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ECONOMY: Scepticism Greets G20 Attempt to Make History

Abid Aslam

WASHINGTON, Nov 17 2008 (IPS) - Leaders of the world’s 20 biggest economies emerged from weekend crisis talks with an apparent sense of historical accomplishment but key audiences seemed sceptical.

President George W. Bush addresses reporters following the arrival of G20 leaders and delegates to the Summit on Financial Markets and the World Economy on Nov. 15. Credit: White House photo by Eric Draper

President George W. Bush addresses reporters following the arrival of G20 leaders and delegates to the Summit on Financial Markets and the World Economy on Nov. 15. Credit: White House photo by Eric Draper

The first Group of 20 (G20) leaders’ summit on financial markets and the world economy agreed to use government spending to fight a spreading recession, to tighten lax oversight of markets, to resist protectionism, and to revive stalemated negotiations for a new global trade pact. Progress on some of these points is to be reported by the end of March 2009.

Leaders reiterated prior commitments to modernise international financial institutions by giving under-represented countries greater sway over them and reaffirmed their allegiance to the Millennium Development Goals, a U.N. anti-poverty wish list, albeit without any clarification about what this means in the context of the current turmoil and dwindling international aid.

The U.S. delegation, headed by President George W. Bush, left the talks with its pride intact: The bloc of 19 rich and poor countries plus the European Union (EU) issued a final communique that diplomatically blamed the made-in-USA catastrophe on a failure of market regulation in “some advanced countries”.

French President Nicolas Sarkozy and other European leaders who pushed for a summit could be seen as action figures on the global stage at a time of rising insecurity and falling popularity at home. After the talks, Sarkozy, who also is the EU president, insisted pointedly that Europeans won “virtually everything” they had wanted from the summit.

The Europeans had sought greater international regulation of financial firms. Leaders agreed to set up a “college of supervisors” so regulators in various countries could exchange intelligence on banks and investment houses operating across borders.

For Sarkozy, however, it seemed the talks’ significance was more profound. “America is still the number-one power in the world,” he told a news conference. “But is it the only one? No.”

Brazilian President Luiz Inacio Lula da Silva, who also is acting chairman of the G20, had much the same to say about the entire Group of Eight (G8) self-styled industrial democracies that long have dominated international political and economic discourse. In addition to the United States, these countries include Britain, Canada, France, Germany, Italy, Japan, and Russia.

“We are talking about the G20 because the G8 doesn’t have any more reason to exist,” said Lula. “The emerging economies have to be taken into consideration in today’s globalised world.”

Brazil and China overcame objections from some Western officials to win a pledge to induct more emerging economies into the Switzerland-based Financial Stability Forum of finance ministries and central banks. Promises to give developing countries more power at the International Monetary Fund (IMF) and World Bank also were reaffirmed.

The talks offered Bush a much-needed chance to burnish his international credentials and to strike a multilateral pose. Bush had rebuffed Sarkozy’s calls for a meeting of the G8, instead opening the summit to the G20, which encompasses advanced and emerging economies that account for 80-plus percent of the global economy and about two-thirds of the world’s population.

Bush took credit for this precedent-setting inclusiveness. “The first decision I had to make was who was coming to the meeting. And obviously, I decided that we ought to have the G20 nations,” he told reporters.

“With that many nations, from six different continents, who all represent different stages of economic development, would it be possible to reach agreements, and not only agreements, would it be possible to reach agreements that were substantive?” he said. “I’m pleased to report the answer to that question was, absolutely.”

Not everyone seemed convinced.

“Despite President Bush’s attempts to talk up the 20-country emergency summit on financial markets and the world economy, it was hardly surprising that the outcome yielded little in terms of substantive solutions to a problem that goes beyond the immediate threat to global growth,” declared the Business Standard, a newspaper based in the Indian financial capital, Mumbai.

“The World Bank and IMF, the World Trade Organisation, the Bank of International Settlements and the Financial Stability Forum are the bodies where serious issues should be addressed, and decisions taken quickly,” the newspaper added in an editorial. “And it so happens that the WTO has been paralysed by disagreements, the IMF has a shortage of resources, and so does the World Bank. The BIS was warning of the present crisis, but no one listened. The G20 can play an over-arching role, by providing air cover with good ideas, but that cannot be a substitute for the work at ground level.”

The Hindu, a leading Indian daily, concluded that the summit declaration “does not reveal any paradigm shift” from existing positions on global flows of goods and capital.

Spanish daily El Pais struck a similar note, describing the summit’s proposals as “generic principles to reform the financial system”.

Britain’s Telegraph, in a headline referring to leaders’ acknowledgement that the crisis stemmed from questionable business practices in advanced capital markets, expressed the hope that “G20’s admission of financial guilt may prove the first good step of many”.

Gawain Kripke, a spokesman for the charity Oxfam International, urged a greater role for the United Nations and its nascent financial crisis task force.

“There were some important gaps in the action plan,” said Kripke, and the U.N. body “should play a leading role in developing and implementing proposals to give these measures a deeper basis in transparency, accountability, and representation.”

“More than two billion people were not represented at this summit and it’s critical that their voices and contributions be part of the solution to the current crisis,” he added.

U.N. talks are to enter a new phase next week with a session in Qatar on financing for development. The next G20 leaders’ summit is to be held in April. By then, Barack Obama will have occupied the White House and Britain will have taken over chairing the G20.

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