Friday, 13 March 2009

United States, Russia, China and the Eurozone are Seriously Off-Message for Brown's Big Day

Russian Deputy Prime Minister and Finance Minister Alexei Kudrin will attend the G20 ministerial meeting that begins near London today.

“We have to coordinate the anti-crisis policy and design anti-crisis measures to prevent similar crises in future,” an official in the Russian delegation said.

According to Tass 'Russia believes certain provisions in the communique of the meeting need to be specified. In particular, the proposal to earmark not less than two percent of GDP for anti-crisis measures does not correspond to the existing situation in various countries of the group. Therefore, specific bailout volumes should not be fixed.

“Differentiation is necessary by groups of countries... taking into account the opinion of BRIC countries” (Brazil, Russia, India and China), the official said.

Russia also believes the British proposal to decrease the refinancing rate does not reflect the specifics of developing and oil producing countries. “The economic situation differs and there is no single recipe for all,” he said.

The finance ministers will discuss the reform of the International Monetary Fund, specifically the amount of additional reserves, quotas and decision-making mechanisms, but:

“Institutions such as the IMF should not just provide urgent aid to certain countries, but also must take into account the consequences which the world economy would face in six-twelve months from anti-crisis measures,” the official said.

Ministers will also consider the capitalization of development banks. While the World Bank can provide to all of its members not more than 100 billion dollars in three years, which is clearly insufficient in current conditions, developed nations are in no hurry to up its capitalization.

“There should be no group egoism and the task of the G20 is to consider how the world economy will react, and to balance the instruments and measures that are taken to confront the challenges faced by different groups of countries. Hypothetically the growing crisis phenomena could make certain states bankrupt and it is necessary to prevent such areas of social and political instability,” the official said.

Oh dear. Now Russia is off message. First the United States tells it like it is. They regulate themselves (and everyone else if they feel like it, watch your tone Brown). Then China notes its debt holdings are 'worrying' and certainly they aren't going to take on any more. Then France and Germany (read the eurozone) say case by case and no more debt.

Brown's April 'summit' is going to cause a public demonstration of currently submerged major opposition of interests. A surfacing of every last divergence of policy, ideology, constraint, and not least national duty. For what? So he can be snapped with his trouser-leg tucked into his sock shaking important hands.

The 2 April 'summit' should be cancelled and meetings at this level held only when national priorities have been aligned, if not resolved. An added advantage would be if by then the United Kingdom were to be represented by a democratically elected government with a mandate to act in this crisis from its electorate.

1 comment:

Toronto Real Estate Agent said...

Nicely said, the G20 summit seems like a huge waste of time. Countries all around the world have different problems and different solutions how to solve them. But they're never going to agree on one of them. It will always be disadvantaging somebody and thus creating arguments about which system is better. The 2% of GDP financial stimulus that would be saved annually works for some but definitely doesn't provide much protection in the next crisis for some countries. I guess we'll have to wait and see what they come up with.

Take care, Julie