As the old political and economic world order passes away, new voices need to be heard in constructing its replacement, writes TONY KINSELLA.
UNFORTUNATELY EVO Morales Ayma and Carl Martin Welcker will not be attending next week’s G20 summit in London. The planetary political and economic norms we have known are expiring. A demise that involves tragedy and loss yet, as with all deaths, it also reflects the natural order of things and people passing and being replaced.
Evo Morales is the first president of Bolivia to hail from that country’s indigenous peoples who make up between 55 and 85 per cent of the population, depending on how you count.
Carl Martin Welcker is the managing director of the Schütte company founded by his grandfather in 1880 which employs 550 people and turned over almost €100 million in 2008. A medium-sized engineering firm with global sales in a specialised sector, it epitomises the Mittelstand companies that form the backbone of the German economy.
Morales campaigns to reverse the 1961 UN Convention on Narcotic Drugs that classifies the leaf of the coca plant, which contains a mere 0.01 per cent of the cocaine alkaloid, as a drug. The Andean peoples who have chewed coca leaves for millennia were, of course, not part of 1961 decision to outlaw their custom.
The Schütte company produces the machine tools used to make nearly 80 per cent of the spark plugs in the world. The company is struggling to come to terms with a 50 per cent drop in orders.
The millennial tranquillity of the Salar de Uyuni salt flats, 3,600m up in the Bolivian Andes, is about to be disturbed since they contain around 50 per cent of the world’s known lithium deposits. Lithium-ion batteries will power the first generation of mass-produced electric and hybrid vehicles from 2010 onwards.
The G20 is only 10 years old. Originally a forum for finance ministers from the world’s major economies, it now stands on the cusp of becoming the closest thing to a tool of global economic governance we have. Its component countries account for over 85 per cent of planetary GDP, and it also includes bodies such as the EU, the IMF and the World Bank.
The domination of our planet by Eurocentric, white, and essentially Christian cultures is drawing to a close. If the global economy is predicted to shrink by around 2 per cent during 2009, the emerging economies are all doing better.
China is aiming for 8 per cent growth this year, with the World Bank forecasting 6.5 per cent. India is on course for growth of between 3 and 4 per cent, and Brazil is credited with 1-2 per cent. Although these figures are down on previous achievements, there is hardly a leader from the developed world who would not willingly sign a Faustian pact to achieve something remotely similar.
China is spending nearly 6 per cent of its GDP on stimulus programmes drawn from its $2 trillion of accumulated reserves. Spend on infrastructure, social services and education may, almost, replace the export-driven boom of past decades. Chinese innovation is also surging. While the overall number of patents granted by the US Patent Office remains more or less flat, the number of Chinese-originating patents has grown by 27 per cent a year over the past five years. India’s growth is spreading to its rural areas where over 70 per cent of its one billion people live. Car sales in the Indian countryside are up 22 per cent on last year, and the Tata corporation has negotiated deals with India’s banks to provide increased consumer credit as it rolls out its new Nano.
Brazil’s central bank last week cut its benchmark interest rate to 11.25 per cent, leaving it with lots of room to manoeuvre as February figures revealed a welcome growth in Brazilian employment.
The US, with its economy forecast to shrink by 4 per cent in 2009, is urgently seeking to stimulate its economy, not least because of its lack of a social safety net. Lose your job in the US and you lose whatever health insurance you had as your income plummets. As the Federal Reserve embarks on a $1 trillion “quantitative easing” splurge, or printing money in everyday language, it needs Beijing to keep buying US debt.
European stimulus packages are more modest, in part because of public health provision and a solid, if imperfect, social safety net that preserves income and, to a lesser degree, consumption even when people lose their jobs. While there is general agreement on the need to increase significantly the resources of bodies such as the IMF, Brazil, China, India, Indonesia, Saudi Arabia and South Africa will seek a more equitable sharing of decision-making power in return for any new cash contributions.
Tighter banking regulation, long refused by London and Washington, is likely to be agreed, as are rules that will eventually strangle offshore tax havens. Look for pledges for the poorest countries, and a commitment to massive investment in green technologies.
The London G20 summit will not produce any magic panacea, but should begin to indicate how we might emerge better, fairer and more rational from the economic mess we have either created, or allowed to happen.
European Commission official Gert-Jan Koopman told a meeting on St Patrick’s Day that, “The recession is turning into a depression in an unprecedented manner and at an unprecedented pace.”
Carl Martin Welcker, from a company that has survived two world wars and the Nazi madness concurs. “The speed of the decline in orders is the worst we’ve ever seen,” he said.
Eva Morales thankfully reminds us that, “Mistakes are an unavoidable part of human history, but sometimes we have the opportunity to correct them.”
Pity they won’t be in London.