G-8 countries are taking a protectionism approach to tackle the Global economic turmoil. The politics of Realism and social Darwinism may be utilized by the Developed nations in their bid to save their dwindling economies, experts have said.
According to reports, the emergency measures being taken in developed countries can harm developing countries. Reports claim that G-8 countries are returning to protectionism as plans are underway to subsidize their own banks and industries. No developed country has however admitted to turning its back on free trade.
While poorer countries, facing the most urgent economic and political challenges, have few options and resources, rich countries boast of spending their way out of the crisis. In Africa there has been great losses in export revenue as a result of the protectionism measures utilized by the richer nations. “In South Africa, you can go to our ports and find iron ore and manganese, aluminum piled up, not going anywhere. A lot of what is happening in the poorer countries is happening below the radar screen,” says Trevor Manuel, South Africa’s finance minister. Mr. Manuel fears that teachers, nurses and policemen will lose their jobs, children will not go to school. And whole societies will be undermined.
The damaging effect of the new priorities adopted by banks in developed countries is already taking its toll on developing countries. Botswana for example depends on diamonds for its main export revenues, but has now lost 90% of that revenue since the recession began. Many other African countries that were becoming less dependent on aid now cannot get any more aid and loans are almost hardly readily available from international institutions.
According to Amar Bhattacharya, economist representative of developing countries in the International Monetary Fund (IMF) and World Bank, “African countries who want loan can no longer get loans. Unlike Britain or the US, developing countries cannot respond to the crisis with a massive fiscal stimulus. They cannot expand money for social safety nets or investment. They can’t do anything. And the IMF has limited money – so when countries go to it, the Fund lends them only part of what they need. The borrower must produce the rest by making severe cut-backs. That can have devastating consequences in poor countries – as seen in the East Asian crisis ten years ago.”
“Everyone’s rhetoric is very good, but the reality of some decisions being made is very worrying,” said Ms. Minouche Shafik, permanent secretary for the Department for International Development (DFID). “It is a classical problem where individual nations looking after their own interests end up damaging the collective.”
However, experts say that there are serious and obvious risks for wealthy countries who are utilizing the protectionism approach. It is reported that the trafficking of drugs, and of people, piracy, and conflict, all flourish where governments are insecure and unstable.
If this is the case, poor and developing countries may again be used as a means to an end in what is being described by social and economic experts as a Machiavellian approach to tackling the recession. There is a need however, for African Leaders to be cautious, vigilant and innovative in their bid to protect their countries from suffering any further quagmires.
