Sunday, June 27, 2010

What is the G-20? Why the Fires?

Sometimes I wonder if any of the protesters against the G-20 have any idea what it is the organization does. Same with the protests against the World Bank and the International Money Fund, the IMF. Both of these last two, usually referred to as separate entities, are actually major agencies of the United Nations.

The G-20
The Group of 20 is a worldwide financial diplomatic venture of 19 of the most prosperous countries in the world plus one representative from the European Union. Their members include financial leaders from these countries. Officials from the World Bank and IMF are also invited to attend the summits. These are completely devoted to world-wide financial stability. There's a G-8, also, with less territorial diversity.  In these expanded, pluralistic times, the G-8 is ceding decision power to the G-20. Quite simply, the "money majority" requires more members and more locations to fine-tune the global economy.

Right now, they are talking about rising national deficits in this world-wide recession.
A bunch of suits talking about important things. (

Member countries include the U.S., Canada, Mexico, China, Saudi Arabia, Republic of Korea, South Africa, Brazil, and Australia. All big economies that can move money or act in concert when there is a money supply crisis. All regions have immediate reportage. All races, creeds, continents, faith traditions are represented. In short, everybody's moving up.

The start of the G-20:
Asian Financial Crisis
About the time the USSR was financially failing--the 'Golden Tigers' of Asia were mopping up on the international manufacturing scene. A big wave of speculation ran through Asia. This big mess, dubbed the Asian Financial Crisis (1997), started in Thailand which was in huge government debt. This created a local panic and recession, which quickly spread through Asia for various reasons (still being argued). It then proceeded to panic financial markets around the world.  The G-20 was created in response to a less Euro-centric model of world money movement.

Russian Financial Crisis
In 1999, Russia had their financial crisis, a result of huge debt on the part of all those emerging nations, and a lack of business organization. The fact that their neighbor region of Asia was hip-deep in crisis was also no help, because money exchanges between Asia and Russia were already stunted. But Russia had bigger problems. People were getting shelled; people were starving; schools were closing; manufacturers could not get raw materials nor hospital supplies; and the ruble and other currencies were inflating rapidly. In Azerbaijan, for example, the banks were just printing notes with nothing to back them: neither gold, nor confidence, nor things to buy with that currency. Inflation rose to 400% a year from various factors. Nothing good can happen under such conditions.

Into the breach rose the G-20 and those previously not-so-spotlighted organizations such as the IMF and World Bank. In general, all of these groups (plus the other regional development banks) worked to stabilize currencies and provide business opportunities, back shaky governments, and also teach government officials what to do in order to Grow an Economy.

Unfortunately, this kind of teaching was all new to them too. While they had the correct elements of development, they only had laboratory models--not practical experience. In many cases, their timelines were too stringent.  Places such as Azerbaijan were flooded with refugees from war, non-production, stress and a lack of jobs. That does not look, to a besieged government or its populace, like a time to cut spending.

In time, the IMF and World Bank, the G-20 and the regional development banks helped cut corruption, provide capital for business start ups, forced new countries to prioritize their dreams and bank their resource wealth. By doing this, they provided  a chance for lasting investment (such as education, infrastructure)  for these emerging and poorer countries. Since the major economies are the most likely lenders to the Development Banks, and the Development Banks work together, it facilitates an orderly rate of growth for these countries, supplementing small dreams and helping refine and fund bigger ones.

Why the demonstrations, then?
Photo: UK, 1999. Blah, blah, blah. (

Well, it depends on which group is protesting.
1. They are seen by some as a precursor to world government--the G-20 is kind of like a world-wide Federal Reserve. It's a system that doesn't leave countries alone to fail or succeed on their own. It's about cooperation in money policy, not survival of the fittest. Of course in a world-wide economy with export and import, we do need our customers and suppliers to survive.

2. They are sometimes seen as a place where the rich countries make rules for the poor.
It is true that sometimes poor countries need to incubate their own small business before letting in major corporations in every industry. Other times, they can't develop it on their own.

For industries like oil or mining, those countries do not have the technical savvy nor the money to develop alone. When international industry does come in, the World Bank funds partner investment--so that the country gets a stake in production besides the rents of the land--and pushes for this money to be invested in the country.

In other industries, such as the insurance business or farming, small operators are sometimes considered necessary to grow a home economy--and can be pushed out of business by larger, international insurance or agribusiness firms.

In general, a mix of world-opportunity and home opportunity is good for any country. Developed countries by definition have grown a home economy and are looking for international trade. Therefore these developed countries do tend to emphasize international opportunities. Individual nations sometimes erect tariffs or restraints of trade in defense.

