The G7’s ongoing maneuvers within the G20 

By Jooned Jeeroburkhan

While humanity remains focused on the ‘soccer planet’, a small group of power-politics players is busy reshaping Planet Earth itself into a plaything they hope will prove more malleable and compliant than the controversial jabulani ball of the 2010 FIFA football World Cup. That group is the old G6, made up of the US, UK, Germany, France, Japan and Italy, which has been running the old ‘World (dis)Order’ since the 1973 oil crisis. Canada joined them in 1976 to form the G7, which became the G8 with the induction of Russia in 1997. 

In the aftermath of the 1973 oil crisis (provoked by the Arab oil embargo against US arms supplies to Israel in the October War), the US gathered finance ministers and officials of the UK, Germany, France and Japan (G5) to coordinate governance of their own national and the global economies.

When the 1st G6 (including Italy) summit was held in 1975 at Rambouillet, the pattern had been set by the financial consultations and coordinations of these ministers and senior officials. The 2nd summit admitted Canada, and the 3rd included the president of the European Commission as observer. 

The heady 1990s 

By 1996 (the 22nd summit), the UN, the World Bank, the IMF and the WTO became associated with the G7 – the year before Russia joined. But the pattern of ministerial and bureaucratic consultations was maintained – and widened to other issues like health, law enforcement, labor, trade, energy, environment, foreign affairs, justice, and terrorism. 

The 1990s were heady years for the West (wealthy countries of the North), convinced, as victors of the Cold War against Soviet communism, that the world was theirs to shape as they pleased. They proclaimed ‘The End of History’, and ‘The Clash of Civilisations’ (pitting the West against Islam), and insisted ‘There Is No Alternative’ (the TINA Syndrome). 

Iraq had been kicked out of Kuwait, bombed back to the 1950s, disarmed under UN supervision, deprived of sovereignty over its air space, and cordoned off by UN-approved sanctions. Worse was to come. The Rwanda war turned the African Great Lakes region into killing and looting fields. The former Yugoslavia was dismembered along ethnic lines with NATO support. 

Contrary developments 

Yet, contrary developments were afoot. Giants India and China were coming out of a long slumber, emerging as incircumventable world powers. Brazil, South Africa, Iran were calling for a more democratic architecture of global governance, and for a bigger role in it for themselves. Pakistan, India (and Israel) were nuclear powers – albeit outside the ‘Big Five’ nuclear club. Latin America was shaking off US domination and taking charge of its own destiny, burying the infamous Monroe Doctrine. 

Together with Russia (co-opted by the G7 but never really trusted), these countries were forging regional and global alliances aimed at building a ‘multi-polar’ world. With India, they called for democratization of world institutions, beginning with the UN Security Council, where they wanted seats, the World Bank and the IMF. 

The 1990s were also a period of huge financial crises in Asia, in Russia and in Latin America. By 1997-1998, G8 prescriptions via the World Bank and the IMF as well as the casino market had thrown into disarray the currencies and economies of Brazil, Mexico, Argentina, Russia, and Southeast Asia. 

On the back of an envelope 

Against this background, the G7 began to discuss opening their club of capitalist economies to emerging powers of the South. According to one report, it was Paul Martin, then Canada’s Finance Minister, and Lawrence Summers, then Bill Clinton’s nominee for Treasury Secretary, who in April 1999 wrote down a list of 20 countries (the G20) on the back of a manila envelope – for lack of paper! 

The exercise was quite arbitrary. If China, India, Brazil, Mexico, South Africa were logical choices because of their economies, Indonesia, Argentina, South Korea, Australia, Turkey and Saudi Arabia got in because of demographics, geography and ideology. Since Russia is not fully trustworthy, the G7 have a clear majority within the G20 thanks to the European Commission, Australia, South Korea and Saudi Arabia. France reportedly wanted only a G13. 

The very first meeting of the G20 was held at the Finance Ministers’ level and it took place in Berlin in December 1999. Exchange rates, public debt reduction and trade globalization already dominated the agenda. The next one was in 2000 in Montreal, with the South’s major grievances towards the North in trade and agriculture exploding. At the 3rd meeting, in November 2001 in Ottawa – three months after the UN Summit against Racism in Durban – the US ‘War on Terror’ left no room for any other topic… 

Anomalies abound 

These ministerial consultations gave way to the first G20 Summit proper in November 2008 in Washington, at the height of the financial crisis that shook the US and European economies to the core. Within six months, a second Summit was held in London, in April 2009, and a 3rd six months later in Pittsburgh, in September 2009. 

