World leaders attending last week’s G-20 summit took three big steps backwards with their solutions for solving the current international economic crisis, according to John Cavanagh, director of the Institute for Policy Studies, and Robin Broad, professor of international development at American University. Cavanagh and Broad were disappointed with the results of the summit after leaders had at least asked “many of the right questions” before arriving in London. The leaders arrived ready to discuss three key points: Promoting a “global green stimulus;” crafting global regulations to “close down the casino”—meaning the high-stakes fiscal policies that hedge funds and banks have embraced, creating the current economic mess; and coming up with a “North-South transfer” in which wealthy nations, which started this mess, would provide resources to poor nations affected by the crisis.
But on all three points, the G-20 summit failed to deliver, according to Cavanagh and Broad. Their biggest concern centers on the North-South transfer issue, which world leaders decided can be resolved through the International Monetary Fund (IMF). “No global economic institution has caused more pain over the past 30 years than the International Monetary Fund,” write Cavanagh and Broad. “The IMF has long operated like a medieval doctor who has only one remedy to any ailment: stick a leech on the patient and bleed him.” The authors of the op-ed blame U.S. Treasury Secretary
Timothy Geithner, a former IMF official, for steering President Barack Obama towards the IMF on the critical question of how to help developing nations.
Cavanagh and Broad also blame Geithner, a key part of the “Wall Street-Treasury complex,” for the summit’s failure to tackle the “global financial casino.” They argue that France and Germany “proposed a new international regulatory system to close down the casino”—but “U.S. and British officials resisted, revealing again that the U.S. Treasury department still doesn’t understand that this global crisis cannot be fixed through national measures.”
Europe, however, takes the blame from Cavanagh and Broad for not adequately addressing Obama’s “green government stimulus packages,” behaving contemptuously towards the idea of spending billions, as the U.S. is doing, in trying to jumpstart the economy.
-Noel Brinkerhoff
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