Tackling the global financial crisis: For a new relationship between government and the market

3 November 2008

The SI Commission on Global Financial Issues met in Vienna on 3 November, for the first of a series of meetings, and in advance of the Socialist International Council in Mexico on 17-18 November where tackling the global financial crisis will be at the top of the agenda.

Hosted by the Chancellor of Austria, Alfred Gusenbauer, a member of the Commission, the discussions highlighted the principles guiding the global social democratic response to the world financial crisis and, given the new phase of the crisis affecting emerging and developing countries and the urgency of the situation of many people around the world today, the Commission set out five concrete initiatives to assist those directly affected by the crisis.

Calling for a new relationship between government and the market, the Commission underlined that confidence would not be restored in the financial markets unless behaviour was changed through comprehensive and robust regulation, accompanied by far-reaching reforms made to the international financial system.

Concerned for people who are unwitting victims of the crisis, losing their homes, jobs, pensions and social services, the Commission put forward the creation of a Social Protection Fund to aid developing countries with inadequate social protection schemes; the creation of a Small Enterprises Development Fund to support small business, as a sector which employs the majority of workers, contributes to the GDP and can expand decent work; the creation of a Financing Infrastructure Fund to help stimulate the economy; support for a short-term liquidity line for emerging and developing countries to be immediately and urgently established by the IMF; tackling the issue of insufficient financial resources in multilateral institutions and regional development banks by seeking new sources of funding and lending facilities, as well as more fundamental reforms in the global economic governance. These proposals emanating from the discussion were expanded upon in a statement of the Commission, called “For a new relationship between government and the market".

The Commission, established by the Socialist International Presidium at its meeting at the United Nations, New York, at the end of September, brings together political leaders, ministers and experts from all continents, and its members include: Professor Joseph Stiglitz from the United States, Nobel laureate and Chair of the Commission; Anatoly Aksakov, Member of the Board of the Russian Federation Central Bank and Member of Russian State Duma, For a Just Russia Party; Dr Héctor Alexander, Minister of Economy and Finances of Panama, Democratic Revolutionary Party, PRD; Cuauhtémoc Cárdenas, Founder of the Party for Democratic Revolution, PRD, Mexico and Honorary President of the Socialist International; Elio Di Rupo, Leader of the Socialist Party, PS, Belgium, and SI Vice-President; Alfred Gusenbauer, Chancellor of Austria and SI Vice-President; Eero Heinäluoma, Finnish Social Democratic Party and SI Vice-President; Ibrahim BoubacarKeita, Former Prime Minister of Mali and Leader of the Assembly for Mali, RPM; Pia Locatelli; President of Socialist International Women; Fathallah Oualalou, Former Minister of Finance, Socialist Union of Popular Forces, USFP, Morocco; Professor Shri Arjun K. Sengupta, Member of Parliament, Indian National Congress Party; Antolin Sánchez Presedo, Member of the European Parliament, Spanish Socialist Workers’ Party, PSOE, Spain; Peer Steinbrück, Federal Finance Minister of Germany and Deputy Chair of the Social Democratic Party; Andres Velasco, Minister of Finance, Chile; and Fozia Wahab, Member of the Pakistan National Assembly and Chair of the National Finance Committee of the Parliament. A member of the Commission from France will be appointed following the Socialist Party’s upcoming Congress.

George Papandreou, President of the Socialist International and Luis Ayala, Secretary General of the Socialist International, participated alongside the Commission members who took part in this first meeting. Juan Somavia, Director-General of the International Labour Organisation, joined the discussions as an invited guest. And from Austria, Christoph Matznetter, Secretary of State, Federal Ministry of Finance; and, Andreas Schieder, Secretary of State, Civil Service and Administrative Reform, also attended.

A progress report on the Commission’s work will be given by Commission members at the upcoming SI Council meeting in Mexico which takes the global social democratic response to the crisis as its main theme. The Council discussions, incorporating the entire membership of the organisation, will address this issue and a special document prepared by the Chair of the Commission on the social democratic principles towards a new financial architecture will be presented for adoption.


Future meetings of the Commission are envisaged, including seminars with academics and experts and a major Conference in the second half of 2009, to contribute to constructing a roadmap to deal with this crisis, in which democracy, inclusion, fairness, green development and protection for the environment will find their rightful place.