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16 April, 2009A new opinion piece by IMF General Secretary Marcello Malentacchi looks forward to the next G8 meeting.
Should we call the recent G20 held in London just one more failure by politicians?
As we look forward to the G8 meeting, the question is provocative but must be asked.
At the meeting, Gordon Brown announced that another five thousand billion dollars will be injected into the world economy by the big 20.
The announcement was made with much fanfare. However the ostensibly new money announced British Prime Minister has, with a few possible exceptions, all been previously decided in the budgets by G20 nations.
No more money is to be expected.
More fundamentally, all these funds represent an added economic value that is yet to be created. In other words, there is no money available now, waiting to be used in the vaults of the various G20 nation Central Banks.
That announced money represents new production, extra labour and working hours yet to be demanded of the world's workers.
As part of the new measures, the International Monetary Fund will get an additional one thousand billion US dollars, around three times what it has today, to be used to rescue nations on the brink of bankruptcy.
This measure is good, but only if accompanied by a reform of the Fund to avoid the same problems that have brought us to the situation we are in today. That means placing the control of the fund into the hands of democratically elected bodies, unlike today, where it is largely controlled by the Ministers of Finance of the world's richest nations.
One welcome measure from the G20 was the formulation of three special lists for the so called "Fiscal Paradises", and highlighting nations such as Switzerland which have facilitated the lack of monetary transparency that contributed to the crisis. But following dialogue, the majority of Western nations have been able to have themselves re-classed as clean. Disturbingly, places like London and others with close relationships with the US and Europe were not subject scrutiny.
It is crucial that strong new legislations are passed by all nations and implemented right across the world's financial systems. This includes banks and insurance companies everywhere to prevent private individuals and institutions from using the system to wash their money.
It is good to attack the "paradises" however fiscal evasion must first be combated at home, not when the money has already left the country.
The failure of the G20 to deal with this issue is what makes the most recent meeting one for politicians but not for outcomes.
To summarize let me quote somebody known as the Pagliazzo of the world, Berlusconi:
"Not matter what we decide in London, the G8 later in Italy will have to take all the real decisions."
In openly pointing out that even the G20 means nothing in comparison to the G8 and other secret informal meetings between world Finance Ministers, Berlusconi's words further emphasise the urgent need for reform of world finance systems and institutions.
Without a democratic global economy, we will see our mistakes repeated, and as today, it will be the workers who pay.
Marcello Malentacchi