G20 Deal Doomed to Fail

Professor Tonak argues that the G20 deal is prepared assuming "there's enough production and consumption" to support the sanctions. He further criticizes G20 leaders to avoid tackling the causes of the crisis.

Tolga Korkut

Professor Ahmet Tonak defines the latest G20 meeting in London as a desperate attempt to further neo-liberal policies. He notes that the agreed sanctions to ease the ongoing crisis fail to challenge the fundamental mechanisms that created the crisis in the first place.

One of the important decisions that arose from the meetin on April 3rd was to provide an additional 1.1 trillion dollar source to the International Monetary Fund (IMF) and other international finance institutions. G20 leaders urged for a stronger IMF.

Tonak regards this move as an attempt to inject money to the economy, thus stimulating it. “But this approach is destined to fail,” says Tonak and explains:

“Because to stimulate international trade, first there must be production, so producers should decide that it’s profitable to invest in production and believe that a market to sell their goods exists. Rising unemployment shows us that this isn’t the case.”

The G20 deal would reform the inequalities, according to Tonak. “For example, this deal doesn’t address the investment banking system. It avoids reforming any quality of the system that caused the global crisis.”

He also criticizes the deal as impossible to execute in accordance. “Participating leaders will return to their home countries and face up to specific needs and reactions of their societies.”

According to Tonak, even one article reveals that the G20 can’t function as an international decision maker. “Partly by illegal means, partly to avoid taxes, there is a huge body of money –around 11 trillion dollars- that floats around –sometimes landing in Caribbean Islands, sometimes at banks in Switzerland. It’s known that the third of this money rests in Switzerland. The article against those ‘tax heavens’ was changed. Some countries –such as France want stricter control over these places. Yet, Hong Kong is among those places and this created tension between France and China. As a result, stating the names of tax heavens was emitted.”

Tonak sees the solution in making investments that creates jobs –especially in developed countries.

“In the US, health and education systems as well as urban infrastructure are going down. Stimulating those areas would create jobs and at the same time, benefits the general expectations of the society. (TK/AGÜ)