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What can we expect of the G-20 Summit?

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by Nilio Gumbs 27.MAR.09

The G-20 summit, to be held on April 2 in Britain, may not live up to expectations, as many changes required in light of the Global Financial crisis may not materialize.

The British Prime Minister Gordon Brown has called for changes in the Global Economic Order. But countries such as the United States, Brazil and China have different ideas as to what these changes should be.{{more}}

The USA is pushing for a strong global regulatory framework to manage financial institutions. China, on the other hand, is seeking a wider mandate for the International Monetary Fund – to act as a global Monitoring agency of financial institutions and a lender of “first resort” to countries in financial difficulties. Brazil is clamoring for a greater role for emerging economies in any new global economic order.

China is also interestingly putting forward the notion of debunking the US dollar as the leading international currency in which international trade is denominated and conducted, in favor of a global currency.

The G-20, which comprises Canada, Mexico, Brazil, Argentina, United Kingdom, Germany, France, Italy, the EU, Russia, Turkey, Japan, South Korea, China, India, Indonesia, Australia, Saudi Arabia and South Africa, represents both developed or highly emerging economies. They will set the new global economic arrangement, to which other less developing nations will have to adhere.

It was only 14 years ago when developing countries, including many of those in G-20, had the unfortunate experience of having the World Trade Organization (WTO) established over their heads by the developed countries.

Similarly, the Basel Accord -International Banking Regulation- and the Financial Action Task Force (FATF)- international Money Laundering Guide lines- were formulated by the Organization for Economic Cooperation and imposed on developing countries. Countries failing to comply were blacklisted. This meant that financial transactions emanating from black listed countries were subject to greater scrutiny or could not do business with big global banks.

Already, President Obama and Prime Minister Gordon Brown have personally attacked off-shore tax havens, of which there are many in the Caribbean, as if they are a source of the present financial crisis.

While the G-20 may offer greater diversity and global character, it may not reflect the structural characteristics of small island states of the Atlantic, the Pacific and the Indian Ocean.

It is totally impossible to have a level playing field between micro states and countries with continental land masses and advanced technology.

It appears that whatever competitive advantage small states do have, such as offshore banking services with their attendant secrecy laws and Internet Gambling, they are being whittled away by developed countries with international guidelines under the pretext of harmonizing international trade and financial rules.

Small Island states such as the Fiji Islands, Samoa, Tonga, Solomon Islands, Vanuatu, Seychelles, Mauritius, Cape Verde, Maldives, along with Caribbean states, should form themselves into a sub-grouping where they can formulate common responses on international trade and financial issues and speak as a unified block. If not, we will be the victim of yet more international machinations.