Together, the G20 represents 70 per cent of the global population and 90 per cent of the global GDP. But anomalies abound. The organization has no clear legitimacy. It is an arbitrary structure. Countries that have been clamoring for global democracy (India, Brazil, South Africa) are now locked into this undemocratic circus – where financial mandarins rule the roost, the security bill for summit meetings tops $1-billion, and citizens’ free speech is stifled by the police and the mainstream media. 

Nearly 1000 demonstrators have been arrested at the G20 Summit last week in Toronto. The 100 or so anarchists of the Black Block provoked these arrests by smashing shop windows and police cars, and they monopolized media coverage at the expense of some 25.000 peaceful demonstrators calling for fair trade, human and women’s rights, an end to war and arms sales, a shift to clean and green energy, a strong response to climate change, and a new life-style sustainable for every human on the planet.  

Sovereign equality of States 

The G20 does away with the principle of the sovereign equality of States, a pillar of the UN Charter. It functions on the basis of consensus – but it also excludes from the debate and decision-making process more than 170 member States of the UN – mostly smaller nations, including Mauritius. 

And, as NATO after the Cold War, the G8 refuses to dissolve itself into the G20. It continues to run the show. The US, the Brits, the French and the Germans were the ones whose speeches and comments were reported by the media – the Chinese, the Indians, the Brazilians, the South Africans were seen fleetingly, and never heard. And the G8 wants to continue as a group. 

And, as Naomi Klein (No Logo, Disaster Capitalism) wrote in the progressive Washington weekly The Nation: ‘My city feels like a crime scene and the criminals are all melting into the night, fleeing the scene. No, I’m not talking about the kids in black who smashed windows and burned cop cars on Saturday. I’m talking about the heads of state who… smashed social safety nets and burned good jobs in the middle of a recession. Faced with the effects of a crisis created by the world’s wealthiest and most privileged strata, they decided to stick the poorest and most vulnerable people in their countries with the bill.’ 

‘How else can we interpret the G20’s final communiqué, which includes not even a measly tax on banks or financial transactions, yet instructs governments to slash their deficits in half by 2013? This is a huge and shocking cut, and we should be very clear who will pay the price: students who will see their public educations further deteriorate as their fees go up; pensioners who will lose hard-earned benefits; public sector workers whose jobs will be eliminated. And the list goes on,’ she adds. 

Who is regulating whom? 

More ominously, notes Aziz Fall, a Montreal economist with a group fighting for the interests of Africa, ‘the States of the G8 seem unable to regulate their overgrown corporate sector, especially the multinational corporations, and it is these MNCs which are dictating budget cuts to governments.’ 

Before the Toronto Summit, the World Bank had suitably pressed the G20 to help alleviate poverty. On Tuesday, it postponed a decision on writing off the debt of the Democratic Republic of Congo – on the eve of the 50th anniversary of the country’s independence. 

On another front, a UN report released on Tuesday called for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value. China’s yuan could rapidly become an internationally used currency and serve as an alternative to the US dollar in central bank reserves, the Asian Development Bank chimed in. To top it all, the head of the IMF said he would like to consider putting the yuan into the basket of currencies that make up the Fund’s Special Drawing Rights, but its value first needed to be freely determined by the market. 

Focused on their own game 

While The Guardian, citing unpublished Treasury papers, writes that Britain’s austerity budget will lead to 1.3 million job losses by 2015, we read that the sugar cane industry in Mauritius is ‘au bord du gouffre’, according to both Agriculture Minister Satish Faugoo and Thierry Merven, of the Chambre d’Agriculture, and Barclay’s Mauritius seems less than delighted by the central bank’s decision to raise the cash reserve ratio of commercial banks. 

Which shows that not everybody is distracted by the FIFA World Cup 2010, in the world or in Mauritius. Those who are busy maneuvering within or with the G20 also remain focused… but on their own game. 

The new government in Mauritius is surely reading the signs, just as everybody else. Let’s see what kind of budget it brings in the first year of its new mandate.

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* Published in print edition on 1 July 2010