Jun 30, 2010 Editorial
The G-8 group of industrial nations met last week in Canada, followed by the expanded G-20 grouping that has recognised the new global economic realities and roped in the largest developing countries, in their third attempt since 2008 to ensure a smooth recovery from the global recession that kicked in that year. For a small nation on the periphery totally dependent on trade, such as ours, the deliberations of this all-important agglomeration of economies that account for 83% of world production, were very disappointing.
When their own economies were in deep trouble, the G-20 nations did not have any difficulty in pouring trillions of dollars into stimulus packages that were designed to pull them out of the recession. As Angel Gurria, head of the Organization for Economic Co-operation and Development (OECD), told G-20 leaders at the summit, “When the house was on fire, we all knew what to do: get a hose.” With the recovery in various levels of success it has become once again a case of “every man for himself and the devil take the hindmost.” The problem is that the poorest countries in the developing world, in which we find ourselves, are in the hindmost.
The US and Britain had to sanctimoniously remind their rich cohorts in G-8 – mainly Italy, Germany, France and Japan – that they were short by a whopping $18 billion of the $50 billion they had promised in aid back in 2005, that was supposed to have been met by this year. They conveniently failed to mention the 0.7 percent of their GNP that was promised to be directed as aid to the poorer countries, decades ago, so that these countries could have the minimum flow of resources for investment necessary to drag them out of poverty.
The World Bank noted the interrelationships that had been forged globally in the last few decades and warned that progress made so far in developing countries could be set back if aid levels declined further, pushing more people into poverty. This decline would hinder their own recovery since the developing world provided markets for much of their production.
Secretary General of the UN, Ban Ki-moon pointed out soberly before the meeting: “Despite substantial stimulus efforts in many countries, the evidence shows that these have not always “trickled down” to meet the immediate needs of the poorest and most vulnerable. We are seeing the greatest dynamism in the emerging economies, but also the greatest pain. Far too many are left on the sidelines.
In developing regions, many workers have been pushed into vulnerable employment. The ranks of the global unemployed have grown by 34 million, and another 215 million women and men have become working poor. And, for the first time in history, more than one billion people are going hungry worldwide. A recovery is not meaningful if people only learn about it in the newspaper. Working women and men need to see it in their own lives and livelihoods.”
The unkindest cut to the poorer countries was the short shrift given to reviving the Doha trade round of the WTO which had been dubbed the “Development Round” and designed to facilitate those countries by their own bootstraps through trade.
A year ago, in a tussle between the larger developing countries that wanted to ensure that the “development dimensions” of the Doha Round were safeguarded and the US and EU that mounted pressure on the same countries to open up their markets globally for both agricultural and industrial goods, the talks collapsed. US President Obama bluntly told G-20 leaders that existing proposals in the Doha world trade talks did not meet US needs and would have to change significantly.
So much for the oft-invoked mantra of “trade liberalisation”. Last year, the G-20 leaders had reiterated in their Pittsburgh communiqué that they would press for a successful conclusion to the Doha round negotiations by the end of 2010. This time they dropped the date and set no new one. Trade liberalisation, as Walter Rodney might have reminded us if he were around, is to be supported only if trade flows in one direction.
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