G8 down, but not out, as G20 makes pledges on crisis
If the big headline for April’s G20 Summit (See IU April 2009) was the $1.2 trillion pledged to tackle the financial crisis, this month’s showcase was the G20 itself, as the 20 countries crowned themselves the premier fora on global finance. Next year’s G8 in Canada will in fact be preceded by a G20 meeting, which Ottawa will co-host with 2010 G20 chair Seoul. Earlier this month, Liberal opposition leader Michael Ignatieff went one step further, suggesting that the G8 not bother meeting any more, and calling for a permanent G20 secretariat in Canada.
G8 down, but not out, as G20 makes pledges on crisis
A Focus on Poverty, Economic Reform and Climate Change
In 2010 Canada will play host to the world. The Vancouver Olympics and the G8 and G20 Summits in Muskoka and Toronto will draw the attention of millions to Canada, its geography, its values, policies and practices. If 2008 was the year of China, then 2010 can be the year of Canada. Around the globe, Canadians proudly sport the Canadian flag in traveling as a symbol of Canadian democracy, openness and concern for human rights. Yet our great international achievements of the past—Canadian contributions to the establishment of international peacekeeping, the Universal Declaration of Human Rights, the Ottawa Treaty to Ban Landmines and the International Criminal Court—are today clouded by concerns about Canada’s current role in climate change negotiations, Afghanistan, reform of the global economy and addressing global poverty.
New loans for LICs: IMF “with a human face” or “a mask”?
At the end of July, the IMF announced “unprecedented” increases of concessional (grant/low-interest) lending for low-income countries (LICs) ($8 billion in the next two years; up to $17 billion by 2014), zero interest on new and existing loans through 2011, greater loan flexibility, and a set of new instruments to channel the increased support (Extended Credit Facility for flexible medium-term support; Standby Credit Facility for short-term and precautionary needs; and Rapid Credit Facility for emergency support with limited conditionality). The shift also came with assurances from Fund Managing Director Dominique Strauss-Khan that new programs would focus on poverty reduction, economic growth, and safeguards on social protection. In addition to the anticipated new resources, IMF membership also greed this month to a new general allocation of Special Drawing Rights (see “Agreement…” in this issue).
Rich countries block real change at UN meeting on crisis
In June the United Nations was the site of a battle being waged between the G77, a group of over 130 developing countries, and the United States, Canada, Japan and the European Union. The fight was over how to address the financial and economic crisis and efforts to transform and democratize the global financial system and its institutions. The final outcome document of the UN Conference on the World Financial and Economic Crisis and Its Impact on Development is positive in that it represents a truly global response and has opened up space for countries to express their views on crisis. But the document falls short because rich countries blocked it from including more substantive solutions (see JUST THE FACTS). This is particularly distressing given the wealth of ideas generated in the Stiglitz Commission (IU May 2009), one of the key inputs for the meeting.
Tensions build as UN conference on crisis postponed
June 24-26 now mark the new dates for the UN Conference on the World Financial and Economic Crisis and Its Impacts on Development, postponed from the beginning of the month as many European heads of state had said they could not participate because of European Parliamentary elections. The postponement is welcome relief to a process that began last October and has been tense ever since, exposing clear lines between those who favour a truly global response to the current crisis with a real rethink of how the global economy is governed vs. the newly crowned G-20 and their proposal for a status quo plus approach.
A Call to Action
A Citizen's Agenda for Reform of the Global Economic System
I. INTRODUCTION: Open the Debate
When US financial powerhouse Lehman Brothers collapsed last fall, the world saw the start of an unprecedented collapse in global stock markets, bringing with it the loss of billions of dollars of investment around the world and severely shaking the foundations of the international banking system. Gloomy economic forecasts, a loss of investor confidence, and mass capital flight have all contributed to the worsening of the current global financial crisis. A decade ago, a similar situation unfolded in East Asia when market speculation sparked investors to pull out billions of dollars of capital, inflating debt and destabilizing markets in the region. In response, the Chiang Mai Initiative emerged in an effort to protect Asian markets from future crises. But has it stood up to today’s global economic collapse? And is an Asian Monetary Fund on the horizon? This brief explores these, and other, issues.
Europe looking to lead on response to financial crisis
A warning against US (and Canadian?) opposition to a new international architecture of institutions and tighter regulations to manage a more “moral” form of global capitalism, a flexible Economic Council within the United Nations, and an economic sustainability charter that establishes the rules for global financial governance, were three of the key themes raised by German Chancellor Angela Merckel and French President Sarkozy at a high-level symposium hosted by Sarkozy and former British Prime Minister Tony Blair in Paris this month.
Financial crisis a boon for ECAs
While hefty public bailouts of the financial and auto industries have stimulated debate on the role of governments in commercial markets, one form of government subsidy has flown beneath the proverbial radar: export credit. Confronted by an increasingly dire financial crisis, Western governments are using their export credit agencies (ECAs) to boost liquidity and rescue faltering industries. At an extraordinary World Trade Organization meeting last month, participating governments reported a 30% increase in ECA business over the previous 12 months. The WTO called for even greater reliance on public credit to lessen the burden on commercial banks. Shortly afterwards, the OECD announced an agreement with non-members, including Russia and Brazil, to provide markets with publicly-sourced export credit.