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German development policy 1998–2005: the limits of normative global governance

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Abstract

The Social Democratic/Green government which was in office in Germany from 1998 to 2005 announced that it would practise development policy as ‘global structural policy’: as policy aiming to transform global economic structures in favour of poor countries. The article proceeds by analysing the attempts to do so in three areas: the reform of structural adjustment programmes and debt relief, the reform of the international financial architecture, and the ‘Development Round’ in world trade negotiations. The article also analyses the accompanying discourse in order to identify the factors limiting this form of normative global governance.

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Notes

  1. All translations are from the author.

  2. Although it has to be noted that the break with earlier development policies of the conservative party was certainly not as thorough as the new government claimed, and that since 2005 there still is a considerable degree of continuity.

  3. Although, as Brand correctly points out, the opposition is weakened by the widespread acceptance of important tenets of neoliberal discourse by many proponents of (normative) global governance, making it often seem a means of managing the legitimation crisis of neoliberalism since the second half of the 1990s.

  4. For a more thorough (or slightly less incomplete) treatment, see Ziai (2007).

  5. To be precise: non-normative approaches to international politics based on orthodox conceptions of national interest do equally have a normative element in terms of privileging one's nation (and the interests of ‘its’ companies) (Anderson 1991) which is, however, less obvious, because it is perceived as self-evident.

  6. Prime examples would be the Multilateral Debt Relief initiative of the Gleneagles summit in 2005 or the Norwegian decision in 2006 to cancel its odious debts (see http://www.odiousdebts.org/odiousdebts/index.cfm?DSP=content&ContentID=16405 as of 2 April, 2009).

  7. After the demise of the Bretton Woods system in the beginning of the 1970s, international capital flows were gradually liberalised by the OECD states. This liberalisation, together with innovations in information technology and an increasing concentration of income, was the precondition for the explosive growth of financial markets in the 1990s, which was accompanied by new actors and instruments (above all hedge funds and derivatives). During this period, many financial investors went to the Southeast Asian ‘tiger states’, which had, under the advice of the IMF, adopted anti-inflationary politics of high interest rates and pegged their currencies to the US dollar. In summer 1997, the perception of problems in the banking sector of Thailand led to the flight of capital and the onset of currency speculation, against which the country's central bank proved powerless: the pegging had to be abandoned on 2 July and the Thai baht dropped by 25 per cent. The crisis, which soon infected the neighbouring economies, consisted of devaluation, slumps in currency prices, insolvencies and the collapse of banks, and had dramatic consequences for the productive sector in terms of employment and poverty. According to estimates, 22 million people fell under the poverty line in Thailand alone. The impact was disproportionately severe for women, who experienced major increases in their workload as a consequence of the crisis. The emergency loans of the IMF amounted to almost 100 billion USD, and mainly had the effect of allowing loans to US and European banks to be repaid. The economic policy conditions attached to them neither stopped the currency slump nor contributed to a recuperation of the economy. Many argue they even exacerbated the crisis (Stiglitz 2002: 89–132; Elson 2002: 29f).

  8. The differences to the current situation at the G-20 summit in Pittsburgh (September 2009 — in the midst of an even greater economic crises than 1997–1998) are obvious and the attempts to regulate the international financial markets are more decisive.

  9. Gill and Law (1988: Chapter 7) have described this phenomenon as the ‘structural power of capital’.

  10. On the following, see Dunkley (2000).

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Acknowledgements

The author wishes to thank the anonymous reviewers and especially the JIRD editors for their extremely helpful questions and comments.

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  1. Institute of African Studies, University of Vienna, Spitalgasse 2, Hof 5, Wien, 1090, Austria

    Aram Ziai

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Ziai, A. German development policy 1998–2005: the limits of normative global governance. J Int Relat Dev 13, 136–162 (2010). https://doi.org/10.1057/jird.2009.33

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