London on March 28, 2009. Protest organised Put People First, an alliance of more than 150 unions, and attended by 35,000 people. Photo by Xinhua.

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Lenin's Tomb

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By Eric Toussaint and Damien Millet, translated by Christine Pagnoulle in collaboration with Elisabeth Anne

April 1, 2009 -- The G20 summit meeting in London from April 1 onward was loudly announced and publicised. Those 20 industrialised and emergent countries (G20) are meeting to find solutions to the economic crisis. But long before the end of the summit, it is clear that they will not rise to the challenge.

The G20 was not created in order to provide genuine solutions; it was hastily summoned for the first time in November 2008 to salvage the powers that be and try and 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.

Public opinion will be told to look in the two directions that are expected to focus aggravation: tax havens and the 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 in, or relationships with partners located in, tax havens. The EU countries that function like tax havens (Austria, Belgium, the UK, Luxembourg…) as well as Switzerland must do away with bank secrecy and put an end to their outrageous practices. Yet such is not at all the orientation chosen by the G20: a couple of emblematic cases will be cracked down on, minimal measures will be required from those countries, and a black list of non-cooperative territories that will be eventually made public will have been carefully vetted (Luxembourg or Austria have already been promised they will not be on it).

On the other hand CEOs' incomes, including golden parachutes and other bonuses, are indeed outrageous. In times of growth the employers claim that those who brought such benefits to their companies had to be rewarded to prevent them from moving to another. 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' superbonuses, which will not be hit by any specific penalties anyway, the G20 countries will further bail-out their banks. Though globally discredited and delegitimised, the IMF will be put back at the hub of the political and economic game thanks to a new provision of funds that will have been made available by 2010.

Popular mobilisation needed

The G20 strategy is to put a fresh coat of paint on a world that is collapsing. Only a strong popular mobilisation 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 demos were big: 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 the social movements from all over the world at the World Social Forum at Belém in January thus had a gigantic echo.

Those who had announced the end of the movement for another globalisation were wrong. It has proved that it is able to bring large crowds together, and this is only the beginning. The success of the mobilisations 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 which consist in bailing out bankers and imposing restrictions on the lower classes.

As a counterpoint to the G20 summit, the president of the UN General Assembly Miguel d'Escot, 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 the UN General Assembly.

New debt crisis

A new debt crisis is looming in the South, it is a consequence of the real estate private debt bubble bursting in the North. The recession that now affects the real economy of all countries in the North has led to prices of raw material plummeting, which considerably has reduced the strong 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 countries of the South. The combination of these two factors has already resulted in suspension in debt repayments 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 US whose external debt is over US$6000 billion (twice the total external debt of all the countries of the South). Central banks in countries of the South buy US 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 such as those that exist between countries that are members of ALBA (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 to the god of free market is non-negotiable. Everything else is hocus pocus.

[Eric Toussaint is president of the Committee for the Abolition of Third World Debt (CADTM), Belgium (http://www.cadtm.org), author of A diagnosis of emerging global crisis and alternatives (Mumbai: Vikas Adhyayan Kendra, 2009) and The World Bank: A Critical Primer (London: Pluto Press, 2008). Damien Millet is spokeperson for CADTM France. Toussaint and Millet are joint authors of 60 Questions 60 Answers on the Debt, the IMF and the World Bank, English version to be published in 2009.]