The G20 summit meeting in London from April 1st onward was loudly announced and publicized. Those 20 industrialized and emergent countries (G20) are meeting to find solutions to the crisis. But long before the end of the summit, it is clear that they will not rise to the challenge.
The G20 strategy is to put a fresh coat of paint on a world which is collapsing.
The G20 was not created in order to provide genuine solutions; it was hastily summoned a first time in November 2008 to salvage the powers that be and try and to plug the breaches in capitalism. It is therefore impossible for this body to opt for measures that are sufficiently radical to save the day.
Anderson Cooper and co. hail the ‘progress’ made by the G20 towards a “New World Order” under Gordon Brown and Barack Obama. They have come to an agreement on a new financial regulation/stability board, but not as advanced as some have hoped.
Anderson begs the question, ‘does this mean a new world order?’
Public opinion will be told to look in the two directions that are expected to focus aggravation: tax havens and the CEOs’ incomes.
Tax havens have to be abolished, that goes without saying. To achieve this it should be easy enough to make it illegal for companies and residents to have any assets in, or relationships with partners located in, tax havens. The EU countries that function like tax havens ( Austria , Belgium , the UK , Luxembourg …) as well as Switzerland must do away with bank secrecy and put an end to their outrageous practices. Yet such is not at all the orientation chosen by the G20: a couple of emblematic cases will be cracked down on, minimal measures will be required from those countries, and a black list of non-cooperative territories eventually made public will have been carefully vetted (the City, Luxembourg or Austria have already been promised they will not be on it ).
On the other hand CEOs’ incomes, including golden parachutes and other bonuses, are indeed outrageous. In time of growth the employers claimed that those who brought in such benefits to their companies had to be rewarded to prevent them from moving to another. Now that we live in a time of crisis and those companies have to admit to increasing losses, the same executives still claim similar rewards. The G20 will try to regulate their incomes for a limited duration. The logic of the system is not questioned.
Apart from tax havens and CEOs’ superbonuses, which will not be hit by any specific penalties anyway, the G20 countries will further bail out their banks. Though globally discredited and de-legitimized, the IMF will be put back at the hub of the political and economic game thanks to a new provision of funds which will have been made available by 2010.
The G20 strategy is to put a fresh coat of paint on a world which is collapsing. Only a strong popular mobilization will make it possible to lay solid foundations to build another world in which finance is at the service of people, and not the other way round. The 28 and 30 March demos were big ones: 40,000 people in London , thousands and thousands in Vienna , Berlin , Stuttgart , Madrid , Brasilia , Rome , etc. with the common motto “Let the rich pay the crisis!” The week of global action called for by the social movements from all over the world at the WSF at Belém last January thus had a gigantic echo. Those who had announced the end of the movement for another globalization were wrong. It has proved that it is able to bring large crowds together, and this is only the beginning. The success of the mobilizations in France on 29 January and 19 March (three million demonstrators were in the streets) is evidence that the workers, the unemployed and young people all want other solutions to the crisis than those which consist in bailing out bankers and imposing restrictions on the lower classes.
As a counterpoint to the G20 summit, the president of the UN General Assembly, Miguel d ‘ Escoto, has called a general meeting of Heads of States and Governments in June and asked the economist Joseph Stiglitz to chair a commission that will draft proposals to meet the global crisis. The suggested solutions are inadequate because too timid, but they will at least be discussed at the the UN general Assembly.
A new debt crisis is looming in the South, it is a consequence of the real estate private debt bubble bursting in the North. The recession that now affects the real economy of all countries in the North has led to prices of raw material plummeting, which considerably has reduced the strong currency revenues with which governments of countries of the South repay their external public debts. Moreover the current credit crunch has induced a rise in borrowing rates for countries of the South. The combination of these two factors has already resulted in suspensions in debt repayment by those governments that are most exposed to the crisis (starting with Ecuador ). Others will follow suit within one or two years.
The situation is absurd: countries of the South are net creditors to the North, starting with the US whose external debt is over US$ 6,000 billion (twice the total external debt of all the countries of the South). Central banks in countries of the South buy US Treasury bonds instead of setting up a democratic bank of the South to finance human development projects. They should leave the World Bank and the IMF, which are tools of domination, and develop South-South relations of solidarity such as those which exist between countries that are members of ALBA ( Venezuela , Cuba , Bolivia , Nicaragua , Honduras , and Dominica ). They ought to audit the debts they are asked to repay and put an end to the payment of illegitimate debts.
The G20 will see to it that the core of neoliberal logic is left untouched. Its principles are asserted again and again, even though they have blatantly failed: the G20 maintains its attachment to a global economy based on an open market. Its support to the god of free market is non-negotiable. Everything else is hocus-pocus.
Can this G-20 summit prove to be anything more than group therapy for a bunch of fingernail-gnawing, troubled individuals?
