Canada plays host, the banks got off Scott-free, the Europeans were sitting on the sidelines and the poor are forced to tighten their belts further in the aftermath of Gs 8 and 20 summits, deduces Gamal Nkrumah The ascent of the Group of 20 leading emerging economies has been both expeditious and impressive. Their economic clout is now being matched by the flexing of their political muscle at international forums. Last weekend's Group of Eight, immediately followed by the Group of 20 leading global economic powerhouses confirmed their growing influence in the international arena, and their unique selling points were lavishly put on universal display. A large part of the initial appeal of leaders of emerging economies such as Indonesia's Susilo Bambang Yudhoyono and South Korea's Lee Myung-Bak stepping unto centre stage was the novelty of Asian statesmen demonstrating excellent communication skills with their Western counterparts. What is more, they are marshalling support among their own compatriots at home for their new high-profile roles. However, as the United Nations Secretary-General warned in Canada on the eve of the G8-G20 summits, the poorest of the poor underdeveloped countries must not be left out and bear the brunt of the international financial crisis. "We cannot balance budgets on the backs of the world's poorest people. We cannot abandon our commitment to the most vulnerable," the UN secretary-general pointed out. "We must keep a strong focus on the longer-term." The G20 communiqué pledged to slash deficits in both industrially advanced and emerging economies by half by 2013 -- a somewhat unrealistic goal considering the global economic mess. "We must gain a deep understanding of the severity and complexity of the profound impact of the international financial crisis," Chinese President Hu Jintao surmised. China's growth slowed down to 19.2 per cent from 21.5 per cent in September 2009, and the People's Republic is, of course, perhaps the world's most promising emerging economy. The unfortunate truth is that nine million children die at birth worldwide and that 350,000 maternal deaths are registered around the world, mostly in the poorest and least developed countries in Africa and Asia. And least we forget, in the G20 emerging economies alone, some 2.5 million children die per annum before they reach their fifth birthday. The emerging economies might be promising, but large segments of their populations are desperately poor -- this is spectacularly so in developing countries such as India, Indonesia, South Africa and Brazil. Indeed, the G20 final communiqué pledged to "narrowing the gap" between rich and poor and ensuring "food security" -- an initiative endorsed at last September's Pittsburgh G8 summit. The lesson from Pittsburgh and Toronto is that leading the world might be burdensome, but it is not as tough as being the downtrodden and underdog of this world. The rich are obliged to consult with the poorest and least developed, too. They cannot afford to stand aloof. Yet what was strikingly clear at the G8 and G20 summits this week is the preoccupation of the wealthy nations with the problems facing them. The G8 summit, held in an elite resort area north of Toronto, focussed on political and security matters. The G8 summit, was characterised by incessant bickering between Western allies and the tensions were palpable. The G20 summit, on the other hand, held in Toronto itself was a fresh-faced alternative to the G8 summit, though marred by the unprecedented security clampdown on the streets, where 600 demonstrators were arrested, bravely defying the 20,000 soldiers, intelligence agents and police officers deployed to protect the assembled leaders. The United States stressed economic discourse beyond restricting financial consolidation at the G8 and G20 summit and even though the final communiqué did not single out China, it vaguely referred to "greater exchange rate flexibility in some emerging markets" -- an oblique reference to China. US President Barack Obama did urge the Chinese authorities to let the yuan become subject to "market forces". However, even some notable academic American gurus are critical of Obama's approach. "It is wrong," Robert Mundell, Columbia University Nobel economist, noted, "for the US to force China to destabilise the yuan." Still, the G20 communiqué indicated that "the amount of capital will be significantly higher and the quality of capital significantly improved when the new rules are fully implemented. This will enable banks to withstand, without government support, stresses of the magnitude associated with the recent financial crisis." Germany, the customary cheerleader for fiscal continence and temperance, was in a strong position at the G8 and G20 meetings. Other European powers have fared less impressively. According to the Financial Times, "France