By Melissa Draper
Over 500 people packed the cavernous, almost regal ECOSOC Chamber of the United Nations headquarters to hear President Correa of Ecuador speak last Thursday, June 25. It was a side event to the UN Summit on the World Financial and Economic Crisis and its Impact on Development. Some of those 500 people were merely there to see a president. Presidential star power always draws a crowd.
Others were there to hear his explanation of why Ecuador chose to make history – at least a small part of history. If Ecuador fulfills President Correa’s promise – announced on May 30 — it will become the second country ever to withdraw from the treaty that gives power to an obscure institution, ICSID (the International Center for the Settlement of Investor Disputes) – a controversial investor-dispute tribunal based at the World Bank. This move by Ecuador would reinforce the precedent set by Bolivia’s withdrawl in May 2007, that puts ICSID and its corresponding legal framework under increasing scrutiny.
President Correa opened his speech with a reminder of Latin America’s history of dominant economic policies imposed from abroad, pointing out the misnomer the ‘Washington Consensus’ policies of the last two decades. “It had nothing to do with consensus,” he remarked. He went on to point out about the current situation that “if a system has failed, we cannot expect a solution from those who created that system. Instead, we have to look to others like our own people, and those of us who sit here today.”
He praised the title of the event ‘Peoples Rights not Corporate Profits’ since, he explained, “capital has more rights than a human being. This is absurd,” he proclaimed.
To balance his criticism, President Correa explained how Ecuador, along with other allies in the region, were working to develop viable alternatives. He defined them as three pillars of a new financial structure proposed to unite South American countries under a more just system. It would include the Bank of the South (Banco Sur) a regional version of—as well as a counterweight to –the World Bank, a Regional Reserve Fund (Fondo Regional de Reservas) to leverage South American countries’ pooled reserves to their benefit, and a plan to work towards a common currency. He was describing the tenets of UNASUR, the Union of South American Nations, which was first proposed in 2005 and is modeled after the European Union. Among those three pillars falls a specific recommendation by Ecuador to create an alternative to ICSID.
The organizers of this civil society “side-event” to the UN Summit on Financial Crisis did not originally expect to have President Correa’s starpower as a way to draw attention to these issues. They had envisioned this event quite differently. Major civil society networks, including Our World is Not for Sale (OWINFS), the Hemispheric Social Alliance, Friends of the Earth International, Jubilee South, and Social Watch saw this parallel event to the UN Summit as a chance to target a specific part of the global financial system that has had tangible impacts on humans rights and the environment in several countries in Latin America.
The event was conceived of as a forum to talk about the seemingly esoteric but now obviously pressing challenge to find alternatives to the existing system that allows foreign capital and investment to have such sovereign power over public interest, primarily in developing countries where governments don’t always protect the interests of its people. It was an attempt to bring the legalese speak, normally relegated to the corporate conference rooms of highly specialized arbitration lawyers, to a space where NGOs and grassroots organizations could inject a human dimension to the debate over mechanisms of investor protection such as Bilateral Investment Treaties (BITs) and institutions like ICSID. The goal: determine a constructive way to propose alternatives to a body of international law – and its corresponding institutions– that was created to protect investor interests against sovereign countries.
Some of the organizers wanted to focus on a symbolic move to push other Latin American countries that had promised to withdraw from ICSID to fulfill their promise. The original countries of the ALBA (the Bolivarian Alternative for the Americas) bloc –Bolivia, Cuba, Dominica, Nicaragua and Venezuela made this commitment at their 5th annual meeting in May 2007. Bolivia has been the only one to follow through on that promise so far. Cuba and Dominica are not members of the ICSID treaty. Nicaragua and Venezuela are signatories to the ICSID treaty but have not completed the process of withdrawl. Ecuador, a new member of the ALBA bloc as of last Wednesday, announced on May 30 that it would withdraw from its treaty obligations. At the UN Summit, however, Ecuadorian officials could not confirm the current status of their withdrawl process.
The target of campaigns and criticism around these issues from civil society has mainly come in the form of intense battles on singular cases – like the case surrounding Bechtel and Cochabamba’s water revolt in 2000. The lack of a coordinated global effort has made it difficult to complete a review of the entire system and rally support behind reforms, or full-fledged alternatives to the existing system.
The fact that two South American presidents – both Correa of Ecuador and Morales of Bolivia – asked to join the civil society event proves there is momentum building for the proposal of alternatives to institutions like ICSID. President Morales was unable to arrive in New York due to mechanical difficulties with his plane.
A smaller meeting, held the day before President Correa’s speech, brought together a dozen civil society leaders to discuss what was needed to propel such a new global campaign along these lines. The Fundación Solon, based in La Paz Bolivia, the Institute for Policy Studies in Washington DC and the Democracy Center, out of Cochabamba, Bolivia hosted the meeting. While new discussions are being held at the national and regional levels in Latin America, these three host organizations say this was an opportunity to gather allies who were attending the UN Summit in New York to further the debate.
That same week, IPS’ Sarah Anderson discussed the role of bilateral investment treaties, ICSID, and the Obama Administration’s review of the system when she spoke on a panel at the Brecht Forum on “Towards a People-Centered Economy: Alternative Responses to the Crisis.” The Network for Justice in Global Investment – supported by a broad range of groups, including the organizations that hosted this smaller meeting – launched its website the same week.
“I wish it didn’t require a crisis for the world to reflect and make change,” commented President Correa. Perhaps now is just the chance for South America to make its push for a new financial infrastructure for the region, including challenges like providing alternatives to ICSID.
As governments across South America gear up to take on concrete alternatives to the financial system they have so vehemenently criticized, it will be important for civil society – from its grassroot social movements to its active NGO-sector- to have a role. That will require local civil society to take its protest and demands – as well as solutions- to a global platform.