[From the web] The Broken “New Normal” and the G20 Mirage by Dorothy-Grace Guerrero

The Broken “New Normal” and the G20 Mirage
by Dorothy-Grace Guerrero

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That is a mirage, cheap mirage, revolting, romantic and fantastical — that’s another ball on Lake Como.

Fyodor Dostoyevsky Notes from the Underground

The Group of Twenty (G20), informally recognized as “the other UN”, is an unofficial, unaccountable, yet very powerful platform for international cooperation on the most important issues of the global economic and financial agenda. It was originally set up to deal with the global implications of the Asian financial crisis in 1998 with goals ‘to provide a new mechanism for informal dialogue in the framework of the Bretton Woods institutional system, to broaden the discussions on key economic and financial policy issues among systemically significant economies and promote cooperation to achieve stable and sustainable world economic growth that benefits all’[i].

Although the idea to broaden the international architecture beyond the G-7 or G-10 developed during the early 1990s in the U.S. Treasury, Paul Martin, Canada’s finance minister, championed the idea that emerging economies must be part of the solution to the Asian crisis within the G-7. Germany supported the idea of a new forum, and shepherded it through the G-7 summit process[ii]. The G20 brings together leaders, finance ministers and central bank governors from 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States of America plus the European Union, which is represented by the President of the European Council and by Head of the European Central Bank.

The geo-political reconfiguration of the international system due to the relative weakening of the US, the still unresolved crisis in the Eurozone and the rise of new powers such as the BRICS countries (China, Russia, Brazil, India and South Africa), brought about a changed global power rivalry. US president George W. Bush elevated the grouping into a Summit of Leaders in 2008 to enable it to deal with the financial crisis that started from the US and the EU economies, which they could not fix themselves. Since then this self-selected clique of big and emerging powers designated themselves as the new steering group for the global economy.

Non-G20 governments, intellectuals, and activists (antiglobalists, alterglobalists, etc.) have questioned its legitimacy and reason for existence. G20 Summits also became a focus for protests. Although it does not have the power to create policies and arrive at legally binding agreements, it undermines the UN process and insufficiently represents poor countries. Its track record of failures (for example, in resolving the Asian crisis in 1998 and the 2008 crisis originating in the US and EU) and unwillingness to veer away from neoliberalism has condemned the global economy into a vicious cycle of recurring economic crises. The Financial Times refer to the cycle as “an endless cycle of bubble, financial crisis and currency collapse”[iii].

It is not comforting to the poor in developing countries that new actors are joining the big league. The rise of new powers like the BRICS countries and their actions, so far, have yet to prove that they are offering a new and better leadership in global governance. If we look in the recent World Bank and UNCTAD experiences of selecting leaders and making decisions on how the financial crisis should be managed, we could see that rich countries will not easily give up their control of the global institutions.

It is still a big question if the BRICS countries are offering a positive alternative of economic and social progress to other developing countries. However, what is becoming increasing clear is that these new powers are merely continuing the same or more intense practices of exploitation and extraction of resources from poorer countries to further enrich themselves. The G20, instead of providing an alternative is merely resuscitating a flagging and failing capitalist system. It is giving new energy to the same unsustainable and unjust paradigm that facilitates the accumulation of wealth by a few while resulting in dispossession and pauperization of the already marginalized and disempowered.

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