The G-20 meeting in Seoul took place November 10-11, 2010, at a time of a serious economic and financial crisis. This crisis continues to take its toll on people in many countries around the world. The heads of state of the 20 nations which make up the G20 met to determine the economic policies they want to direct the world economy.
Just a little more than one year ago, from June 26-30, 2009, the United Nations (UN) sponsored a different form of meeting. Some called the UN meeting, which was formally titled the “Conference on the World Financial and Economic Crisis and its Impact on Development,” the first meeting of the G192.(1) At the UN meeting the heads of state or other government representatives of the 192 nations that are members of the UN were able to contribute their voice and their vote to a discussion of the causes of the crisis and to a program for determining the needed response. The meetings were webcast for the public and open to the press. Civil society could participate. Expert economists were invited to contribute their advice. The meetings were held under the provisions of the UN charter providing for a role for the UN in the global governance of the world economy.
The 1997 Asian financial crisis had been the impetus for the original creation of the G20 by the G7 nations. Then when the 2008 economic and financial crisis discredited the neoliberal ideology and the G7 which promoted that ideology, the G20 was enlisted to fill the role previously taken by the G7. The G20 meetings are not open to the public or the press. Nor are the meetings webcast. Thousands of police were employed in Seoul to keep civil society and the public away from the proceedings. The decisions made by the G20 leaders are in general to serve the interests of the few nations that are part of the G20 or of those they favor. For example, Lee Myung-bak, the President of South Korea, invited a group of more than 100 corporate heads to consult with the G20 so the G20 would know first hand what these corporations needed from the G20. No comparable provision was made for the G20 to know the needs of workers or farmers or small business owners, or educators or students or poor people.
The challenge presented to the excluded 172 nations of the UN and the excluded people around the world is whether the G20, as a G-7 appointed, non representative, economic grouping, is to be encouraged to take over the reins from the G7 to continue to promote the neoliberal agenda that led to the current economic and financial crisis? Or is a more democratically constituted entity, the G192, created at the UN in 2009, the more appropriate body to deal with the serious systemic problems that the economic and financial crisis has revealed need to be solved?
The nations of the G7 include the US, Great Britain, France, Germany, Japan, Italy and Canada.
The G20 includes the G7 nations, along with 13 additional nations. These are Brazil, Argentina, Mexico, Turkey, Russia, China, India, Indonesia, South Africa, South Korea (ROK), Saudi Arabia, Australia. and the nation that holds the presidency of the EU. This year it is Belgium.
The G20, like the G7 has no agreed upon law or treaty that governs it. It has no charter or constitution. There is no clear reason why a given nation is on the G20 while another is excluded.
The G192 includes all the member nations of the UN. It has a basis in the UN charter for its legitimacy.
At the UN, several nations have voiced concerns that relying on the G20 to solve the problems of the economic and financial crisis is not an appropriate course of action. Presentations at the UN have documented that there are several efforts currently being developed to provide regional mechanisms to deal with flaws in the global economic and financial architecture. Also economists from the United Nations Conference on Trade and Development (UNCTAD) have presented proposals for new institutional forms to make needed change in the current international economic and financial architecture.
Along with the UN members who believe there is a need for an increased role for the UN to solve the current economic and financial crisis, many civil society organizations have joined together to propose that the UN is the appropriate entity, not the G20, to determine economic and social changes in the global economic and financial architecture.
Actions by the South Korean government, as the host of the fifth G20 Summit in November 2010, demonstrate a fundamental problem with the G20. Civil society organizations, who have been exploring the problems and mechanisms for finding solutions to the crisis, were excluded from the proceedings and even the venue where the G20 took place. Some of the activists who were to be part of an alternative summit event and who had been issued visas to come to Seoul, were detained at the Seoul airport when they arrived for the alternative Summit being held by Korean NGO’s. These activists were then deported without any explanation. (2)
In stark contrast, 120 corporate executives were invited to consult with the G20 so that their views could be included in the decisions made at the Summit. Some of the very corporate entities whose actions were part of bringing on the crisis were encouraged to present their views on what steps to take so as to continue to protect the speculative activity at the roots of the crisis. The so called Business 20, was launched by the government of South Korea as a side event for the G20. The South Korean government proposed that it become a permanent part of the G20.
An article in the Korea Times says that “the business summit provides a rare opportunity for the CEOs of world–leading corporations to come together with political leaders and discuss urgent issues. Better cohesion and understanding between governments and corporations are critical to building a more stable, resilient economic structure.” (3) Citi for example, was one of the invited corporation. This corporation is the result of a merger of two institutions that pressured the US government to end the Glass-Steagall Act of 1933. This important US banking regulation which was originally passed to prevent another depression, was ended in 1999.