U.S. President Barack Obama and British PM Gordon Brown want financial stimulus assurances from the G-20.
1 of 3 The prospects are not good.
The men and women called together in London by UK Prime Minister Gordon Brown to counter an economic slump are politicians -- just at a time when the world's electorates are demonstrating their lack of faith in governments and in their ability to understand, let alone sort out, the economic mess.
Thirty, 20, even 10 years back there used to be some belief that getting the power-players together could solve problems, or at least give others a push in doing so.
But it was once said of a former U.S. Secretary of State, "There was never any world situation so bad that a few well-chosen words from John Foster Dulles couldn't make it a hundred times worse."
The main task of this London summit may be simply to avoid doing that.
The British talking down of expectations over the past few days has been significant. Up front, on camera, ministers make optimistic noises. Behind the scenes diplomats warn of a potential lose-lose scenario.
If the summit fails to agree, it will destroy what is left of any confidence in the world's trading centers. Who's who at the G-20 »
But if the G-20 leaders do sign up to an agreement, it is likely to be so anodyne that it won't make any difference, other than boosting a few participants' opinion poll ratings at home a notch or two for being seen to try.
It was always unreal to imagine that the economic ministers of the G-20 nations were going to re-write their budgets in 24 hours in London.
And since the G-20 doesn't have a permanent secretariat, who is going to enforce anything they do agree?
The run-up to the summit has revealed essential differences in approach between the principals.
U.S. President Barack Obama and Brown both favor driving on fiscal stimulus, even if the governor of the Bank of England is cautioning his prime minister he can't afford to throw any more money at the problem. Obama, Brown together before the G-20 summit »
Brown and Obama have limited room for maneuver since both their countries have such hefty current account and budget deficits.
They just don't have the money to do it themselves, and they may have trouble persuading those who do have the cash to use it.
In an uncomfortable reminder of serious divisions over the Iraq war, Germany's Chancellor Angela Merkel and France's President Nicolas Sarkozy, each with more national traditions than Obama and Brown, and with their welfare states already pumping money into their economies as unemployment increases, are pursuing a different agenda.
Blaming "Anglo-Saxon economics" and dodgy banking practices for the mess, they don't want more funds injected. Watch the view from France »
They want to focus on tougher regulation of the financial community. They want the summit to start re-writing the global rulebook on capitalism.
This week's London Summit brings together the leaders of the world's 20 largest economic powers, known as the Group of 20, to discuss the global financial crisis and decide new measures to set the world on a more stable economic footing. Sarkozy, a man constitutionally uncomfortable unless the spotlight is shining on him, has even threatened to walk out of the G-20 proceedings rather than sign up to anything he doesn't consider tough enough on reining back tax havens, policing hedge funds and restricting the bonus culture.
Facing growing unpopularity at home, he is back on the "moral capitalism" kick he evidenced when holding the EU presidency.
The intriguing thing is that the economic crisis and Brown's lining up with Obama, who has proclaimed his belief in the enduring "special relationship" with Britain, has revived the Franco-German alliance which used to dominate EU affairs and which had seemed to wither under Merkel and Sarkozy.
She doesn't like his touchy-feely ways, he finds her incremental style of politics frustrating. They had drifted apart, but they are back sharing a political tent.
Their agreement does not just make life uncomfortable for Brown.
It means that on his first trip outside the U.S., Obama is facing unexpected tensions with instinctive allies and the possibility of being associated with discord and failure.
He must be disappointed too at the overall contribution from the EU, which sees many of its newer members to the east struggling for survival in the economic slowdown.
The EU response has been insignificant, poorly co-coordinated, and divided.
Jose Manuel Barroso, the president of the European Commission, has outlined six areas on which the Europeans hope the summit will focus.
They include, tactfully, both Brown's fiscal stimulus and Sarkozy/Merkel's tougher regulation of markets.
The big question on the fiscal stimulus front is: What will China do? The Chinese perspective »
Brown's hope is that China, worried about the safety of its money invested in the U.S., will be ready to commit extra funds to fighting the world recession.
But if he agrees to do so, President Hu Jintao will surely exact a price.
Already the G-8 countries have seemingly conceded that the world's current problems are too big for them to solve and that G-20 is a more appropriate forum.
If China comes up with the money to help, it will need assurances that it will in the future enjoy greater power within such multilateral institutions as the IMF and the World Bank.
The U.S. and Europe, who have dominated the G-8, now have little option too but to accept a new world order.
The G-20 meetings -- remember that chap George Bush who called one in Washington last November? -- have given Asia, India, China and Latin America a much-needed voice at the top table.
Whatever the outcome in London it is unlikely now that the G-8 alone will ever carry the same sway.
And not surprisingly, Italian Prime Minister Silvio Berlusconi, who hosts this summer's G-8 in Sardinia, has proposed that its gathering should be immediately followed by one of the G-20.
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