Arauz: Unilateral, coordinated actions from the South

Good morning to everyone. Thank you for this invitation. It is truly a pleasure to be here on this island of resistance, of history, of freedom. It is an island of hope for the whole world, for the whole South, for all our peoples. 

Speaking about the New International Economic Order in the context of the super-imperialism that we are experiencing is truly challenging. Because we have to consider not only the utopia, the horizon that we are trying to reach, but also the trajectory, the path, how we are going to advance in that direction. And it turns out that, if we place all our hopes exclusively on the consensus that we can reach with the dominant force, that of the Global North, that of financialized capitalism, that of hegemony, etcetera, it is hard that we can reach agreements where they decide to yield their power. But we still have some spaces left, some cracks within the current hegemonic system through which we can operate. But my proposal here is not going to be to build together with the dominant hegemonic system. I am going to propose a set of unilateral actions that the countries of the South can take, but in a coordinated and joint manner. 

We are also gathered here because the Republic of Cuba is chairing the G77 for the first time, and this is an international recognition by the Global South of the long-standing leadership, of decades of struggle and resistance of the Republic of Cuba. It is not a mere symbolic gesture, and I believe that we must take up the challenge posed by Cuba when it accepts this designation, to focus the G77 agenda on issues related to science, technology, knowledge, to that cognitive dispute, to that war, in short, of a cognitive nature to which the planet has been subjected at this time. 

But we cannot ignore that one of the most important challenges within the framework of the G77's work agenda for this year, as well as an essential element that must be in the New International Economic Order in its version for the 21st century, taking up the struggles and aspirations of the past, is to effectively put an end to the sanctions, to the criminal blockade that the Cuban people have been subjected to for having the courage to resist that hegemonic system. So this must be one of our priorities, and forgive the lack of formality, but I do ask for a round of applause for the courageous Cuban people that have received us. 

I would like to talk about the right to development. Sometimes we get involved in discussions that forget the great aspiration on which the New International Economic Order was based 50 years ago, which is the right to develop. The right to develop and to be able to achieve well-being, the buen vivir, the good life of our peoples; to be able to have our human rights guaranteed around essential elements such as economic, social, cultural rights and — so important in the context of the 21st century — those related to the environment, to nature.  And I believe that we have to face a series of challenges in that direction.  And I believe that we have to face a series of challenges in this direction. 

I begin by characterizing the foundation of this late capitalism of the 21st century to which we are subjected and which we have described this morning.This financialized, transnational capitalism, which has an enormous cognitive element — the one that disputes the common senses, the one that tries to alter our behavior, our way of seeing and understanding the world— has a legal scaffolding that has been built for that purpose. 

Yanis said already that the forces of capital, the forces of the right, the conservative and hegemonic forces, managed to build a hegemonic system, but that was a step-by-step process, where they institutionalized the philosophy of financialized capitalism in international public law. And we are talking about the crystallization of the WTO in the 1990s — they turned it into a body — all countries ratified the same body of law. 

It is elementary to understand this because those of us who have participated in progressive projects in the exercise of government sometimes receive criticism that we do not succeed in transforming our countries or the entire world with a management from a peripheral, dependent, subordinated country in terms of the international hierarchy. They forget that planetary capitalism has been crystallized in international law. 

It is illegal to be anti-capitalist, it is illegal in terms of international law to pose an alternative to hegemonic capitalism. And I am not only referring to the WTO and its agreements in terms of trade in goods and services, but in cognitive terms of, for example, the intellectual property agreement: it is illegal to copy ideas, it is illegal to transfer technology, it is illegal to democratize knowledge. The same on the trade agreement relating to investment or investment measures. What does that mean? That if a country dares to regulate the operation of a transnational company domestically, demanding that it hires local companies, that it can have national participation, that it can transfer technology, among many other conditions that can be imposed, it is also violating the WTO agreement on investments.  But it does not end there because in the end the WTO has political teeth where there are panels, appeals committees, among other things, and where in the end, negotiations take place between the states. 

