Statement: The Global Economy after the G20 meeting in Seoul
PARIS COUNCIL: global economy - climate change - resolution of conflicts, 15-16 November 2010
The world needs concerted and deep action to support sustainable recovery, employment and growth, poverty reduction and climate financing. Although the world economy is in the path of recovery the financial crisis is not yet over. At the same time there are reasonable fears that planned austerity measures and financial crises could endanger the promising economic recovery as was stated in the SI Council meeting in June 2010.
At this point there is a real need for constructive co-operation and coordination of national policies to tackle the imbalances in the world economy. The SI therefore urges all the major powers to once more to gather and agree on a joint strategy to achieve sustainable growth and balanced state budgets and to agree on the reform of financial architecture.
We regret that the G20 meetings in Toronto and Seoul in 2010 have not resulted in any agreement on real concrete strategy how to tackle the imbalances. Therefore, the SI urges the French presidency of the G20 to continue these discussions with a view to achieving new agreements on promoting growth and reducing the aforementioned imbalances.
Countries which have shown that a trade surplus ought to be ready to boost domestic demand and formulate mid-term plans to cut deficits and debt. Those counties with the largest deficits must proceed more quickly with balancing public budgets. It is in the interests of all nations that we can avoid a possible currency war and give real possibilities to free and fair trade.
The SI is in favour of new international financial structure and new global governance. Stabilising, reforming and strengthening the new international financial system is a necessity. Bank regulation and ratings agency reforms must go on.
In the new financial architecture the financial sector must be made to bear the costs of the crisis. The repeated bailouts are, in effect, subsidies of the financial sector and create a severe moral hazard -problem.
A global Tax on Financial Transactions could be a tool for global governance, improving the transparency of financial markets whilst ensuring a fair share of the burden and fair distribution of resources. The SI urges all political and other organisations to endorse the new Tax on Financial Transactions.
Better global governance is needed to avoid the crises we have seen. It is of the utmost importance that global financial institutions like the IMF and the World Bank will be reformed as has been promised.
The SI once more emphasises that the financial crisis is not a reason to forget the necessity of tackling the problems of poverty in world, notably in Africa. It is important to take stock of the level of execution of the millennium commitments, to promote all necessary action with a view to reducing the debt of the poorest countries and to accompany development policy in the world in an effective manner in the sense of equality of opportunity. The developed world must keep its promises also concerning climate financing.