Bailing Out a Leaky Boat
#008

As the sub-prime mortgage crisis spread to all financial sectors of the U.S.economy and quickly to the rest of the world, the media  heaped praise on governments for bailing out financial institutions. The media have also been uncritical in their assessments of high-level meetings to save capitalism itself:  a meeting of European leaders on October 1, a meeting of western leaders at Camp David on October 18, and the Asia-Europe Meetings (ASEM) held on October 24-25. Throughout the Fall, governments have been furiously bailing out banks and financial institutions, outdone only by the International Monetary Fund’s attempt to bail out Iceland’s economy to the tune of USD 2.1 billion, and its emergency assistance of .USD 16.5 billion designed to bail out Ukraine.

Prior to an international Economic Summit planned for sometime late 2008, the G20 will meet in Washington in November. Hardly representing those who bear the brunt of the international financial crisis, the G20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States of America, and  the president of the European Central Bank.

Talks at the November G20 meeting will no doubt be a continuation of the talks already held in October: how to protect and save the key financial institutions on which western capitalism and western governments depend. It is not clear now, of course, what financial institutions and, even countries, will ask for a bailout before the G20 meetings, and then before the Summit. Currently IMF is in talks with Belarus, Ukraine, Serbia, Pakistan and Turkey

Nevertheless, it is safe to conclude that the G20 meeting and the Economic Summit meeting  will continue on the same path of the October meetings --- a rescue operation of western capitalist institutions in order to rescue world capitalism itself. While the excesses of neoliberal free-market capitalism are being repudiated, there is no talk of fundamental reforms that will make capitalism more just, more equitable, and more inclusive.

Excluded so far from any of the talks, from the G20 meeting, and no doubt from the  Economic Summit are representatives of the great majority of the world’s 192 countries. The people of these countries have born the brunt of the world economic crisis because they have experienced skyrocketing prices in food and because they often live on very small incomes. They face dire consequences when food is costly, and therefore stand the most to lose if the world economy continues its downward spiral.

 One response to Third World exclusion is the “Statement on the ‘Proposed Global Summit’ to Reform the International Financial System.” Drafted by civil society organizations (NGOs) from Third World countries, the Statement calls for a international summit organized by the UN that would include representatives from all countries. It states that any summit must meet five objectives: 

1. be inclusive of all governments of the world;
2. include representatives  from civil society, citizen’s groups, social movements and other      stakeholders;
3. have a clear timeline and  process for regional consultations, particularly with those most affected      by the crisis;
4. be comprehensive in scope, tackling the full array of issues and institutions;
5. be transparent, with proposals and draft outcome documents made publicly available and      discussed well in advance of the meeting.

In short, the Statement proposes an inclusive and participatory summit that ensures that all affected by the current crisis be represented. It also implies that issues such as trade, foreign aid, labor protections, and land rights not be excluded from the agenda. The statement also reflects a longstanding concern that international financial organizations, especially the International Monetary Fund, do not operate with transparency. The USmedia have paid little, if any, attention to this Statement, its context, or the implications of the issues that it raises.

 Also unnoticed by US media is the release this month of a three-volume report on human rights crimes published by Business and Human Rights Resource Centre (BHRRC), an independent institute that monitors corporations and multinationals. Its Report on Corporate Complicity in International Crimes chronicles human rights and labor abuses committed by corporations and multinationals. The authors - eight jurists - draw the conclusion that there are widespread human rights abuses committed by private companies against people in Third World countries and these abuses are criminal – they violate international human rights treaties and labor conventions.

 “The Statement on the Proposed Global Summit” and the BHRRC report taken together have powerful implications. The Statement does not advance an alternative to world capitalism. Rather it makes two procedural points: first, that those who are most affected by the world economic crisis must be represented at any world summit, and second, people, generally, need to be represented by civil society organizations as well as by governments. The Statement will undoubtedly be ignored because economic elites have always excluded Third World countries in their high-level deliberations. However, excluding them now, when all national economies are both interconnected and imperiled, is fool hearty.  The BHRRC Report confirms what human rights activists and labor unions have been saying for several decades -- corporations and multinationals are guilty of horrendous abuses and widespread exploitation of Third World people.

 Economic elites from rich countries who gather for the Washington economic summit later this year will be happy enough left to themselves. The last thing they want to hear is that the boat they are busy bailing out has a big and gaping hole.

Judith Blau teaches at the University of North Carolina, Chapel Hill and is president of the US chapter of Sociologists without Borders. judith_blau@unc.edu

Huffington Post, October 31, 2008

Comments

[bankruptcy attorney Chicago]

Economic crisis has resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world.