But transnational capital did not stop there. Why were they able to win such resounding victories? It is because between the 80s, 90s and the beginning of this century they implemented an agenda — particularly through bilateral treaties for the reciprocal protection of investments — which, from my point of view, are the fundamental pillar of the operation of transnational capital in the 21st century. And through these TBIs they directly exert pressure and blackmail the nation states that dare to regulate for development. I can give you a thousand examples of countries that want to establish environmental regulations on the operation of a transnational mining company in Central America. They get an arbitration in the ICSID, in the World Bank, because a country dares to establish environmental regulation for a mining operation. 

We can talk about cases in which sovereignty over natural resources in oil matters is sought to be recovered. To say: well, we are going to charge an extraordinary tax on oil income, in the context of climate change or the need to overcome extractivism and for that rent to remain for the people. Ah, you dare to do that? You will be sued at ICSID. And through these practices of blackmail and intimidation, they are altering what is considered acceptable or unacceptable behavior by a State with respect to the regulation of transnationals. And this used to happen only to the countries of the South as the main victims of the system, but now we are seeing that the system has come back to bite the tail of those who have been driving it, specifically the European countries.  It turns out that with the contemporary regulations, those of this era, those of this past year, energy companies find the functioning of the TBIs, of the international arbitration system, and only in the last few weeks we have had announcements from powers like Germany, France, others like Belgium, Poland, that have decided to withdraw from the Energy Charter Treaty, — which is a mega investment protection treaty — that gives impunity to transnational corporations, oil and energy companies, among others. 

And yet, in the South we are not realizing this enormous contradiction at the very heart of transnational capital. And it is a gigantic opportunity for the South — as we have done in Ecuador when there was a progressive government, in Bolivia, in Indonesia, in India, in South Africa — to denounce, to unilaterally terminate the bilateral treaties of reciprocal protection of investments. And how? With the same arguments that European countries are now using themselves to withdraw from the Energy Charter Treaty. This will give us a margin to be able to build the horizon, the utopia; it is the element of an indispensable and necessary transition in order to move forward.

I would not like to dwell so much time on this aspect, but I consider it central to the neocolonial functioning of the financialized and transnational capitalism we are currently experiencing: To put an end to the network of BITs — of which there are more than 3,000 around the planet, and which are fundamentally North-South — is an indispensable step. 

In Ecuador we proceeded with an audit of the BITs, we analyzed the conceptual, legal and political basis with which Ecuador entered into all these treaties in the 80s and 90s, and we found a series of irregularities. Then we analyzed the arbitrations and found the conflicts of interest of the arbitrators who win case by case, and do not belong to any jurisdiction, and then we analyzed the social, environmental and cultural impact of the transnational corporations that had sued Ecuador. And the conclusion was that we had to escape from that neocolonial regime as soon as possible.

I am proud that here are colleagues who accompanied me in that enormous effort: the Foreign Minister at that time, Guillaume Long, was who signed the denunciation of the BITs, and there is also Christian Pino, for example, who was secretary of the audit of the BITs, which I considered a central element, central in being able to build a transition to this New International Economic Order.

We cannot build an aspiration to overcome capitalism, if the legal framework in which we are operating is that of institutionalized capitalism and converted into International Public Law. 

Now, this brings a series of other challenges and implies, well, then, what kind of capitalism can be built or what kind of societies can be built, as an alternative to hegemonic financialized capitalism?  And I believe that here too we have advances and concrete instruments to which the energy of the G77 can be devoted. I am talking, for example, about the Binding Treaty on Human Rights for transnational corporations. Because we have to put our feet on the ground, and capitalism, — perhaps in this hegemonic, financialized, transnational version, with an increasingly large cognitive component — we will not be able to defeat overnight, but we can limit its abuses.

And it is essential that, just as commitments were made in other moments in history in the 20th century, that States have to comply and submit to binding obligations in terms of guaranteeing Human Rights. We must recognize that in this era of the 21st century, more human rights violations come from transnational corporations themselves - extracting wealth, money, but ultimately human rights - and that this is where we can begin to act.

