Fresh paint on a broken system

THE G20 summit meeting in London from April 1 onward was loudly publicized a meeting of 20 industrialized and emergent countries to find solutions to the crisis. But long before the end of the summit, it is clear that they won't rise to the challenge.

The G20 wasn't created in order to provide genuine solutions; it was hastily summoned in November 2008 to salvage the powers that be, and try to plug the breaches in capitalism. It is therefore impossible for this body to opt for measures that are sufficiently radical to save the day.

The public will be told to look in two directions that are the focus of anger: tax havens and CEOs' incomes.

Tax havens have to be abolished; that goes without saying. To achieve this, it should be easy enough to make it illegal for companies and residents to have any assets, or relationships with partners located, in tax havens. The European Union (EU) countries that function like tax havens (Austria, Belgium, the United Kingdom, Luxembourg, etc.) as well as Switzerland must do away with bank secrecy and put an end to their outrageous practices.

Yet this isn't the orientation chosen by the G20. A couple symbolic cases will be targeted and minimal measures will be required from those countries. A blacklist of non-cooperative territories will eventually be made public, but it will have been carefully vetted (the city of London, Luxembourg and Austria have already been promised they will not be on it).

Meanwhile, CEOs' incomes, including golden parachutes and other bonuses, are indeed outrageous. In times of economic growth, employers claimed that executives who brought in big profits to their companies had to be rewarded to prevent them from moving to another company. Now that we live in a time of crisis and those companies have to admit to increasing losses, the same executives still claim similar rewards.

The G20 will try to regulate their incomes for a limited duration. The logic of the system is not questioned.

Apart from tax havens and CEOs' super-bonuses, which won't be hit by any specific penalties anyway, the G20 countries will further bail out their banks. Though globally discredited and de-legitimized, the International Monetary Fund (IMF) will be put back at the hub of the political and economic game, thanks to a new provision of funds that will be made available by 2010.

THE G20 strategy is to put a fresh coat of paint on a world that is collapsing. Only a strong popular mobilization will make it possible to lay solid foundations to build another world, in which finance is at the service of people, and not the other way round.

The March 28 and 30 demonstrations were big ones: 40,000 people in London, thousands and thousands in Vienna, Berlin, Stuttgart, Madrid, Brasilia, Rome, etc., with the common motto "Let the rich pay the crisis!"

The week of global action called for by social movements at the World Social Forum in Belém last January thus had a gigantic echo. Those who announced the end of the movement for another globalization were wrong. The protests have proven that the movement is able to bring large crowds together, and this is only the beginning.

The success of the mobilizations in France on January 29 and March 19 (3 million demonstrators were in the streets) is evidence that the workers, the unemployed and young people all want other solutions to the crisis than those that bail out bankers and impose restrictions on the lower classes.

As a counterpoint to the G20 summit, the president of the UN General Assembly, Miguel d'Escoto, has called a general meeting of heads of states and governments in June and asked the economist Joseph Stiglitz to chair a commission that will draft proposals to meet the global crisis. The suggested solutions are inadequate because they are too timid, but they will at least be discussed at the UN General Assembly.

A new debt crisis is looming in the global South; it is a consequence of the private real-estate debt bubble bursting in the North. The recession that now affects the real economy of all countries in the North has led to the prices of raw materials plummeting, which has considerably reduced the currency revenues with which governments of countries of the South repay their external public debts.

Moreover, the current credit crunch has induced a rise in borrowing rates for the countries of the South. The combination of these two factors has already resulted in suspensions in debt repayment by those governments that are most exposed to the crisis (starting with Ecuador). Others will follow suit within one or two years.

The situation is absurd: countries of the South are net creditors to the North, starting with the U.S., whose external debt is over $6 trillion (twice the total external debt of all the countries of the South). Central banks in countries of the South buy U.S. treasury bonds instead of setting up a democratic bank of the South to finance human development projects.

They should leave the World Bank and the IMF, which are tools of domination, and develop South-South relations of solidarity like those that exist between countries that are members of the Bolivarian Alliance of the Americas (Venezuela, Cuba, Bolivia, Nicaragua, Honduras and Dominica). They ought to audit the debts they are asked to repay and put an end to the payment of illegitimate debts.

The G20 will see to it that the core of neoliberal logic is left untouched. Its principles are asserted again and again, even though they have blatantly failed: the G20 maintains its attachment to a global economy based on an open market. Its support of the god of free market is non-negotiable. Everything else is hocus-pocus.

Translated by Christine Pagnoulle in collaboration with Elisabeth Anne.