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Vijay Prashad: Developed countries fight to stop UNCTAD linking financial speculation to food insecurity

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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.

The price of food and oil and other commodities, according to most people that study the issue, is greatly affected by speculation. Of course, you can find this being said not just by people who are hungry, to whom it’s a matter of life and death; even by airline executives. And even oil executive have said that speculation comprises a big piece of creating price bubbles. Well, a fight has broken out whether or not to control some of this speculation, and it’s taking place in Doha, Qatar, where meetings of the United Nations Conference on Trade and Development are taking place. Countries of the South are saying they need control over the
financialization of food, particularly, and other commodities. Countries of Europe, North America in particular, are saying no. So what’s taking place and what’s the importance of this fight at UNCTAD?

Now joining us to talk about this is Vijay Prashad. Vijay is a professor of international studies at Trinity College. Amongst his many books are The Darker Nations: A People’s History of the Third World and Arab Spring, Libyan Winter. He joins us now from Hartford, Connecticut. Thanks very much for joining us again, Vijay.


JAY: So give us a sense of the actors and what’s at stake.

PRASHAD: Well, this is the 13th conference of the UN Conference on Trade and Development. The UNCTAD, you know, it’s a major UN body, was created in 1964. The previous conference, held in Accra, Ghana, in 2008, took place in the summer. It took place before the full flow of the financial crisis. So in many ways this conference, the 13th one, held in Doha, Qatar, is the first conference after the financial crisis. And here the main debate has been around the so-called mandate of this UN body.

It’s very important to put this in perspective. Most major multilateral institutions that study, say, the world economy, questions of trade, questions of finance, most of these organizations, such as the International Monetary Fund, World Bank, the OECD, most of these organizations are controlled by either the United States or the Europeans and with some input from the Japanese. But UNCTAD is the only organization which has some, at least, you know, institutional loyalty to the other countries of the world. It is in that sense a institution of its member states, of the UN.

JAY: Now, UNCTAD is—its reputation is actually pretty good in terms of opposing normal neoliberal economic policies, particularly good at warning the world where this financialization is heading. Talk a bit about that history of UNCTAD in terms of the work it does in between these conferences of leaders, ’cause that’s really what’s at stake, whether it’s going to be able to continue this work.

PRASHAD: Precisely. I mean, they have the conference, in a way, to put forward a program of what they should do in the next four years. So, you know, in its 30 year history, UNCTAD has produced a very important body of work that has warned, right through from the 1990s to the present, at least, about the dangers of runaway finance. I mean, you know, UNCTAD was the only multilateral body that warned us about all the major economic crises—you know, the Tequila crisis, 1994; it warned about the financial crisis in several reports; it warned about instability in financial markets, toxic finance, the role of the so-called shadow banking sector. So they have produced report after report warning the world of what had, you know, basically taken place, which is that our social lives have become financialized. At the same time, the International Monetary Fund not only was championing financialization, but in the midst of crises was recommending the exact same recipe that it had recommended when there was no immediate crisis.

JAY: And let me just jump in for a second. Below this video of this interview we’re going to link to some of our interviews with Heiner Flassbeck, who works with UNCTAD, and you’ll see the kind of work they’ve been doing it why this matters. Keep going, Vijay.

PRASHAD: Yeah, precisely. So at this meeting, in the runup to this meeting, there’s been a great push from the Europeans and the United States to reduce, to rein in UNCTAD’s mandate—in other words, to prevent UNCTAD from producing the kind of research that they produced from 1964 onwards. Now, because there are 192 countries, you know, as member states of the UN, the negotiations that take place to produce their final document, which in a way is their program document—it’s what enables them to do the kind of research they do—to make the negotiation a little streamlined, the entire body of nations are divided into negotiating blocs.