Well, it turns out that the Binding Treaty on Human Rights for transnational corporations is not a utopian dream; it is a project that has been in the works for more than a decade within the United Nations, within the Human Rights Committee, within the Human Rights Council. And this must be revived again.

One objective that could be achieved in the short term, is to implement this treaty in a binding way as soon as possible and, in this treaty, to recognize the transnational character of transnational corporations. That is to say, just because they establish subsidiaries in a country, they cannot be linked to the parent company from where decisions on how subsidiaries operate are made. This corporate veil has been the main legal tool through which transnational corporations evade the control and regulation of the States, when they are required to comply with their responsibilities towards our peoples.

And I am absolutely convinced that only if we focus on these two elements to undo the transnational capitalism that was legally established as international public law, and rather build international public law around binding human rights commitments for international corporations, we will make a enormous leap in how this capital operates in our economies, in our societies. In addition, going to comment on something that is also happening in our America, and that can have key consequences, and that is an Advisory Opinion recently requested to the Inter-American Court of Human Rights by the governments of Colombia and Chile, precisely raising the subordination of economic rights and the rights of capital to human rights. This Advisory Opinion — when the Court responds — if positive, will be an absolutely key precedent that may have fundamental consequences on how capital is treated, subordinated to human rights, particularly to economic, social and cultural rights.

The challenge does not end there. We need to move towards a complete decolonization of the hegemonic system. The G77 was also born at the moment of decolonization. The New International Economic Order was born as a proposal for decolonization, not only formal — that we have borders and that each country finally manages to have its own flag — but a real decolonization, where the relationship of power and subordination of the countries of the South to the colonial powers of the North is broken. And there, we have to realize that in this current system the main mechanism of colonization, as many have explained, is the hegemony of the dollar. It is the hegemony that allows the implementation of aggressive sanctions against noble peoples, such as Cuba and Venezuela. We cannot ignore the impact of sanctions, which is only possible because of the hegemonic brutality of a single country — the exorbitant privilege, as the French also called it 50 years ago. 

And how do we do that? By waiting for the goodwill of the Northern power? We have to take unilateral but coordinated action.  They cannot sanction all of the Global South simultaneously. And we have to take decisive action to collectively, in a coordinated way, in solidarity, implement alternative financial and commercial systems  — and there are many proposed designs, and they are not technically difficult to implement— to be able to overcome this criminal blockade against the Cuban people, against the Venezuelan people.

We must also move towards the decolonization of payment systems — very much related to what I have just said. Now, if we want to do trade between Uruguay and Costa Rica, that transaction must be settled in a bank in Miami, and the liquidity must remain there most likely to buy Treasury bonds to feed the insatiable appetite of the US war machine.

We need to demilitarize the digital space. It's not just cognitive capitalism as a force of capital per se. The hegemonic cognitive capitalism actually existing in the 21st century is hyper militarized. Or have we forgotten about the Snowden revelations already? Or haven’t we seen the recent linkage between the US security apparatus with the hegemonic social media content providers in the US? We are talking about a deep link between the security apparatus, the military apparatus, with cognitive capitalism. That surveillance capitalism, where it's not just about maximizing profits, or selling a little more advertising. No. The vast majority of these Big Tech companies operate at a loss. They have been operating at a loss for decades. Why? Because they are not mere instruments from the logic of capital, but from the hegemony of security, of super surveillance, of military control of these technologies. And here the challenge is even greater.  How can we combat all that? 

We have to. This is the fundamental challenge, and it is the main weakness that we have had in the global south: the advancement of our scientific and technological agenda. Part of the current Cold War that we are experiencing now is specifically around the dispute of technological standards. Who are we going to depend on, Whatsapp or WeChat? But the discussion doesn't stop there. The discussion has to do with the whole material process behind, for example,  information and communication technologies, because that requires increasing diversity and quantity of strategic minerals. And where will these minerals come from? From the Global South, from South America, from Central America, from Africa. And we are going to be mere spectators in this international insertion that is skyrocketing. And we are all witnesses in our daily lives. And when we analyze the data,  are we going to act again in a unilateral but concerted, unilateral but coordinated way, in order to be able to renegotiate our international insertion, at least in the material dimension, of the cognitive capitalism that is currently in force?

