Three Steps Backward, one step forward!

(G-20 Meeting of Finance Ministes and Central Bank Governors in Sydney, Feb. 22/23, 2014)

The most recent meeting by the G-20 Finance gurus in Australia ended with the headline: we will increase GDP growth by the G-20 by 2 percentage points over our present path over the next 5 years! Wow! I am inclined to exclaim.

There are two things to say to that: One, how much is such an objective worth, if it is not detailed by who does -what and what can be done to achieve that. Just to say that we need more investment and structural reforms to achieve that, is below Economics 101. Second: Have the G-20 ministers and governors ever heard of climate change and the effects of growth on it? Have they heard about the increasing spreads in incomes achieved in their countries, and what that means for job creation, for political stability and for poverty rates?

The participants must be back in 1970’s dream land, when it was all about growth. But then, at least in Central Europe, a plethora of measures to reach that would have been attached. Not here, not in 2014! When the G-20 established themselves as the new Global Governance Institution in 2009, I had hoped that the inclusion into this forum of 12/13 emerging countries would tamper the neo-liberal, anti-state-interventionist position of the G-7/8, and that the large emerging nations would put some of their own successful environmental and especially social policies on the table. Befor the present G-20 meeting there had been loud complaints by some of the emerging countries about the tapering policies of the FED, about the negative effects of rich country policies on their well-being. Not  a word of that discussion, if it ever happened, made it into the G-20 Communique – strange, just more of the same old story, growth, financial stability, fiscal responsibility. The intellectual and political impoverishment of the international debate is a real sign for alarm.

But there are some rays of light in the communiqué: one, the G-20 adopted the new OECD standard for automatic exchange of information on bank accounts, with a view to implementing it between each other by end of 2015 and encouraged so far non-complying countries to also join this consensus (pro domo: as Austria is as yet non-compliant, this refers also to my home country, a demand which I as a Transparency International member have made repeatedly!); two, the G-20 endorsed the OECD BEPS (profit shifting) initiative urging implementation of the respective action plan – all this with a view that taxes be paid where the taxable economic activity takes place. This refers also (but not exclusively) to electronic trading, taxable treatment of licences, etc., and to the establishment of registers of beneficial owners.

But overall, this is an extremely disappointing result. While it proposes non-binding commitments for its members, it missed its chance to show the (rest of the) world that its main value lies in joint cooperation, in a give-and-take for a common purpose, and that the world economy, its society and the global ecosystem need more than individual countries’ non-enforceable verbal commitments, but a lot of coordination. That would be the G-20’s raison d’etre.


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