Academic and activist Walden Bello, from the Philippines, is a leading critic of the current model of economic globalisation - who once risked 25 years in prison to expose the extent of how World Bank projects helped support the dictatorship of Ferninand Marcos of the Philippines. He outlines how an alternative to the Bretton Woods institutions is emerging with the expansion of BRICS nations - and other global south-led institutions which are working together to expand opportunities for  their economies and to pursue a greener and fairer development model.

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Hi there, welcome to Economics from the South,

where we rethink economics, give a voice to marginalized communities and come up with lasting solutions to

ensure a fairer, more sustainable future for all of us.

I'm Julians Amboko, a Kenyan business journalist and your host for this International Development Economics Associates podcast.

As I wrap up six weeks of conversations that have focused on the international debt crisis

and rethinking the global financial architecture.

I'm honored to be joined by someone from the Philippines who's put a lot of thought and action into those two issues.

Episode six.

I am Walden Bello and I'm the co chair Of the board of a focus on the Global South, which

is research and analysis institute based in Bangkok, Thailand, affiliated with Chulalongkorn University.

And I also have been doing a lot of work on global political economy.

And also a former member of the House of Representatives of the Philippines.

Walden, you were actually quite famous for having broken into the World Bank headquarters one time.

Give us some cut line to what really prodded and what that was about.

Well, we were trying to figure out what was happening with World Bank projects in the Philippines during the

period of Ferdinand Marcos, the dictatorship from 1972 to 1986.

And since the World Bank was the biggest donor of Marcos, we felt that we really had to access confidential material.

At first, we developed a set of contacts within the bank, but it was not enough.

So, uh, we at that point felt that, uh, we had to just break in and get the documents.

And, uh, I and my colleagues over a period of about three years went to the bank.

We post as World Bank project directors coming in from abroad.

I'm looking very haggard with our ties askew.

And we were asked for IDs, and we tried to pretend that we were trying to find our IDs in our pockets, and since

it took such a long time, the guards just let us go in.

After three years, we were able to sneak out about 6, 000 pages worth of World Bank material, which documented

in detail how they supported the Marcos government.

Interesting.

Thank you so much for that insight.

Let's come back now and talk about a conference you and I both attended not too far back in Rio, Brazil.

And you mentioned a very interesting thing about shifting geopolitics and what you talked

about, the giving birth to a new global order.

If you could talk a little bit more about this new global order, what it looks like and how

it is different from what we have presently.

What I was trying to show there were several things.

One was that the old international liberal order presided over by the United States as a

hegemon is in very deep trouble at this point.

Uh, it's on the defensive.

And this order is very much protected by a political canopy that consists of NATO, the Bretton Woods institutions, like the IMF

and the World Bank and the World Trade Organization, et cetera.

And of course, US capital as the dominant force, and that has been the reigning world order since 1945,

46, over 70 years later, we have a situation whereby.

China has become a major force in the global economy.

We have the Global South, despite all the difficulties, becoming stronger as a collective

than it was in 1946 or in 1975, or even in 2000.

And we have the emergence of the Brazil, Russia, India, China, South Africa, the BRICS.

So we are in a situation whereby the undisputed dominance of the United States, you know, has really been eroded.

The erosion has not only been because of the economic challenge that has been posed by China becoming the second biggest economy.

And by some measures, now the biggest economy, but also because of the military defeats of the United States,

particularly in the Middle East back in the 2000s.

So this is now a much, much more plural world in terms of the quotient and the exercise of power.

And it is also a more dangerous world because a hegemonic power in decline is extremely dangerous because it

does not want to give out its position on strength.

The U.

S.

now is relying on the area where it still has undisputed superiority over all global powers,

which is the military to try to arrest its decline.

There was this great phrase by Antonio Gramsci, the Italian Marxist, during the 1930s.

He said that the old world is dying and a new world is trying to be born, and this is a time So I guess what it was trying

to say here is also something that captures the essence of our times, you know, which is there is a new world that is striving

to be born, but this is also a very, very dangerous world.

So basically that opportunity and danger somehow seem to be twins.

You can't have one without the other.

Why is this conversation particularly important within the context that we now find ourselves in?

This is extremely important at this point in time because the Bretton Woods institutions have not really been

responding to This debt crisis, which is, in fact, some people would say it's, it's worse than the 1980s debt

crisis we have here, not only the least developed countries in Africa and in Central America and in South Asia.

