Describing the need for a new financial grouping to challenge the G8 and G20, John Hiliary, in an article in the Guardian (UK) writes, “It is not just that they [G8 and G20] are exclusive, invitation-only forums where deals are drawn up behind closed doors. It is the fact that both the G8 and G20 have championed the same free-market fundamentalism that served the interests of their corporate backers but brought the world economy to the brink of collapse. It is the tune that needs changing, not just the band.” (1)
Such a new economic grouping, which some have called the G192, recently held its first meeting at the United Nations in New York. The meeting, which took place from June 25 – June 30 was officially titled “Conference on the World Financial and Economic Crisis and its Impact on Development.” (2)
Referred to as the G192 because it includes all 192 member nations of the United Nation, the meeting provided a sharp contrast to the more exclusive meetings of the G8 and G20 that the major economic powers have convened. The UN meeting provided a glimpse into how a more democratic process can lead to a better understanding of the global financial and economic crisis now plaguing the nations of the world.
A number of the talks presented at the UN meeting did indeed represent a substantial change from the kind of guiding ideology that has dominated grouping like the G8 and G20. In offering such a change in perspective, the UN conference provided a means of considering both the problem represented by the current global economic and financial architecture, and the means that are being attempted to make a change.
Dr Ralph Gonsalves, Prime Minister and Minister of Finance of St. Vincent and the Grenadines, who served as co-facilitator for the outcome document approved during the conference, credited Venezuela for proposing the idea for such a conference in November 2008. Gonsalves said (3):
“I also applaud the vision of the Bolivarian Republic of Venezuela which first conceptualized a formal United Nations conference on this crisis in a draft resolution tabled last November.”
Calling the current moment, “a crisis of capitalist globalization, of international capitalism in crisis,” Gonsalves depicted the crisis as “reflective of the triumph of neo-liberal ideology, which sought to roll back any interventionist role of the democratic state.” According to the set of ideological tenets he saw as setting off the crisis, “the organs of the State, so the neo-liberal thesis went, were to be minimalist; the international capitalist system driven by ‘the market’ was best left to be self-regulatory, according to the neo-liberal ideologues.”
The result of such ideological tenets which led to little or no regulation over investment and other financial institutions and instruments, Gonsalves explained, is “the worst crisis in international capitalism since 1929-31 has come upon us.”
He proposed that the crisis brings forth an increased need to recognize the important role of “the democratic State.” In his region, he said, the democratic national government has been “a force for good.”
Along with “the urgent need for further reforms of the global financial system and architecture,” Gonsalves called for “improved regulation at all levels and for an appropriate state role in regulatory matters.”
Several other speakers at the conference, including the Foreign Minister of the Dominican Republic, stressed the need to recognize “the regional sphere” as the most ideal for the implementation of the short and long-term measures that will end the crisis, as opposed to the global and national sphere.(4)
In his presentation to the General Assembly, Steve William Abana, the Minister for Planning and Coordination of the Solomon Islands, called for an enhanced role for the UN in creating an international mechanism to periodically assess the global economic situation and provide broad guidelines for the economic and financial sectors. (5)
He and others who spoke during the five days of the conference called for serious reflection about the legitimacy and effectiveness of the current economic and political system so as to determine its flaws and the means needed for its reform.
One of the most significant complaints was that the use of the dollar as both a national currency in the US and as a source of international reserves was a problem needing change. “A common international currency has remained elusive,” observed Dr Dipu Moni, the Foreign Minister of Bangladesh. (6) This is a problem that many, including Chinese economist Yu Yongding, a member of the General Assembly Experts Commission emphasized as a significant problem needing both short and long term attention. (7) The Experts Commission was established by the President of the General Assembly to help prepare for the conference.
Though this conference was to be open to all the member nations of the UN to participate, the US did not provide visas in time for the designated representatives of Iran or Venezuela to attend. (8)
In place of the designated government official of Venezuela who was to speak, Ambassador Jorge Valero the Venezuelan Ambassador to the UN spoke on Friday, June 26.
Valero described the resistance to the conference on the part of some of the developed nations. He said, “We were aware that an initiative of this nature would be met with resistance by forces clinging to the past. An attempt was made to prevent the United Nations from discussing the economic and financial crisis that we are suffering today, when it is precisely this forum – the G192 – [that is-ed] the most legitimate and representative of the world.”(9)
Valero said, “We must move towards the construction of a new international architecture that is not concentrated, legitimizing new relationships that underpin the emergence of a multipolar world. We must take off the straight jacket of unipolarity.” Crucial to such a program is the need “for a more effective involvement of the State to ensure an appropriate balance between market and public interest.”
It was, however, the presentation of President of Ecuador, Rafael Correa, to the General Assembly and later in a press conference, that most eloquently demonstrated that the conference and the concept of a G192 was urgently needed. (10) Correa’s talk put the conference into a context that helped to illustrate how the solution to the current crisis cannot be left to the few powerful nations that make up the G-8 or G-20.
