Spotlight G20: Emerging Economies Join G20 Coalition to Tax Speculation

Sarah Anderson, guest blogger, part of our 2011 Spotlight G20 Series

Talk about piling on. Bill Gates, the Pope, the Archbishop of Canterbury, 1,000 parliamentarians, 1,000 economists, the world’s major labor leaders, Occupy Wall Street protestors, Oxfam and other major development groups, thousands of nurses, the World Wildlife Fund and other major enviros, Michael Moore… It might be easier to list who didn’t come out in support of a Wall Street tax in the lead-up to this week’s G20 summit in Cannes.

The outcome?  No home run, but some measurable steps forward.

No one expected a G20-wide agreement on taxing financial transactions at this summit.  Despite rising support, opposition from the United Kingdom, Canada, and the United States, among others, is still just too strong.  But there were high hopes that a subset of European and non-European G20 countries would launch a “coalition of the willing” in support of the tax.

This goal was achieved.  In his concluding press conference, summit host French President Nicolas Sarkozy announced that South Africa, Brazil, and Argentina were joining the list of current supporters, which inlcude France, Germany, Spain, the European Commission, and several other European governments.  Sarkozy said he hopes to move towards implementation in early 2012.

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Spotlight G20: The eurozone debt crisis and the G20

Kevin P. Gallagher, part of our 2011 Spotlight G20 Series

As Tuesday’s headlines from Greece prove, the latest eurozone rescue plan is far from a long-term solution. But it should prevent this week’s G20 meeting from being completely hijacked by Europe‘s short-term woes.

Instead of another round of fire-fighting, the G20 should address the larger issue of a mechanism to prevent sovereign debt crises in the future from spiraling like this one. If they don’t, Greece and defaulters of the future will suffer the fate of Argentina – a nation whose sovereign debt restructuring threatens to be taken over by trade and investment treaties.

As political economist Eric Helleiner has shown, with every crisis comes a new proposal for a sovereign debt workout mechanism that meets a sticky end. Mexico proposed a mechanism in 1933; the United States a mechanism in early drafts of the IMF articles of agreement in the 1940s; UNCTAD saw such a regime as core to a “new international economic order” in the 1970s; and most recently, the IMF issued a call for a sovereign debt restructuring mechanism, in 2001 in the wake of Argentina’s financial crisis.

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Spotlight G20: G20 Resource List

As the G20 Cannes Summit comes to a close, as part of our 2011 Spotlight G20 Series Triple Crisis recommends checking out the following resources to make sense of what was and was not included in the G20’s agenda and why.

G20 Information Centre, Munk School of Global Affairs, University of Toronto: The G20 Cannes Summit 2011: A New Way Forward
Center for Global Development, Development and the Cannes G20 Summit
Thomas Bernes (CIGI), Prescriptions for the G20: The Cannes Summit and Beyond
Uri Dadush, G20 Must Help Manage Eurozone Crisis
Financial Times Special Report, Overview: Dark outlook piles pressure on leaders
Kevin P. Gallagher, The Eurozone Debt Crisis and the G20
Jose Antonio Ocampo, Stephany Griffith-Jones and Kevin P. Gallagher, The G-20’s Helpful silence on capital controls
Andrew Sheng, The Coming Global Credit Glut
Barry Eichengreen, The G20 and Global Imbalances
IMF’s Special Report to the G20 and Paul Krugman’s response, Surprise Anti-Austerians
Jeffrey Sachs, Obama, the G20, and the 99 Percent

Spotlight G20: Brics should condition Euro bailouts on growth and more say

Kevin P. Gallagher, part of our 2011 Spotlight G20 Series

As the Eurozone crumbles before them, European leaders are begging for help to bailout Greece and create a facility to insure that the crisis doesn’t sweep through Italy, Spain, Portugal and beyond.  For the last sixty years the United States would have been the nation to step up and lead with ideas and resources to the rescue.  Sadly, the US is nowhere to be found: out of ideas and out of cash.  In desperation, Europe has turned to the BRICs.  Rather than direct bi-lateral payments, the Brics are starting to say that they prefer to channel their resources through the IMF. Brics shouldn’t let this crisis go to waste.

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Spotlight G20: Learning from Latin America

Fander Falconi, part of our 2011 Spotlight G20 Series

At the October meeting of G-20 finance ministers the only interesting item of note was a return to the discussion of a tax on international financial transactions, or “Tobin tax”. In 1971, the American economist and Nobel laureate  James Tobin, proposed this initiative to reduce speculative activity international. This initiative garnered international support, even by the organization Association for the Taxation of financial Transactions and Aid to Citizens (ATTAC), which has the backing of the European Union. The measure was not supported by the United States or China.

