Putting the Globalization Process on Pause

A wave of protesters attempting to disrupt the annual meetings of the World Bank and the International Monetary Fund was only the latest sign that the process of globalization has become immensely controversial.

Despite the many declarations of the inevitability and desirability of globalization, the actual process of globalization -- at least as measured through international institutions -- is likely to slow down or stop for the foreseeable future.

The last six months have been particularly rocky ones for the three main institutions of globalization: the World Trade Organization, the IMF and the World Bank.

The demonstrators who just turned their efforts toward disrupting IMF and World Bank meetings earlier this month had been more successful creating chaos in Seattle last December during a WTO summit.

More troubling to the institutions than either event, however, is that the protesters seem to have considerable public support in the United States and around the world. In the United States -- arguably the country that has benefited most from the process of globalization -- a majority of those polled expressed some sympathy with them.

And the problems are not confined to street theater. The Seattle WTO meeting also exposed significant schisms that divide the world's trading countries.

Critics can justifiably wonder just how committed the European Union and Japan are to new WTO negotiations; it seems the fear of additional agricultural liberalization, with accompanying political fallout from their farmers, has cooled both to the prospect of a major new WTO agreement.

Even larger difficulties are apparent between the developing world and the developed world. The developing world has increasingly come to see the WTO as an institution controlled by developed countries that often works to their detriment.

This argument seems strange because it is expanded global trade that has allowed countries such as South Korea to make enormous developmental progress. Whatever the facts, however, the perception is undeniably widely held. In the end, it was this breach between the developed and the developing world that truly brought talks in Seattle to an inconclusive close.

In the future, this developing-country attitude seems likely to grow more acute. The widely heralded addition of China to the WTO is likely to strengthen developing-country opposition to further trade liberalization.

China has long tried to claim the banner of leader of the developing world. In the context of the WTO, a boisterous China that opposes trade liberalization in areas ranging from protection of intellectual property to new rules on investment is likely to forcefully assume the leadership role it has sought.

In the next few years, the developed world, led by the United States and Europe, is likely to have its hands full merely resisting developing-country efforts to roll back WTO rules in many areas.

ncreasingly, the IMF and the World Bank are also under fire.

The protesters on Washington's streets were only the most visible opposition.

Critics from the right and left have castigated IMF policy for many years. An increasingly vocal group of economists and former government officials has called for its outright scrapping.

A U.S. government commission with the mandate of reviewing the operations of the IMF and the World Bank supported writing off debts to the poorest countries, but also called for a substantial curtailment of IMF operations. The United States is the largest contributor to both organizations, and its recommendations are likely to have an impact.

Both the WTO and the IMF have also been hamstrung by divisive battles over leadership. In part, these conflicts reflect the deep division between the developed world and the developing world. The World Bank could face a similar struggle.

It may well be that much of what is popularly called globalization is now beyond the reach of all governmental organizations. The actions of private actors, the global Internet and new technologies promise to further enhance trade and commerce around the globe. Even if they wanted to stop this progress, governments could likely do little.

Still, the WTO, the IMF and the World Bank have nurtured much of the process of globalization. But each of these institutions seems unlikely to play a leadership role in supporting and encouraging globalization in the near future.

This could well lead to a global pause in the process of economic globalization. Though it may sound ominous, such a pause may actually provide the world with a needed period of reflection. The pause may give street protesters, governments of developed and developing countries alike, and the international institutions themselves time to decide exactly what direction they want economic globalization to take in the 21st century.