by: Zuhair Ahmed
On November 15th, 20 leaders from around the world met to discuss a truly global coordinated plan of attack to best tackle this economic downturn. This brings an end to the reign of the old rich boys club of the G8. No longer can an international effort exclude such nations as China, India, Brazil, and Saudi Arabia. By expanding to the now Group of 20 advanced economies the world as a whole has a much better shot of handling this crisis.
Already a good deal has been accomplished. India championed the rights of developing nations and the United States for developed ones during this year’s failed WTO trade talks at Doha. Major disagreements arose about the role of agricultural subsidies. India argued that such subsidies gave developed nations an unfair advantage in trade and directly went against free market principles. The US felt they were necessary to keep developed nations growing, a claim many economists would call into question. Yet, by bringing these powers to the same table both India and the US have vowed for more compromise in an attempt to bring down more barriers to free trade. In gesture of good faith they have agreed to pick up the trade talks again before the end of the year which has the potential to jumpstart the global economy.
The other big breakthrough is a plan to bring major reform to the IMF and the World Bank. Both organizations were created towards the end of World War II at the Bretton Woods Agreement with the goal to bring stability into the international markets. However, since their creation both the IMF and the World Bank have been criticized all sides for being used as tools to advance Western interests. These institutions derive authority from a system of voting rights. Despite the fact that almost all UN members are also members of the IMF and the World Bank, the greatest voting power is tilted heavily in favor of the Western countries. As a result, the president of the World Bank is always an American and the president of the IMF is always a European. A nation can submit a plea to increase its voting share, but this has to be approved by the board of directors, again which is packed with Europeans and Americans.
There is a long history of the IMF in particular propping up dictatorships that have allied themselves with Western powers. Augusto Pinochet in Chile, Zia-ul Haq in Pakistan, and Mobutu of the Congo have all received billions of dollars in loans and other financial assistance in order to keep their regimes afloat when they were in power. With a more equal distribution of voting rights, this current Western bias can disappear and bring with it a new age for the betterment of all nations.
Lastly, during the G20 meeting it was agreed that a more uniform way to regulate their economies should be adopted. The truth of the matter is that many countries at the conference were annoyed that their own economies are suffering as a result of the Americans not being able to prevent the issuance of fraudulent mortgage bonds which eventually snowballed into a worldwide panic. There is now a strong global effort to make sure that this does not happen again anywhere in the world. What’s probably going to come out of this is a basic uniform set of laws to prevent market manipulation and fraud. However, wither this code of ethics will ever be adopted by enough countries to make a difference is still in question.
By taking a more inclusive role in negotiations, a touch of optimism and good will has descended on the world at a time when many were preparing for the worst. Even if little comes out of this meeting over the following weeks and months it should still be hailed as a success. The very notion of limiting global talks to 7 or 8 nations may have made some sense in the decades following World War II, but this is simply an unthinkable idea today. We live in a globalized world and it’s about time that the West took notice.