But, um, you have the so called emerging economies like Argentina, for instance, which has already

defaulted on its debt back in 2020, 2021.

So you have a variety of countries that, of course.

Their debt problems have their own particularities, but the main thing is because they have been brought about

by their participation in a global economy that continues to condemn them to tremendous trade deficits and to a

subordinate place in the global economy from which they have tried to get themselves out of through loans, both from

the private sector and the multilateral institutions, but loans whose conditions have made their situation even worse.

The World Bank and the IMF in particular have really come out with no new solution except to say, Hey, you

know, we are going to impose the same conditionalities.

What is even more tragic at this point is that the IMF.

And the members of the so called Paris Club and the United States Treasury, uh, are saying that, Hey, the big problem here is China.

China does not want to participate in a common debt restructuring.

So it's like a blame game.

And uh, what China has said is that.

Hey, we've been forgiving debts on a case by case basis, and they have, they have been forgiving debts, you know, over the last

20, 25 years, and they don't want to participate in a common debt restructuring that will just impose the same conditionalities

on the indebted countries and make their situation worse.

And China's been basically saying, we are not participating in something like that because it's really a development problem.

And you know what, our aid to these countries is really meant to assist them in really developing in a more autonomous way.

And we're not going to impose conditions on them that you want us to do that will guess.

underdeveloped and even further.

So that's the situation we're in right now.

Walden, now that you have mentioned the situation that we are in, and specifically said that, um, the Bretton

Woods are structured and not offering solutions, is it a foregone conclusion that the era where we had the Bretton Woods and the

United States setting the global agenda as far as the financial architecture and distress resolution is concerned is dying down

gradually or do we expect to see still more activity from them?

These institutions are definitely on the defensive because they know that

they're suffering from a crisis of legitimacy.

Uh, not only have their prescriptions failed, and there's hardly any instance of a successful case of structural adjustment,

which is the neoliberal restructuring of their economies.

Aside from that, they also have, uh, a problem whereby in terms of the voting shares of these institutions are heavily

weighted towards the United States and Europe, and the United States in both the IMF and the World Bank, uh, retains,

uh, a veto power, which gets 17 percent share of the votes.

We also have this very feudal institution that the only person that can become a president must be somebody

from the United States and the only person who can be a managing director of the IMF is a European.

So the big question is how long can they keep on saying, you know, that we're not going to have any significant

change in this when in fact you have this economies like China, Brazil, India becoming bigger and bigger and bigger.

And we also are seeing that there have been the emergence of the BRICS institutions associated with

the BRICS or with China that, uh, have become important channels of assistance to the developing countries.

For instance, the Asian Infrastructure Investment Bank, the, uh, New Development Bank, which is a multilateral

institution, one of the products of the BRICS, of course, it's still quite undeveloped at this point in time.

You have the Contingency Reserve Fund, which would play the functions of the IMF for

countries that are in emergency conditions.

Uh, you have the Belt and Road initiative, a more than 1 trillion funded initiative by China.

It's coverage is in fact, not just Asia, but Latin America and Africa.

So what we're seeing is that.

The weight of the Global South, and especially the weight of certain countries like the BRICS in China has become

bigger during this crisis and that you also have the incipient alternative in terms of a multilateral order.

So we'll just take a look at the BRICS.

There are now about 10 countries that fund the BRICS and recently Ethiopia and Saudi Arabia.

And the United Arab Emirates have joined in.

And if you look at it, you have this massive, uh, sovereign wealth funds into the hundreds of billions of dollars of

Saudi Arabia and the UAE, uh, calling in at this point.

And then you have about another 40 countries in line that want to join.

So we still don't know the final institutional arrangements of the BRICS.

We don't know at this point how much of resources the BRICS will bring together and how these resources will be developed.

But the point is, that I'm trying to make here is that these are real developments at this point that are

cutting into the power and the hegemony of the West.

And I think that that's a fairly significant trend at this point in time, because it also responds to the

political developments in Europe and the United States.

What you have in Europe at this point and the United States is a contention between the forces.

Of global liberalism, that's tied to the old order, which was to promote the hegemony of, of Western capital globally and

the insurgent right wing movements, you know, that seem to be more interested in keeping the United States and Europe as

fortresses to prevent them from being, you know, uh, penetrated.

By the Global South, my sense about it in studying this is that when you look at Trump and Vance, their vision

is a kind of a fortress America, uh, in which they bring American capital back home, they call it reshoring, uh,

and they, they limit trade, uh, with the rest of the world.

