Erenlai - Items filtered by date: Wednesday, 08 April 2009
Wednesday, 08 April 2009 18:56

Life after G20

The London G20 Summit had been cautiously orchestrated: rumors of a possible walkout, excitement over President Obama’s maiden voyage, and dramatic speculations upon whether the participants were ready to unite and “save the world”- all of this came up to the expected conclusion: our leaders had risen up to the circumstances. The additional funding pledged for the IMF and the resolution to enforce stricter financial regulations are supposed to provide us with the best possible deal in the worst possible economic environment…

Actually, the hype about the Summit had positive results per se. World economy these days seems to be ruled as much by “psychological stimuli” than by a financial one, and anything that concurs to a boost of optimism has real effects in the real world… World leaders need to be global cheerleaders as well, and their smiling faces splashed on TV screens and newspapers’ front pages somehow contribute to economic stimulation.

This however does not mean that the Summit was purely rhetoric. The steps announced for controlling the world financial system were slightly more stringent than one could have expected, and its step by step re-foundation now looks like a real possibility – only ten or fifteen years later than should have been the case. No lessons had been drawn form the Asian financial crisis, and the reforms suggested at that time are only now being examined.

The additional funding for the IMF and the foreseen stimulus packages are good news for the emerging economies, the growth of which remains the best hope of revival for the world economy. However, these measures will do little for solving the haunting problems of toxic assets that still besets the American economy and virtually threatens its partners. More importantly, the nature of the growth to be achieved has not been truly addressed by the Summit. A mere rise in consumption will not solve the long-term issues that the present crisis has put under light. The rate of growth is much less important than the quality of development. This is not true only for developed nations but for emerging ones as well, as environmental hazards, public health risks and growing inequalities threaten their stability as surely as recession does.

The debate now runs between the ones who advocate strong stimulus packages and those alarmed that fiscal stimuli will only add up to the burden of future generations. Both parties are wrong. The most pressing issue has to do with the way fiscal packages will be invested where they should be. Since the beginning of the nineties, the world community has done its homework well and has recognized where the true priorities are to be found: universal access to clean water, primary education and quality medication, public health facilities, energy-saving investments and soil conservation are the assets needed for ensuring that we inhabit the common house of the earth in a just and sustainable way. The current recession does not change the nature of the global agenda, it makes it even more stringent. The G20 has not succeeded in igniting a sense of urgency and purpose that would make the crisis the opportunity to engineer a genuine new world order. Short-term economic revival and long-term overhaul of the global system should not be seen as conflicting objectives but rather as mutually reinforcing obligations.
(Photo by C. Phiv, London, 2009)

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