What the World Development Movement wants from the G20
Date: 1 April 2009
This briefing includes the World Development Movement’s critique and recommendations to the G20 leaders on the following areas: trade v protectionism; refuelling the IMF; resurrecting the WTO Doha development round; the climate crisis and the Green New Deal.
This is not just a banking crisis.
The banks collapsed and were bailed out. The global economic system as a whole has broken down, and must be radically revised to ensure that it puts people and the planet first.
A consequence of the capitalist casino system of international finance and consumption is the climate crisis. The economic and climate crises are intrinsically linked and should have been addressed as such by the G20 leaders.
This meeting defined the future of the global economy more than any other in the last sixty years; and as such had profound implications for the world’s poor and efforts to tackle climate change. We want an economic system that is up to the challenges of the 21st century.
Dr Julian Oram, head of policy at the World Development Movement, said:
“The G20 must not prescribe more of the same toxic medicine that led to the current sickly state of the global economy. This means no more unregulated markets, no more exposure of poor countries to corporate tax dodgers, predatory speculators and filching banks, and no more power given to unaccountable global bodies like the World Bank and IMF.
“We need a global green new deal, with at least two per cent of world GDP targeted to green investment and job-generating projects. There needs to be proactive intervention in markets to support a green economic recovery with decent jobs, stronger public services and social protections in all countries, and far greater transparency and democratic control over the financial system.”
No action from the G20. Climate change was barely mentioned in the final communiqué, no firm commitment was made on a global Green New Deal. Indeed the UK Government’s later budget announcement set aside the bare minimum for this vital aspect of economic regeneration. Despite the rhetoric about the UK as a ‘leader’ of the fight against Global Warming, we are in fact already lagging behind most of our comparably wealthy European neighbours. With us investing less future money than those countries we will only fall further behind, unless there is a big change in government policy.
Economic control for developing countries
Trade is vital to developing countries but the rules are rigged in favour of rich nations and multi national companies. Poor countries must not be locked into unfair free trade deals that bring little benefit to people and reduces their ability to choose economic policies appropriate to their circumstances. In particular, developing countries must not be pressured into signing up to a deal at the World Trade Organisation.
Re-regulating the global banking system
Gordon Brown cannot push for re-regulation of the banking system and trade deals that deregulate financial services at the same time. EU free trade deals prioritise banking liberalisation in developing countries. If the G20 are serious about re-regulating the banking system, this must apply to European banks operating in developing countries too.
Tackling climate change through the stimulus package
The climate crisis must be tackled at the same time as the economic crisis. The global stimulus package must be green – there must be massive public and private investment in a global transition to low carbon economies, this will create jobs and tackle climate change. The G20 must agree a Green New Deal that sets the world on course for a low-carbon economic recovery.
Emergency lending and reform of IMF and World Bank
Developing countries currently have little say in how powerful organisations like the World Bank, IMF and World Trade Organisation are run. The IMF has a history of lending money to developing countries with strict policy conditions – such as cuts in public service expenditure, privatisation, and liberalisation – which have exacerbated the current economic crisis. Any emergency lending to countries on the brink of economic collapse must not be linked to these same disastrous economic conditions. Furthermore, the Bank and IMF need to be radically overhauled and made democratically accountable to the people in whose interests they are supposed to work.
No real action on these from the G20. Indeed the EU has recently signed new bilateral trade deals with Lesotho, Swaziland and Botswana, locking them into unfair terms that were rejected by South Africa, Angola and Namibia. The Namibian trade and industry minister Hage Geingob has said of the deals, “We might be small, but we are still a sovereign state. You cannot smoke cigars in boardrooms in Brussels and bulldoze us.”
The World Development Movement’s key demands for the G20
Gordon Brown in particular has led the fight against the fledgling murmurs from many countries that are seeking to protect jobs at home. The World Development Movement believes that trade is vital to developing countries’ economies; however the current trade rules are designed to boost profits in European and US multinational corporations, rather than deliver real gain for people living in poverty in developing countries.
The European Union is currently negotiating trade deals with half the countries around the world. It includes a hit list of 34 poor and emerging economies to target for new trade deals – countries where more than 920 million people live in poverty. Impacts of trade deals have shown that effects on the poorest people can be dire and include: loss of jobs; increased food costs; loss of access to credit; dumping of subsidised agricultural goods; foreign companies dominating services such as water, energy and banking; profits funneled back to Europe; and weaker economic performance.
