G-20 Summit: Seoul Symphony In Discord
By Farooque Chowdhury
13 November, 2010
Countercurrents.org
Seoul just had a symphony in discord. Signs of rupture are there in the just concluded G-20 summit. Neither the quintuplet nor the triplet could play a song of solace in this tumultuous world. Even the duet, G-20 is actually G-2, failed to sing a single song. Hope only played a G-diminish chord. The una corda made the sound of disunity among the world powers.
The summit, only economic in appearance but political also in essence, was accompanied by contention and competition, and was under the intercontinental cloud of the Great Financial Crisis. These made it a workshop for innovation of a mechanism capable of pulling up the global economy. The summit of the countries collectively producing more than 85 percent of global wealth carried all the seeds of in-fighting although Lee Myung-bak, the South Korean President, set a target of achieving “balanced growth with international solidarity”. But balanced growth, neither within respective borders nor in the world markets, is always beyond the capacity of contending capitals, whether represented in the summit or not.
The state of the US economy compels Obama to tell that the US cannot remain a profligate consumer using borrowed money and needs other countries’ help to fix the world economy. This carries implications for other capitals that eye the US market for their growth. Lula had to tell the truth: Rich countries’ target for export based growth would “bankrupt” the world. The two leaders’ opposing positions exposed one aspect of capitals’ limitations.
Germany, the second-biggest world exporter after China, stood against the US proposal to limit current account surpluses and deficits to 4 percent of GDP to reduce trade gaps. There, in the opposing proposals, also are needs of competing capitals. It was beyond the capacity of the summit to forget respective interests.
The majestic parties in the summit were two – the US, reeling under crises and China, with its trade surplus that hit $27.15bn last month. Basically they failed to agree. The US wants to get China to allow its currency rise while Fed plans to pump $600bn into the sluggish American economy, effectively devaluing its own currency. The US plan is not acceptable to its competitors. China considers that the Fed move to print money is having a distorting effect. Ever growth is the goal all the parties plan to achieve. But the truth was uttered. Cameron had to tell: “The alternative isn’t some wonderland of continuous growth…” Capital has its limits that it dislikes to admit, but a changed time compels it to admit.
Competing interests disallowed the leaders to reach real solutions for “real” economy they were searching for. Their, respective economic interests’, failure produced a communiqué containing a design named Seoul Action Plan, a neo-entry in the dictionary of economic diplomacy. The statements, the principles, the pledges made in the summit are not new. Those have been made and unmade, stated and restated repeatedly in earlier summits and conferences.
The communiqué shows that a conclusive Doha Development Round of trade liberalization talks for reaching a global trade deal by next year is now one of their tents of hope. But none knows that whether a sandstorm would bury it or not. That Round is their “narrow” and “critical window of opportunity”, the leaders said. A successful Doha Round, as the WTO estimated, could boost the annual world trade up to $200bn. But quicksand of conflicting interests also waits there. The G-20 leaders “now”, as the communiqué said, need to “complete the end game.”
The summit paid attention to almost everything from job creation to “further strengthen the global economy” to “accelerate job creation” to “ensure more stable financial markets” to “narrow the development gap” to “promote broadly shared growth beyond crisis” to support LICs to “combat the challenges of global climate change”. It has not failed to mention the Seoul Development Consensus for Shared Growth, Multi-Year Action Plan on Development, the Financial Inclusion Action Plan, the Global Partnership for Financial Inclusion, a flexible SME Finance Framework, Mutual Assessment Process, Anti-Corruption Action Plan, and many more with the assurance: “We hold ourselves accountable. What we promise, we will deliver.” But limitation of the economies they lead may not allow them to deliver what they promised.
They significantly assured to “pursue all outstanding governance reform issues at the IMF and World Bank; and build a more stable and resilient international monetary system, “a modernized IMF that better reflects the changes in the world economy through greater representation of dynamic emerging markets and developing countries.” The leaders said: “[C]omprehensive quota and governance reforms, as outlined in the Seoul Summit Document, will enhance the IMF's legitimacy, credibility…”. So, the world now knows that the IMF, etc. needs more legitimacy and credibility!
Failures to reach agreement failed to make a long list, and those “small” disagreements were watered down. These included steps to deal “prospective” currency wars, and a few fundamental problems. The communiqué, however, ignored a few fundamental problems: stagnation and its causes in the world economy, financialization, and these leading to casino with attractive bubbles.
The attentive summit heard the news of Ireland’s worsening debt troubles looming over the financial markets and pushing the country on the brink of seeking a bailout. Irish finance minister confirmed that the country was facing a grave economic crisis. About a year ago there was Dubai debt crisis. Hence, the G-20 leaders’ declaration, “Risks remain. … [U]ncoordinated policy actions will only lead to worse outcomes for all”, does tell two aspects: 1. the present world economic system’s incapacity/vulnerability, and 2. a daydream for coordination within the confine of competition. Coordination between capitals competing for wider space can be temporarily achieved, and that temporary coordination breaks down after reaching to markets’ limits.
However, hope was not sold out in market. The G-20 stood “united” in “conviction that by working together” it “can secure a more prosperous future”, and yearned for balanced growth, structural reforms, etc. But balanced growth is not the character of these profit-driven economies. And, now it seems, structural reform is not a panacea for only poor countries, which was imposed by the famous pair of world economy institutions.
Observations of mainstream press also tell the output of the summit. The Financial Times said: The leaders “failed to reconcile their positions”, settling only on a vague collection of “indicative guidelines”. The Daily Telegraph had similar opinion. Wall Street Journal pointed out the “fundamental disagreements”. Reuters assessed the summit an “encouraging failure”.
G-20 will meet in 2011 in France, and in 2012 in Mexico. By that time competitions turning intense and contradictions getting sharpened may produce dramatic incidents. And, the unemployed, citizens without social security cover, the poor will continue to suffer magnifying imbalanced growth.
