Oleh/By : DATO' SERI DR.
MAHATHIR BIN MOHAMAD
Tempat/Venue : THE BERJAYA BEACH RESORT LANGKAWI
Tarikh/Date : 25/07/99
Tajuk/Title : THE LANGKAWI
INTERNATIONAL DIALOGUE
" GLOBALISATION AND SMART PARTNERSHIP "
There is no doubt that globalisation is an idea
whose time has come. We all must therefore be prepared
to accept it.
2. But whereas the idea has come, it is far from
clear. So far the interpretation or definition of
globalisation has been made largely by the rich
countries. Not surprisingly the interpretation of the
concept would result in gains by them. If they are the
only ones to gain, whether the idea is timely or not,
there is no very good reason why the poor countries
must also accept globalisation.
3. There was a time when the idea of colonisation and
imperialism was acceptable. It was natural almost for
European nations to colonise the rest of the world.
Even the smallest European nations regarded it de
rigueur for them to acquire vast territories in Africa,
Asia and South America and rule them as colonies.
4. For a long time no one, not even the colonised
Asians or Africans, questioned the rights of the
European to occupy and rule their lands. Europeans
even invented the idea of their God-given right and
responsibility to rule. It was the White Man's burden.
They have been especially chosen to bring their
civilising influences to the natives, sometimes
referred to as the savages.
5. When an idea has come and is accepted it becomes
so entrenched that it is very difficult to say or do
anything that is against it. To do so would involve
charges of heresy. The dissenter becomes the object of
universal opprobrium. He is castigated by all and
shunned even by his friends or his own kind.
6. It takes time for the defects and ill-effects of
the idea to emerge and to be recognised. Thus
Communism and Socialism as ideologies may not be
criticised or rejected where these ideologies had
become accepted. Everyone whether he believed in them
or not, would sing their praises. Not to do so would
incur the wrath of the community or people. Of course
it may result in painful punishment, even death in many
cases.
7. The fact that when these ideologies were
introduced one of the objectives was to banish the
oppression of feudalism or capitalism did not prevent
the Communists and Socialists from indulging in the
same kind of oppression when they were in power. It
would seem that oppression is only bad if it is imposed
by others against oneself. If one gets into power and
indulges in the same kind of oppression against others
it is acceptable.
8. Thus the rule of the Czar of Russia was
oppressive, but the rule of the Communists was even
more oppressive. Not only were the feudalists and
capitalists liquidated i.e. massacred, but even workers
who disagreed suffered the same fate.
9. It took a long time for Communism and Socialism,
the ideas whose time had come, to be rejected and
discarded. A lot of cunning and determination was
required in order to reject an accepted idea.
10. Gorbachev and De Klerk are two of a kind. To get
rid of ideas which they believed to be wrong and
harmful they had to hide their intentions until they
reached the pinnacle of power. Then and then only did
they reveal their true feelings about the ideologies
they had apparently believed in and propagated in the
past. Had they revealed their intentions before they
attained supreme power they would have been summarily
removed. Their career would have ended as the fanatics
would have refused to support their bids for leadership
and would have ensured only pure believers would lead.
11. Using whatever power or influence over the party,
the fanatics would have ensured that the heretic would
be thrown out and prevented from propagating their
heretical ideas. Thus an idea which has outlived its
time would go on being practised and would continue to
do harm for much longer than it should. Until someone
like De Klerk and Gorbachev emerged who were clever
enough to hide their ultimate intentions, an idea whose
time is over may survive. And the damage that it may
cause may continue for long after the people had in
their hearts rejected the idea.
12. This digression is necessary in order to
appreciate that an idea whose time has come may not be
the ideal that it is made out to be even as it is put
into practice. Throughout the history of mankind there
had been innumerable ideas which had come, had been
accepted as ideal and infallible, only to be found
wanting in every way as to be discarded. Feudalism,
the Divine Rights of Kings, Republicanism, Communism,
Socialism, dictatorship and numerous others are among
the ideas thrown up by Man in his quest for a perfect
system. They all have gone the same way. They are all
now in disrepute and have been discarded, to be
replaced by new ideas whose time it was said had come.
