7th April 2009

Did the G20 Summit Live Up to Expectations?

I don't know about you, but I was secretly hoping the G20 summit last week would live up to Gordon Brown's hype, surprise us all and radically re-shape the global economic system.

After all, we live in interesting times. Even before the spectacular implosion of the banking sector under the weight of those 'toxic assets' last year, we were already seeing a global food crisis affecting tens of millions of people. Rising and volatile energy prices presage the looming threats of peak oil and runaway climate change. And now a global recession is slowly unfolding, with predictions that by the end of the year there will be 40 million fewer jobs and world trade will have contracted by 13%.

It’s true that these crises are not new. They represent the intensification of an older crisis, that of the yawning divisions of poverty and inequality between and within nations. What is new, at least in the rich countries, is the sense that finally there is a public debate taking place about the roots of these crises, and even an opportunity to change direction.

The destabilisation of the financial world has toppled a thirty year old orthodoxy from its throne: neoliberal economics, and its central tenets of liberalisation, privatisation and deregulation. There is a new sense of political possibility in the air, and commentators left, right and centre are clamouring for us to build a new politics and a new economics.

So did the G20 summit in London represent an exciting break with the past? Not really, though there were definitely some relatively momentous developments.

I found it refreshing to be organising in response to a G20 summit. Back in 2005 we were putting our demands to a much more exclusive rich country cabal, the G8. Now with the G20 calling the shots, and China, Brazil, India and South Africa on board, it feels like a small step forward for global democratic governance, although there are still 172 countries left outside.

The top line announcement of the summit communiqué was a $1.1trn stimulus for the global economy, with much of this going to the IMF and World Bank, including $50bn earmarked for poor countries. This will in effect resurrect these discredited financial institutions, which had been dwindling in importance. The IMF in particular will see its budget treble to £507bn.

The G20 have called for the IMF to be reformed, a broader process that will be finalised in 2011, but it is not clear how much it will have to reform. It is hard to feel optimistic about an institution that continues to lend money with crippling free market conditions attached, forcing poor countries to cut jobs and public spending during recessions even though that is the exact opposite of the policies being pursued by G20 countries themselves in the current crisis. As a spokesperson for Oxfam was quoted in the Guardian saying, “the IMF is big, it’s bad and it’s back”.

More encouraging was an agreement to reform global banking, including tackling tax havens, hedge funds, derivative trading and the other dark arts of the shadow financial system. Poor countries lose £110bn a year through trade mispricing, where global corporations shift their money between jurisdictions to avoid tax. This is the start of a long process to end tax haven abuse.

However, there was pretty much nothing in the G20 communiqué on climate change or a green new deal, just a vague reference to “low carbon technologies and infrastructure”. Action has been deferred to later in the year. On trade, G20 leaders called for a conclusion to the Doha round at the WTO, which has been repeatedly rejected by poor countries.

So the G20 only took a tiny step in the right direction. It is clear that the campaign for a better politics and sustainable economics has to continue and it will be a long road. But is UK civil society up to this mission? Does the public want it?

There seem to be few signs of widespread public support for a traditional leftwing political agenda in the UK. The future lies more perhaps in a combination of green politics and what people are calling the ‘politics of happiness’, the need to improve our quality of life by concentrating on more than just economic growth. These cross-cut the traditional left-right political divide.

I was fired up by the 35,000-strong ‘Put People First’ march and rally in central London on 28th March, and by the climate change activism in the City of London on 1st April. There is some hope in these broad civil society alliances – covering environmentalism, single issue campaigns like fair trade and trade unions – for a progressive programme that can capture the public imagination. But it will take considerable resolve in the face of public complancency and political pressure to return to business as usual.

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