Allow me to jump in there with a very quick question.

You have given us the shape and form of what the new order looks like, including some of the structures

already being set up, uh, under the BRICS initiative.

It's been 15 years or so since we had the first BRICS summit, um, in 2009.

Skeptics have raised the question as to whether we are seeing the same dominance under BRICS that we saw

that we have seen rather under the current structure, where currently the Bretton Woods is heavily skewed

towards the United States under the BRICS initiative.

If you look at the lending, for instance, people have argued, look, it is still concentrated by China and therefore susceptible

to the same challenges we have seen under the Bretton Woods.

People should, should raise these issues regarding the structure of the BRICS, the dominance of China within it at

this point in time, the dominance of China in terms of lending.

You know, these are really very valid questions to raise.

The thing is, this is a formation that is in flux, that is in the process of being consolidated, and it,

it has a number of, of members at this point that have to, to work out the, the decision making processes.

So the process of institutionalization really will be a really big, big challenge, because these are very, Different

countries, I mean, Saudi Arabia is very different from China, very different from Brazil, but overall, I think

that institutions like the BRICS, they're really positive in the sense that they now have created more space.

More resources that can be potentially accessed by the countries of the Global South and not only resources, but also when it

comes to development models, I think all throughout the Global South at this point, the sort of free market led private corporate

kind of development is in disrepute because this has been a model that has been tried and Then you look at a state led capitalism

like China, and it has worked in terms of reducing the level of poverty of China to 2 percent of the population, which that's

not the Chinese government, that's the World Bank that says that.

And you know, so by example, countries like China, and not only China, are showing, you know, that there

is a different path that can be followed and that the Western path is no longer viable in terms of.

Ending inequality, reducing poverty, and creating more space for the exercise of sovereignty.

What are these things which need to be done, or we need to ensure are done under the emerging new order

to ensure that the Global South gets a fairer deal than what has been there under the present structure?

And how do we ensure we don't replicate?

Some of the missteps that we have had under the Bretton Woods led architect, we need to make sure that the

membership is not just limited to the bigger what they call emerging economies so that, in fact, the criteria.

For membership becomes something that is not just based on indices of GDP and economic power.

Secondly, is that in an arrangement like the BRICS, one has to make sure, you know, that voting power.

Is in fact distributed in a relatively egalitarian way and again, while the size of the contributions of the

bigger bricks needs to be a factor, uh, in terms of their voting power, it should not be the only one third.

And I think that one of the things that is very important at this point is that.

Institutions like the BRICS must have room for civil society from the Global South.

We should not just be talking about governments monopolizing decision making, but civil society

organizations from Asia, from Latin America, from Africa, you know, have in fact an input into this process.

We need to make sure that they do not repeat the same sort of, uh, problems.

The same sort of inequalities that have been reflected in the Bretton Woods institutions, the kind of, uh, representation

issues, the kind of loan arrangements and loan projects.

Like structural adjustment that have discredited the IMF and the World Bank.

As we seem to be in a transitory phase, where we are exiting the order that has existed under the Bretton Woods and in

pursuit of a new one, potentially under the BRICS, how do we unlock new financing which doesn't come with all the strings

attached, as has been the case with the Bretton Woods?

Well, let's just look at the two models of lending that have been contrasted a lot over the last two decades.

One is the IMF and the World Bank that basically have a, a set of conditionalities known as

the Washington consensus, which is basically.

We will lend you money to meet your emergency needs, but you've got to follow the prescription

of austerity, austerity, austerity, austerity.

So, as I said earlier, that austerity measure has not worked.

It does not work in Africa.

It does not work in Asia.

It doesn't work in Latin America.

It does not work even in Europe, you know, in terms of basically getting economists back on their feet.

All that he has done is, and just take a look at Greece, for instance, is just Keep countries permanently

indebted and dependent on loans and aid from the West.

And it's not only the IMF and the World Bank.

There's also the institutions like the Asian Development Bank, the Inter American Development Bank

that are satellites of the World Bank and the IMF.

And, you know, which followed the same prescriptions with the same lack of success.

And I would just want to say here that, uh, Albert Einstein's definition of insanity was doing the same thing

over and over again and expecting a different result.

So from that perspective, the IMF and the World Bank are examples of organized insanity.