Developing countries must be able to choose the economic policies that will work for people in those countries, and not be locked into free trade deals that only benefit European multinationals.
The World Development Movement is calling for these trade deals to be stopped and is campaigning for Europe to adopt a trade agenda that puts people before profits.
It is possible to trade in a way that benefits the poor. Such a system would:
- Work in the interests of people and the environment
- Let developing countries choose their own development policies
- Not be dominated by European corporate interests
- Be transparent, democratic and truly representative
- Prioritise regional trade between countries at similar levels of development
- End Brown’s banking de/re-regulation contradiction.
- Stop European banks failing the world’s poor
The World Development Movement has warned that Gordon Brown’s proposals at the G20 to salvage the global economy could be wrecked by contradictions between his tough talk on re-regulating the banking sector at home, while the UK continues to push for banking liberalisation in developing countries through European free trade deals.
Our new report, Taking the credit, reveals the extent of the negative consequences of the financial services liberalisation in developing countries through EU free trade deals. These deals would lift restrictions on how multinational banks, like Barclays, HSBC, Santander operate in developing countries. The World Development Movement’s evidence shows such deals would mean that poor people and small businesses lose out on access to credit and other banking services.
Benedict Southworth, director of the World Development Movement said:
“On the one hand, Gordon Brown has developed a mantra of tough talk on the re-regulation of banks. On the other, together with other European leaders, he is aggressively pushing free trade deals which demand that developing countries follow a deregulated and liberalised banking model. That model has clearly and spectacularly failed here and has also failed poor people in the developing countries. This is a huge contradiction that threatens a positive outcome at the G20 – and undermines development in poorer countries.
“If Brown continues to push for these contradictory policies, he will find his credibility in tatters and risks being branded a hypocrite by those who have concerns over the unfair nature of proposed European and WTO trade deals.”
Gordon Brown is insisting that one of the key solutions to the economic crisis is to give the IMF more money and more power, essentially in order to bail out economies. But the World Development Movement believes that the IMF cannot be trusted with this role. The institution has an appalling history of forcing developing countries to implement economic policies that have deepened poverty and inequality. The IMF continues to insist that developing countries cut their public spending in return for loans – which means cuts in vital public services, like health and education provision.
The IMF has also been complicit in pushing privatisation and deregulation in poor countries. It has colluded with the world’s big banks to foster a spirit of gung-ho or risk-free financing, that has de-stabilised banks and entire nations. We believe that the IMF is Out of time and with the World Bank must now be restructured, along the lines of Keynes’ original ideas, to be democratically accountable bodies with independent financing and voting systems free from political bullying and corporate bias.
Climate change will hit the world’s poorest people first and worst. They are already experiencing the climate crisis and are suffering from loss of livelihoods and live in increasingly unstable environments. The climate crisis is the twin of the economic crisis and must be addressed at the G20 summit. It cannot be sidelined.
The G20 must recognise that ever increasing consumption and the associated reliance on fossil fuels and out-of-control greenhouse gas emissions is unsustainable and leads us to runaway climate change. The G20 must agree a Green New Deal which prioritises a transition to a global low carbon economy. This will create green jobs through massive investment in renewable energy and wider environmental transformation. The stimulus packages implemented by G20 countries must focus on green, low carbon investment. It is in this way that both the economic and climate crises can be solved.
The ‘food crisis’ and other excuses
The World Trade Organisation is warning that trade is falling and is sending urgent warnings to the G20 leaders not to raise trade barriers, and is hoping that the G20 will lay the ground work for a summer meeting of the WTO that could finally wrap a deal that has proved illusive. But the World Development Movement believes that No deal is better than a bad deal . The WTO has a history of the EU and US pressuring developing countries into opening their markets so that their multinational businesses can reap the rewards, whilst committing to minimal reform in their own policies, for example minimal reductions in subsidies to farmers in the EU and US. There are many more examples of unfair trade rules.
Put People First
The World Development Movement is part of Put People First.
Put People First is an unprecedented alliance of more than 150 union, development, faith and environmental organisations ranging from the TUC to the Salvation Army, Friends of the Earth to Oxfam, Tear Fund to the National Pensioners Convention, Stop Climate Chaos to Action Aid. A full list of supporting organisations is available at http://www.bond.org.uk/pages/platform-members.html
Put People First was set up to tell world leaders attending the G20 summit in London on Thursday 2 April that only just, fair and sustainable policies can lead the world out of recession.
Press officer, World Development Movement
0207 820 4900/4913, 07711 875 345, Email: [email protected]