Chris Giles does a great job of gutting the financial pledges made at the G20. The big numbers are, predictably, not quite what they seem. His conclusion:
When all the sums are added together, rather than $1,100bn, the new commitments appear to be below $100bn and most of those were in train without the G20 summit.
This is the breakdown.
– $500bn of new money for IMF
Japan and EU separately pledged a total of $175bn before the summit. China offered $40bn at G20. The remaining $285bn is covered by a generalised pledge to establish a new financing scheme. Aspiration to make progress by the Spring
– $250bn increase in IMF Special Drawing Rights
The boost to the IMF’s own currency amounts to creating money. All new — indeed fresh off the global printing presses. But no country committed their money.
– $250bn in trade finance
The vast majority is an “aspiration”. The G20 annexe notes that new money committed is not $250, but around $3bn-4bn.
This is classic Gordon Brown.
It is tempting to blame all the demos and violence in the streets of London on the economic crisis. But I think that would be a misreading. The fact is that the British – and many other Europeans – have long enjoyed a good riot. The thing that needs explaining is why we haven’t had much social disorder since the turn of the century, not why it has returned now.
When I was growing up in London we had the Notting Hill riots in the 1970s, the Brixton riots in the early 1980s, riots in Liverpool, all the disorder linked to the miners’ strike, the Poll Tax riots at the end of the Thatcher era. If you want to go a lot further back, you could mention the Gordon Riots in 1780; the Chartist riots in the mid-nineteenth century.
And that’s just Britain. Obviously, the French have an even livelier tradition of social disorder and street riots. And just before 9/11, it began to look as if no meeting of European leaders would be complete without being set against a background of anarchist demonstrations. In July 2001, I went to an EU summit in Gothenburg where most of the city seemed to have been trashed by the “black blocs” of assorted European anarchists.
But, after 9/11, all this seemed to have stopped for a while. Maybe security was tightened up; maybe even the anarchists felt that protests against globalisation were no longer quite the thing. Whatever the reason, for several years things have gone quiet. Of course, there were big demonstrations against the Iraq war – but they had a coherence and a focus that the anti-capitalist demos lack.
So, while it is tempting to hail the street protests against the G-20 as signalling some sort of new political era of protest, I think it is the opposite. It’s back to business as usual.
Looks like Gordon Brown is going to revert to an old political trick as he pulls together a deal to save the world. There has been some movement on a number of fronts. The IMF will have its funding tripled to £750bn, or more; at least £100bn of trade finance; a big increase in special drawing rights, the IMF’s own currency, or significantly in excess of £40bn. On top of that we should see some new language on fiscal stimulus, although some officials are still doubtful that it will have any more meaning.
What is the Brown trick? Add up all the measures. The prime minister has always been a fan of big, round numbers. My rough calculation is that the international finance pledges and the existing levels of fiscal stimulus (£2,000bn?) would add up to something approaching £3,000bn. That will depend on whether “significant” progress is made on the IMF funding and SDR front, which seems very likely. Cue the biggest financial stimulus the world has ever seen.
The big question is whether this is new money. Most of the trade finance will be reallocated from various countries export guarantee budget, we think. The IMF funding will depend on the mechanism used, which is still a live issue. Far too early to be cynical, but watch out for the details.
A big moment: Downing Street have just released the seating plan for the G20 dinner. The protocol officials seem to have done a decent job because it is hard to pick the best place to sit. We’ve decided that Felipe Calderon of Mexico has a pretty good spot, with Russia and Brazil to his left and right, and China and France opposite (well, if Sarko turns up). We’re wondering what Gordon Brown will have to say to Susilo Bambang Yudhoyono.
By Alistair Gray
“It’s been a bit boring. I’d have liked to have seen more smashed windows,” said a 33 year-old artist who said he goes by the name Morganic. “I remember the poll tax riots – that was much more fun.”
The Financial Times building is a good vantage point for watching the goings-on at the G-20 summit. The Excel centre, where the summit will take place, is just a few tube stops away. As I write the “anti-capitalist” demonstrators are gathering near London Bridge – I can hear the sirens and the hovering helicopters through the windows. A procession of world leaders and summit participants have been trooping through the building, giving on-the-record interviews or off-the-record briefings.
It is not quite the “empty chair”, but Nicolas Sarkozy is making very clear that he is unhappy with Gordon Brown’s grand plan. Will the G20 meeting survive the Sarko huff?
Gordon Brown now wants us to judge the G20 against “five tests”. If there is any common theme to his new yardstick for success, it is that the tests are almost impossible to measure or oppose. Who would be against restoring growth in emerging market economies? Or support a dirty banking system that escaped a regulatory “clean up”?