The Glass-Steagall Act was created to regulate the financial services industry, by erecting a wall between the commercial banks and their depositors, and the risk oriented investment banks of Wall Street. The commercial banks and their depositors were to be insured by a government entity, the Federal Deposit Insurance Corporation. (FDIC).
Citigroup had to be bailed out in 2008 by the US government for first $25 billion and then $20 billion. (4) It was saved from bankruptcy only by such huge loans from the US government. The understandings of corporations like Citi are not as the Korea Times writer claims, “critical to building a more stable, resilient economic structure.” Such understandings and actions, instead, have to be critiqued and prohibited, as such actions like ending the Glass-Steagall Act helped to create the crisis.
Civil society organizations point to the need to create new systemic forms to be able to solve the problems at the root of the crisis. Civil society organizations, excluded from the G20 official events, issued a statement at the end of the alternative Summit they held. Their statement describes the need to make significant changes in the architectural framework of the global economic system. Analyses of the economic crisis offered by the Korean civil society group People’s Solidarity for Social Progress (PSSP) (in Korean, Jin Bo Yun Dae) (5), and the international group ATTAC (Association for the Taxation of Financial Transactions for the Aid of Citizens)(6) expose the roots of the crisis. They also propose reforms to change the structures that cause the problems.
While the G20 works in secrecy, the civil society activists propose instead an open forum to explore the roots of the crisis and to hear all voices so that the problem and solutions decided can service the needs of all the people, rather than the few whose actions contributed to cause the crisis.
PSSP explains that 900 social movement organizations in 115 countries including ATTAC and others signed a “Statement on the proposed Global Summit to Reform the International Financial System” in 2008. The statement called for “a new framework for discussing alternative ways to solve the current economic crisis, one that protects democratic participation and debate.” The organizations called for such a conference to be convened by the United Nations “to replace the G20 as the body for discussing reform of the international economic system”.
ATTAC also calls for the UN to play a bigger role in solving the problems uncovered by the crisis. “An appropriate institutional setting under the auspices of the UN has to be set up to strictly regulate and re-orient the financial system,” an ATTAC article proposes. ATTAC outlines the kind of regulating processes the UN economic body would need to assume. “Such a UN body would also be the forum for decision-making about the extent to which financial services companies, financial products/services would be liberalized and freedom of capital movement would be limited. This would mean that such decisions would not be taken in the WTO/GATT and free trade agreements (FTA) as is currently the case.”
What is important about the articles and analyses from such civil society groups to entrust economic governance to the UN, is that they expand the spectrum of thinking on the causes and the range of issues to be considered to solve the crisis. Along with the 192 member nations of the UN who were able to present their views at the 2009 meeting at the UN about the economic and financial crisis, the views of civil society analysts, and of UNCTAD and other economic experts, contribute to the kind of discussion and debate needed to find a way out of the crisis.
One article published before the G20 began, explained that the problem is that the G20 has appointed itself as the “principle body responsible for finding a solution to the global economic crisis and for managing the world’s economy.”(7) Not only does the G20 exclude the majority of the world’s people and nations from its decision making process, it also is willing to agree to solutions that cut back on the living standards of working and poor people, while protecting the wealth and power of the corporate sector.
Such actions can only deepen the crises rather than help to provide the needed solutions. The problem represented by the G20 for the majority of nations and peoples of the world is expressed in the simple question posed by Filipino activist Walden Bello–“Who gave them the authority to solve this crisis?”
1.Ronda Hauben, G192 Meeting at the UN Presents Needed Alternative to the G8 and G20, July 13, 2009.
2. Several of civil society activists who had been granted visas to go to South Korea during the recent G20 Summit for an alternative Civil Society Summit were forcibly held at the airport when they arrived in the country and then deported. See “Open letter to the South Korean government on the deportation of seven Filipino activists” by PSPD.
3.Kim Jae-kyoug,“Excess Reform May Mar Recovery” Korea Times, November 10, 2010.
4. See for example: “CitiGroup Citibank BailOut Saved from Bankruptcy with $20 million” 11/24/2008
5. Basic Overview of the G20 by People’s Solidarity for Social Progress
6.ATTAC, “The time has come: Let’s shut down the financial casio”
7. Newsletter July 2010, People’s G20 Preparation Committee, South Korea