Statement on the outcome of the G20 Summit in London

Advancing a global welfare statehood: SI Committee on Economic Policy, Labour and National Resources meeting in London, 6 April 2009

The Socialist International stands for and is committed to global solidarity. The Financial Crisis of 2008/2009 was caused by the strategies of banks and other financial actors and by failures of the USA and other OECD states. The failures have their impact on all regions and states; they have led to permanent insecurity for the vast majority of people around the world. In order for the global recession to be overcome and to stabilise the world economy, it is now imperative that non-OECD states like China make greater contributions.

The Committee has assessed the results of the G20 London summit, addressing two issues:

  • strengthening financial systems,

  • the impact on Non-OECD states.

The assessment is based on the resolution of the Council in Vallarta 2008 and the Meeting of the SI Commission on Global Financial Issues from 31 March 2009.

The SI Committee on Economic Policy, Labour and National Resources and commission on national global financial issues will monitor the ways in which the G20 implements the outcomes of the London summit. The SI will continue to make proposals for a more stable and effective global economic order.


1 The efforts to strengthen financial systems

The G20 have agreed on important reforms to strengthen regulation and supervision of the financial sector.

The expansion of the Financial Stability Forum to the Financial Stability Board and its effective co-operation with the IMF and World Bank could be first steps to charter a new World Finance Organisation, something the SI is already proposing.

All systematically important financial institutions, markets and instruments should be subject to an appropriate degree of regulation and oversight. Another aim of the SI and a mechanism of the welfare state – regulation – will be implemented on the global level.

The G20 called on all jurisdictions to adhere to international standards of tax transparency and agreed action against others that do not meet these criteria. It should now agree on effective actions against tax havens.

The establishment of the regulatory oversight regime that includes registration could become a transparent way of more effective oversight of the activities of Credit Rating Agencies. The SI is now convinced that good governance and right incentives have to be promoted.


2. The impact on Non-OECD states

While huge sums of the public’s money are invested to save banks in the OECD states, the emerging markets are contracting and developing states are being starved of credit and development funds.

The G20 declaration on delivering resources through the International Financial Institutions opens a way for capital to continue to flow to emerging markets and developing states, protecting their economies and supporting world growth. By lending these new resources the International Financial Institutions have to avoid the mistakes made under the dominance of the Washington Consensus. The poor states need concessional lending. The commitment of the G20 to meeting the Millennium Development Goals and especially the commitment to sub-Sahara Africa are important in this respect. It is unacceptable that governments use the financial crisis as a pretext to delay these aid commitments.

The SI underlines the need, that new investment be made

  • in education and other means of expanding human capital,

  • in green-growth,

  • in high-return energy-saving activities,

  • in infrastructure.

The Agreement of the G20 on delivering new resources to emerging markets and developing states is proof that a step forward has been made in the organisation of global participation and responsibility for the global economic development. The G20, not the G7, is now able to shape global economic policy.

But the G20 format still excludes the poorest states. A world order committed to the Universal Declaration of Human Rights, as well as economic, political and democratic rights, cannot function without the participation of all regions – and in this way without the representation of all citizens – of the world. The promotion of labour rights is also crucial to working people across the world.

Democracy is indivisible. If democrats expect the democratic participation of all citizens at state level, they have also to strengthen this concept at the global level. It is unacceptable that leaders use the financial crisis to oppress democracy. 

The majority of the least developed states are small with limited governance capacities. To overcome these disadvantages the UN and the G20 should support regional integration and continue to accept the participation of regional representatives in the global decision making. The OECD should increase its assistance for governance capacity building for the less developed regions and states.

The SI reiterates its proposal to establish a new United Nations Security Council on Economic, Social and Environmental issues –a Council for Sustainable Development. In this Council all regions of the world should be represented. That is the best way to engage all states in a broader context, in a spirit of inclusiveness, in the pursuit of common solution to overcome structural failures in the global economic system, as well as in favour of shared prosperity and well-being of all people.