Correa referred in his talk to some stanzas from a poem by the poet Juan Ramon Jimeniz. The poem emphasized how the powerful dominate and treat the rest of the people as “the different.”
“The different, the exploited and vilified, the majority of us,” Correa said, “demand transparency and truth at the time of revealing who was at the origin of today’s crisis, who plundered the peoples, who benefited from these adjustment policies, from illegitimate debts, coup d’etats, subterfuges and institutionalized illegalities.”
Correa described how the lowering of interest rates by the US after September 11, 2001 was a decision that in a deregulated environment encouraged the growth of subprime loans with very high risk, resulting in a situation of increased volatility and subseqently stock markets crashing.
Elaborating Correa said, “Now precisely we the different are here, and we have come to the G192 to demand democracy and to highlight the other possible world, the other urgent world that we need, the world of peace and justice, only made possible through the respect for the sovereignty of the people and through equilibrium and respect among human beings, countries, nations, continents.”
Correa placed the responsibility for the crisis on the shoulders of what he referred to was the Washington Consensus. His characterization of the Washington Consensus is as “a paradoxical and cynical agreement signed behind the backs of peoples and governments and limited to the conclaves of the dominating and colonialist powers.” Correa explained that “the different” will talk “about issues that it seems, are absent in other exclusive and excluding fora, such as the G8 or G20.”
These issues include how, “the crisis originated in the U.S. financial markets” and how it has spread so that “the whole world has been contaminated.”
Correa explained that the current crisis is but a symptom of a system that privileges financial speculation over the real economy. “For years the United States maintained huge trade and fiscal deficits, with the connivance of the International Monetary Fund (IMF).” he said. “Any other country would have been forced to devalue their currency and ‘correct’ its imbalances.” The United States, however, Correa pointed out, was allowed to continue its irresponsible fiscal and monetary activities while other nations would not have been allowed the same leeway.
Such preferential treatment of the US financial sector by the IMF, such a “double standard”, led the IMF to “choose complicity” with the US and subsequently “led to the unhinging of capitalism.” According to Correa, “the effort to recapitalize the IMF without even removing one chair from its Board of Directors” is a sign of the duplicity that he proposes is undermining the operation of the IMF.
By the time the crisis became evident in 2008, Correa explained, 9 trillion dollars was dispersed to banks and other institutions “without any oversight or control mechanisms and without knowing where these funds have gone or how they have been used.” This raises the question of what effect such action will have on the global financial system and crisis in the future. He proposed that the current crisis is a much more serious crisis than those which recur periodically “provoked by capitalism” or even when compared with the Great Depression.
Correa argues that the reform the Bretton Woods institutions, the World Bank and the International IMF, are only a stopgap, temporary measure. These institutions have only “served to make ideological marketing for neo-liberalism and the Washington Consensus,” he maintained.
“If the speculative markets of the capitalist core were directly responsible for the world crisis,” Correa reasoned, “it would be absurd and irresponsible to let the solutions be proposed, programmed and executed by the same system that caused it.” Yet this is what is being presented as the means to carry out a reform of the Bretton Woods institutions by the G8 or G20.
Instead, the crisis, Correa and others argue, presents the opportunity to work toward a new regional and global architecture for the world financial system. As an example of the regional proposals, he pointed to Latin America. Correa described the work to create a Development Bank for the South capitalized by the countries of their region.
He argued that the gravity of the crisis requires that it be addressed within the UN by all the governments of the world. This conference held by the United Nations, “must be the turning point towards the strengthening of the role of the United Nations in world governance to advance towards a true democratization of international relations….”
Correa called for “models of society that put human well being above the interests of capital.” At the press conference he held after his speech to the UN General Assembly, Correa elaborated on what such a model would be.(11) He said that the model he was proposing was a form of 21st century socialism which learns from the errors of past socialist efforts and builds on these lessons.
Though the UN conference continued for two additional days, the Outcome Document was put to a vote on Friday, June 26.(12) The document was adopted by the conference participants by consensus. After it was approved, applause filled the hall of the UN General Assembly.
After the vote a few nations spoke of their reservations and several spoke of their hopes for stronger action. Many commented that something significant had been achieved. The principle of full participation of the 192 nations of the UN, the G192, had been established as a basis for discussion of the problems of the global financial and economic crisis.
On Monday, June 29, and Tuesday, June 30 those nations which had not yet spoken, presented their talks to the General Assembly. One of those was Sin Son Ho, the UN Ambassador from North Korea. He said (13):
“It is fortunate that the draft outcome document, which is the product of the intensive inter-governmental negotiations so far, contains, more or less, such issues like the possible substitution or the diversification of international reserve currency, and the strengthening of supervision and regulation over and reform of international financial institutions.”
