Pacific Asia Resource Center. THE PEOPLE VS. GLOBAL
CAPITAL: THE G-7, TNCs, SAPs, AND HUMAN RIGHTS. Report of
the International People's Tribunal to Judge the G-7,
Tokyo, July 1993. New York: The Apex Press, 1994. vii + 163
pp. ISBN 0-945257-23-6 $14.95 (paper).

Reviewed by Jan L. Flora, Department of Sociology, Iowa
State University, Ames, Iowa, USA

The International People's Tribunal to Judge the G-7 was
convened in Tokyo in 1993 to coincide with the G-7 meetings
also held in Tokyo. The G-7 group consists of the Finance
Ministers and Heads of State of Canada, France, Germany,
Great Britain, Italy, Japan, and the United States. Its
focus is the world economy, although other urgent items are
discussed. The Tribunal was initiated in 1992 at a
Washington meeting of 100 NGO activists. It is affiliated
with the Rome-based Permanent People's Tribunal. The
Tribunal to Judge the G-7 gathered evidence and, utilizing
international law such as the Universal Declaration of
Human Rights, judged the G-7's "complicity" in
the present global capitalist economic system, and in
particular the Structural Adjustment Programs (SAPs),
enforced through the International Monetary Fund (IMF) and
the World Bank.

This little book contains testimony of individuals from
Japan, India, Malaysia, Indonesia, the Philippines, Sudan,
Jamaica, Grenada, Nicaragua, and Brazil affiliated with
universities, independent research institutes and other
NGOs. It contains an eloquent statement from a farmer from
Japan. It concludes with a document of indictment, which
summarizes the case against the G-7 in straightforward
language. Testimonies cover

The testimonies are uneven. Some are excellent and well
documented. Others critique the capitalist development
process generally and at least one (Budiman) presents a
list of major debtor countries suggesting that Indonesia
ranks second only to India in total international
indebtedness. The table does not list either Brazil or
Mexico, both of which have larger debts than Indonesia.

SAPs are agreed to by the debtor country as a condition for
receiving a SAL (Structural Adjustment Loan) from the IMF.
Generally, other lending is keyed on approval of the SAL
and acceptable progress toward fulfilling the SAP. The SAPs
generally contain specifics for accomplishing the following:
reduction of the size of the government and the fiscal
deficit, privatization of particular government
enterprises, liberalization of foreign investment, and
"getting prices right" including currency
devaluation, substantial tariff and domestic subsidy
reduction. 

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While presenters agree that the import-substitution statist
approaches previously pursued by many Third World
governments had ultimately failed the masses. However, they
argue, the SAPs were designed above all else to ensure that
transnational corporations (TNCs) could operate freely
throughout the Third World. While ostensibly designed to
encourage more efficient production and delivery of
services in debtor countries, citizens in those countries
was not served by the SAPs^×neither in the short nor
the longer term. Presenters at the Tribunal suggest the
following reasons: 1) The SAPs result in debtor countries
"eating their seed corn." Investments in human
capital (including both educational and health services)
and infrastructure have been curtailed sharply in many
countries in order to shrink government. Jennifer Jones, a
Jamaican NGO leader, shows that the percentage of the
Jamaican national budget represented by the Ministries of
Construction (Roads and Housing), Public Utilities and
Transport, Agriculture, and Youth and Community
Development, and Local Government declined by from half to
70% from the 1970s to the 1990s. Per capita expenditures
for education and for health declined by about 1/5. Only
the percentages for the Ministry of National Security and
the Ministry of Finance grew. The latter, which manages and
pays the national external debt, represented over half the
total budget by the early 1990s.

2) Isagani Serrano, Vice President of the Philippines Rural
Reconstruction Movement, points out that "getting the
prices right" is a good deal more complicated, because
of externalities, than is suggested by the free marketers.
He points out, "Structural adjustment was just as
environmentally blind as the previous State-dominated
structures that it was trying to undo" (p. 109), and
argues that cutting back spending "undermined the
government's capacity for environmental management"
(p. 114). He also admits that South Korea cut down 1/3 of
its forests while pursuing a successful state-led Export
Oriented Industrialization. One might conclude that the
culprit with respect to environmental degradation may be
economic growth, but the SAPs offer no solution. More
broadly, if the SAPs ultimately serve the interests of the
TNCs at the expense of the people in debtor countries, then
one would not expect the internalization of
externalities^×whether they be deteriorating
infrastructure, human capital erosion, or environmental
degradation^×in "getting the prices right."

