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The dominance of the “Washington Consensus” and neoliberal economic principles has reduced the ability of countries to act in defense of their own interests – it was pointed out in an event where a world-renowned professor of international law from National University of Singapore exchanged ideas with Hungarian experts.

A panel discussion on “public interest in economic globalization” was organized jointly by the University of Public Service (UPS) and the Mathias Corvinus Collegium (MCC) with Muthucumaraswamy Sornarajah, world-renowned professor of international law of the National University of Singapore, and Gábor Kutasi, head of the Economy and Competitiveness Research Institute of the University of Public Service. The discussion was moderated by Lénárd Sándor, Head of Center for International Law at the MCC. As a moderator, he defined the framework of the discussion that aimed to explore the theoretical background of the “Washington Consensus,” the concept of the “race to bottom” as well as their impacts on Central-European countries.

Professor Sornarajah explained that the basic idea of the “Washington Consensus” is to prioritize free market over government control. Based on the demand of the United States, international law was used to articulate this idea to the world. This was clearly illustrated by the fact that Central European countries, in the course of the change of regime, rushed to join the investment treaties that provided absolute protection for foreign investments. One of its consequences is a significant transfer of competence from state to international level, where international judicial forums have been given the right to control the regulatory powers of states. Gábor Kutasi emphasized that foreign capital has led to an increase in GDP in Central Europe in the short and medium run. However, in the long run, it is also necessary to pay attention to the fact that foreign investment has a decisive impact on the structure of economy.

Recalling the Southeast Asian experience, Professor Sornarajah pointed out that the competition for foreign investments requires favorable legal environment for the foreign investors, which in turn leads to a reduction of state regulation as well as of the protection of public interests. Somewhat differently, East-Central European countries managed to take advantage of their strategic locations as they are closer to Western markets, and they attracted foreign investments that could be integrated into the local economies. It is important that states stay vigilant to ensure the benefits of globalization. Gábor Kutasi emphasized that one of the key questions is whether the rich markets will stay in the proximity of Central-Europe in the long run, since this is one of their competitive edges in the globalized world. In response, Professor Sornarajah added that with the rise of Asian economies, especially China, Central European countries can also aspire to play a bridge role.