WILL CLINTON WIN HERALD LESS ECONOMIC THEOLOGY?

Geneva 4 Nov (Chakravarthi Raghavan) -- The electoral "avalanche", as one US TV commentator put it, that has swept George Bush out of office in the United States and brought Bill Clinton into the White House will, on balance, prove to be a positive factor for the Third World, according to competent observers here.

No serious observer of international development and economics expects any major change of direction or policy in US economy, nor any 'generosity' to the South in terms of more aid or more trade benefits and there will undoubtedly be some major uncertainties over the Uruguay Round.

But the Clinton victory would put an end to the 'theological' fervour brought to international economic discourse by the Reagan crowd and their "voodoo economics' as candidate George Bush described it in 1980 (when he ran against Reagan in the Republican primaries but embraced it fervently when chosen as Vice-President and later became President.

Hopefully too, the 'Fundamentalist' approach and laissez faire economics and trickle down theories of the IMF/World Bank/GATT managements, economists and technocrats who are pushing it on the Third World countries and devastating their economies will lose some steam.

These institutions viewed the Reagan victory in 1980, not as mere change of government of its important, though only veto-holding minority shareholder, but as election to the Presidency of the planet and a mandate to international institutions to change the economic and political policies of all countries.

They pushed on the developing world a dogmatic view of the 'free market' policies that is not practised in any part of the Industrial World and was never practised either in the nearly 200 years of industrial capitalism.

This has devastated the poor nations and their vast majority of populations and productive structures, and destabilising their private and public institutions, just as much as it has devastated the poor in the North.

And in countries like the United States and the United Kingdom these policies and attitudes ennobling greed and avarice, have crippled the manufacturing and productive sectors of economy while encouraging the 'animal spirits' of crude capitalism and fostering the worst forms of speculative finance capital which economists from Adam Smith to John Maynard Keynes, have decried.

But the IFIs, without concerted pressure on them, may not show the same zeal to change their policies and abandon their 'trickle-down economics' which as Clinton repeatedly said in the campaign had not worked in the United States itself.

And the United Nations, whose Secretary-General gives the impression often these days of having embraced the Bush economics and talks of the UN leaving the main economic role to the IMF/Bank and the GATT, and has two key aides of Bush in the top echelons of the UN administration, may find it even more difficult to get rid of these philosophies.

The Clinton victory, if nothing else, has come about because of the concerns of the US public over the economy. Clinton may not have got the ringing popular vote for his mandate. But those who have voted for change of economic policies are the vast majority of the US voters -- when the Clinton and Perot votes (both of which were against Bush and his policies) are taken into account.

While the basics of the Clinton economics remains unclear, and oon the same special interest lobbies could again operate on the White House and over Congress, it is equally clear that Washington would atleast not be the new messiah of laissez faire but would reverse its retreat from the economy and play an activist role.

No doubt, and not merely because of the Reagan-Bush economics, the US can no longer determine global economic policies. It is not even any more in a position to do it internally. It has to secure the cooperation of others and act in concert.

And given the collective weight, not decisive or controlling, but still sizeable, of the developing world, it has once again, if only it acts together, be able to bring their own interests to bear in this global concertation.

There is now widespread acceptance that the world economy and that of the industrialized countries is facing major problem of debt deflation and this cannot be cured through the monetarist and supply-side theories, but would not need an active role by the State in the economy.

The Reagan 'revolution' was preceded, even during President Carter's rule by the actions of the US Federal Reserve under Volcker whereby the interest rates were hiked overnight.

And an indication that the tide may have turned even before Clinton moves into the White House has come in the growing consensus view among analysts on Wall Street and other financial markets on the need for an active role by the State.

Keynes is fashionable again and the monetarist and supply side theories are on the retreat -- except in the Third World countries and in the former socialist bloc where the IMF/Bank philosophies now hold sway -- even if there be no consensus on what actually can and needs to be done by the State.

