If anti-globalization radicals really want to tear down the world capitalist system they might want to go door-to-door next year on behalf of incumbent U.S. president, George W. Bush.
While Bush brags about his business experience and identifies with the interests of wealthy US capitalists, a continuation of the policies he has pursued since Sept. 11, 2001 threatens not only the US economy, whose ballooning defense-driven federal deficit risks a potentially disastrous collapse of the dollar.
But his insistence on effectively exempting the United States from the rule of international law commercial as well as human rights law also threatens the very foundation of the multilateral economic system under which global corporate capitalism has prospered for more than 50 years, according to a growing number of economic analysts.
For multinational corporations, which act as both the chief engines and beneficiaries of the global system, the rule of law provides the predictability they need to make investment decisions. Without it, countries find it much more difficult to attract capital and benefit from global trade and investment regimes.
Concern about Bush’s unilateralist policies and their relationship to the global economic order was first voiced late in 2002 as it became clear that he was determined to go to war on the basis of a new national-security doctrine that featured preemptive military action.
Among those who expressed alarm at the time were a number of former high-ranking policy makers, most notably Jeffrey Garten, currently dean of the Yale School of Management.
“The big issue is disregard for international law,” he warned in an article in Business Week magazine in an appeal to corporate executives to weigh in against the administration’s course.
“The U.N. Charter places stringent limits on the right of self-defense, saying that the unilateral use of force can be used only against imminent threat of attack.”
“The danger is that once the US brazenly departs from international treaties, it invites widespread cynicism about all global agreements and opens the door to other nations’ flaunting them too,” Garten argued at the time.
Unconstrained either by Congress, the UN Security Council or the captains of finance and industry, Bush went to war, fueling a new round of warnings.
“Uncertainty is anathema to investment and growth,” wrote Business Week editorial page editor Bruce Nussbaum as US troops crossed into Iraq from Kuwait, noting that the war’s possible consequences, as well as the flaunting of international law, posed serious threats to global confidence.
“Chief executives are beginning to worry that globalization may not be compatible with a foreign policy of unilateral preemption,” he went on.
“US corporations may soon find it more difficult to function in a multilateral economic arena when their overseas business partners and governments perceive America to be acting outside the bounds of international law and institutions.”
Nor was Bush’s self-exemption from international law seen as the only blow against global corporate interests. The administration’s plans to privatize the Iraqi economy while awarding lucrative rebuilding contracts to US companies also flew in the face of the interests of a global capitalist system supposedly based on transparency and openness.
“American imperialism is, by definition, a retreat away from global capitalism, a retreat from the invisible hand of markets in favor of a more dominant role for the visible fist of governments,” argued Paul McCulley, a managing director of PIMCO, the world’s largest bond investment fund.
Indeed, the unabashed commitment to reward US companies (preferably political contributors) in Iraq gave rise to fears about a new mercantilism based ultimately on military (and hence government) power of the kind that characterized European imperialism, as opposed to the creation of an open global market in the war’s immediate aftermath fears that were fanned with the September collapse of the World Trade Organization (WTO) Doha Round in Cancun.
Those fears reached their height earlier this month when Deputy Defense Secretary Paul Wolfowitz announced that companies from countries that did not support the war in Iraq including some of Washington’s closest allies would be barred from bidding on some 18.6 billion dollars in contracts for Iraq’s reconstruction, a decision that, according to many trade experts, violates a WTO agreement on government procurement.
The decision announced the same day that Bush met with former secretary of state James Baker to craft a strategy for persuading US allies, including those whose companies were banned from bidding, to forgive Iraq’s 220 billion dollar foreign debt drew outrage from affected governments, including France, Germany, Canada and the European Union (EU).
“It is a bad idea because reciprocity is the foundation on which trade depends,” said Steven Schooner, an expert on international procurement law at George Washington University here.
“When the US closes its public procurement market to foreign companies, it empowers foreign states to exclude companies from their public works projects.”
“I would expect most multinationals to cringe at the thought that one government can decide by fiat to exclude from government procurement entire swaths of the world,” said Charlene Barshefsky, US trade representative under former president Bill Clinton, adding, “open markets and free and fair access (are) … the lifeblood of multinationals.”
Despite these concerns, Bush, who is running for reelection next November, publicly backed the decision in a statement that must have sent chills down the spine of multinational CEOs. Asked by a reporter if the ban violated international law, Bush answered, “International law? I better call my lawyer. He didn’t bring that up to me.”
The decision and Bush’s sarcastic reaction might actually have finally galvanized the corporate world, or at least Baker who is far better attuned to the concerns of multinational companies than anyone in the administration with comparable ties to the president.
Shortly after Wolfowitz’s announcement and just before Baker’s first trip to Europe as Bush’s personal envoy for Iraq debt reduction, the White House quietly told the Pentagon and the Coalition Provisional Authority in Baghdad to indefinitely suspend contract awards for the 18.6 billion dollars.
According to Washington Post columnist Robert Novak, the administration is actively considering lifting the ban.
Reversing the decision would be an important signal to multinational corporations that Bush may indeed be inclined to temper his unilateralist and nationalist tendencies in the interest of maintaining a multilateral order that is friendly to corporate-led globalization.
But analysts like Garten are unlikely to take anything for granted. “The business community … is the only strong voice in this country for continued globalization,” he told a Los Angeles audience last month.
“We’re at a very tender point in globalization where we could go forward with more opening, more trade and more of the things that globalization has brought, or we can go backwards and the world could very easily fragment into different blocs of countries, more nationalism, more protectionism.