UNMIK ON AIR

27 September 2003

Global economy impact on Balkans

(By Sputnik Kilambi and Zoran Culafic)

Hello and welcome to this special Documentary edition of UNMIK ON AIR with Sputnik Kilambi and Martin Redi

Economy jokes are not particularly funny but it’s worth recalling the one about a scientist and an economist marooned on a desert island. The good news is that the pair find a crate of tinned peaches washed up on the beach. The bad news is that they don't have a can opener.

The scientist scours the island in vain for a rock with which to prize open the tins. The economist, meanwhile, sits serenely on the beach enjoying the view. When the scientist expresses concern at his insouciant behavior in the face of potential starvation, the economist replies that he sees no problem because they will eat when they are hungry.

"How can we do that without a tin opener? asks the scientist. "Assume we have a tin opener", replies the economist, "and then it's easy."

The assumptions prior to the Cancun summit clearly didn’t hold up – or at least failed to convince the majority of poor and developing countries that opposed the agenda of the rich nations en bloc. The assumption that free trade will help the developing world escape from poverty, they argued, ignores another key aspect, that trade must be fair and not just free. A global economy which allows subsidies worth 2 dollars a day per cow in the European Union while condemning the majority of the world’s population to survive on less than a dollar a day is clearly neither fair nor sustainable – so goes the argument of those challenging the current trade regime.

Poor countries simply could not sign on to demands from the EU and others that they open up their markets while developed countries continue to pay huge subsidies to their own farmers – Ibrahim Rexhepi, economy editor of Koha Ditore.

Ibrahim Rexhepi: The main fight was about agriculture; subsidies in the rich countries kill the market of the poor countries, these goods compete in poor countries, making impossible for poor countries to find a free market. The Cancun conference made it clear that the rich are rich and the poor are poor, and they have to cope with this.

The stakes at Cancun were high for everybody, adds Robert Piper, head of UNDP in Kosovo – and the focus on agriculture made it especially relevant to Kosovo,

Robert Piper: the great majority of people do depend on the agricultural sector for their livelihoods, so Kosovo does have a stake, it does not have a voice at this time in that process and that is something that needs to be addressed as we move forward in the political process in Kosovo.

While NGOs, unions and farmers’ organizations from around the world denounced the WTO summit, representatives of the rich countries and the corporate world insisted the success of the talks was key for world prosperity. Prosperity for whom, ask detractors. The globalization of the world economy may be a reality, argues Nebojsa Medojevic, head of the Podgorica-based NGO Center for Democratic Studies, but the much-vaunted benefits have yet to trickle down to the legions of underprivileged in the world.

Nebojsa Medojevic: The huge multinational companies which control the WTO are pressing local governments to reduce customs taxes and eliminate subsidies, while maintaining their own subsidies and high customs and other taxes, thereby protecting their own national economy from imported products. At the same time they sell their subsidized products to poor countries, thus deepening their poverty and dependence. Poor countries, or third world countries as some call them, are sinking more and more into total dependence on the developed nations, which then provide aid or technical help, just to keep them alive.

In Kosovo particularly, says Ibrahim Rexhepi, the concept of the free market is misused since it implies choking the local market. And instead of having a free market that would accelerate local production, people are oriented more towards trade and the gray economy.

Ibrahim Rexhepi: The producer cannot make a profit; even farmers have switched to trade, since there is better profit. You make more if you buy flour or wheat from Hungary or Vojvodina than to produce it here. The government, the ministry of agriculture, the parliament should have this in mind and draft laws, create infrastructure and allocate budgets. Even in the richest countries the agriculture is subsidized. The EU subsidizes the production of agricultural goods up to 50 billion euros.

The UNDP, says Robert Piper, is unequivocally committed to fair trade and not just free markets. The UN is very clear that the agricultural subsidies that exist today in many developed markets are fundamentally undermining the economic viability of the largest number of the world’s population.

Robert Piper: When you start comparing the numbers of funds that have been invested in development corporations versus funds that are going into agricultural subsidies, there’s a somewhat perverse negative relationship. Without doubt, the UN (edit) feels very strongly that this issue of tariffs regime and agricultural subsidies is undermining the development process, is undermining governments’ abilities to establish a successful human development policy.

Unfortunately, these aspects of the debate on where the world economy is and should be headed are not adequately covered in the region, says Spyros Psaroudas, from the Greek branch of the European Social Forum, campaigning for alternative economic policies.

Spyros Psaroudas: For example, the public has very poor information; this includes not only countries like Serbia or Albania, but unfortunately Greece as well. The newspapers, the press in Greece wrote only a few lines in the front pages (edit) and of course TV channels didn’t pay any attention to what happened in Cancun or what’s going on in general.

A report just released by the London-based New Economics Foundation predicts a gloomy forecast for the world’s poor, though the world economy, as a whole, is poised for growth. According to the report’s authors, poor countries are actually subsidizing the rich ones – quoting a net flow of 48 billion dollars per year from the poorest people to the richest, which easily outstrips annual aid grants of 32 billion dollars.

The economic changes underway in the Balkans today has also increased the gap between rich and poor, says Branko Milanovic who works for the World Bank in Washington; in his native city Belgrade, for example, people are still having difficulties accepting the new rules of capitalism

Branko Milanovic: I think that people take it very hard – the uncertainty, the fear of unemployment, even bigger than the fear that you might get a smaller salary, and the fact that tomorrow’s new owner (of the company) could simply fire you, despite the fact for example that you were working there for 30 years or so

Spiraling economic inequities have other consequences as well – including the criminalization of society. In the Balkans, says Branko Milanovic, this is exacerbated by a decade of conflict.

Branko Milanovic: Along with criminalization of the society during these wars, there has also been a change in values. Criminals are the main force today, and they are the models for your children tomorrow, it’s really very difficult for parents to accept this, not to mention that it is totally counter-productive for the society. What future has a society if all educated people think their aim should be to become a criminal?

Massive unemployment, unequal trade and the ever widening gap between the haves and the have-nots are among the reasons that UN chief Kofi Anan recently called for a radical reform of the UN and the global economic system as a way of preventing conflicts. A call echoed by Nebosja Medojevic from the Podgorica Centre for Democratic Studies.

Nebosja Medojevic: Such a sharp gap between a small number of rich countries and rich individuals on the one hand and a huge and still growing population of poor people on the other could surely lead us to some new conflicts. Thus at the end, it could have a boomerang effect on the rich countries.

The Balkans haven’t seen the massive anti-globalization protests that have accompanied every major international gathering in recent years – at least not yet. Many argue, that the debate is not really relevant for the region, given the high unemployment rate and the lack of foreign investment. But the situation is changing, and adds Spyros Psaroudas of the Greek Social Forum, it is time for Balkan people to sit up and take notice. Solidarity, he says, is as important as the notion of competition.

Spyros Psaroudas: Because of the economic policies followed by the governments in the region, there is more military and police state. These factors are very clear to everybody who understands the political and social reality in the Balkans. What remains unsolved is to make people understand that another Balkans is possible.

With unemployment stalled around 60%, people in Kosovo have ample motivation to redirect their focus from ethnic rivalry to the sort of bread-and-butter fundamentals that affect most people in the region, irrespective of ethnicity.

That does it for this special program on UNMIK ON AIR. Thanks for listening.