13. The nation-state which we are all urged to
dismantle in order to make way for globalisation is
largely the result of the evolution of tribalism. In
Europe the nation-state realised its peak of
sophistication, where loyalty to the country of one's
birth entails making the supreme sacrifice for its
defence and offence. Such is the loyalty expected of
the nationals that even when the country is obviously
in the wrong loyalty is still expected. My country,
may it always be right, but my country right or wrong
expresses the thinking and attitude of European
nationals towards their country.
14. And so people go to war to defend the nation-
state. Throughout the 2000 years of European history
not a year passed without at least one war between the
numerous nations of that continent. Nationalism and
wars of conquest naturally lead to expansion of states
and then to empires. There seems to be no limit to
such expansionism. Empires of European states
eventually covered the whole globe.
15. In the years following the Second World War, which
include the Pacific War, the empires came into
disrepute and were dismantled. Actually it was the
fear of the spread of Communist ideology among the
colonial people which prompted the break-up of European
empires outside of Europe.
16. The lands liberated by the demise of the empires
should have reverted to the status quo ante -- to
tribal territories ruled by different tribes. But the
departing imperialist had so successfully implanted the
idea of the nation-state that the newly independent
peoples opted for the totally foreign concept of nation-
states. It was believed that different tribes and
races could be made to forget their tribal or racial
origins and give their undivided loyalty to the new
nation-states whose boundaries had been arbitrarily
demarcated by the European colonisers. With tribalism
and racial loyalties still very strong it is a wonder
that any of the new nation-states survive at all. As
it is, many of them are ungovernable.
17. Intractable tribal and racial wars have become
such a feature of these artificially created nation-
states that it is quite likely that some will
eventually break up. Certainly they would remain
unstable and incapable of prospering.
18. The new nation-states have hardly understood the
concept of the nationalism and national Governments
before they are urged to give up their national
identities in order to embrace the totally new concept
of a global state, for that is what globalisation is
all about.
19. According to the great thinkers and ideologists of
the West, globalisation is about breaking down national
boundaries as barriers to the flow of capital and goods
to wherever they can make the most profit. Since
capital and practically all the goods belong to the
developed and the rich, the opening of borders must
result in the poor having to accept inflows of
everything from capital to manufactured goods and even
services from the rich. The result must be massive
outflows of whatever foreign exchange the poor
countries have.
20. Still it looked good at first as capital inflows
helped the setting up of industries and boosted the
local stock market. Jobs were created in large numbers
and earnings at all levels increased. The economy grew
for some and imports could be paid for. Export
oriented foreign-owned industries helped to earn needed
foreign exchange to pay for imports.
21. Developing countries which accepted the free
inflow of capital and goods grew and prospered.
Nationalistic countries which had jealously protected
their markets were persuaded to open up. Thus
Southeast Asia achieved high growth due to opening up
their countries to foreign capital, goods and services.
But certain restrictions were maintained in order to
allow local companies to emerge and grow along with the
countries' prosperity. Banking in particular was
confined largely to nationals.
22. These minor restrictions coupled with what
appeared to be inefficient Governments prevented the
foreign capitalists from exploiting to the full the
potentials and wealth of these countries. They felt
that these were irritants which must be got rid off.
23. Destroying in order to rebuild is of course not a
new idea. Phoenix is supposed to rise from the ashes.
If prosperity did not result in the newly
industrialising middle income countries recognising
their faults and taking corrective measures, could not
a downturn and economic turmoil awaken them to the need
for change and for reforms in their Governments and
their practices?
24. Destroying is always easier than building or
creating. In this instance it was necessary only to
pull out the capital and the economies would collapse.
If an inflow of capital could build economies an
outflow especially a rapid outflow can be expected to
destroy them.
25. And so borderless capital was pulled out. More
than that through currency trading money was devalued
so that the countries are left with practically useless
money which could pay only for a fraction of the needed
imports.
26. The result was unprecedented -- rapid recession
and economic turmoil. The people became restless
especially when efficient propaganda machines of the
currency and market manipulators convinced them that
their problems were due to their Governments being
corrupt, non-transparent and given to nepotism and
cronyism. Accordingly the people should agitate for
reforms which must lead towards opening up the
countries to the totally free flows of capital. There
should be no more restrictions of any kind. Local
considerations must be ignored.
