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November 5, 2010

G-20 meeting in Seoul – the Hemispheric Social Alliance (HSA) calls for real change

Since 2008, a date that marked the beginning of the most recent global crisis that started off in the U.S., the G-20 has unilaterally taken over the role as the key forum charged with global problem solving without either taking into account the other 172 countries represented in the United Nations, or listening to diverging opinion and analysis such as that represented in the Stiglitz report.

In its early days the G-20 debated themes such as development, employment and the environment with even some talk of fundamental solutions that would challenge the underpinnings of the international financial architecture such as regulating financial markets, combating fiscal paradises and the illicit flow of capital, and promoting the idea of a financial transaction tax. But over time we have witnessed that more conservative proposals have gained the upper hand based on the assumption that market forces are either resolving the crisis already, or have the capacity to do so. One can no longer find much mention in G-20 declarations of financial market regulation and the need to reign in rampant speculation, and in their references to ‘development’ they try to revive failed policies such as support for easing investment flows along with greater legal security for transnational capital and companies. As a result several countries that had adopted policies aimed at an economic recovery, at improving peoples’ standard of living, and at reactivating the job market by increasing public expenditures and stepping up the role of the state as regulator, have all but been abandoned these efforts in a return to regimen of structural adjustment where the public purse gets accessed to save the large financial groups whose speculative activities lie at the heart of the current crisis.

The crisis is not over, and the resulting commercial disequilibrium is an indication that we are into a new phase, one that some are describing as the currency wars, and in which the US is trying to artificially promote exports while reducing its commercial deficit by printing money which in turn leads to a devaluation of the US dollar in the context of an interest rate that is being held at zero. In response to this, other industrialized countries have intervened in foreign currency markets to protect their own currencies from speculative pressures. In the U.S. and Europe production is not recovering, unemployment rates remain the same, but the banks and other financial firms have survived nicely on government subsidies which have allowed them to realize enormous profits. The countries that make up the G-7 are placing their hopes on a sustained economic recovery in the emerging economies that will provide a market for their products and thus help to finance their own commercial deficits.

Europe’s fiscal and financial crisis that initially affected Greece and other countries in eastern Europe and that was front and centre as a topic at the June G-20 in Toronto, has now extended to other countries on that continent as can be seen by the reaction to austerity measures in the form of a wave of strikes in Spain, Portugal, Belgium, and France, all of which points to worsening levels of unemployment and deteriorating working conditions. The response has been to cut public spending on social programs that are all part of a move to the right. This situation is unleashing racism and xenophobia midst structural adjustment programs of the type seen in Latin America 20 years ago, and which at the height of neo-liberalism pushed that region into a period of stagnation, de-industrialization, and social crisis.

In the face of the current crisis, faulty decisions have led to solutions being taken by the G-20 nations that, instead of focusing on the causes such as financial and monetary speculation and on resolving the unemployment that this has generated, are simply reproducing the same policies that brought on this crisis. No measures have been taken against financial paradises, action against speculation has been timid, no real controls over financial capital have been implemented, and once again there are calls to avoid protectionism amidst renewed talk about restarting the DOHA round of the WTO.

The G-20 decided to reinforce the powers of one of the institutions that have promoted commercial and financial liberalization policies – the IMF. The emerging economies hoped to influence the direction that the IMF takes in guiding global economic policy on the fact that they have been given a 6% increase in decision making power in various bodies of that institution. However, we see the self-same policies being reproduced in order to maintain the structures of globalization that have landed humanity in this crisis.

The G-20 is an elitist and illegitimate construct that is taking decisions over the direction of the world’s economy, and its responses to the crisis correspond to the interests of Big Capital. Although the conflicts arising from the new international geopolitical policies do receive some eco at the G-20, the emerging economies involved have not been able to bring about the serious measures required to resolve peoples’ deteriorating living conditions.

In consideration of the heads of state gathered at the G-20 in Seoul:

We call for real changes to economic policy. We should not be continuing to deepen a model that benefits large scale financial capital and transnational corporations; that serves to erode the role of States in promoting sovereign national and regional policies; that continues policies leading to ever greater levels of poverty and inequality. Measures to be taken to deal with this crisis need to be part of a change in the model of ‘development’.

We demand the suspension of the DOHA Round and of the free trade and investment treaties that are one more step in the implementation of this model and which act to limit the possibility for countries to define their own development policies.

We reject the intent at promoting the Copenhagen Accord via the G-20, pushing aside existing multilateral bodies with the purpose of imposing false solutions to the climate crisis and allowing for the continuation of the model that generated climate injustice. We reject the attempt to inject new life into the IMF so that this body can once again implement spent policies that serve only to justify its own existence while remembering that these policies took several of the countries in the Americas into bankruptcy and generalized poverty in the 90s. It is necessary to regulate financial speculation by instituting capital controls, exchange rates controls, and through the elimination of fiscal paradises.

We call on the peoples of the world to build a broad common front to oppose the policies that trying to saddle us with the cost of the crisis, and to speak out against neo-liberal globalization that is pushing humanity towards the precipice while simultaneously impoverishing the world’s people.

Hemispheric Social Alliance
November 5, 2010

Translation done by Rick Arnold, Common Frontiers - Canada

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