TWN Info Service on WTO and Trade Issues (July09/19)
24 July 2009
Third World Network

WTO head Pascal Lamy rebuffed on own pay rise attempt
Published in SUNS #6743 dated 17 July 2009

Geneva, 16 July (Chakravarthi Raghavan*) -- The world may be in a deep economic and financial crisis, and enterprises may be going bankrupt, and CEOs and employees everywhere may be taking cuts in their remuneration, but the WTO Director-General, Mr. Pascal Lamy appears to have recently sought a 30 percent increase in his own emoluments.

He was however rebuffed by an informal meeting last week of a core group of countries, including all the leading industrial countries in the budget committee, according to reports published in the Indian and Brazilian media.

According to the report in the Business Standard in India, quoting trade diplomats in Geneva, a core group of the WTO's budgetary committee shot down the a demand from Mr. Lamy for a 30 per cent hike in his salary and other emoluments. The informal core group meeting is reported to have told Lamy that it was not proper to raise such a demand at a time of wage deflation and a generalised freeze of salaries of the top CEOs.

Lamy gets current about half-a-million swiss francs. The WTO budget is expressed in swiss francs and is paid by members according to their world trade shares.

Mr. Lamy, has been at the helm since September 2005, and got himself re-elected for another four-year term earlier this year. Generally, in international organizations, the terms and conditions are settled by contract soon after the election or re-election. It is not clear from the reports, whether Mr. Lamy had sought the salary increase as part of re-election terms, or after.

The WTO which wants its membership and everyone else to be transparent' is seldom open and transparent about its own affairs, not even among all its senior officials; within the secretariat only a handful of top officials are aware of the WTO affairs and Lamy's own moves.

This issue of Lamy's pay rise was apparently handled, not even at an informal meeting of the budget committee (which is headed by the Swedish envoy), but at an informal meeting of the core group of the budget committee!

The report about Lamy's effort and its being turned down comes even as the WTO and Lamy are promoting, at every international or regional fora, and as a panacea for all the world's economic ills, a successful conclusion of the Doha Round. Mr. Lamy reportedly will be in India on 3-4 September for a ministerial meeting of about 30 countries that India is due to hold.

The meeting is to be that of the WTO's Group of 20 in the agriculture talks, and India reportedly is also inviting some others such as coordinators of other groups (LDCs, ACP, African etc).

Despite all the noises being made about a successful conclusion (and the promises of the G-8 since 2002, and repeated this year by the G8+5), the Doha process seems unlikely to get anywhere over the next year or two. Mr. Obama struggling with his domestic agenda and the financial sector restructuring, has not got the negotiating authority from Congress, and even many of the second rung of top officials in USTR, Commerce and Agriculture, remain to be named and confirmed in the US Senate.

In this situation, the mere fact of Lamy seeking a pay rise at a moment of global crisis, even if unsuccessful. will further damage the WTO and its image and credibility.

It will provide a boost to civil society groups in their campaigns against the WTO (and its neo-liberal theological approach to trade liberalization), and Mr. Lamy.

The news about Lamy seeking a hike in emoluments, and being rebuffed, apparently surfaced at a US mission reception this week, and has now spread among trade diplomats and officials and observers, and has been the talk of the town not only at the WTO, but other fora.

According to some trade diplomats, who spoke and gave some further details on Thursday on condition that they not be identified, Lamy reportedly not only wanted his emoluments to be increased by 30 percent, to bring them in line with those at the IMF, World Bank, European Central Bank and other institutions, but he also wanted a down payment on his pension benefits, on the basis that his term at the WTO would not get him full benefits.

Mr. Lamy, according to Europeans, already gets a pension from the EC Commission for his long years there, from the French Bank Credit Lyonnais which he one headed, and as a member of France's elite bureaucracy.

The attempt of the WTO and its staff to get same level of emoluments as the World Bank and the International Monetary Fund came up even at the time of Marrakesh, and the subsequent entry into force of the World Trade Organization.

At that time Mr. Peter Sutherland, the GATT Director-General who successfully concluded the Round, and became the first head of the WTO (for a short period), and his successor Renato Ruggiero pushed for the equivalence (in salary and emoluments) of the WTO with the IMF and the World Bank - which generally get about 20-30 percent more than the UN and system institutions. The United States and other industrialized countries turned it down.

Trade diplomats are somewhat mystified as to why and how Mr. Lamy raised these issues at this time, and wondered what credibility he would have with the membership and public outside.

According to several media persons in Geneva, who cover the WTO intensely, several of the western media outlets were called up by trade officials and persuaded not to carry the story that came into the open Wednesday.

The Business Standard report said that despite 50 million job losses and rapidly growing wage deflation due to the festering economic turmoil, Lamy pressed the budget committee to increase his current salary and emoluments of about half a million Swiss francs (a little less than $500,000) by over 130,000 Swiss francs (about $125,000).

Surprisingly, according to the report, Lamy's demand was only for increase in his own his salary and emoluments but not the Secretariat's staff, according to "a trade envoy from a West European country", cited in the report. "What is more disturbing," the report added, "is that the director-general makes such a demand when the world is going through a rough patch," citing a trade envoy from an industrialised country.

The report said that during a meeting of the core group of the Budgetary committee which is headed by Sweden last week, the Secretariat's proposal for an exclusive pay hike for its director-general came up for discussion.

The US, the largest contributor to the WTO's budget, according to the report, said it was unrealistic to consider a demand to increase the salary and the emoluments of the director general when many CEOs all over the world are forced to live with either steep salary cuts or a generalised freeze. The report cited trade diplomats as saying that a senior US official, who took part at the meeting, conveyed that Lamy was no exception and it was improper to raise his salary.

Several other industrialised countries such as Japan, Germany, Britain, and Australia are reported to have said it was not an appropriate time to consider such a demand when the economic downturn is severe and bonuses for CEOs were being frozen in many countries. Even France reportedly did not support Lamy.

(* Chakravarthi Raghavan, Editor Emeritus, contributed this comment) +