Not much could have been expected from
this G20 Summit. Despite the urgency of a global economy going rapidly
over the cliff, there is still too much disagreement about most issues
among the members. Even so, the resulting communiqué released with
so much fanfare is deeply disappointing.
There is deafening silence on the fiscal front, with no clear commitment
to co-ordinated fiscal stimulus, just some vague statements. There are
politically correct noises about tax havens, banking secrecy and financial
regulation, but since small print matters crucially in this regard, the
statements are too general to be meaningful.
The only apparently concrete commitment is to poor countries that have
been thrown into crisis by the global turmoil, through pledges of $850
billion in new funds. This sounds like a reasonable amount, but how much
of it is for real? And how unconditional will such money flows be?
Not much, it turns out. For a start, the proposed new allocation of SDRs
($250 billion) is to be a general allocation, based on existing quotas.
So the bulk of it will go to ... the G20 countries! Helping poor countries
get more would require a special issue of new SDRs – something that was
proposed in the IMF in 1997 but vetoed by the US, and held in abeyance
ever since.
Much of the rest of the money will be conditional lending from the IMF,
which has recently distinguished itself only by its utter failure to prevent
or deal with financial crises in emerging markets because of its aggressively
procyclical conditionalities. Indeed, the single greatest beneficiary
of this G20 meeting must be the IMF, which would otherwise have been on
life-support as a global player.
Meanwhile, G20 has completely ignored the recommendations of the Stiglitz
Commission on international financial reform set up by the more democratic
international body, the UN General Assembly. Just a few weeks ago, this
Commission recommended a new special allocation of SDRs, along with a
new credit facility for development funds, strengthening regional initiatives
and providing 1 per cent of all stimulus packages as ODA. These would
actually have made much more positive difference to developing countries
than the self-aggrandising posturing of G20.
Even the G20's commitment to avoid protectionism sounds ominous for developing
countries, as it is combined with the goal of “reaching an ambitious and
balanced conclusion” to the WTO trade negotiations, which can only mean
forcing more trade liberalisation that has already led to agrarian crisis
and deindustrialisation in much of the South.
The basic problem, though, is that the G20 has not produced anything like
the response needed to pull the world economy out of this unprecedented
mess. Clearly, the idea is to put back the broken pieces somehow, to produce
more of the same pattern of growth as before. That is neither desirable
nor sustainable, and will rapidly run into crisis once more, at tremendous
human cost. What a pity that the would-be leaders of the world have shown
so little generosity or imagination.