27. If the Governments refuse then they should be
overthrown and replaced by Governments more willing to
adopt the practice of allowing for free flows of
capital and goods, i.e. to globalisation.
28. The economies of East Asia were all but destroyed
through currency devaluation and stock-market
manipulations. Banks were forced to close and those
which could remain open suffered runs and became
moribund with huge non-performing loans.
29. The businesses lost market capitalisation as their
share plummeted and they could not meet margin calls.
Deprived of credit their businesses grounded to a
standstill. Many went bankrupt and where the IMF had
forced open the market, many good businesses and banks
were sold literally for a song to foreign predators.
30. When a currency is devalued and share prices
depressed, in terms of foreign currency everything
including shares and properties become extremely cheap
for foreign buyers. The Malaysian Ringgit was devalued
by almost 50 percent which reduced Malaysian shares to
half their price in terms of the US Dollar. When the
share prices went down by 90 percent, the share value
in foreign currency is reduced to five percent of the
original value. Thus foreigners with dollars can snap
up these formerly good companies for just five percent
of their price if they are allowed to.
31. When businesses fail the Government gets no
revenue. The Government will have to borrow. The IMF
will lend but with conditions which will in effect
result in total foreign control of the economy. If a
country refuses to accept IMF loans and conditions and
tries to borrow foreign currency from the market the
rating agencies would downgrade the country's rating so
that interest would be so high as to make foreign
borrowing suicidal.
32. All Governments subsidise businesses if for
nothing else to reduce the cost of living for the
people. The IMF directs that subsidies must be
removed. At a time when people have lost their jobs
and incomes, removal of subsidies is cruel. But the
countries indebted to the IMF must comply or the
promised loans would not be made available.
33. The direct result of the removal of subsidies was
to agitate the people and precipitate riots, looting,
raping and murder. In the end the Government is
overthrown and a more compliant Government put in
place. But the problem is not resolved, certainly not
immediately. Instability, inflation and recession
continue as the currency traders go on to devalue the
currency further.
34. All these have a very direct connection with the
free flow of capital across borders in a globalised
economy. Currencies do not devalue themselves. They
have no built-in sensors. Governments and currency
traders, people devalue or revalue currencies.
Governments devalue currencies in order to help their
countries by reducing the costs of goods exported.
Governments are not interested in making a profit for
themselves through devaluation.
35. But currency traders devalue currencies for
profit. They may claim that they are disciplining
Governments but they will not discipline Governments if
they are going to lose money in the process.
36. Clearly the currency traders and the stock market
manipulators are unscrupulous. They don't care for the
social cost, the poverty and the misery they cause.
Since globalisation affords them the opportunity to
exploit, they will exploit. And we have seen how their
exploitation results in financial and economic turmoil
and in political upheavals all over the world.
37. Has the world economy gained by their exploitation
of the globalised market? They have no doubt brought
prosperity for their own countries. But everywhere
else throughout the whole world they have caused
economic turmoil and regression, and the destruction of
the wealth which had taken decades to build. World
trade is badly disrupted, affecting even the wealthy
developed countries. Truly the poverty they cause is
very many times greater than the profits they make and
the wealth they bring to their own countries. It is
worse than a zero sum game. The wealth of whole
nations is destroyed in order to give a little profit
to a few people.
38. Admittedly the economies of East Asia are now
showing signs of recovery. But this is due to the
currency traders and the short-selling manipulators
being curbed. Their greed and excesses which caused
the LTCM disaster have resulted in banks denying funds
for their activities. At the same time there was a
fear that if they were not curbed then the countries
affected might take action by regaining control over
their currencies or merely refusing to pay their debts.
The recovery of the economies of East Asia is not even
due to the loans extended to them by the IMF. It must
be noted that these loans are largely for paying the
loans due to foreign banks.
39. The experience of East Asian developing countries
is that the free flow of capital across their borders
can result not just in economic well-being but can
actually destroy their economies. The destruction is
actually far greater than the contribution to growth.
What had taken decades to build can be destroyed in a
matter of days or weeks. The subsequent turmoil far
exceeds the benefit of the inflows of capital.