I believe that here, in addition to the alternatives in terms of the technological standards that are currently being disputed, we have to start from the material base where the South does have an advantage to be able to move forward and build our own technological standards of the South; if we do not use technology — scientific technological development associated with the guarantee of our right for development — to guarantee the economic, social and cultural rights of our peoples, we will always be on the side of the periphery, of dependence.

It is essential to build our own technological standards from a perspective of appropriate technology — not cutting-edge technology- but appropriate technology — to be able to meet the needs and rights of the people of the South. And here we have many examples that we can point out as anecdotes, from the experiences of the countries of the Global South: technological sovereignty, digital sovereignty, construction of our own technological alternatives, but we still have some pending challenges. There is only a duopoly of operating systems in the devices that we all use on the planet, why can't there be the development of an own operating system, which becomes the standard in mandatory regulation, but from the priorities of the South? So that 99% of the information of the population of the South does not end up being stored in servers located in Miami, or in servers located in the data centers of the North.

Let's take an example: the case of means of payment, of transactional systems, of digital payment systems. Globally, retail payments, small-scale payments, the ones that we humans use on a day-to-day basis in most of the Global South, are stored in data centers in the United States. I mean credit cards — plastic card operators - Visa, Master Card, for example — are stored in data centers in the United Estates, and the USA Patriot Act of 2001 allows the U.S. government to directly access those data servers. But on those servers are the data of billions of people on the planet, where a person from Singapore with a bank account in Malaysia can buy food in India, and yet, because of the operator of that card, the data is stored in the United States and they can have super surveillance over it. The same happens with the Swift payment network which is stored, in the case of Swift in Belgium, but only one country in the world has managed to get access to the central databaseSurprise: the United States government. And this is only one dimension, that of payments, but it reveals a lot about our individual behavior.

I'm not even referring to instant messaging. We happen to have this meeting trying to build the New International Economic Order. Most of the attendees surely received the invitation via Whatsapp. Well, they know everything we send through that communication channel. And we need to build concrete, real alternatives from the South in order to be able to address our priorities, to be able to plan with dignity any action that may have some forcefulness and that is not merely a rhetorical exercise. And that means educating ourselves and building scientific and technological alternatives from the South. There are many paths to follow. It is not so difficult, technically it is not complicated. What we need is political will, coordinated and unilateral action to demand our own standards that allow us to gain margins of sovereignty in these aspects.

We have to analyze how capital operates in the context of the 21st century. And there is something that has left me thinking for years now, which is the fact that capital is absolutely bio-ignorant, as I call it. And I mean in the etymological sense: bio=life, capitalism does not understand life, just as it does not understand death. For capital, life is not incorporated within its axioms, within its values, within its logic of operation. Life, whether it is or not, is irrelevant. And this bio-ignorant capitalism, which ignores the existence of life, is perhaps our greatest opportunity to be able to regulate it, to be able to domesticate it, to be able to discipline it, so that it at least assumes that life exists; and the logic of bio-ignorant capitalism is born out of the insufficiency of the conceptual and methodological framework in which capital operates.

Forgive the technical digression, but we are basically talking about the concept of accounting. Capital exists in accounting, especially the abstract capital of the 21st century, the financialized capital, the capital of quick profit, the speculative capital, the capital that can travel from one jurisdiction to another in five minutes or three seconds. Not the physical capital, the physical asset, the factory, the machinery. No, that cannot travel around the world in a matter of seconds. But that abstract capital — that was also described 100 years ago by Hilferding, by Lenin, etc.— that can travel in a matter of seconds, and that capital lives in accounting. Well, who defines the rules of accounting? The United Nations? No. Who defines the rules of accounting? They are a conglomerate of four large private companies that have hegemony over financial information on a planetary level. I am referring to the famous Big Four: PricewaterhouseCoopers, Deloitte, Ernst & Young, KPMG. Four large auditing firms that establish the global accounting standard — what is an asset, what is a liability, to which account it should be recorded — and capital operates in that accounting logic. 

