Implications of the Alliance between the G20 and the Business-20 (B20)
Intorduction by Nancy Alexander, Director, Economic Governance Program, Heinrich Boell Foundation-North America
The eurozone crisis hijacked the French G20 Summit and shows every sign of doing the same at the Mexican Summit, as fear of a Greek exit (“Grexit”) from the eurozone morphs into panic over Spain (“Spanic”). (See analysis). Ever since the US-triggered global financial crisis, the G20 has taken a zig-zag policy path between stimulus (2008-2009) and austerity (2010-2012) with governments cowering in fear of the bond markets and their electorates. The body, including eurozone leaders, has been unable to find a middle ground that would salvage or create desperately needed jobs and social protection programs in fiscally responsible ways. Instead, they are perceived as perpetuating a cycle of privatizing gains and socializing losses of corporations, particularly financial institutions.[i]This dynamic creates inequality and impoverishment, while fueling the myth that taxpayers cannot afford to stop the desecration of the planet. In the spirit of the Occupy and Indignados movements, these will be among the themes of civil society events in the run-up to the Mexican Summit. (see Box 1 below) In fact, G20 actions have profound implications for human and earth rights. In the “Must Read” section, “A Bottom-Up Approach to Righting Financial Regulation: The Group of 20, Financial Regulation and Human Rights” argues that, while it is proper to not confuse the G20 with a formal institution, let alone one with human rights mandates, its member countries should not evade their responsibility to uphold human rights obligations. (see p. 20) Another “Must Read,” which assesses the World Bank’s new publication “Inclusive Green Growth” and, despite the word “inclusive” in the title, the publication short-changes the role of equality, human rights, and poverty reduction in achieving sustainable development (see p. 19).
In his article, Geopolitical Perspectives on the G20, Carlos Heredia, Director, Division of International Studies of the Center for Research and teaching in Economics (CIDE) contrasts the proponents of extreme austerity, which risks choking off growth and production, with proponents of stimulus and investment. The former approach creates “double jeopardy” in that it sacrifices the masses to preserve privileges for the elites, while distracting Leaders from seeking lasting solutions to global crises .In addition to providing a sweeping history of the evolution of the G20 and the power blocs within it, Heredia compares Mexico’s leadership at the December 2010 climate negotiations (The Conference of Parties (COP-16)) in Cancun with its leadership at the upcoming Summit. At the climate talks, the Government of Mexico had the power that comes with being a host country with its own proposal and the political will to promote it. But, in hosting the G20, Heredia says that the government lacks a national strategy to reform the status quo on global issues. (See Box 2: Priorities for the Mexican G20 Agenda.) 2Heredia’s views on the consultation process between the Mexican Government and CSOs are featured, below. (see Box 3: “The G20 and Civil Society: Outreach without Impact”) Why has the G20 – the “premier forum for international economic cooperation” – failed to stop the financial crises? Is it getting the right advice? Is it captive to key interests? In their article, Selected Highlights of B20 Draft Recommendations to the G20, Aldo Caliari of Center of Concern (USA) and Nancy Alexander of HBF-North America examine the intimacy between the G20 and the Business 20. While not necessarily wedded, the B20 and G20 are close allies that hold their Summits back-to-back in the same location, so that world Leaders can mingle with Chief Executive Officers of the largest transnational corporations. This month, the B20 and G20 Summits and the Rio+20 Conference will be held back-to-back:
- the Business-20 (B20); June 17-18,
- Los Cabos, Mexico the Group of 20 (G20);
- June 18-19, Los Cabos, Mexico
- •the UN 2012 Earth Summit (Rio+20);
- June 20-22, Rio de Janeiro,
Brazil This article presents the B20’s draft recommendations in seven areas. In the areas of food security, green growth, infrastructure and climate finance, the G20 and B20 may launch a “Dialogue Platform on Inclusive Green Investment” to dramatically increase pools of public funding to leverage private investment. In the food security area, corporations have collaborated to prepare a model “public-private partnership” for replication around the world. The priorities of the B20 are reinforced by the new reports to the G20, including one by the World Trade Organization, that chastises countries for taking trade-related measures (e.g., industrial planning, local content requirements, domestic preferences in government procurement) that, used properly, have often boosted domestic employment and production. According to Sarp Kalkan of the Economic Policy Research Foundation of Turkey (TEPAV), Mexico is the country most dependent on trade with other G20 countries, while India, China, and Indonesia are the least dependent. Kalkan’s graphic: “Which countries are more addicted to G20?” is so stunning because it illustrates that some of the fastest growing countries are the least dependent on external trade. (See Knowledge Box, p. 18) In his article, The G20 and the Problem of Unemployment, Alberto Arroyo Picard of the Metropolitan Autonomous University and a civil society network (RMALC)in Mexico describes the problems with Mexico’s economic model, including high unemployment, and compares the diagnoses and prescriptions for these problems provided by the Business 20 and the Labor 20. Arroyo describes Mexico’s low rates of growth and job creation, the vast numbers of the “invisible” unemployed, and the rise in precarious jobs. He cites the L20 statement to Labor and Employment Ministers in May 2012, claiming that the G20 had “failed to deliver” on its commitments and promises from previous Summits to boost employment. Arroyo commends the trade unions for challenging the austerity ethic which – taken to an extreme – leads to a collapse in growth, violations in worker rights, and declining job quality. He points out that, ironically, the B20 understands that job creation is needed to increase aggregate demand, promote growth, and address social discontent. Therefore, logically, it should embrace the L20 agenda. If the B20 does not, it may fail to achieve its goal of saving the private sector. In his article, Mexico’s Track Record: A Cautionary Example for the G20, Manuel Perez-Rocha of the Institute for Policy Studies (USA)says that, since the summiteers will be cocooned in the luxurious and secluded resort of Los Cabos, it is important to provide a “reality check” with regard to the performance of the Mexican government in each of the priority areas addressed by the G20: economic growth and job creation; financial stability; financial exclusion and food security; and sustainable development. In this sobering account, Perez-Rocha describes the trends in illicit transfers, foreign ownership of the financial
3system, speculative flows, rising indebtedness, declining rates of food production, increases in the incidence of hunger, and ways that mining and tourism are impacting the environment and the rights of local communities. He outlines the features of a new economic model which, among other things, strengthens production for the internal markets, applies capital controls to stem capital volatility, increases support for small farmers and local companies, and transitions to renewable energies. References
[i] The IMF’s former Managing Director Strauss-Kahn warned that “ultimately, we must extricate ourselves from the ruinous cycle of privatized gains and socialized losses.”