40. It must be admitted that foreign capital invested
in permanent industries are not harmful. They cannot
easily liquidate and take out their money. It is the
short-term investments in stocks and shares which can
do massive damage. They can be suddenly liquidated and
the money pulled out. Of course the currency traders
invest in nothing at all. They merely do short-selling
of currencies which they borrow in order to devalue
them and make billions overnight.
41. If free capital flows and currency trading are
manifestations of a borderless globalised world, is
there any reason why the developing countries should
accept globalisation unquestioningly? The risk and the
destruction are simply too great for them. Rescue
operation by the international agencies can saddle them
with more debts which they may never be able to repay.
Rebuilding their economies would take decades. Placed
under the supervision of the international agencies
they would lose control over their economy. And as can
be seen in some cases even their politics can come
under the control and manipulation of foreigners.
Globalisation can therefore result in loss of economic,
political and social independence. This is too high a
price to pay for the dubious benefit of gaining access
to the markets of the rich for goods which they do not
produce.
42. Besides, the markets of the rich are easily closed
by other means e.g. by raising standards to a level
the poor countries cannot meet. As for their raw
materials the prices can be manipulated very easily.
For decades now increasing amounts of raw materials and
commodities have to be sold to buy less and less of the
manufactured goods of the rich. The terms of trade
have consistently been in favour of the rich.
43. Globalisation can bring benefits but only if it is
given a human face, if it is governed by rules and
practices which can ensure that the poor countries will
not be faced with repeated economic turmoil and
regression. It is entirely possible for this to be
done. But it can only be done if the international
community including the poor are given a say in the
interpretation of globalisation. Currently the poor
have hardly any say. Many who are obliged to the rich
for aid and loans are not able to speak out.
44. The first thing that everyone must admit is that a
level playing field is not enough. The players must at
least be of the same size. If that is not possible
then handicaps must be given to the disadvantaged. It
has always been so in sports and there is no reason why
it cannot be in international competition where the
competitors are even less evenly matched.
45. Secondly, in order to have free trade we must
regulate. We have to discard some regulations but they
must be replaced with new ones worked out by the
international community and enforced by truly
independent international agencies, not the ones which
are under the control of the powerful and the rich.
46. There must be transparency in trade and dealings
between nations. No one, certainly not the currency
traders and market manipulators should be exempted from
the requirement to open their books. There must be
limit up or limit down provisions so as to prevent
excesses.
47. Loans extended by banks must be prudent and
balanced. If countries are subjected to ratings so
must the hedge funds. They may not leverage by more
than a reasonable multiple of their assets. And those
competing with them as well as the Governments must be
able to leverage by the same multiple at reasonable
rates.
48. Ratings must be done by international non-profit
organisations financed by the international community.
No one should dominate through too high a proportion of
the financing.
49. There must be a tax on all international
speculators. They may not operate out of offshore
financial centres. The tax must be shared so as to
help the countries ravaged by them to recover.
50. These are some of the things that can help give a
human face to globalisation. There must be many more
things that can be done which can make globalisation
more welcome by all, including the poor.
51. Globalisation, a borderless world is already a
fact. In the field of information distribution and E-
commerce, borders mean very little now. But the fact
that globalisation has come and is apparently
irresistable does not mean that we should just sit by
and watch as the predators destroy us.
52. Those of us who believe on sharing, in prospering
our neighbours; we certainly cannot just submit. Many
of us still remember the days of colonial subjugation,
the pain and the humility. Many still beat the scars
of the unequal battles for our independence. We fought
for hundreds of years. We have only just won. We have
hardly tasted the fruits of our sacrifices. We cannot
now be forced to submit to foreign domination once
again. It may not be the raw colonialisation that we
knew but it is not too far different.
53. We must therefore work to put a human face to
globalisation. As during our struggle for
independence, there are many among the rich who are
with us, who appreciate our views. Let them join up
and be counted. Let them join us in our new struggle
to preserve our self-respect and our rights.
54. I am not being rhetorical. I am not over-
reacting. I am not being alarmist. We in Malaysia
have been through two terrible years fighting shadowy
predators. We have barely survived. I wouldn't like
to see friends going through what we went through.
55. I have therefore tried to give a true picture of
what globalisation can mean if present interpretations
are accepted unquestioningly. I hope you will find
discussion on this subject enlightening.
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