Report by Michael Smith on a speech by Chris Patten, EU Commissioner for External Affairs and former Governor of Hong Kong on "The Challenges and Opportunities of Globalization"

by Michael Smith, editor, For A Change magazine

The world does not need less globalization but ‘more of the right sort’, according to Chris Patten, EU Commissioner for External Affairs and former Governor of Hong Kong. But the big challenge is how to ensure that globalization ‘works to the greatest benefit of the greatest number of people’, he said in a lecture on ‘The challenges and opportunities of globalization’ at the Royal Geographical Society in London, 31st January.

Globalization was not new, he said. Between 1890 and the Great War of 1914-18, for instance, world trade doubled in an era without passports. By 1940, 40 per cent of Britain’s capital was invested overseas, though of course this has since fallen back since the end of the colonial era.

The world was now into ‘Globalization Mark Two’. Technology had speeded up the transmission of ideas, people, goods and money, in what Francis Cairncross had described as ‘the death of distance’. There had been dramatic falls in the costs of telephone calls, air travel and computing power. By the end of the 20th Century, foreign direct investment amounted to $800 billion, involving 60,000 transnational corporations.

There was also a link between political liberty and globalization. ‘Free and democratic countries make the best neighbours,’ Patten said. And an ethical foreign policy was ‘not an airy fairy concept’, however much it had been discredited. Moreover, many people had been lifted out of poverty in the last 40 years, particularly in South Asia. But Patten warned that ‘too many people are marooned in absolute poverty’. Throughout the 1990s, 1.2 billion people lived on less than a dollar a day.

In inner cities there were also great disparities of income. People living in Canning Town in London had a life expectancy six years shorter than those living in Westminster, only six underground train stops away.

Poverty bred violence and there was a need to ‘make the globe safer for all by making it fairer for all’. It would cost the world $9 billion to provide basic fresh water supply. But Europe spent $11 billion a year on ice cream; $50 billion on cigarettes; $111 billion on alcohol; $17 billion on pet food; and $12 billion on perfume. Poverty was an affront to our sense of humanity. The EU spent $50 billion on development assistance to the poor nations. This amounted to 0.22 per cent of GNP, a fall in absolute terms and way below the UN target of 0.7 per cent. Nonetheless, aid was being better targeted to directly help the poor.

Patten spelt out four priorities towards a more equitable globalization:

1. A massive rise needed in the amount of development aid provided by the industrial nations. The EU gives two-thirds of the world’s granted aid, and ‘the UK has one of the best managed aid programmes in the world’.

2. The need to strengthen the institutions of global governance. Better international efforts were needed to combat money laundering, which amounted to some $600 billion to $1,500 billion a year. The drugs trade was bigger than the world’s export of cars or iron and steel. ‘We need global rules,’ Patten said. ‘This is known as multilateralism. You give away a bit of your sovereignty. But you gain much more in benefits.’ Britain disagreed with the US on issues such as the need for a small arms protocol, and the Kyoto accord on global warming. But ‘we must take a lead ourselves’.

3. The rules of international trade needed to be fairer to the world’s poorest nations. The total exports of sub-Saharan Africa, for instance, were hardly more than Malaysia’s exports. Progress on access to Western markets had been made at the World Trade Organization in Dohar last year, and ‘there was nothing more important than delivering on these promises’, Patten said.

4. The international community needed to work ‘far more resolutely’ to help ‘failed states’ such as Afghanistan, Sierra Leone, Somalia and elsewhere. There was a need to restore good governance in the states that had fallen to pieces. Non-Governmental Organizations had a role in this task.

Chris Patten emphasised ‘the centrality of man in the sweep of history. Technology can empower the individual, so that we can recognise that we can each make a difference.’ There were the concepts of ‘original sin and original virtue’. ‘We have to be more effective in our humanitarian responses to evil.’

He refuted the notion that multinationals were as powerful as nations. It was not as true as it seemed. ‘They have to meet the test of consumer approval. They have to meet standards of accountability and regulation.’ The collapse of the Enron energy corporation had shown that ‘unless you can count on professionals behaving like professionals then the whole of the market economy is undermined’.