3. Whatever the G-20, IMF, or World Bank do, it's not enough.
There are always calls for the World Bank, the IMF, and the G-20 to Fund More, so that everybody always gets a fair shake. Sometimes, in international relations, I get the feeling that international financial institutions are supposed to dispense perfect justice. They now have a spotlight, and other actors (such as Presidents and Dictators) do not get the same scrutiny.

I don't say the G-20 is perfect, or the IMF or the World Bank--they're damned good at hardball, and they do have biases. Yet nobody else can do what they do, which is, create a space that evens out the cycles of failure and speculation into something less disastrous. We are too linked to other countries to be isolated any more. It matters what Saudi Arabia does, what Tanzania does, what happens in Thailand or Costa Rica.

Those that consider the G-20 as a form of world government should realize that the nations involved are actually performing complicated country-to-country negotiations. Furthermore, as a student of international relations, I have seen that many times their advice is not taken.

The international financial institutions help the poor, not with handouts, but with loans. They teach the poor how to prosper--they don't hand stuff over for nothing. They serve an absolutely essential function in the realm of charity as well as finance. They create business environments and therefore chances for prosperity.

The G-20 is good for everybody who wants to hold onto their money in a reasonable fashion and prosper the permanent way. With twenty different countries, and twenty different national agendas, they make a pretty good watchdog between themselves, too.

And my prayers and best wishes to the first responders in Toronto. 

This Black Bloc demonstration will never help the world's poor, 
and maximizes the amount of misery everywhere. (ynet news.)

Further Reading:
Wikipedia, G-20. and Republic of Korea-G-20 site.


Bob G. said...

That was some good history on the G-20...
ANd here I wa thinking it was a bunch of (rich) guys going to a city to shop for INFINITI SEDANS (they do have the G-37 out now).

Like to see these protestors do THEIR homework when it comes to UNDERSTANDING the TRUTH.

Good post.

Christopher said...

I think there are people in this world who simply like to rally around a cause to justify their lawlessness. Trying to rationalize their arguments, from an outside perspective, is practically futile. Most of these protests are lead by professional anarchists, with the main body of the protestors comprised of gullible students, who want desperately to be a part of something signigicant. Unfortunately, in this case their efforts are misguided and wasted, manipulated by an ill-intented few.

Ann T. said...

Dear Bob,
I can't stand it! People don't do their homework, and then create this misery for the people of Toronto, their police and fire, their taxpayers.

I once watched video from a World Bank demonstration and half the participants were drunk. They were explaining to the [absolutely wooden-faced] police how they were there to help the downtrodden.

The downtrodden in that case were the police, who were neither allowed to respond back with their personal thoughts nor laugh in the protester's faces.

As to a bunch of rich guys, LOL! Along with their perks comes this pack of asshats.

Thanks for writing in, and allowing me to vent,

Ann T.

Ann T. said...

Dear Christopher,
That is the best and most knowing explanation so far for the motivations.

The literature of grievance so often masks atrocity and anarchy. Thanks very much for contributing this part.

Ann T.

The Observer said...

Ann T:
Thanks for this great post! As to the rioters, ever since Seattle, I've known they were Astroturf, mostly fake!

The Observer

The Bug said...

I have another blogger friend (Barry, from An Explorer's View of Life) who was in a hospital in downtown Toronto. He was safe, but his wife Linda had some pretty hairy moments going to visit him. Her question was WHY downtown Toronto near their hospitals for this controversial meeting?

Ann T. said...

Dear The Bug,
I feel for your friend. It must have been horrible!

I think in some ways the G-20 is a prisoner of its own success. First they want to be by financial and political centers. If they weren't, the security force necessary would have less place to go. They would be displaced for instance to a small town and they couldn't import enough security.

Second, the world of protest would say they were trying to Hide something.

Third, it is supposed to be a prestigious thing for these capitals. I imagine the Prime Minister of Canada was able to speak, for instance, giving his vision of world economic justice.

I don't know about hospital access, I guess it depends where the convention area is or something like that.

They're just damned no matter what they do, and everyone good suffers while the cars burn and the windows smash.

I hope she and her husband are okay. What a frightening story, just to add to the stress they already feel!

Ann T.

Ann T. said...

Dear The Observer,
Sorry, I missed your comment! Bad Ann T.!

Yeah, I couldn't agree more. Seattle set that one for me, too. And this time, the little cowards were seen changing out of their all-black clothes and melting into the crowd. No convictions, no courage, no life plan, no constructive activity. Just hell for everyone else to deal with.