And it turns out that if we analyze this accounting and we say, well, let's see now the environmental assets, the environmental liabilities. What are you talking about? That simply does not exist in accounting. Where is the responsibility of companies in relation to the environment, in relation to a project? Where is the responsibility of capital in relation to death? It does not exist in accounting, and that makes projects that were once financially unviable — because they incur too many costs linked to death, to diminishing life — because it does not exist in accounting, turn out to be extremely successful, and prosperous, and profitable businesses.But if we incorporate the valuation of life within the accounting framework, we can change what kind of projects are viable and capital can thus be disciplined from a human rights perspective, from the perspective of the rights to life.

There is also a macroeconomic version of this. Many will have heard of the possibility of moving away from reliance  on GDP as a measure of well-being, and looking for other alternatives. But it is not enough to simply create a green GDP. "Oh, just take GDP and put two or three points less and we have a green GDP." No, we really have to sit down and think about the construction of the standard of macroeconomics, because in the end that has a narrative and cognitive dominance over the behavior of our peoples. It is fundamental to build an alternative to that dynamic, and it can be done from a coordinated, unilateral perspective from the peoples of the South. To be able to build a coherent nexus between human economic activity — money — but also land, water, energy, minerals, biodiversity, air, gas and ecosystem services.

There is an enormous pending work to be done, from the construction of a New International Economic Order associated with the guarantee of human rights of our peoples. And one of the absolutely key elements, and I will end with this, in this financialized era, where all the anxieties of our peoples are summarized in a series of volatilities — of the exchange rate, of the price of bonds, of the evolution of the capital market — we have seen that we are absolutely financialized and the strategy of domination, to a large extent, is given through the generation of dependence, through debt. Sovereign debt, foreign debt, public debt, the debt of the peoples vis-à-vis the hegemonic actors of the North. And there again we cannot expect charity from the hegemonic governments or from the big investment bankers. It would be naïve to think that they are going to arrive like Santa Claus to forgive our debts, despite the fact that, if they comply with what the Old Testament says, they should do it more or less every 70 years. But we have to start acting in a coordinated way; unilaterally and in a coordinated way. 

The World Bank, the IMF and various agencies are projecting that between 23 and 30 countries this year will not be able to meet their foreign debt obligations. We already know that they will not be able to pay, the peoples of the South, they will not be able to pay. Some time in May, in August, in April, in June, they will stop paying their foreign debt obligations. Why? Because they do not have the money and because they will reach a point where they will say I cannot afford it and consequently I would no longer attend to certain fundamental rights of my people, therefore I will suspend payments of the foreign debt. Imagine, each one of those countries will be subjected to a disciplining as described by Yanis where they will be told: well, we are going to go through a restructuring process, but in exchange for privatizations, destruction of public services, etcetera, etcetera; the agenda we know. But what if — knowing what we already know from the peoples of the South — we manage to organize ourselves, a few phone calls and a smaller meeting than this one, and say let us act jointly with respect to the debt problem. Let us organize to declare that we do not have the capacity to service that debt. But not individually, each one on the date we have to, but anticipating that situation and doing it jointly, from a clearly political perspective, in order to be able to motivate a more balanced discussion between the major creditors and the joint strength that the countries of the South can have.

I believe that it is imperative, just as there is the Paris Club, just as there is the London Club of large creditor banks, that we have the club of debtor countries in order to join forces — as we are always taugh — and be able to face this dynamic of indebtedness, which is going to have systemic consequences this year. I do not think it is a very difficult a task, I do not think it is impossible, but I think we have some very concrete challenges within the framework of the  New International Economic Order, of Cuba's presidency of the G77 and of possible mechanisms, with unilateral but concerted actions, to be able to negotiate our international insertion towards a broader, longer,  long-term and forceful construction that is required to build a New International Economic Order. The challenge is there. Let us see if we can rise to the occasion, to the historic challenge. 

Thank you very much.

Andrés Arauz is former Minister of Knowledge of Ecuador and a former Central Bank General Director. He is currently a Senior Research Fellow at the Centre for Economic Policy Research (CEPR).