Ambassador Sin said that the only way out of the crisis “is to replace the outdated international financial and economic system with a new international economic order that ensures the equal sovereignty of all countries. It is the imperative requirement,” he concluded, “of our times to restructure the old international financial system and economic order of the last century, which relies heavily on the US dollar.”
In an article published shortly before the conference, Julio Escalona, an adjunct Ambassador to the UN for the Venezuelan mission, predicted that just convening the conference would be a victory in itself. “For the first time,” he wrote, an initiative promoted by the South against the will of the North could materialize. Then it’s a matter of forcing the centers of power to discuss topics, such as the IMF and World Bank’s monopoly on credit, the reform of the international financial structures and regional currencies, the end of the dollar’s hegemony, among other things, and making sure the discussion continues open inside the UN, as well as the G-20 could signal the beginning of a new epoch.” (14)
Just as Escalona predicted, the presentations by the Ecuador’s President Correa, and others, were examples of a sharp critique of the problems at the core of the current crisis. These critiques demonstrated the inadequacy of just reforming the Bretton Woods institutions, institutions created over 60 years ago. Instead the UN conference helped to highlight the need to redesign the current financial architecture, taking into account the experience of the past half century. The new architecture that is being proposed is one that is more solidly based on a regional component, and one that will be more supportive of national sovereignty than the Bretton Woods institutions.
How this new architecture will be formed is yet to be determined. But the need for it has been argued and the requirements it must satisfy have been articulated. Significantly, through this conference at the UN, the principle of involving all 192 nations of the UN in identifying the problems and fashioning means to solve them has been successfully put into practice for the first time.
Describing the importance of the UN meeting, Father D’Escoto Brockmann, the President of the United Nations General Assembly saw the meeting itself and the outcome document that was agreed to, as a victory. At a press conference at the UN on July 10, he said that the significance of the conference was, that no longer is it possible to leave in the hands of a few, the matters that affect the whole world.(15)
Reminding journalists that every effort was made prior to the conference, first not to have the conference, then to narrow the focus, Father Brockmann explained how despite these problems, the G192 is now recognized as a venue to deal with the economic and financial problems of the global crisis. “In the end its happening,” he noted.
Documents Referred to in Article:
(1) John Hilary, “End the G8 Charade – We Need a G192”, Guardian Online, Comment is Free, Monday, 6 July, 2009.
(2)United Nations Conference on the World Financial and Economic Crisis and Its Impact on Development
(3)See Gonsalves Statement
H.E. The Honourable Ralph E. Gonsalves
Prime Minister and Minister of Finance of Saint Vincent and the Grenadines
(4)See Troncoso Statement
H.E. Mr. Carlos Morales Troncoso
Minister of Foreign Affairs of the Dominican Republic
(5) See Abana Statement
H.E. Mr. Steve Abana
Minister for National Planning and Aid Coordination of Solomon Islands
(6) See Moni Statement
H.E. Dr. Dipu Moni
Minister for Foreign Affairs of the Peoples Republic of Bangladesh (on behalf of the Least Developed Countries)
(7)Press Conference: Joseph Stiglitz, Chairman of the Commission of Experts of the President of the General Assembly on reforms of the international monetary and financial system, to brief in connection with the current General Assembly Conference on the Economic Crisis and its Impact on Development.
(8) See Presstv Articles
“US prevents Venezuela minister from attending UN confab”, Presstv
“The US government has refused to grant entry visas to Venezuelan Minister of Finance Ali Rodriguez”, Presstv
“Iran criticizes US over visa denial, US denying visas Iran’s first vice president and members of his delegation”, Presstv
(9) See Valero Statement
H.E. Ambassador Jorge Valero
Vice Minister of Foreign Affairs for North America and Multilateral Affairs and Permanent Representative of the Bolivarian Republic of Venezuela to the United Nations
(10) See Correa Statement
H.E. Mr. Rafael Correa Delgado
President of the Republic of Ecuador
(11) Press Conference with HE. Mr. Rafael Correa Delgado, President of Ecuador, and H.E. Fander Falconí, Minister for Foreign Affairs of Ecuador, to brief in connection with the current General Assembly Conference on the Economic Crisis and its Impact on Development.
(12) Draft Outcome Document, A/CONF.214/3*
(13) See Sin Son Ho Statement
H. E. Ambassador Sin Son Ho
Permanent Representative of Democratic People’s Republic of Korea to the United Nations
(14) Julio Escalona, “It’s the time of history. Whether we know it or not, whether we believe it or not”
(15)General Assembly President Miguel d’Escoto Brockmann on the outcome of the UN Conference on the World Financial and Economic Crisis and Its Impact on Development as well as on the current crisis in Honduras, Press Conference, June 10, 2009
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