Now, contrast that to China, basically there's relative autonomy in terms of the application of these

loans, their implementation and that sort of thing.

It has none of the economic conditionalities that the World Bank IMF lending has, but it's been criticized

that, well, China does not make a distinction between.

Countries that are dictatorships and countries that are democracies.

And of course, as you know, somebody that favors democracy, that's something that we'd be sensitive to.

But at the same time, uh, I, I think that if democracy versus authoritarianism were to become a condition, Uh,

lending, uh, that you impose on a country like China, then it might create a situation where it will be very difficult

to start making distinctions between democracy, semi democracy, semi authoritarian, authoritarian, uh, and maybe.

If you look at it from the Chinese perspective, the thing is to, okay, let's just deal with the government

as it is and, uh, let them make their decisions as to the application of the loans that we give them.

You know, it's not perfect, uh, but at the same time, I think that's better.

Then the kind of, uh, uh, set conditionalities that just create even more poverty that you

have with, you know, the IMF and the World Bank.

Even just writing off a debt is such a difficult process.

Uh, when it comes to the Western institutions, it's almost impossible.

Uh, but what you see is that because its main concern is to help countries develop Development capacity

and policy space, one can appreciate the relatively liberal way that China has been, uh, forgiving debt.

Why?

Because I think that it has come up.

Also as a developing country, and that's why there's a very big difference between that kind of perspective that

appreciates the constraints on development and that of the IMF and the world bank that basically are a strict bankers

rule that you pay because you borrowed, you screwed up.

You haven't fulfilled the conditions of, you know, contracting the debt.

And, and so you have to suffer for it.

So, there's a world of a difference between the two.

Fantastic.

Allow me to draw us to the close of this conversation, Walden, and really just to piggyback

on your last point there around debt resolution.

Should the Global South detach entirely from the Bretton Woods as they are?

Is there a case for deciding that, um, Continuing on this path is a lost cause, let's cut links and find our own way.

And why I'm asking that question is because if you look at the countries, for instance, which

have fallen into distress currently, you default.

And before you ink any deal with your creditors around restructuring, it is almost a precondition

that you must have an IMF program on board.

So do we detach and move away entirely?

What is the practicality of that?

And what's the way forward?

My sense is that rather than the sort of making a clean break at this point in time, I would be much

more pragmatic and say, let us, uh, just adopt a posture of defending our interests within these institutions

at this point in time, and also making it difficult for them to operate by pushing that there has to be new ways.

that relate to the Global South and that they have to jump structural adjustment, they have to change their voting power.

So my sense at this point is to avoid clean breaks, but stay with a defensive and an offensive strategy, which you

coordinate with other countries within the Global South that makes these institutions even weaker and weaker and weaker.

Let me just give you an example.

The, the World Trade Organization, the World Trade Organization was supposed to be.

The prime engine of global trade liberalization, uh, back in the 1990s.

But what happened was that over the last two and a half decades, the countries in the Global South were able to get together,

uh, work together at every point, whether it was a On the so called new issues like investment, trade related intellectual

property rights, expanding those on all of those issues where the West was pushing for more and more liberalization.

They were stymied within the World Trade Organization so that at this point in time, the World Trade Organization has, you know,

become dysfunctional as an engine of global trade liberalization.

But None of the countries have left.

The Global South countries remain to be there in an aggressive defensive mode, because remaining in the institution

while weakening it as an engine of trade liberalization is, I think, a better strategy than just cutting off.

Because these institutions Among other things, they provide the fora for the Global South to be able to come

together to realize that they have common interests.

It's in the combat within these institutions that cooperation among the countries of the Global South are fostered.

The experience of having worked together to defeat liberalization within these institutions will be very important.

for us in the Global South as we create our own institutions.

Walden Bello, I like your closing point there.

We must have a defensive offensive strategy as we navigate how to work our way into a new dispensation.

Thank you so much for your time.

Thank you, too.

And thanks for the questions.

I really, really appreciate them.

That's a wrap for this series of Economics from the South from the International Development Economics Associates.

All six episodes are available wherever you get your podcasts.

As ever, more details in the show notes, including a link to the IDEAS website, where there's a

wealth of articles, analysis, and research papers.

And of course, please do sign up to the IDEAS newsletter.

I'm Julians Amboko, the producer is Penny Dale.

The concept is by Charles Abugre, C.

P.

Chandrasekhar, and atieno Ndomo of the International Development Economics Associates.

Thank you for listening.