Last year in Kenya, when my African friends were discussing the depression and financial crisis, they asked why is it that people in the West, especially the US workers, are now only grasping the dangers of the power of the banks? African working peoples have faced the onslaught of the capitalist’s financial war against ordinary people for the past 30 years. The most obvious evidence has been high rates of unemployment and underemployment, massive hollowing out of industrial capacity, destruction of social services, and millions of deaths orchestrated by the IMF (International Monetary Fund)-imposed currency devaluation and liberalisation policies. These neoliberal strictures have been most evident in the areas of health care and education. In a continent where over 7,000 persons were dying everyday from preventable diseases, the IMF was also arguing that African economic recovery could only come from the complete opening of African markets and currency devaluations.
The experiences of Africans over the past 30 years are most pertinent within the context of the Group of Twenty (G20) meeting in South Korea. This meeting has four main items on the agenda, namely:
1) Building a framework for strong, sustainable and balanced growth
2) Strengthening the international financial regulatory system
3) Global financial safety nets
4) Modernising the international financial institutions.
If we look at the language and orientation of this agenda, we can see that the political leasers have not really learnt that the world is in a transition into a new international system. The other lesson that has not been learnt is that the West cannot keep exploiting the former colonised peoples forever. The structural adjustment policy measures that were initiated by the Bretton Woods Institutions against the oppressed nations and peoples are now being promoted in the West in the name of ‘austerity measures’ for global economic recovery. The escalation of the impact of the depression from Africa, Asia, and Latin America has now reached the working peoples of Western Europe and North America. When the managing director of the IMF referred to currencies as a weapon of war, many interpreted his statement as a volley against China. But could it be that he was addressing US leaders when he said, ‘Many do consider their currency as a weapon, and this is not for the good of the world economy.’ Robert Zoellick, the head of the World Bank followed in October by reminding the world that, ‘If one lets this [currency war] slide into conflict or forms of protectionism, we then risk repeating the mistakes of the 1930s.’
One of the challenges at this moment is for working peoples to begin to see that their interests converge so that they can develop a new sense of international solidarity. It is such sense of solidarity and internationalism that can ensure a formidable network for effective organisation and mobilisation against the toll of this capitalist depression and drum beats of war.
G20 SUMMIT
This international solidarity requires that we pay attention to local struggles and connect to international struggles, whether in New Orleans, Port-Harcourt, Guangdong, Quito, Madrid, or in Rouen, France. In these struggles, the workers and the youth, bit by bit, are regaining confidence in their own power and in their capacity to fight back. These forces are learning new lessons as the political leadership succumb to the power of the bankers who want to divert this growing solidarity to weaken the new alliances across borders.
We particularly need to closely watch the balance of forces arrayed as world leaders meet in South Korea. This is the meeting that is called the Group of Twenty (G20). It emerged as a response to the financial crisis of the 1990s, and the realisation that the former colonial masters who comprised the G7 could no longer dictate terms to the world. The summit in South Korea will be the 5th meeting of the G20 heads of governments to contemplate ways forward on the crisis arising from the failure of capitalism. Because the G20 has been conceived in a moment of crisis, it remains a holding operation until there is a process of deepening the democratisation of the international political system.
The G20 is a successor international formation to the G7 that was established in 1976 at another moment of international crisis when the USA foisted the system of flexible exchange rates on the countries that were defending Western capitalism. The G7 comprises Canada, France, Germany, Italy, Japan, UK, and the US. This gathering was convened one year after the US was defeated in Vietnam and five years after the Nixon administration had devalued the dollar. As an instrument of Cold War politics, economics, and diplomacy, the G7 bolstered the political authority of the US and the centrality of the dollar. In the face of the profligate spending and indiscipline of the US capitalist classes, the German and French leaders set about the creation of a competitive currency under the umbrella of the political formation that matured to become the European Union. The Euro became a competitor to the US dollar. This tenuous alliance of the G7 survived in the context of the Cold War. It was in this context that Reagan told the leaders of Germany and Japan that they had to support the US as long as they would want to be protected from the Soviet Union.
