Vain and Void, neither G8 nor G20!

28 June 2010 by Eric Toussaint , Damien Millet , Sophie Perchellet

As at previous meetings, the Toronto summit of the exclusive 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). club to which the world’s richest countries invited the heads of state of the major emerging countries once again raised great expectations only to conclude with an empty bubble. As in London in 2008, then Pittsburgh in 2009, the Toronto G20 discussions focused on a way out of the crisis. But a capitalist way out, favouring creditors and great powers.

For the last two years global financial regulation has been an elusive sea serpent, unsurprisingly resulting in no concrete measures. To appease their citizens who pay a high price for the consequences of the present crisis although they bear no responsibility for it, governments pretend they are trying to redefine the rules in the global financial game whereas for decades they have promoted the cancellation of any rules that would protect the world’s peoples.

Regulation of the derivatives Derivatives A family of financial products that includes mainly options, futures, swaps and their combinations, all related to other assets (shares, bonds, raw materials and commodities, interest rates, indices, etc.) from which they are by nature inseparable—options on shares, futures contracts on an index, etc. Their value depends on and is derived from (thus the name) that of these other assets. There are derivatives involving a firm commitment (currency futures, interest-rate or exchange swaps) and derivatives involving a conditional commitment (options, warrants, etc.). market, i.e. purely speculative financial innovations with no social utility, capital requirements for banks, limits on the new surge in bonuses for executive officers in major banks, taxation of major banks and financial transactions are issues that brought out sharp divergences within the G20. This is a very convenient way of not deciding on anything. This agenda won’t be discussed until the next G20 summit in Seoul in November 2010. This is an effective means of making no progress on this essential issue.
Each media show is sure to feature the same harping against protectionism. All over the world, the World Trade Organization (WTC), backed by the World Bank World Bank
WB
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, 180 members in 1997), 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.

http://worldbank.org
and the International Monetary Funds (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.

http://imf.org
), pursues its mission of doing away with national protections viewed as obstacles to free trade. This means people’s fundamental rights, such as the right to food sovereignty, are sacrificed on the altar of growth and TNC profits.

However, the various crises that have shaken the world in recent decades have their origin in this very liberalization of trade and of the flow of essential speculative capital. The major financial deregulation in the 1990s, destructuring complete sectors of national economies, and dismantling the State set the stage for the sudden offensive of capital holders against populations all over the world, first in the South but now also in the North.

The current crisis and bank bailout plans have hugely increased the public debts of countries in the North. The hurricane of austerity measures unleashed on European countries has led to drastic public spending cuts while preserving returns on capital. The G20 thus committed itself to fiscal plans that will at least halve deficits by 2013 and stabilize or reduce government debt Government debt The total outstanding debt of the State, local authorities, publicly owned companies and organs of social security. -to-GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
ratios by 2016
. |1| The cuts needed to achieve this will put the burden on working-class people and favour affluent classes. The toxic remedies first applied in the 1980s are back: wage cuts or freezes, higher VAT, deregulating the labour market, privatizing public companies, retirement pension system “reforms”. The first victims of all these austerity measures will be found among the people whose situations are most precarious. Since 2008, IMF has opened credit lines to some ten European countries. In Iceland the people have made clear that they would not pay for the financial and banking sector’s mistakes. In Romania the 15% cut in retirement pensions was ruled unconstitutional despite IMF pressure. In Ukraine, relations between IMF and the government have been stalled since the latter’s unilateral decision to raise minimum wages by 20%. Several major demonstrations have taken place in countries hit by these policies, as well as in Toronto where anti-G20 demonstrations were brutally repressed.

The G20 summit was thus merely one more building block in a capitalist way out of the crisis. For everyone struggling for social justice, this G20 is an empty shell: it relentlessly makes the same unjustifiable demands and comes up with the same old phoney “solutions”. Leaving aside the illegitimate G8 G8 Group composed of the most powerful countries of the planet: Canada, France, Germany, Italy, Japan, the UK and the USA, with Russia a full member since June 2002. Their heads of state meet annually, usually in June or July. and G20, the very root of these crises must be tackled, by expropriating banks and transferring them to the public sector under citizens’ control, by a citizen’s audit of the public debt to cancel illegitimate debts, by establishing genuine tax justice and a fairer distribution of wealth, by fighting massive tax fraud and evasion, by regulating financial markets through a register of shareholders and the prohibition of short sales, by a radical cut in working hours to create jobs while safeguarding wages and increasing retirement pensions. To achieve this we have to build a vast popular mobilization to unite local struggles on an international level and do away with socially regressive policies.

Translated by Christine Pagnoulle in collaboration with Marie Lagatta


Spokespersons, vice-president of CADTM France and president of CADTM Belgium respectively (www.cadtm.org )

Footnotes

|1| The G-20 Toronto Summit Declaration http://g20.gc.ca/toronto-summit/sum...

Author

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 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. Since the 4th April 2015 he is the scientific coordinator of the Greek Truth Commission on Public Debt.


Author

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 (45)

0 | 10 | 20 | 30 | 40

Author

Sophie Perchellet

CADTM France (Paris)


Other articles in English by Sophie Perchellet (3)

CADTM

COMMITTEE FOR THE ABOLITION OF ILLEGITIMATE DEBT

35 rue Fabry
4000 - Liège- Belgique

00324 226 62 85
info@cadtm.org

cadtm.org