In the very narrow terms of the only area of North-South economic dialogue, the GATT and the stalled Uruguay Round of Multilateral Trade Negotiations, the talks would have to be put on ice atleast till early spring of 1993 -- until the Clinton crowd moves into the White House and other executive offices and the new Congress extends the administration's fast-track authority.

Also, there will be a big turnover in the EC Commission at the end of the year with the Agriculture Commissioner, Ray MacSharry and possibly even the External Relations Commissioner, Andriessen on the way out.

Both would no doubt like to crown their Commissionerships with an accord, as many GATT diplomats who have spent years of their careers on these negotiations.

Technically, Bush still occupies the White House until inauguration day in January and has the authority to conclude a deal and could send it to the Congress before he quits and so could the EC Commission, its negotiators and others.

Several of the Third World countries who have already yielded in many areas, and have taken unilateral trade liberalisation under the pressure of the IMF and the Bank, also have an interest in concluding the negotiations in the belief that the longer it goes on the more sacrifices they would be called upon to make.

For the record perhaps, the EC's chief GATT negotiator, Amb. Tran Van-Thinh told newsmen that he welcomed the outcome of the US elections, and there was a continuity and so the negotiations could be resumed, with everyone having in mind the US fast- track authority deadlines.

But few, not even GATT's professional optimists who have been talking for over two years of 'windows of opportunity', believe that any one will seriously negotiate with the US in this situation.

Some of them privately saw the outcome of the US elections as 'unhelpful'.

But, atleast as far as the Third World is concerned, the view of Republicans being 'free traders' and Democrats as protectionists has been more of a myth than reality.

In terms of restrictions, voluntary or involuntary, on imports from the Third World -- whether in textiles and clothing, steel or any other competitive imports -- the Reagan-Bush era saw more protectionist actions than in the entire Eisenhower, Nixon and Ford republican administrations or the Kennedy, Johnson and Carter administrations, one long-time Third World trade expert in an international organization said.

While the exports of the developing world to the United States increased during the Reagan-Bush administrations in volume, it was essentially due to the booming US economy (from 1982-1986) and the high value of the US dollar.

But at every stage when the imports came in and became competitive, restrictions were slapped or voluntary export restraint agreements were pushed -- whether it be in textiles and clothing, steel, consumer electronics or anything else.

Even more, disguised protectionist instruments like anti-dumping duties and investigations were used to harass imports, while as coercive instruments like the 'special 301' and 'super 301' were used to open up Third World economies.

While the basics of the Clinton economics remains unclear, and when the dust settles down the same lobbies could again operate on the White House and over Congress, it is clear that Washington would reverse its retreat from the economy and play an activist role.

No doubt, and not merely because of the Reagan-Bush economics, the US can no longer determine global economic policies. It is not even any more in a position to do it internally. It has to secure the cooperation of others and act in concert.

And given the collective weight, not decisive or controlling, but still sizeable, of the economies of the developing world they have once again, if only they act together, be able to bring their own interests to bear in this global collective concert.

The immediate focus in GATT though is over the US-EC oilseeds dispute and the US taking retaliatory measures against imports from the EC, following the failure of the talks at Chicago of US agriculture secretary Ed Madigan and EC Commissioner Ray MacSharry.

The US delegate Rufus Yerxa told newsmen Wednesday afternoon (before a resumption of the Council meeting after lunch) that the US was seeking authorization from the GATT Council to suspend concessions to the EC in the amount of one billion dollars -- the amount the US claims it has lost in impaired GATT rights because of the EC's domestic support to oilseeds.

It was not expected that the Council, which has to proceed on consensus, will be able to adopt the decision sought by the US.

The EC itself was expected to seek the customary ten days time to consider the decision proposed.

It was not clear whether Washington would then go ahead and announce the actions. It has already published a hit list of imports from the EC from which it will choose products to withdraw concessions. But any action now might further complicate the Uruguay Round.