On November 5 to 7, over 1,200 delegates from over a hundred CSOs in 11 Southeast Asian countries gathered in a “virtual conference” to discuss grassroots people’s issues across the region. The theme of the Asean People’s Forum 2020 has a very clear message to the Asean governments: “Southeast Asian People’s Solidarity for an inclusive, cohesive and responsive community.”
Right after the People’s Forum, November 10, the International Monetary Fund (IMF) conducted a “virtual dialogue” with representatives of CSOs across the Asia-Pacific. The topic of the dialogue: “Economic impact of Covid-19 in the region and the policies needed for the recovery”.
For the dialogue with the CSOs, the IMF brought in Jonathan Ostry, deputy director for research. Ostry is considered a “social reformer” in the IMF. He has been writing about financial globalization and inequality and has contributed to the supposed change in the IMF’s obsessive and one-sided attention on the financial side of the macro-economic equation. Such obsession often leads to the adoption by indebted countries of the debilitating austerity or belt-tightening programs, which have been the standard IMF economic recipes for debtor countries. Under Christine Lagarde, the former IMF managing director, any negative social and economic outcomes from IMF’s lending projects such as gender discrimination and rise in economic inequality are now considered “macro-critical,” subject to critical IMF assessment of the loans.
Ostry has written books and articles questioning unregulated capital flows and how this has given rise to social inequality. Accordingly, some kind of a balance should be established on how much austerity and market deregulation to adopt and what are the policies needed to tame runaway inequality and foster more inclusion in the growth process. One of his favorite topics is the role of redistribution policy, for example, redistribution of resources to improve people’s access to health care and quality education.
In the above meeting with the CSOs, Ostry blurted out toward the end of the dialogue: there is a need to re-think economic and financial integration. We then asked him: what is his model for economic integration, for an alternative program of integration. We pointed out that in the Asean, those in charge of crafting programs for economic and financial integration have equated integration to the simplistic neo-liberal programs of liberalization and deregulation of markets, capital flows and so on. Thus, the blueprints for the Asean Economic Community reduce the task of building one “Asean Economic Community” or AEC to opening up economies of Asean countries via uniform tariff reductions, removal of non-tariff barriers, mutual recognition agreements for goods and skills, and so on.
And yet, it was economic financial deregulation in the 1990s that many economists consider as the culprit for the 1997-1998 Asian financial crisis. The AFC, in turn, is now seen as the “dress rehearsal” for the bigger global financial crisis (GFC) that hit America, Europe and the world in 2007-2010. The deregulation of the financial sector was the object of attack by the predatory financial speculators, which pose as FDIs and yet do not invest on the real economy (industy and agriculture) to create jobs and values. They invest on stocks, money markets, commodity futures, changing land prices and so on, and leave the market as soon as they are able to harvest easy earnings from their speculative activities. In many cases, they create artificial market bubbles to inflate their earnings, and then leave once they have collected their earnings, creating in the process collapsing markets for the hapless host economies.
Somehow, Ostry was taken aback when the question of an alternative model was posed to him. He did not give any concrete or definitive answer to the question of an alternative model. But if the IMF is serious in doing a serious rethinking, he and his colleagues should take a look at the Asean economic program and the critique advanced by the CSO participants in the APF 2020. In the joint statement by the 1,200 participants, they gave a vivid outline of the evolving economic landscape in the Asean today, as follows:
- Growth fuelled mainly by foreign speculative investments, rising consumerism and overseas workers’ remittances;
- Widening wealth concentration amidst worsening hunger and food insecurity;
- Poverty surging due to the surging Covid-19 pandemic, which has affected the livelihoods of 218 million, especially of women;
- Disaster capitalism rearing its ugly head under the pandemic as big corporations try to take over lands and resources of impoverished peasants, indigenous peoples, rural poor and urban poor; and
- Economic contraction triggering high levels of debt that can worsen the situation of borrowing countries.
On Asean economic integration, the Forum participants noted that over two decades of intra-Asean trade liberalization have not delivered greater intra-trade because statistics indicate that the volume has remained stuck at 25 percent since 1985. With the China-led Regional Comprehensive Economic Partnership, they predict this will lead to deeper inequalities among Asean members and between the Asean and the non-Asean RCEP trade partners. As we wrote earlier, India saw the likely adverse trade impact by RCEP on India’s industrial and agricultural producers; hence, without so much ado, India decided to withdraw from the RCEP.
With the Covid pandemic and the failure of the Asean to meet integration targets in 2015 and 2020, is it not time then for the Asean to rethink, indeed, the existing program of economic and financial integration? In the first place, Asean is composed of 10 countries with 10 different levels of development. One of the goals of integration is to close the gaps among the 10 member-states. There are no indications of progress in this area despite over two decades of aimless economic liberalization and deregulation. In fact, the gaps have been widening and deepening between and among these 10 countries, with Singapore and Brunei at the top (over $60,000 per capita) and Laos and Myanmar ($2,500 plus per capita). If the much-delayed Asean Financial Integration is pushed, more inequalities are likely to happen, with the big banks of Singapore, Malaysia and Thailand lording over the region, together with the global banks such as Citibank and HSBC.
What the APF 2020 participants propose is a dialogue between the CSOs and the Asean on alternative community building at the regional level. On the economic front, the proposal is building Social Solidarity Economy network across the region. The SSE model is focused on strengthening solidarity ties among social enterprises and socially-oriented firms that are dedicated to the promotion of sustainable development based on the five Ps propounded in the UNDP’s SDGs: People, Planet, Prosperity, Peace and Partnership.
More on SSE model in the next column. Meantime, we urge Ostry and his colleagues as well as the Asean governments and their economic planners to listen to what the people at the grassroots are saying. Read the Joint Statement of the APF 2020.