Under the Baobab: The G20 and the post-crisis world Mixed views beyond our borders
Wednesday, April 08, 2009
The G20 summit in London has provoked a great mobilisation of campaigners for global justice, fairness, equality and sustainability.
Their emerging coalitions may play a key role in shaping the politics of the post-crisis era. Also in this article, Under the Baobab got comments on the G8 by Paul Kingsnorth, Susan George, Duncan Green, David Mepham, and Ann Pettifor; and the full text of the G20 communiqué after the London summit on 2 April 2009
English writer and environmentalist campaigner. He currently resides in Oxford, England. A political movement which ten years ago seemed to be sweeping all before it, yet hit a brick wall a few years later, may once again make the political running. The global justice movement is back in town. Ten years ago, in the US city of Seattle, governments gathered for a ministerial meeting of the World Trade Organisation. They had come to set the rules by which the global economy would operate. In retrospect, it was probably the high-water mark of globalisation: after the fall of communism and before 11 September 2001.
As the meeting began, the delegates were unexpectedly confronted by a mass of people who saw things very differently. More than 50,000 people took to the streets to rebel against the WTO's version of history. Environmentalists highlighted the global economy's disastrous impact on the natural world; campaigners for justice railed against the exploitation of the poor; unions, religious groups, anarchists and thousands of unaligned individuals took to the streets to shut down the WTO. The police responded violently with tear gas, pepper spray and rubber bullets. A movement was born, and during the next three years it stormed every global summit.
The inequality and unsustainability of the global economy were exposed to public view. But the 11 September 2001 attacks and Iraq war caused the movement to dissipate, and its surface energy disappeared.
Yet, a decade on, the wheel has come full circle. Many of the claims that the protesters made back in Seattle have been proved right, and what is happening now can be seen as the next phase of the same movement. But this time those who claimed that markets should not be left to their own devices, that global inequality was something to be ashamed of, find their arguments echoed, however insincerely, by prime ministers, presidents and CEOs.
The movement seems to have learned from its mistakes. It knows it can never repeat the vast street protests that culminated in widespread police brutality, most shamefully the death of an activist in Genoa in 2001: a newly empowered and determined state apparatus would not allow it, for one thing. But it knows also that getting too close to power, as the Make Poverty History coalition did, can be fatal. The trick is to create a space in which everyone from artists and anarchists to NGO policy wonks can play a part, while making hard, detailed demands of power. And not stopping until those demands are met.
It remains to be seen where this movement goes next. But the world leaders inside the summit venue would be well advised to listen to what it has to say. After all, it's not as if they have any better ideas of their own.
She is the author of fourteen books written in French and English and widely translated. She is also honorary president of ATTAC-France [Association for Taxation of Financial Transaction to Aid Citizens.
There are millions throughout the world who refuse to accept the plans and the so-called solutions of the G20, who refuse the notion that the very people and institutions that got us into this crisis to begin with have any legitimacy to get us out of it. They want to give power to failed institutions like the IMF and the WTO; they want business as usual and they have already handed over hundreds of billions to prop up the banks.
The money is ours. It can only come from our past, present and future taxes. But we are receiving absolutely nothing in return. The banks belong to the people and should be treated like public utilities for the good of the people, for making credit available to job-creating enterprises and for massive conversion to a green, fossil-fuel-free future. This crisis is a crisis of the whole world system - a crisis of poverty and inequality, of food and agriculture, of climate and the environment. So let's use the financial crisis to solve the others and let's begin with the banks. The banks are ours - and we want to use them for the common good, for the welfare of people everywhere and a green future for the planet.
He is Head of Research, Oxfam / From Poverty to Power, United Kingdom.
Here are some killer facts on the global economic crisis and the response. First the bail out: globally, as of January 2009, a calculation for Oxfam shows that banks and other financial service firms have already received or been promised at least $8.424 trillion. The breakdown is $903 billion of government capital injections; $661 billion of toxic asset purchases; $1.38 trillion of subsidised loans and more than $5.48 trillion of debt guarantees. This equates to more than $1,250 for every man, woman, and child on the planet.
OK, that's a lot of zeroes. What to compare it with? By comparison, the annual cost of ending extreme poverty - the amount needed to lift the 1.4 billion people living on less than $1.25 a day above this threshold - is $173 billion. That is reached basically by measuring the area of between the global income-distribution curve and the $1.25 a line.
Conclusion: the resources devoted to the global financial bailout are sufficient to end world poverty for half a century.