Ann T.

BGC73 said...

If only what you say were all so we would live in such a wonderful world where poverty doesn't exist. It is apparent that your knowledge of what you speak is in depth and you do raise valid points.

But the truth of the matter is that these are closed door affairs that shut out the citizenry, whom elected these so called leaders. The negotiations normally serve corporate interests and remove pesky barriers such as recourse for municipalities and governments if corporate interests have a negative impact on resources, environment or the social well being of citizens. The multinationals have the upper hand and can sue governments if they infringe in any way on their corporate interests even if the corp is infringing on local laws. And with multinationals, earnings go to disembodied share holders whose only interest is profit and growth, not community's, the environment and social well being. This is what most were there to protest, you should check out the Council of Canadians, whom had a large presence and performed education seminars surrounding this event, they are a reputable organization that is not funded by the government or corporations.

And if this event is so closely affiliated with the UN then why don't they use the facility in New York which is specifically for hosting world leaders and have security already in place?

If corporations were as altruistic as you believe them to be then explain something like the terminator seeds Monsanto donated to Haiti farmers? hmm farmers have the ability to save seeds from the best plants each year and then plant next season at little or no cost. Or become completely dependent on a multinational and pay for seeds each and every year, have to buy pesticides etc..,. That seems like a lot of self interest on the part of Monsanto.

And no civil liberties, rights and free speech came without some kind of fight. Those in power want to retain it and are very reluctant to change. Sometimes they have to be shaken up. And it seems there is more concern about damage to property than the damage that people feel when economic policy's hurt people, community's and the environment. The laws are set by those in power and thus normally only serve them, so if laws were broken, well then that's only a relative term.

Ann T. said...

Dear BGC73,
I love a thoughtful comment, and therefore I am very glad you wrote in. I have some small regret it was not sooner, when my usual readers could have had the benefit of a differing point of view.

I don't think poverty eradication can take place totally in the realm of the G-20, World Bank, and IMF, WHO, etc etc. A lot of it has a different source that is internal to a person or even a cultural learning. As deep as we can go, I think, it to change features in a landscape that enable people to do well and eliminates some of the most base or jarring risk.

But you don't get stuck on poverty reduction in your comment, nor will I.

The closed door concern, i.e., transparency, is always and forever a good point. From the good ol' boy network on up to the international level. For this issue, I think the target of the Committee and certainly everyone else is secondary when they pick the G-20, World Bank, etc. The place to go on this is the banking industry, especially those with huge confidentiality and haven status. Taking on that industry, the Swiss, Caymen, and tiny Euro states that have it would do much for:

1. making sure foreign aid stays in the country it's meant for;
2. squash conspiracies of cartels, starting of course with the banking cartel
3. quelling internal wars by showing what's funding them.

In this sentiment, I am not alone, but our voices of course are covered up not just by the "conspiracies" of big business and big government, but those of the radicalized, populist, professional grievance-makers, who miss the point frequently.

The reason the UN does not host all of these is very simple. Each time they go to HQ UN, they end up in the United States, NY or DC. It is a huge diplomatic coup, and helpful to realizing the plural sources of world economic power, to let other countries host the Doha rounds, the ROK summit of the G-20, and so forth. It does allow their local businesses to feature themselves--is that a bad thing? I don't think so. In the end, it does reinforce some things about local communities and their differentness, and progress v. tradition to hold them elsewhere.

I am not going to waste time defending individual corporations, b/c another one will just pop up. Some are very bad. The WB in particular, and other international organizations, are often the only ones who can enforce and keep track of this crap. Protesting against the enforcers is just counterproductive. In my opinion.

Likewise, your words on revolution seem sadly misplaced. If the rich are so damn powerful, what threat came to them? Instead, the locals, many of whom might share your sentiments, and the local police, who are dicked around as much as anybody or more--by the spread of international power over local power, had to take this on.

Way counterproductive. It just runs the rich into their enclaves, and leaves everybody else in the smoking ruins.

I have come to greatly distrust the language of grievance, which seems to hold as many, or more, sophisms and false panaceas as the establishment.

If I could agitate the world community, I would start with Switzerland Et Cetera, prying open their bank deals in a peaceful and legislative manner, using good reportage and not calls to panic, and a bunch of number-crunchers.

The reason I would want reasonable people, is that making the haven banks transparent would rock the financial world enough, changing in quick order a number of capital flows. Panic sucks.

I am so glad you wrote in. I hope you see that I am no dreamy-eyed pundit. I consider myself a moderate, the most radical position available today, and (it seems) the hardest to maintain.

Ann T.