Arab and African countries discover that they are in the same sinking boat as Western economies, writes Gamal Nkrumah s Perhaps, the world should not be expecting exciting results straightaway. What does the world expect from United States President George W Bush, the Republican strongman who in a feat of leger de main managed to turn the structural fiscal surplus he inherited from Democrat Bill Clinton into a massive structural deficit? The Bush administration is solely responsible for the mess the world now finds itself embroiled in. Against this background, several key international meetings took place this week. The meeting of the International Monetary Fund (IMF) and the World Bank in Washington was followed by an equally consequential meeting of the European Union (EU) finance ministers in Brussels. The consensus was that a complete overhaul of the global financial system is now deemed imperative. Bailouts of financial institution have become compulsory. State intervention and nationalisation are acknowledged to be the right course of action, though the details are all important. The US and Britain were forced into acting immediately to remedy the situation. These interventions, in effect a partial nationalisation of the financial and banking sector, are expected to alleviate the immediate financial crisis, but it is not clear if they would have a long-term impact on the global economy. It may take many months and even a year before the implications would be fully felt. And, it is in this context that there are growing fears and concerns for the fate of developing countries. "We should not forget this other crisis," admonished IMF Director Dominique Strauss- Kahn. Robert Zoellic, the World Bank president, concurred. "We need to modernise multilateralism for a new global economy," Zoellic told delegates assembled at the meeting of the twin 185-nation institutions in Washington on Saturday. A strategy to deal with the global financial crisis was endorsed on Saturday by the IMF, World Bank and the so-called G-20 group of 20 wealthy, industrially advanced countries and emerging economies. The main aim of the meeting was to restore confidence in the global economy. China with a forecast 9 per cent GDP growth in 2008 could emerge as a source of development finance to the least developed countries in Africa. The considerable petro-dollar surplus of the Arab Gulf states could be another source of investment as well. This may have practical implications many years from now. There are few hints of a repetition of the Great Leap Forward and the Cultural Revolution in China's new muscle-flexing; however, Beijing is still an inspiration for the less developed countries in a way that Mao's China never could have fathomed, offering promises of cheap, accessible consumer goods to the masses. There is certainly no sign of austerity in the fight to combat the international financial crisis which was frivolously and cynically dismissed by US Treasury Secretary Henry Paulson as "a bump in the road." A bump it is most certainly not. Otherwise, it would not have entailed the $700 billion dollar cash infusion. In a separate but closely related development, the 15 eurozone nations met on Sunday in Paris to formulate a joint strategy to bolster market confidence in eurozone economies. They pledged to underwrite inter-bank loans and safeguard financial investments. The eurozone meeting was supported by the IMF and the World Bank. "I welcome the result of the eurozone meeting. The eurozone plan is comprehensive," Strauss-Kahn said, hailing the Paris gathering as a resounding success. The developing countries are far more vulnerable and susceptible to financial ruin than the industrialised ones. Infusions of capital are sorely needed. African governments' greatest fear is the likely slashing of foreign aid commitments as a result of the financial crisis. But poorer countries must not sit idly by waiting for hadouts to fulfill the UN Millennium Goals. African leaders should take the initiative. The critical point is that any restructuring strategy should be based on realistic valuations of the situation in the different developing countries. They are not all in the same position. But what they have in common is the need to work together to define common strategies, to speak with one voice in international forums, in order to maintain their bargaining position. The West is trying to drive a wedge between the emergin economies such as Brazil, India, and China, members of the so-called G-20, and the least developed countries such as most of Africa, Afghanistan and the like. Drastic solutions to poverty are desperately needed. This is especially so as the most impoverished and least developed countries face growing economic pressures because of the global financial crisis. African governments anticipate a considerable reduction in inflows over the next few months. The fall in remittances is widely expected to be exacerbated by reductions in foreign exchange reserves and foreign investments. How the worst affected developing countries would cope is a mystery that few are prepared to answer at present. Unlike Western governments, the authorities in developing countries are in no position to take stakes in local banks. The financial sector is in any case run by foreign banks. The developing countries are also under greater pressure because of intractable liquidity strains. Some developing countries are being driven to the brink of financial collapse.
