The Meaning of “Austerity”: Understanding G20 planned cuts

With the G20 announcing that austerity will reign – with efforts to cut deficits on the backs of the poor and not banks, it is important to understand exactly what it is. James Corbett of the Corbett report does a fantastic job explaining ‘austerity’ of  with this overview of what it is, how it works, who it hurts.

Austerity reigns, we lose: G20 summit roundup

Austerity reigns, we lose: G20 summit roundup

Above is Naomi Klein on Democracy Now on the G20 plan to cut deficits in half by 2013.

“What actually happened at the summit is that the global elites just stuck the bill for their drunken binge with the world’s poor, with the people that are most vulnerable,” Klein says.

As I described (G20 and Deficits) in the week’s leading up to the G20 summit, the push was for austerity and cuts to social spending, regardless of how much it would hurt the poor and could easily, according to some economists lead us to a new depression.  Canada (with France, Britain and Germany, among others) led the charge.  Well, it happened.  Austerity reigns.

Here are a number of excellent articles on the aftermath of the G20 meetings themselves.

Sticking the Public With the Bill for the Bankers’ Crisis How else can we interpret the G20 communiqué that includes not even a measly tax on financial transactions?

As Canada’s Democracy Trembles, a New Global Architecture Emerges

G-20 Nations: Race to the Bottom will Continue
A critical analysis of the G-20′s Toronto Declaration

The G20’s prescriptions for the global crisis will only worsen the situation for Africa

G-20 Nations: Race to the Bottom will Continue

G-20 Nations: Race to the Bottom will Continue

I have been writing about the G20′s austerity plans for the past few weeks (here and here for example.  Well, it has been approved by the G20.

I’ll be writing more about the austerity and other G20 declarations tomorrow.

Here is Dawn Paley’s excellent piece on the Toronto declaration.  Read the original from Vancouver Media Coop here

——

G-20 Nations: Race to the Bottom will Continue A critical analysis of the G-20′s Toronto Declaration

by DAWN PALEY
As the G-20 summit winds down behind the fences surrounding fortress Toronto, there are at least 560 folks in jail, and anyone left out on the streets is facing detentions, beatings, searches and arrests.

This is the context in which the Group of 20 gathered to write the Toronto Summit Declaration, a 27 page document released earlier this evening. An early critical reading of this text makes it evident that those who have taken great risk to mobilize against the G20 have done so on behalf of the health of communities, and the planet.

Because though the Toronto Declaration begins with a populist appeal to sustainability, job creation and financial regulation, it enshrines a commitment to force the poor and working class around the world to tighten their belts yet again as states implement strict new austerity programmes.

The Declaration proposes an ambitious new structural adjustment agenda, designed by the IMF and the World Bank, that aims to halve first world deficits by 2013.

Shoring up financial sector abuse of public funds is likely one of the most pressing concerns of publics, who have been denouncing the bank bail out all around the world. But the language in the Toronto Declaration does little to guarantee meaningful public oversight of the financial sector.

The Declaration welcomes the recently passed US Financial Reform Bill, which according to Newsweek “effectively annoints the existing banking elite,” without putting a cap on executive compensation. Nor does the bill crack down on the banks that are supposedly “too big to fail,” including J.P. Morgan, Goldman Sachs, Citigroup, Bank of America and Morgan Stanley.

Financial oversight will remain with elites, led by the IMF and other Multilatral Development Banks (like the Inter American Development Bank and the African Development Bank), which the declaration proposes should become “even stronger partners” in the future.

The Declaration indicates that G20 countries will pump $350 billion into Multilateral Development Banks, doubling their lending capacity, so that they can “focus on lifting the lives of the poor, underwriting growth, and addressing climate change and food security.”

The move towards putting MDBs on the front lines of global lending could be a response to the growing global rejection of International Financial Institutions like the World Bank and the International Monetary Fund. This shift is reminiscent of a move away from global trade and regional agreements like the Free Trade Area of the Americas and the World Trade Organization, and towards smaller regional deals and bilateral agreements.

The Toronto Declaration makes a point of noting that Haiti’s debt with International Financial Institutions will be cancelled, but avoids mention of the larger debt that the country owes to the Inter American Development Bank (IADB). Haiti owes less than $200 million to the World Bank and the IMF, while their outstanding debt to the IADB is upwards of $441 million. The IADB has also positioned itself to become the lead development bank behind the $10 billion reconstruction of the country.

In addition to an increased role for the IADB and other regional development banks, the Toronto Declaration promises more privatized “development financing” for low income countries. This could mean further subsidies for transnational corporations active in resource extraction and the maquila sector.

Language in the document around increasing global output, create tens of millions of jobs, and reduce global imbalances flies in the face of recommendations for countries with higher debt loads to continue a regulatory race to the bottom by “maintaining open markets and enhancing export competativeness.”

The Toronto Declaration also welcomed the launch of the Global Agriculture and Food Security Program, which proposes to create food soverignty between public and private partnerships. This flies in the face of demands from peasent groups, including Via Campesina, who stated at the end of 2009 that “The absence of the heads of state of the G8 countries has been one of the key causes of the dismal failure of [the November 2009 Food and Agriculture Summit]. Concrete measures were not taken to eradicate hunger, to stop the speculation on food or to hold back the expansion of agrofuels””

The Declaration asks that the OECD, the ILO, World Bank, and the WTO facilitate their version of events by having them “report on the benefits of trade liberalization for employment and growth” at their next meeting. States are cautioned to stick with World Trade Organization measures and avoid new “barriers to investment or trade in goods and services.” Items that potentially included among these barriers are new environmental legislation and new forms of taxation on corporate activity.

On the topic of climate change, G-20 countries that support Cophenhagen issued a weak call for other nations to “associate with it.”

Police left convergence centre; reports today at detention centre

Update 7:30pm Police left the convergence centre!

Mass arrests possibly going down at convergence centre. It’s blocked off. No one can come in or out. Please go support. 1266 queen street west

live feed at convergence centre: http://qik.com/jesse

A few of the best articles and interviews I could find:

Firsthand report of arrests, tear gas, beatings of peaceful demonstrators at detention centre  Interview with independent journalist Stefan Christoff

Jail solidarity action attacked by Toronto police
Members of prisoner support rally outside G20 prison beaten, arrested by police

Excessive force used on protesters, int’l media AWOL

The Erosion of “Rights”: a quick descent: a few highlights for serious consideration

and keep checking 2010.mediacoop.ca for more

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