And now the caveats:
First, a lot of this is in the form of guarantees rather than actual money disbursed - for a better estimate you could for example, see what proportion of guarantees were actually drawn down in previous crises. Anyone got a number?
Second, this is a static transfer: achieving sustainable poverty reduction requires dynamic processes through which developing countries and people living in poverty can produce their way out of extreme deprivation.
Third, getting this money into the hands of those 1.4bn people in the right amounts is a monumental task and even if it were possible, would add a lot of additional costs. Still, the contrast is I think worth making - bank bailout vs make poverty (almost) history.
David Mepham, Save the Children Whatever it takes
The global financial crisis may have started in the US and other developed economies, but it is now impacting very severely on some of the world's poorest countries and communities, including children.
The leaders of the G20 should reject narrow nationalism and protectionism and recognise their wider interests and obligations. A global economic recovery plan will not succeed if the needs of developing and low-income countries are not addressed, and it is morally untenable that the world's poor should be left unaided to cope with the effects of the crisis. While the G20 is not the right forum for reaching binding agreements on climate change, it is also vital that proposals to help stimulate economic recovery are fully consistent with a dramatic reduction in the emission of greenhouse gases over the next decade and beyond. The ecological crisis, like the financial one, is hitting poor people the hardest.
The World Bank estimates that an additional 100 million people have been pushed into poverty over the last year because of the food and fuel crisis, and that another 46 million could suffer the same fate in 2009 because of the financial crisis. There has already been a dramatic reduction in resource flows to developing countries, including reduced export revenues, lower levels of inward investment and less income from remittances. This has left developing countries facing a financing gap of between $270 and $700 billion, depending on the length and severity of the downturn and the nature and timing of the policy response.
Such financial instability and declining incomes can have highly damaging and lasting consequences for children. When a child's growth becomes stunted as a result of inadequate nutrition during the first two years of life, the effects are irreversible. No amount of subsequent intervention can make up for the damage done to that child's cognitive and physical development. Similarly, when children drop out of school because the costs of attending have become prohibitive, they rarely resume their studies when economic circumstances improve.
The implications of the current crisis for child mortality are particularly serious. Even before the onset of the crisis, the world was way off track in relation to Millennium Development Goal 4 (a commitment to reduce child mortality by two-thirds between 1990 and 2015). But it is now estimated that infant deaths in developing countries could be 200,000 to 400,000 per year higher on average between 2009 and 2015, making the target still more challenging to achieve.
There are three areas in particular where decisive action by the G20 is needed: honouring existing promises on increasing aid flows to the poorest countries; ensuring that more of this aid reaches the poorest and most marginalised communities, particularly through a rapid scale-up of social protection programmes (cash transfers and other in-kind benefits); and giving developing and low-income countries a much bigger voice and real decision-making authority within the international financial and economic institutions.
The G20 leaders should commit to do "whatever it takes" to protect the world's poor, including millions of children, from the disastrous consequences of an economic and financial crisis that was not of their making.
Member of Advocacy International and is also the Director of Jubilee Research at the New Economics Foundation in London. She is co-founder and Director of the international Jubilee 2000 Coalition in Britain.
A week before the G20 summit, the governor of the Bank of England, Mervyn King - a public servant and head of a nationalised bank - intervened in the global political process it represents.
The message he delivered was an attempt to sabotage proposals by Britain's prime minister Gordon Brown and President Barack Obama of the United States to reflate the global economy. They planned to do this by ensuring that government spending filled the vacuum created by the collapse of private-sector spending - and to protect and create jobs.
Without this stimulus it is certain that the global economy will continue to contract - and destroy economic activity. The ILO predicts that job losses in 2009 will rise to 52 million, against 14 million in 2008.
In opposing the injection of liquidity into the system, Mervyn King is both overstepping his authority and missing the target. The real threat today is deflation. As credit dries up around the world, consumption is squeezed, exports collapse, firms are bankrupted and unemployment rises on a frightening scale. These job losses will in turn exacerbate the crisis of the finance sector. The unemployed will default on mortgages and debts, and will stop consuming, leading to more corporate bankruptcies and bank failures. This will accelerate the downward spiral of falling wages and falling prices.
Mervyn King is an unelected central-bank governor, who moreover presided over the City of London - the very belly of the beast that was globalisation - and did very little to tame the beast as it helped inflame the biggest credit-bubble in history. His overwhelming concern, like many monetarists, is with the interests of creditors - the money-lenders that brought down the temples of our civilisation on all our heads.
He was wrong then, and is wrong now. But his comments reveal the problem of democratic legitimacy and accountability that go to the heart of the G20 process - and to the way the world is misgoverned.