Everything else in that meeting was mutual recrimination about passivity in the face of a deepening economic crisis and the replay of an old script: neoliberal structural adjustment, reduced spending and public consumption. These policies have left a number of European countries, such as Greece, on the verge of bankruptcy.

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Spotlight G20: The Crisis in the Eurozone Conference

As the G20 is likely to focus primarily on the eurozone crisis at the Cannes Summit, we recommend checking out The Crisis in the Eurozone– a conference organized by James K. Galbraith taking place today and tomorrow at the University of Texas at Austin. The entire conference will be webcast live here and the program is available here. The event will focus on “A Modest Proposal for Overcoming the Euro Crisis” by Yanis Varoufakis and Stuart Holland, a plan which would combine the innovation of the Eurobond with a “New Deal” approach to European development.

Spotlight G20: The G20 and the New World Order

Sarah Anderson, guest blogger, part of our 2011 Spotlight G20 Series

Signs of a New World Order are everywhere here in the French Riviera, as the elite city of Cannes hosts the G20, the ultimate elite club. The local business rag, the Riviera Times, trumpets a recovery of the tourism business during the 2011 summer season – thanks to a 50 percent increase in visitors from China.

In my hotel lobby there are stacks of China Daily, but no such freebies from the newspapers of the Old World Order powers. Walking by the kiosks, though, I see European headlines rejoicing at the likelihood that China will aid in the Greek bailout. The head of the European Financial Stability Facility, the pot set up to rescue basket case countries, traveled to Beijing last week and rattled a tin cup for donations from China’s $3 trillion reserve fund. This comes amid news that Chinese investors have acquired distressed Swedish carmaker Saab. (They already own Volvo.)

How will China’s juggernaut status affect the G20’s agenda?  In both positive and negative ways, in my view. On the positive side, they could hold some of the other governments’ most extreme free market tendencies in check. Take, for example, some of the positions the Obama administration is pushing in bilateral and regional free trade agreements. In the recently signed treaties with Panama and Colombia, they pushed through new rules that ban the use of capital controls, despite the fact that many countries are using these policy tools to combat financial volatility and the International Monetary Fund is recommending them in certain circumstances. The Chinese government, a capital controls user, would never go along with it if the Obama administration tried to push such nonsense at the global level.

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Spotlight G20: Efforts on Food Price Volatility Hobbled: The G20 and the CFS

Jennifer Clapp, part of our 2011 Spotlight G20 Series

At the meetings of the UN Committee on World Food Security (CFS) in Rome two weeks ago, disappointment was in the air. Expectations that the body would be able to agree to anything near what is needed to effectively address food price volatility had been seriously deflated, especially among civil society groups that were participating. What was the source of the trouble for the CFS? In a nutshell, it was the G20.

Earlier this year when France took on the chair of G20 and President Sarkozy announced his intention to use the forum to address food price volatility, there was initial excitement. Sarkozy promised to rein in excessive speculation on commodity futures markets that was seen to be contributing to price volatility and resulting food insecurity in the world’s poorest countries. There was also hope that the G20 would do away with market-distorting biofuel policies that also have contributed the volatility in food prices. There was even hope that the G20 might support the idea of reserves to manage food stocks and smooth prices.

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Spotlight G20: Brazil in the G20 Meetings

Adhemar Mineiro, guest blogger, part of our 2011 Spotlight G20 Series

The meeting in the beginning of November will be somewhat of a new experience for Brazilian partners in the group. In all previous meetings Brazil was represented by President Lula da Silva and Foreign Minister Celso Amorim, who both had not only experience and inclination for the discussion of international issues, but also high profiles and proven leadership capacity in this kind of meeting. In the next meeting Brazil will be represented by President Dilma Rousseff and Foreign Minister Antonio Patriota, two newcomers with low profiles in general.

On other side, the international economic crisis remains the main problem on the agenda: the G20 as a group has a quite insurmountable problem. Besides its old problem of scarce or nonexistent legitimacy stemming from the idea that a small group of countries cannot represent the whole world, the G20 now faces a new issue. After its three year existence, and despite the use of available resources and political will, the group was unable to overcome the financial and economic crisis and find a new development path. In other words, it is not only the G20’s legitimacy that is now in question, but its ability as well.

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