The G20 meeting is taking place twenty-five years after the Plaza Accords of 1985 when Ronald Reagan and James Baker bullied the Germans and the Japanese to subsidise the US military build-up. The yen appreciated and the Japanese economy never fully recovered from the economic consequences of the Reagan bullying in 1985. The end of the Cold War shattered the justification for the G7 and through the 1990s, the Russians were invited to the table, thus changing the G7 to G8.When Russia joined the G7 the neoliberal hawks descended on the society dismantling social programmes, with years of economic devastation for the peoples of Russia.
US unilateralism was hidden behind the G8. The limits of this unilateralism exploded on the world stage with the deepening of the capitalist crisis, following which there was a hurriedly-called G20 summit in November 2008. It was at this summit that President George W. Bush started to show some humility in relationship to the real position of the US and the rising power of states such as India, Brazil, and China.
G2 – CHINA AND THE US
Unilateralism and the language of the world’s only superpower had been premised on the ‘containment’ and encirclement of China and a national security doctrine that motivated some US security officials to see China as an enemy. This is despite the fact that there had been an alliance between sections of the Chinese capitalist class and the US financial barons. Top US multinationals (such as Walmart) saw China as a place where they could get around labour laws and safety standards. In January 2009, speaking in the capital of the People’s Republic of China, Zbigniew Brzezinski called on the Chinese to make a G2 alliance between the US and China. This invitation to the Chinese leaders to become co-imperialists with the USA was presented under the banner of ', published by Pluto Press.
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As G20 leaders mull the global consequence of quantitative easing in the US, Horace Campbell highlights the need for a democratised international body that can hold major powers accountable. ‘Without such a body, the kind of competitive devaluation that has been initiated by the US could be a recipe for full-blown warfare.’
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[2] http://www.chinadaily.com.cn/opinion/2009-01/15/content_7399628]moving toward a ‘reconciliation of civilizations’</a>.</p> <p>At the moment when the rest of the world was saying that a new financial architecture was needed to break the power of the US-backed IMF and World Bank, Brzezinski was calling for infusion of Chinese capital to prop up the US. From Bolivia, Eva Morales said it was a mistake to revive the IMF, claiming that, ‘[i]t is like giving money to wolves, or entrusting it with the care of the flock: the wolf is not going to keep the sheep; it will devour them. It is not possible that the countries of capitalism which have caused the financial crisis are now the same from where comes the solution.’ Morales was responding to the decision of the G20 summit in London in April 2009 when the leaders promised that a trillion dollar infused in the IMF would restore confidence, growth and jobs.</p> <p>The challenge outlined by Eva Morales to the recapitalisation of IMF to the tune of US$1.1 trillion stands before the G20 meeting at this moment because the very agenda follows the same script of dealing with global financial safety net instead of confronting the suffering and death of human beings and the ecological war against the planet earth. I do not agree with those who argue that the G20 is merely a group of countries appointed by the G8 to represent the rest of the world. It is also true that the G20 in its present constitution is unrepresentative of the peoples of the world. Why should Italy, Germany, France, and the UK be members of the G20 at the same time that the EU is a member? Who appointed the South Africans to be the representative for Africa? Was it because South Africa remains the beachhead for international capitalism with its promulgation and drive for Africans to go on their knees through NEPAD (New Partnership for Africa's Development)?</p> <p>From the standpoint of the peoples of the world, the democratisation of international bodies such as international financial institutions will only come about through new international mobilisation and victories in what they call the Third World that would shake the complacency of workers in Western Europe and North America. Shaking the complacency is not meant to be vindictive but to awaken the working peoples of the major capitalist countries to the vulnerability of their ruling classes. This vulnerability will be heightened by the class-consciousness of the working people of Europe and North America. When the working peoples see the bankers as the problem, perhaps they will not willingly send their children to die in unjust and unnecessary wars meant to protect the global interests of the financial oligarchs.</p> <p>DEMOCRATISING INTERNATIONAL ORGANISATIONS</p> <p>The issue of the democratisation of international organisations was brought into sharper focus this week when the president of the USA promised to support the candidacy of India for a seat in the UN Security Council. This sounded like a hollow promise because it is the same USA that has been at the forefront of opposition to the democratisation of the United Nations. This promise should not be the substitution for rigorous debate for the genuine democratisation of the UN so as to become a more efficient international body for world peace. There is need for an international body that can hold the US and other military occupiers accountable. Without such a body, the kind of competitive devaluation that has been initiated by the US could be a recipe for full-blown warfare. It was none other than the dean of the Press Corps in Washington who has been calling on the USA to attack Iran in order to for the US to recover. David Broder of the Washington Post wrote in ‘The War Recovery’ that:</p> <p>‘Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II. Here is where Obama is likely to prevail. With strong Republican support in Congress for challenging Iran's ambition to become a nuclear power, he can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve.’