A G20 meeting for naught

2 April 2009 by Eric Toussaint , Damien Millet

The G20 G20 The Group of Twenty (G20 or G-20) is a group made up of nineteen countries and the European Union whose ministers, central-bank directors and heads of state meet regularly. It was created in 1999 after the series of financial crises in the 1990s. Its aim is to encourage international consultation on the principle of broadening dialogue in keeping with the growing economic importance of a certain number of countries. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, Italy, India, Indonesia, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, USA, UK and the European Union (represented by the presidents of the Council and of the European Central Bank). 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 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.

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 IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

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 World Bank
The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

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 Island). 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.

Eric Toussaint, PhD in political sciences, is president of the Committee for the Abolition of Third World Debt – Belgium www.cadtm.org ), author of A diagnosis of emerging global crisis and alternatives, Mumbai, India, Vikas Adhyayan Kendra, 2009, 139p.; The World Bank: A Critical Primer, London, UK, Pluto Press, 2008

Damien Millet, a mathematician, is spokeperson for CADTM France (Committee for the Abolition of Third World Debt,).
Joint authors of 60 Questions 60 Answers on the Debt, the IMF and the World Bank, English version to be published in 2009.

Translated by Christine Pagnoulle in collaboration with Elisabeth Anne.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012 (see here), etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

Other articles in English by Eric Toussaint (539)

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Damien Millet

professeur de mathématiques en classes préparatoires scientifiques à Orléans, porte-parole du CADTM France (Comité pour l’Annulation de la Dette du Tiers Monde), auteur de L’Afrique sans dette (CADTM-Syllepse, 2005), co-auteur avec Frédéric Chauvreau des bandes dessinées Dette odieuse (CADTM-Syllepse, 2006) et Le système Dette (CADTM-Syllepse, 2009), co-auteur avec Eric Toussaint du livre Les tsunamis de la dette (CADTM-Syllepse, 2005), co-auteur avec François Mauger de La Jamaïque dans l’étau du FMI (L’esprit frappeur, 2004).

Other articles in English by Damien Millet (46)

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