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3) Maria Clara Couto Soares of IBASE, the Brazilian
Institute for Social and Economic Analysis, in the best
essay in the book, analyzes the process of debt repayment
and assesses the impact of the SAPs in that country. She
points out that the foreign debt by 1985 was US$105
billion, up 64% over 1980, in spite of the fact that Brazil
paid US$91 billion in foreign debt service in that period.
In order to make payments on the external debt, the
government (lacking a fiscal surplus), issued bonds to
purchase hard currency from exporters. This increased the
Brazilian government's domestic debt and triggered
inflation. Efforts to dampen that inflation brought
recession. Annual GDP growth was 1.7% in the
1980s^×less than the population growth rate. Poverty
grew more than 50% over the decade. And by 1989, Brazil's
debt had actually grown to $115 billion. Two sectors in
Brazil did quite well--exporters and the financial sector,
who were able to make considerable sums through
speculation. By the 1990s, Brazil had the greatest income
inequality of any country in the world. Soares concludes by
saying that structural adjustment and its neo-liberal
policies have not provided a base for new development, but
rather have eroded the previously developed productive and
institutional structure and technological capabilities.

4) The Tribunal's "Indictment" does a good job of
discussing the relationships which have weakened the ability
of indebted Third World countries to provide for their
people: The G-7 desires to remain dominant through the
"constant expansion of global capital" (p. 126).
However, the global expansion of capital reduces the power
of the G-7 nations, as they have become "front men for
global capital" (p. 127). The World Bank is also a
servant to the TNCs rather than "serving the common
good," as was the GATT (now the World Trade
Organization--WTO). Indictments include violation of
Articles 23, 26, and 25, which forbid denial of the right
to work, the right to education and the right to a standard
of living adequate for health and well being; usurpation of
the sovereignty guaranteed member states in the UN Charter
through the imposition of SAPs via secret negotiations and
rulings by the IMF and World Bank; etc. These violations
are presented in more detail in an introductory essay by
Richard Falk, international legal scholar.

While the indictments are well argued, the call to action
may be satisfying to those who made it, but not very
realistic politically. Organized citizen groups are
exhorted to demand compensation from the responsible
institutions to those who were harmed by SAPs, and to
obtain recognition by G-7 leaders of their of personal
responsibility for the suffering that structural adjustment
has caused. Based on a secret analysis by the IMF of 66 SAPs
which apparently shows almost a total failure to achieve
their fiscal, monetary, income growth, and debt reduction
objectives, the Tribunal suggests that the IMF be required
to compensate "SAPped" countries through debt
reduction for the harm done by SAPs to people and that the
World Bank compensate persons harmed by its failed
projects. 

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While these are interesting ideas, I would have been more
satisfied if there had also been analysis of possible
contradictions in the system and of the circumstances under
which the G-7, the World Bank, or others might be persuaded
to counter the power of the TNCs. Perhaps, with organized
citizen pressure, issues like global warming could become a
cause for which the G-7 countries, in their own self
interest, would discard free market concepts and provide
grants to Third World countries and to their farmers,
indigenous peoples, and others to encourage for reducing
pollution reduction and rain forest conservation. At what
point, given the increased capacity and pressure for the
World Bank to evaluate projects it supports, will the World
Bank conclude that the principles behind the SAPs^×and
eventually the globalizing development model which
underlies the SAPs--must be radically altered? There are
efforts within the Bank to change the corporate culture
from an engineering mentality to one which gives greater
importance to social results. How successful those efforts
will be is unclear, and may depend also on citizen pressure
for internalizing the externalities generated by the TNCs.
Only once in this book are the NGO coalitions mentioned
which have grown up around the major UN Conferences of the
past decade on women, the environment, food security, etc.
How might they contribute to such citizen pressure?

This book is aimed at activists, and is written in
straightforward prose. It is also appropriate as a textbook
in advanced undergraduate courses as well as graduate
courses on international development and related topics. At
the graduate level it should be supplemented by other
readings on Globalization. I expect to assign the four
chapters I cited above in the introductory part of my
graduate rural development course. Although the
"Indictment" chapter has shortcomings, it should
generate a healthy discussion on the relationship among
actors in the Globalization process and regarding
appropriate tactics for diminishing or reorienting the
global power of TNCs.

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