</p> <p>While David Broder and top politicians were promoting a military confrontation for recovery, Michael Hudson was explaining that the USA was using competitive devaluation (called quantitative easing) as a weapon of war:</p> <p>‘Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatised infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means?’</p> <p>QUANTITATIVE EASING 2 (QE2)</p> <p>QE2 is a second iteration of the current financial war being waged by the USA against the rest of the world. On 3 November 2010 there was a further devaluation of the US dollar by the Federal Reserve which is the central bank of the US. This devaluation by which the US printed US$600 billion of its currency is another manifestation of the present currency war. The term, ‘currency war’ is another way of referring to the competitive devaluation of the top capitalist currencies. The reason for the devaluation is to make a country’s exports cheaper in order to rebuild the economy. </p> <p>In the US, there is an assumption that US manufacturing would recover if the dollar were devalued. The top leaders of the US know this to be fiction because they understand that the productive capability and the competitiveness of the economy have been hollowed out by the emphasis on finance and financial services industries. One commentator said clearly that the US$600 billion would not assist the US economy: ‘That meant that the money Washington is pouring into the economy will go to those who need it least – banks, business, and families with strong balance sheet are in the best position to take advantage of the cheap money flooded into America. The unemployed – who figured prominently in the Fed statement and were one of the direct targets of last year’s financial stimulus – for much further down the food chain, as will the Americans grappling with foreclosure.’</p> <p>This realisation of the impact of quantitative easing is also clear to most leaders of the world. South African foreign minister said the move ‘undermined the spirit of multilateral cooperation.’ The Brazilians critiqued QE, saying that it will hurt the efforts of Brazil to control its currency. The German chancellor also opposes this QE, saying that the US policy was ‘clueless’. Central bankers all across Asia are now considering measures for capital controls to minimise the negative effects of US capitalists rushing into their countries with cheap dollars to buy up productive assets. By the time the G20 started, the USA was so isolated that even South Korea stepped back from signing a free trade agreement with the USA.</p> <p>WHITHER CHINA?</p> <p>The financial war, as manifest in the statements and actions from Brazil, South Africa, Thailand, India, South Korea and Germany, has been lost to many citizens of the North who had been faced with the barrage of misinformation that the imbalance in the world economy stems from the undervaluation of the Chinese currency. Western leaders have been explicit that they want to pressure China to revalue its currency. The Chinese political leadership which has agreed to a gradual revaluation has explicitly stated that the demand for massive revaluation is a demand meant to trigger instability and unrest leading to the break up of China as we know it today. Chinese Prime Minister Wen Jiabao recently warned: ‘[D]o not pressurize us on the renminbi rate. Exporters would close; workers would lose their jobs… If China saw social and economic turbulence then it would be a disaster for the world.’ It is precisely this kind of disaster that the conservatives probably want in order to save capitalism. But this could be a recipe for another world war. One of the challenges of the Chinese people is to make their capitalists accountable so that the present alliance between sections of the Chinese finance capital and US finance capital is broken. The world doesn’t want new superpower, whether from the West, East, North, or South.</p> <p>We want to reiterate that the G20 is a holding operation until there is a democratisation of the international system. This democratisation must also include the political literacy of the working people throughout the world and the internationalisation of the control of capital. Africa remains the most vulnerable in these currency wars and already South Africa has seen its currency appreciate to the highest level in the past five years. This crisis sharpens the push for African Unity and the creation of a common currency in Africa, backed by the vast resources (human and material) of Africa. We started out by making reference to the fatal bullets that were, for 30 years, shelled upon Africans from the barrels of the financial weapons of forced currency devaluation and neoliberal policies of the US-backed Bretton Woods institutions. These conditions await citizens of the Western world unless there is a break with the present mode of economic organisation.</p> <p>BROUGHT TO YOU BY PAMBAZUKA NEWS</p> <p>* Horace Campbell is a teacher and writer. His latest book is '<a href=
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