SUNS  4357 Thursday 21 January 1999

Latin America: The "Financial Time Bomb"



Havana, Jan 19 (IPS/Dalia Acosta) - Is the world threatened by a "financial time bomb" or is there still hope for neoliberalism, is the question being posed by 800 experts meeting in Cuba's capital this week.

The collapse of Brazil's currency closed a "circle" in which "nearly all the peripheral countries were harshly beaten by the crisis," stated Jorge Beinstein, director of Argentina's Centre of System Futurology and Management.

Now, "this cold front is progressively advancing across the central countries" making its impact felt in economic growth forecasts bending downward in the European Union and United States, said Beinstein.

The Argentine expert raised one of the richest debates in the International Meeting of Economists on Globalisation and Development, presided over by Cuban leader Fidel Castro, running Monday to Friday in Havana.

This meeting, organised by the National Association of Economists of Cuba, unites experts from various tendencies, seeking plural responses to a question posed by Castro last year; 'What to do in the face of the crisis?'

The first block in the "domino effect" was toppled on July 2, 1997 in Thailand, rapidly running through the rest of Southeast Asia, Russia and Eastern Europe, and on into Latin America through Brazil this month.

Castro stated Monday "the current contradictions will not be resolved with wars" but resolution of the current situation will undoubtedly take its toll in further suffering amongst the world's four billion
poor.

Cuba's president launched a personal campaign against neoliberal globalisation last year, departing from the thesis that globalising processes are inevitable but can lead to a disaster for humanity when guided by neoliberal policies.

The "financial time bomb" will not explode "overnight," but is "something which is growing, and is becoming less manageable as time goes on," auguring a crisis far bigger than the 1929 Wall Street crash, warned Beinstein.

There is an "inexorable" deceleration of world economic activity pointing to a long term - in 20 to 30 years - decline of the industrialised countries, he added.

The seventies marked "the end to the great post-war prosperity" and world economic growth shrank from 4.5% between 1970 and 1979 to 3.4 in the eighties and 2.9% in the nineties, he stressed.

On the opposite side of the fence, France's Michel Fouquin - a recognised neoliberal flag-waver - said there are now signs of recovery amongst the countries of Southeast Asia, the hub of the recent crisis. Fouquin forecast growth in Thailand for the second semester of 1999, commenting that "the model which served for the development of such diverse countries can still be useful for countries trying to find the path to development."

Meanwhile, director of the TIPS magazine, Roberto Savio, predicted that if current economic tendencies are maintained "we are going to have many more incidents of crisis like the one we are suffering now."

Savio, who is also director-general of IPS, rejected the tendency to restrict analysis to trade and capital flow, insisting that the world is facing a crisis in the speculative finance sector which will also
affect production.

Savio pointed out that any analysis of the present situation must take into account "the element of relations between capital flow and the flow of goods has an unprecedented speculative nature."

"In a situation where there are several speculative dollars for each productive dollar two different dynamics must be taken into account: the international productive sector and the speculative sector," he stated.

John Saxe Fernandez, professor at the Independent National University of Mexico, declared his opposition to all attempts to justify wealth concentration and the regressive redistribution of the gross world product in favour of the advanced capitalist countries and the transnational companies associated to them.

"Current figures prove in practice that the main players in the international arena are the national economies, where the  contradictions of class, gender and ethnic group are deepened," said
Fernandez.

In his opinion, "the current globalisation process is tightly linked to the increasing contradictions between trade and investment, in a context where the relations of national economies increase at the same time."
According to Armando Cordova, former chair of Venezuela's Economic Sciences Academy, "real possibilities for the evolution of economic globalisation" are restricted by "as yet unresolved contradictions."
According to Cordova, these contradictions include the tendency to see this process as an essentially financial phenomenon and to relegate links with the evolution of the productive structures of the globalised economic system to a secondary slot.