Submitted on Friday 03rd April 2009
G20 creates United Front
AS the G20 draws to a close, it has to be seen as one of the biggest PR exercises of all time. The leading financial nations of the World in apparent unity to fight the evils caused by the bad boys of banking.
Except of course that politicians have a bit of a history of feathering their own nests too.
The G20 can of course be seen as a united front that will help restore confidence in world markets and that confidence is certainly missing at the moment.
There were shows of division from the French and Germans but surely this was more of a charade than real as policies of this nature tend to be agreed months in advance. The detail of many of the policies will no doubt be discussed for years.
In fact many of the issues were probably agreed years in advance and the current crises provides a good excuse to gain ground on certain areas. Studying the content of the forum it can be seen that the main themes are continuing globalisation, free trade and extending and homegonising global regulation.
What the G20 seems to have avoided is any real discussions about the weaknesses or otherwise of the dollar pegged World finance system, a system that has now shown itself to be increasingly unstable. Nor did it begin to address the relationship between that system and the rate at which the World natural resources are being gobbled up.
The media presentation of protesters was disappointing and portrayed the crowd as mindless thugs being restrained by the police rather than examining if they had anything of worth to say. In this soap opera presentation they were kind of symbolic of the helpless throngs who awaited the saving by the Masters of the Universe. Gordon and Obama resplendent in matching super hero ties of red and blue ties took it in turn to play He Man. Why let some serious dicusssion get in the way of some good old symbolism?
As such the G20 can be seen as a patching up exercise for old agendas rather than a fundamental rethink.
The main areas of agreement
· A new Financial Stability Board, with a strengthened mandate, will replace the Financial Stability Forum
· Financial regulation and oversight will be extended to all financial institutions, instruments and markets
· This includes bringing hedge funds within the global regulatory net for the first time
· Members are committed to implementing tough new rules on pay and bonuses at a global level
· International accounting standards will be set
· Credit rating agencies will be regulated in order to remove their conflicts of interest
· A common approach to cleaning up bank toxic assets has been agreed
· There will be sanctions against tax havens that do not transfer information on request
· The Organisation for Economic Co-operation and Development has published a list of countries assessed by the Global Forum against the international standard for exchange of tax information
· Resources available to the International Monetary Fund will be trebled to $750bn
· This includes a new overdraft facility, or special drawing rights allocation, of $250bn
· Additional resources of $6bn from agreed IMF gold sales will be made available for lending to the poorest countries
· The G20 also supports increased lending to the worlds poorest countries of at least $100bn by the multilateral development banks
· There will be a commitment of $250bn of support for trade finance made over the next two years
· This will be made available through export credit and investment agencies, as well as through multilateral development banks
· National regulators will be asked to make use of available flexibility in capital requirements for trade finance
· The G20 has pledged to resist protectionism
· There will be a commitment to naming and shaming countries that breach free trade rules
· The G20 will notify the World Trade Organization (WTO) of any measures that constrain worldwide capital flows
· The G20 has called on the WTO to monitor and report publicly on these undertakings on a quarterly basis
· Although there is no new fiscal stimulus, Gordon Brown said G20 countries are already implementing "the biggest macroeconomic stimulus the world has ever seen" - an injection of $5tn by the end of next year
