As a result of the summit meeting held in London, G-20 leaders announced the enactment of a plan to reactivate the world economy that includes an injection of a trillion dollars to global finances (three quarters of which will go to the countries most affected by the catastrophe in progress) and measures to prevent unbridled speculation and unregulated international financial organizations: reforming the International Monetary Fund (IMF) and the World Bank (BM); creating a Financial Stability Board (FSB) charged with monitoring macroeconomic and financial risks and with broadening market regulation; the isolation of countries considered to be tax havens; strict limitation on banking secrecy; regulation of wages and bonuses for bankers; tightening of financial regulation to increase supervision of investment funds and credit rating agencies, and the sale of gold reserves from the International Monetary Fund (some six billion dollars) to help countries in greatest need.
This package of measures is without precedent and constitutes the most important economic accord since the 1944 Monetary and Financial Conference of Bretton Woods; the U.S. dominated that encounter, while in London, a multilateral and less exclusive spirit prevailed. At this point, it would be relevant to assess the importance of the change in administration that took place recently in Washington, because in the logic of the government under George W. Bush, the meeting in London would have been completely impossible.
Moreover, the G-20 summit laid to rest the Washington consensus that called for extreme fiscal austerity; economic punishment for countries in trouble, through “shock therapy” prescribed by the IMF and BM; and the surrender of nations to the interests of transnational financial capitals. By contrast, after the disastrous results of neoliberalism – experienced by poor countries for many years before it was by the rich countries, which had imposed it on almost the entire planet – the importance of reenergizing the economy is clear, as is the importance of limiting the insatiable appetites of capitalist speculation. That fact alone makes it possible to see the events in London in a positive light.
Of course, the international plan announced yesterday is only the beginning of sustained, vigorous action that must be taken to shorten the duration of the recession and restore growth on stronger foundations than those of a few months ago. The accord requires strict governmental monitoring and, over all, firm political will to carry it out, because there is no guarantee the trillion dollars will be used correctly and not disappear in scenarios of bureaucracy and corruption, certainly not unique to developing countries.
Moreover, no one can guarantee that measures announced yesterday have the capacity, in and of themselves, to result in widespread economic recovery. They are, for now, a step in the right direction, but all depends on the reality test. For the benefit of the world community, one hopes they will succeed.