Brazil's President Lula: The G-20's role after economic crisis

The group weathered this challenge, but the developing world needs more say in heading off future ones.

September 23, 2009

Optimism is the leitmotif surrounding the Pittsburgh summit Sept. 24-25. Yet certain concerns remain.

A year ago, as the dramatic recession unfolded around the world, many were convinced the world was heading for a repeat of the crash of 1929.

Due to measures adopted at the G-20 summit in London last April, the worst threat in decades to the global economy was contained.

After a 9 percent reduction, global trade has rebounded, thanks to the injection of $250 billion in flexible, unconditional credit. By the end of 2009 nearly 50 million jobs will probably be lost, but there are signs that the worst is past.

Another $750 billion went to stimulate demand and stabilize the current accounts of many – particularly developing – countries hit by the drastic cutback in foreign trade and credit.

The scale of mobilized resources has been unprecedented. Yet even more significant was the quick and decisive show of collective will involved. The degree of trust thereby regained has helped keep the economy afloat during this period of uncertainty and turbulence.

The international community managed. Should we celebrate having avoided the worst? Should we sit back and wait for the next crisis? After all, the mirage that markets are self-regulating and that financial profiteering is somehow grounded in economic logic has finally collapsed.

Yet even those countries that were not wooed by the promise of easy gains found themselves unshielded from this gale-force crisis.

When G-20 leaders first met in Washington last year, no fully worked-out policy proposals were available. Yet leaders did not let themselves get bogged down in inertia or stalemate. They were aware that the crisis reflects structural imbalances that reach far beyond financial misdoings.

Climate change and growing global competition for energy resources and markets starkly confirm what we already knew: Globalization has made us ever more dependent on one other.

Last year Brazil took the lead in defending the consolidation of the G-20 as a forum of leaders who could manage the crisis rationally. The time had come for a show of political will and for undertaking fundamental structural adjustments.

This explains our dismay at the reluctance of developed countries to embrace proposals for reform of the Bretton Woods institutions. There is fierce resistance to putting teeth into financial markets' oversight mechanisms. Banks are going back to the very practices that precipitated the recent chaos. Bankers continue to be overpaid, while millions of men and women lose their jobs.

Nor do we understand why industrialized countries refuse to shoulder their share of the burden when it comes to fighting global warming. They cannot delegate to developing countries tasks that are theirs alone. Signs of a return to protectionist instincts are equally worrisome. As is the current paralysis of the Doha Round, since we know full well that its conclusion would greatly speed global economic recovery.

Such attitudes threaten the London summit's main achievement: the acceptance that the challenges of a globalized planet will not be met without the active involvement of all.

Our decisions must be made in a more transparent and representative manner. Developing countries did not cause today's major crises. They are, indeed, the main victims. Yet, more and more, they have also become part of the solution.

The emerging world has gone beyond just denouncing speculative adventurers and the breakdown of obsolete dogmas. It is making an active contribution to finding solutions. We must bring the representation and the voting power of developing countries into line with their relative weight in the world economy.

We will arrive at the UN-sponsored climate-change negotiations in Copenhagen this December with our own alternatives to guarantee sustainable development. The Amazon Fund that Brazil launched in 2008 combines the well-being of millions of people with protection of our natural heritage.

We have substantially reduced the clearing of our forests. Brazil's experience with biofuels and the widespread use of hydroelectricity point the way to an energy blend in harmony with environmental preservation.

Policies adopted by countries in the global south have created tens of millions of new consumers, who will drive the recovery of the global economy. In Brazil, income distribution has been shown to be a powerful inducement to healthy growth.

This is no time to suspend anticyclical policies that have proven their worth. The poorest countries, hardest hit by the crisis, are in a hurry to see their economies rebound and thus renew their peoples' hopes for prosperity.

For all those reasons, we stand for more democratic and fair global governance. We hope to see results at the Pittsburgh summit. Of course, the G-20 cannot solve these problems alone.

The crisis of international governance will not be overcome by multiplying new ad hoc groupings, ranging from the G-8 and the G-14 to the G-20 or whatever else might arise in the future. They can only be successful if they help us get back to the reform of the multilateral system.

We want the kind of governance that makes our interdependence an inducement for self-interested solidarity, instead of a pretext for the strong to always come out ahead. The G-20 is an extraordinary chance for us to prove that this is no rose-tinted daydream.

Luiz Inácio Lula da Silva is the president of the Federative Republic of Brazil. © 2009 Voice/Global Viewpoint Network. Distributed by Tribune Media Services.