Well, the three most significant blocs, one is Group B, which is divided into two sections. One is the European Union, and the other is a group called JUSCANZ, which essentially is the names Japan, the United States, Canada, New Zealand, Australia, and Switzerland. These are the groups in JUSCANZ. So these two blocs are the blocs of the so-called Global North, the EU bloc and the JUSCANZ blocs. And then the other bloc, the third bloc, and perhaps the most important in terms of the number of people involved here, the number of countries, you know, this bloc is the G-77 plus China, and in this bloc is 132 countries.

But the G-77 plus China is extremely weak bloc in terms of negotiations, and this JUSCANZ group is the most powerful. And one of the ways in which this happens—it is counterintuitive. You’d think the bloc with the largest number of people would have the most power. But since they need to produce a consensus document, and since this is the way the negotiating process is divided up, this JUSCANZ group, with the United States at the center and the Swiss, in a way, wielding the red pen, have been the most forceful in trying to dictate the agenda of UNCTAD. And they would have gotten away with it at this 13th UNCTAD if two things hadn’t happened: if the previous staff of UNCTAD hadn’t produced a statement where it said that this is ridiculous, what the Global North is doing; and secondly, if the countries of the South hadn’t finally decided to stand up and say, you know, we will not allow you to railroad the only institution that represents some of the views that we hold, because we are—.

JAY: Right. Now, it’s interesting you say that the Swiss ambassador’s heading this up, given that some of the biggest commodity traders and speculators in the world are all based in Switzerland, and a lot of this monopolization and speculization and hoarding that’s going on, especially about food, is all being driven out of Switzerland, companies like Glencore and others. But you mentioned the Swiss ambassador holding the red pen. You’re referring to them going through the draft report and then striking things out they wanted to get rid of. Give us some examples of things that they red-penned out.

PRASHAD: I mean, there are two that are absolutely egregious. One of them is there was a statement—which is a quite simple statement, where—talking about hunger as a need, you know, the addressing of hunger. In other words, this was bringing food security—which is an established principle in the food and agricultural organization at the UN—it was bringing their principle of food security into the preamble of the final document. And so the Swiss essentially said—or JUSCANZ groups essentially said, no, we cannot allow the eradication of hunger to be something that we stand for.

JAY: So why don’t they just change the name? They should get rid of the word Development, just have it, you know, United Nations Conference on Trade and Monopolization, get rid of Development, and at least they could be done with it.

PRASHAD: The last thing they need is temptations like that, because this is precisely what they’ve been trying to do. I mean, what they would really like to do is to see UNCTAD close down. And this is not a new part of the history of UNCTAD. UNCTAD’s—from 1964, has faced opposition from the Global North. In the early years it was the fight between the General Agreement on Tariffs and Trade and the UNCTAD group. The GATT people wanted to close down UNCTAD, and that behavior has not changed.

But you asked me to give you two examples. The second is in fact even worse. The G-77 plus China had put in a notification that perhaps we need to reassess pharmaceutical pricing, that we should think about, you know, differential pricing, etc. That was immediately cut down. And you have to put that in the context of countries like South Africa, Brazil, India, where there has been an attempt since 2003 to create, you know, cheaper drugs for especially things like HIV-AIDS, and other drugs to address, you know, very serious, almost emergency-level crises in these countries. So that had to be cut off.

JAY: Now, one of the things that UNCTAD has been very strong at in terms of its reports and its analysis is this warning and demanding financial regulations and—controlling speculation and such. And if I understand it correctly, that was a big thing for redlining out. Anything, any mention of financial controls and regulation, UNCTAD’s told, stay out of it, which has in fact been one of the main things they’ve been working on.

PRASHAD: Oh, you know, from 2008—you know, I read these reports. For my sins, I read almost all IMF reports, I read the UNCTAD reports. And, you know, if you are relatively objective, you would suggest—you would see that the IMF reports don’t seem to learn from each other. You know, there’s a lot of religion in the IMF reports. The UNCTAD reports, on the other hand, are very strongly empirically based, there’s a lot of evidence, you know, in the reports, and they have warned about specific, concrete problems in the financial sector. So this is not just kind of religious documents; these are very precise documents that warn about specific things.

