fast little loans
The G20 summit ended in Los Cabos, Mexico, this week not with a bang but with a sigh of relief. This was because Greek voters had not let down the side by voting into parliament parties that had vowed to renege on the country’s tough EU bail-out package.
But this was a reprieve, not salvation, as the euro zone crisis rolls on.
In SA the summit made news mainly because of the $2 billion (R16.46bn) SA had pledged to the International Monetary Fund (IMF).
This was part of $456bn (R3.75 trillion) given by 37 countries to build a firewall against the euro zone debt crisis infecting everyone else.
Cosatu condemned the government for spending so much money to prop up Europe when there was so much poverty and joblessness at home.
That was clearly the popular view, judging by the office, radio and Twitter chatter.
The more considered opinions were more favourable.
International law professor and global governance scholar Danny Bradlow summed it up: “You have to pay to play” – if SA wished to be a global player, as it does, it would have to pay this sort of price.
But pay for what and when were the questions he and others asked.
Yes, the gesture makes us look like a responsible global citizen and that must be good for the country’s image to investors and the like.
Yet, the traditional powers have yet to give the Brics the extra IMF voting power they were in effect paying for in advance. And they might not do so this year at least, with US President Barack Obama facing elections.
And whether SA gets the extra seat and vote for sub-Saharan Africa on the IMF board as it wants, or the other Brics take them all, remains to be seen.
The US was notably absent from the countries which pledged money for the firewall fund, evidently consistent with the American view that Europe should sort out its own problems.
Europe, conversely, blames the US for precipitating the disaster with its sub-prime mortgage debacle etc.
That contretemps in some ways underscores the point made by the American political scientist Ian Bremmer in his book, Every Nation for Itself: Winners and Losers in a G-Zero World, that the planet is now experiencing a breakdown in leadership.
He says Western influence has declined and new emerging powers like the Brics have not filled the vacuum.
Except that the stand-off between the US and Europe suggests that even the G7 would not have been able to resolve this problem. And by coming up with $75bn (R617.43bn) for the IMF’s firewall, the Brics showed greater leadership.
Strengthening the firewall might have been the most concrete thing to come out of Los Cabos.
For the rest it was largely plans and promises; some very good plans, some very good ideas, including proposals for greater investment in poorer countries, which President Jacob Zuma liked.
He also liked the new G20 “narrative” (as Mexican officials, not he, described it) about putting more emphasis on growing economies out of the crisis rather than on austerity.
Yet a good narrative remains just a good read, instead of the decisive action to grasp the global crisis by the scruff of its neck, which was needed.
This is not to say the summit shouldn’t have happened. It’s of course better that world leaders meet to discuss global problems than not.
There had been fears before that the Greeks would vote in an anti-bailout government on the eve of the summit and throw the meeting into chaos.
But the Mexican hosts rightly pointed out that, on the contrary, it was a good thing that the leaders representing plus-minus 80 percent of the global economy would be gathered in one place anyway, so they could address the feared Greek election result.
In fact, maybe just such a crisis-within-a-crisis was needed to jolt the G20 into decisive action.
Instead Bremmer’s G-Zero thesis remains largely unrefuted after Los Cabos.