global economic system as the
inevitable outgrowth of economic, social and technological evolution. They
make the case that centralized global economies that feature an
export-oriented free trade model, fed by massive deregulation,
privatization, and corporate-led free market activity in both commodity
trade and finance -- free of inhibiting environmental, labor and social
standards -- will eventually bring a kind of utopia to all people of the
planet. Now it is clear that it is a corporate utopia they have in mind.
But even this will fail to achieve its goals, as the entire process is
riven with structural flaws. No system that depends for its success on a
never ending expansion of markets, resources and consumers, or that fails
to achieve social equity and meaningful livelihood for all people on the
planet, can hope to survive for very long. Social unrest, economic and
ecological breakdown are the true inevitabilities of such a system.

5. It is appropriate to recall that the present structures of
globalization did not grow in nature as if they were part of a natural
selection, evolutionary process. Economic globalization in its present
form was deliberately designed by economists, bankers, and corporate
leaders to institute a form of economic activity and control that they said
would be beneficial. It is an invented, experimental system; there is
nothing inevitable about it. Globalization in its recent form even had a
birthplace and birthdate: Bretton Woods, New Hampshire, 1944. It was
there that a design was agreed to by the leading industrial nations. The
WTO, the IMF, the World Bank, et. al. were instruments that grew out of the
design plan, to facilitate and further the process.

Great expectations have led to despair. After 50 years of this
experiment, it is breaking down. Rather than leading to economic benefits
for all people, it has brought the planet to the brink of environmental
catastrophe, social unrest that is unprecedented, economies of most
countries in shambles, an increase in poverty, hunger, landlessness,
migration and social dislocation. The experiment may now be called a
failure.

6. With the crisis now obvious in Asia, Russia, Brazil, Mexico and soon,
predictably, in other places including western industrial nations, many
peoples of the world, and many nation-states, have begun to recognize that
the globalization experiment is doomed to fail. They have begun to
specifically ask if globalization - especially free trade in financial
flows - is in the best interest of their own nation, or any nation. We
have seen serious corrective actions recently taken by China, India, Hong
Kong, Malaysia, Russia and Chile which, by various means, have tried to
counter the destabilizing force of unregulated private investment that has
proved to benefit no one but the crony capitalists who advocate it. As we
write, many more nations are showing renewed interest in these expressions
of resistance and withdrawal from uncontrolled global capital.
Importantly, the nations that have put, or maintained, controls on capital
have demonstrated a higher degree of stability, and are better able to act
successfully in the interests of their own resource and economic bases and
in the interests of their own populations.

We applaud such actions and urge more nations to investigate and
adopt currency and investment controls, as appropriate to their unique
situations, rather than continuing to take dictates from distant
bureaucracies who have proved they do not know what they are doing.

7. Though the current crisis tends to be reported as strictly "financial"
in nature, it is worth noting that the problems are deeper and more endemic
to the inherent flaws in the design of the global economy itself. All
peoples of the world have been made tragically dependent upon the
arbitrary, experimental acts of giant self interested corporations, bankers
and speculators. This is the result of the global rules that remove real
economic power from nations, communities and citizen democracies, while
giving new powers to corporate and financial speculators that act only in
their own interests; and that suppress the abilities of local economies,
regions and nations to protect resources, public health and human rights,
This has left the peoples of the world in a uniquely isolated, vulnerable
condition; dependent upon the whims of great, distant powers. This too is
an unsustainable condition.

8. Any truly effective solution to the current financial crisis, and the
larger crises of economic globalization, must include the following
ingredients, among others:
a) Recognition and acknowledgment that the current model, as
designed and implemented by present-day, corporate led global trade
bureaucracies is fundamentally flawed, and that the current crises are the
inevitable, predictable result of these flaws.
b) Convening of a new Bretton Woods-type international conference
which would bring to the table not only representatives of nation-states,
bankers and industry, but an equal number of citizen organizations from
every country to design economic models that turn away from globalization
and move toward localization, re-empower communities and nation-states,
place human, social and ecological values above economic values (and
corporate profit), encourage national self sufficiency (wherever possible)
including "import substitution," and operate in a fully democratic and
transparent manner.
c) Efforts to build on the experiences of Chile, Malaysia, India
and the other countries that have placed controls on capital investment and
currency speculation. Encourage all activity that reverses present
policies that expand the freedoms of finance capital and transnational
corporations, while suppressing the freedoms of individuals, communities,
and nation-states to act in their own behalf.
d) Immediately cancel all efforts toward completion of the
Multilateral Agreement on Investment (MAI), or the expansion of the
International Monetary Fund to include ingredients of the MAI that give
added freedom to finance capital to operate free of national controls.

* * *

Finally, the undersigned wish to state that we are not opposed to
international trade and investment, or to international rules that regulate
this trade and investment, so long as it complements economic activity that
nation-states can achieve for themselves, and so long as the environment,
human rights, labor rights, democracy, national sovereignty and social
equity are given primacy.


Signed By:
The Board of Directors,
International Forum on Globalization


Maude Barlow, Council of Canadians, Ottawa, Canada
John Cavanagh, Institute for Policy Studies, Washington, D.C., U.S.
Tony Clarke, Polaris Institute, Ottawa, Canada
Edward Goldsmith, The Ecologist, London, U.K.
Martin Khor, Third World Network, Penang, Malaysia
Andrew Kimbrell, International Center for Technology Assessment, Washington,
D.C., U.S.
Jerry Mander, Public Media Center, San Francisco, CA, U.S.
Helena Norberg-Hodge, International Society for Ecology and Culture,
Dartington
Totnes, U.K.
Mark Ritchie, Institute for Agriculture & Trade Policy, Minneapolis, MN, U.S.
Vandana Shiva, Research Foundation for Science, Technology & Natural Resource
Policy, New Delhi, India
Lori Wallach, Public Citizen, Washington, D.C., U.S.


Endorsed By:

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