SUNS  4335 Tuesday 1 December 1998



DEVELOPMENT: SOCIALIST INTERNATIONAL FOR A RETURN TO REGULATION

Geneva, Nov 27 (IPS/Gustavo Capdevila) -- The economic platform of the Socialist International (SI) endorses the principles of the market economy, while reintroducing the concept of regulation in order to overcome the recent financial turmoil.

The economic declaration adopted by the SI council at its two-day meeting this week in Geneva states that in order for globalisation to constitute an element of progress, it must be politically regulated.

Portuguese Prime Minister Antonio Guterres, chairman of the SI economic commission, said regulation was once again the key concept being debated today in international institutions and fora.

He pointed out that while the SI agreed with the principle of globalisation - "a powerful driving force capable of fomenting growth and development" - they distanced themselves from its origins.

Globalisation arose at a time when most European governments were dominated by right-wing political forces which imposed an "ultraliberal paradigm," he said.

The president of the SI, Pierre Mauroy, cited the last doctrinal and ideological shift taken by the Second International. "Twenty years ago we accepted the market economy, but we are not liberals," he stressed.

Today there is no political grouping among us which does not adhere to the market economy, said Mauroy, a former prime minister of France.

But in the wake of the Asian crisis, public opinion is beginning to lose its "blind faith" in the market, states the document that will constitute one of the bases for discussion at the next SI congress,
scheduled for November 1999 in Paris.

In order to curb the risk of a global recession, the SI recommended that support be provided to the countries that had been, or could be, hit by the crisis.

Guterres expressed concern for two countries in particular, Brazil and China, and said the international community should mobilise its resources to ward off crises there.

The SI formula is based on recommendations of treatment to be undertaken by the economies of industrialised countries.

The onus of responsibility for the future of the Asian economy lies on Japan, and Tokyo should be obligated to pursue reforms of its financial institutions, said Guterres. The United States and the European Union, meanwhile, should harmonise the actions of their central banks and financial institutions so as to adopt sound fiscal policies that contribute to growth.

The SI proposed reforms of the international framework for financial and economic regulation. Guterres insisted on the need for reforms of the Bretton Woods accord which gave rise to the International Monetary Fund (IMF) and World Bank. The socialists also said the IMF interim
committee should become a decision-  making political council rather than a merely consultative body.

The SI also continued discussing the idea of a United Nations Economic Security Council, a sort of broadened Group of Seven most industrialised countries - Canada, France, Germany, Italy, Japan, the United Kingdom and the United States - in the words of Guterres, who said the G-7 was incapable of providing leadership today.

The U.N. Economic Security Council could combine a specific number of additional permanent members with rotating smaller members, he suggested.

In the area of development aid, the SI recommended the earmarking of more resources for multilateral cooperation. It suggested the emission of development bonds by the World Bank and a tax on currency trading, with the revenues to be earmarked for the IMF's contingency reserves.
In its fight against poverty, the SI sponsors a global programme of direct spending in nutrition, housing, health and education for the poorest sectors of developing countries.

The SI urged that higher priority be put on expanding domestic demand and meeting basic needs, rather than an emphasis on solely export-driven development.

The IMF and World Bank should establish new conditions for operations with the developing world, with assistance tailored to local realities and designed to address social problems, Guterres underlined.