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G20: More May Be Needed, to Do More

Analysis by Sanjay Suri

LONDON, Sep 4 2009 (IPS) - The tests are coming thick and fast. After the G20 summit in Washington last year, the G20 in London in April, and the G8 in L'Aquila that was substantially a G20, the G20 finance ministers are meeting in London this Friday and Saturday ahead of the G20 gathering in Pittsburgh later this month.

Finance of course is what it is all about. And conflicting financial interests along the traditional divide between the developed and developing, now complicated by what are called the emerging economies – a little developed and a lot developing.

These now occupy an increasingly more formal in-between space. They are the G5 when the G-whatever meet, the club of Brazil, Russia, India and China (BRIC), or the club of India, Brazil and South Africa (IBSA), looking one way and another to solidify a new strength they found only the other day.

Through various ways of getting together they are looking like a new force in negotiating with the traditionally rich club, the G8 – if you count in Russia on that side as well.

But they are running the risk – and warnings over this are getting louder – also of a new rich-clubbing at the expense of their own poor, and the poor elsewhere that they could speak for; that they are instead going with the G8 part of the G20 (group of major industrialised and emerging nations) in maintaining the status quo to help large corporations.

"When the G20 meeting took place in London at the beginning of this year, there was a call for a radical new beginning," says John Hilary, chief executive of War on Want, a London-based independent group campaigning for development for the underprivileged. "The G20 business leaders themselves said we can't go back to business as usual. But the problem is that since then we've seen no real steps forward in trying to transform the global economy."

The G20 could be calling for change, while changing nothing. "We've heard language, we've heard calls for a new beginning, but every time there is a new proposal for something to change, they say we can't do that," Hilary told IPS.

"For example, recently we heard new calls for taxes on banks when they get involved in currency transactions, but immediately the governments say we can't do that. We've heard talk about trying to clamp down on bankers' bonuses, but again they say we don't want to do that," he says.

Underneath the apparent inclusiveness that comes with expanding the G8 to G20 – for at least some of the time – may lie an exclusion of the really poor, says Hilary.

"In June of this year, 192 member states of the U.N. came up with a plan to take away power from the existing institutions and to have a rethink of the global economy, and yet again all the rich countries of the world snubbed that meeting, they said they didn't want to be involved; instead they just want to go back to their cosy clubs at the G8 and the G20."

But clearly the talking cannot just go on and on. If only because decision time is coming closer by the day, with the climate change summit in December, and the agreement at the last G8 summit in L'Aquila, Italy to conclude an international trade agreement by the end of next year.

Agreements on climate change, on trade, and the issue of protectionism within the context of reviving the global economy are expected to be dominant issues at the G20 finance ministers meeting, leading up to the G20 summit itself in the U.S. city of Pittsburgh, Pennsylvania.

The moves among the developed countries, inevitably, are to push for access to markets abroad, while restricting access to their own markets, and energetically cutting down on the movement of people into their countries.

"In a number of EU countries, restrictions on migration have become tighter," says Dirk Willem te Velde, programme leader at the London-based Overseas Development Institute, an independent research institute. "I don't think that is the right way to go."

This is a form of protectionism against which developing countries will have to press hard at G20 meetings, he says. "For a country like India, for example, it is important to highlight that it is not good for India, but it is also not good for developed countries themselves."

A country like India, with vast numbers of skilled personnel, is particularly affected. "It's very important for India that developed countries are not returning to protectionism, whether it is trade protectionism or labour protectionism," te Velde told IPS. "India has a lot to offer to developed countries, whether it is skilled personnel, or exports, and in that respect it is very important that developed countries promise not to return to a protectionist world."

Doubts have been raised as to whether the developing countries within the G20 will push their case aggressively enough.

"The G20 is a bit better than the G8, but the problem is that the G20 still excludes 172 countries," says Hilary. "The other big problem is that the G20 has kept the same tune as the G8. If the G20 could change the tune, that would make it a great deal better. But the problem is they have also said they believe in free markets, they believe in increased trade liberalisation, they want to try to rush through the Doha round of the world trade talks.

"Well, all of these things are known to be part of the problem. So why is it that the G20 leaders, even the G20 leaders from developing countries, are saying that they see this as part of the solution."

The danger for the G20 could be that it endorses more of the same – and by very many more countries. The opportunity is for the emerging nations together to manage to break, or at least shake, traditional dominance. The time is fast approaching when everyone will have to show which it will be.

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