So the North has been saying that UNCTAD’s writings about finance exceed the mandate of UNCTAD and it needs to return to its mandate. So what does that mean? What it means is they would like UNCTAD to, yes, deal with the question of the financial crisis, but only in the effects of the financial crisis on the developing world. They don’t want UNCTAD to look at the root cause of the financial crisis, which would mean they’d have to turn to an investigation of the banks, of the Global North, of, you know, the kind of liquidity that is promoted in the north to its benefit, etc. So there’s a very interesting fight here. They’re not directly saying that UNCTAD shouldn’t look at finance. What they’re saying is, you can only look at the effects of the crisis, you cannot look at the cause of the crisis. The question, of course, that one asks is: who’s looking at the cause of the crisis? And the answer is: nobody, because the IMF is certainly not looking at the cause of the crisis. So, you know, since UNCTAD is one of the few multilateral institutions that’s looking at the causal problems, is trying to help us get to the root of the problem, this is precisely what the Global North does not want to see happen.

JAY: And this matters to everybody. This isn’t just an issue facing people of the South, because all the conditions are being prepared in terms of monopolization of actual physical ownership of commodities, which is, you know, in the hands of five, six big trading companies and a few big banks—food, oil, of course, and of course minerals as well. And all the banks back into speculation, full speed ahead. You know, all the worry about 2008 and the apocalypse coming and all that, that’s all been put aside, and all the banks are right back in it again, including proprietary trading and everything else. So there’s a lot at stake for everybody. This isn’t just a, you know, quote-unquote, “Third World issue”, is it?

PRASHAD: I mean, look at this. While the UNCTAD meeting has been happening, in Washington, D.C., the IMF had a meeting where they discussed Europe, and the IMF has come to the conclusion that European financial sector needs to deleverage to the tune of $2.6 trillion. That means the banks are going to have to either raise equity, you know, of some percentage, close $2.6 trillion, or they’re going to have to sell the debts they have up to about $2.6 trillion. You know, this was put forward by the IMF, and they said that we need to make sure this deleveraging process takes place in an orderly way. I mean, what they’re saying, essentially, is that since they’re not going to come in and create a new structure for banks in Europe, a new way in which to hold back banks to do the very same thing, they are saying essentially that other financial houses are going to come in and make a lot of money in the deleveraging process.

You know, this is exactly where sober-minded economists, political scientists, and others at UNCTAD need to be in the game, because they need to suggest—they would suggest—if they were allowed to go and investigate this, they would look and see who is going to control this deleveraging process, what is going to happen in this deleveraging market. You know, is this going to be another casino? Who is going to underwrite it? Is it once again the private sector going to play around with the money and the public sector going to be its insurance?

JAY: Well, we’re pretty sure the answer to that’s going to be yes, ’cause no one’s building any alternative. We’re running out of time now, but I encourage everybody, if you want to get a sense of what UNCTAD’s been doing, watch the interviews we’re going to put below. And you’ll see one of the reports that Mr. Flassbeck put out (and his group) was On the Brink, and it meant on the brink of a deep global recession. And in the interview he says that we’re actually past the brink. You can see that they’re not afraid to describe the world more or less as it is. Thanks very much for joining us, Vijay.

PRASHAD: Thank you so much.

JAY: And thank you for joining us on The Real News Network.


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Vijay Prashad is an Indian historian, editor, and journalist. He is a writing fellow and chief correspondent at Globetrotter. He is an editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He is a senior non-resident fellow at Chongyang Institute for Financial Studies, Renmin University of China. He has written more than 20 books, including The Darker Nations and The Poorer Nations. His latest books are Struggle Makes Us Human: Learning from Movements for Socialism and (with Noam Chomsky) The Withdrawal: Iraq, Libya, Afghanistan, and the Fragility of U.S. Power.