G20 summit - some civil society reactions

Civil society groups were deeply concerned about the London summit's outcome and many took to the streets. Kanaga Raja samples a few reactions.

COMMENTING on the G20 summit outcome, the consumer advocacy organisation Public Citizen said on 2 April that the commitments to enhance financial service regulation clash with deregulation requirements in the World Trade Organisation (WTO)'s 1999 Financial Services Agreement. Instead of G20 leaders calling for completion of the Doha Round of WTO negotiations that includes further financial deregulation, they needed to agree to fix the existing WTO rules that facilitated the current crisis.

'It is crazy that the G20 leaders vowed to re-regulate the financial system while simultaneously undermining their ability to actually do so,' said Lori Wallach, Director of Public Citizen's Global Trade Watch division. Instead of agreeing to change WTO rules that now obligate nations 'to continue the extreme finance deregulation policies that got us into this economic mess, the G20 leaders called for completion of a WTO expansion that includes financial deregulation', she added.

'Instead of targeting only actual protectionism, this over-reaching pledge commits countries to eliminate non-trade measures that many have employed to stop certain risky financial activities and stimulate economic activity,' said Wallach. 'What is supposed to be an anti-protectionism pledge is so broadly cast that it snares policies totally unrelated to trade, such as tough new financial service regulations that will incidentally limit trade and investment in risky financial services.'

'The manufactured hysteria about creeping protectionism has caused a bit of G20 communique schizophrenia,' said Wallach. 'One page of the communique identifies "major failures...in financial regulation and supervision" as "fundamental causes of the crisis" and commits to "action to build a stronger, more globally consistent supervisory and regulatory framework for the future" while the next page reaffirms the leaders' commitment to concluding the WTO Doha Round negotiations that require further deregulation of finance.'

Wallach further said: 'Implementing the G20's ambitious goals will require changes to existing WTO rules that lock in domestically and export worldwide the extreme financial services deregulatory agenda that fostered the global economic crisis. It also will require the replacement of the WTO Doha Round agenda with new negotiations that liberate from the WTO's constraints the domestic policy space that is needed to re-regulate the runaway financial services industry and stimulate the economy.'

In a reaction to the massive increase in funding for the IMF, development, health and education groups raised alarm bells about the organisation. The groups said that no new money should go to the IMF until it makes verifiable changes in its policies.

'Thirty years ago, much less severe global economic troubles kicked off a debt crisis and a failed experiment in market fundamentalist policymaking that thwarted and even rolled back development throughout most of Africa and Latin America for two decades, with terrible social cost. The IMF was at the centre of this decades-long disaster. It would be an inexcusable tragedy to repeat that history,' said Robert Weissman, Director of Essential Action, a Washington, DC-based corporate accountability group.

'No new money should flow to or through the IMF without the achievement first of significant, verifiable changes in Fund policy - changes going far beyond governance reforms. Specific policy measures that should be agreed upon in advance of a commitment of new resources to the IMF include: more macroeconomic flexibility, regarding both fiscal and monetary policy for developing countries; a guarantee that countries will have flexibility to expand health care and education spending, irrespective of budget caps; a prohibition on financial deregulation as an IMF conditionality or policy recommendation,' he added.

'It is now up to the US Congress to use its leverage over potential increased IMF funding to ensure that the IMF - which currently imposes harsh conditionalities which will exacerbate the recession in recipient countries - instead allows developing countries to use the same expansionary fiscal and monetary policies the G20 has called for worldwide,' said Deborah James, Director of International Programmes at the Centre for Economic and Policy Research.

'The G20 have rightly called on the IMF to devote some of the proceeds from gold sales to support the poorest countries, but the proposal needs significant improvement before the IMF meetings later this month. IMF gold sales should be expanded and proceeds from the sale should be used for debt relief or grants without harmful conditions - not to further indebt some of the world's poorest nations,' said Neil Watkins, Executive Director of Jubilee USA Network. 

Kanaga Raja is Editor of the South-North Development Monitor (SUNS), which is published by the Third World Network.

     The above is extracted from an article which first appeared in SUNS (No. 6675, 6 April 2009).

*Third World Resurgence No. 224, April 2009, p 23