and Spain both saw quarterly growth of a bare tenth of a per cent." Indeed, Europe as a whole is battling against rising unemployment, growing public debt, and financial ruin. The FT observed that: "The crisis has converted Europeans who formerly only paid lip service to fiscal rectitude into born-again believers." European countries are running annual deficits of about six per cent of the size of their economics -- twice the limit the EU stipulates. They pledged to cut their annual deficits in half by 2013 and push them towards zero after 2016. The US was reluctant, but grudgingly promised to reduce its own deficit to three per cent of GNP by 2016. This devotion to deficit-cutting during a major recession is reminiscent of 1931, when Western countries doggedly slashed budgets and were presciently called "asinine" by John Maynard Keynes. At the same time, banks and other financial intermediaries, which precipitated the current world financial crisis through dubious and unregulated operations, were let off the hook, despite United States President Barack Obama's appeal to enact stronger regulations. The logic expressed was that they should not be hampered as there is now a need for more lending. The Euro logic was lost on the emerging nations, and the tension was tangible in Toronto, with the US courting its G20 Asian and other emerging economies newfound allies, much to the consternation of its traditional European friends. The Keynesian logic is once again being put to the test. If by some miracle the West rebounds from the current crisis without further recourse to economic stimulation, we can put Keynes to rest. Washington is clearly cultivating a new set of collaborators. In the 2009 G20 in Pittsburgh and perhaps more concretely in Toronto, there was an intimation that if the Europeans did not abide by Washington's dictates, they would be dispensed with altogether in favour of the new cohorts, masquerading as America's new saviours. The requisite smiley-wavy photo op of Obama the king flanked strategically by his exotic retinue only accentuates this new development. But as Vijay Prahaad noted recently, the US's verbal commitment to investor friendliness in the emerging economies is regarded with some suspicion in certain quarters. "Like Achilles, the G7 not only killed its Hector, the hope of the planet, but it now has tied the countries of Africa, Asia and Latin America behind its chariot and is dragging them across the battlefield." "The European and Japanese ministers happily bound their economies into dollar seigniorage, with the euro and the yen now secondary currencies in the world of international settlements," Prahaad so aptly put it. America's new friends are in on the game. They overlook the real motive behind this new interest in them. Europe is getting tired of paying for US wars and Washington needs a fresh treasure trove to plunder. The pockets to pick are all too acutely aware of the hubbub Pax-Americana generates. Each emerging economy calculates exactly what it is getting in return for collaborating with America. "What is needed is a calibrated attempt at fiscal consolidation rather than later a one- size-fits-all sort of action. I think the caveat is that this must be done on a growth-friendly manner," India's Prime Minister Manmohan Singh concluded after hearing the final communiqué. This underlying selfishness runs contrary to the air of fraternity of this year's G8 and G20 summits. The US project to reinvent certain G20 members as the financial paymasters of American imperialism may be paying off. It comes hard on the heels of the military setbacks of the US and its NATO allies in Afghanistan and Iraq. The US industrial military complex is looking east towards East Asia and the oil-rich Middle East to fund their escapades and militaristic adventures in potentially lucrative markets of the Muslim world. Michael Hudson, author of Super Imperialism: The Economic Strategy of American Empire spells it out: "When the US payments deficit pumps dollars into foreign economies, these banks are being given little option except to buy US Treasury bills and bonds which the Treasury spends on financing an enormous, hostile military build-up to encircle the major dollar recyclers -- China, Japan and Arab OPEC oil producers." Hudson expounds his theory further: "These governments are forced to recycle dollar inflows in a way that funds US-military policies." There is, therefore, plenty to perturb intrepid investors across the world -- both in the emerging economies and in the industrially advanced ones: the continued global financial instability and economic malaise. And worse, Washington's wars crank on. This year's G whatever summits in Canada did nothing to address the imperative challenges facing the world. Frankly, the Gs' buzzword "growth" might better be superseded by "gore".
