G20: Same Old, Same Old or Real Change?

On the eve of the G20 Summit in Brisbane, Australia, it’s important to place things in perspective. Though agricultural subsidies seem dull in this era of computers, smart-phones and jet travel, agriculture is still a key part of everyone’s economy.

Reducing Poverty

During the Bretton-Woods Conference in 1944 representatives from 44 allied nations discussed how to rebuild their economies after the Second World War. A year later the International Monetary Fund was born. The stated aim of the IMF was to promote international economic cooperation, and foster trade, jobs, and sustained growth to reduce poverty in the world. Today IMF member countries whose economies aren’t doing well borrow money from a central fund to help them right their imbalances. However, they must undergo stringent austerity measures as a condition for doing so. This has resulted in growing frustration in Europe, South America, across sub-Saharan Africa, and in southern Asia, where populations feel their countries are suffering too much as a result of budget cutbacks ordered by the IMF.

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Taking Haiti as a case in point, IMF austerity measures have clearly not been beneficial. It was in the interest of trade liberalisation that the IMF extended financial aid to Haiti in 1986 and 1994 under condition that it reduce agricultural tariffs and open its market to greater international competition. The end result was that Haiti had to import cheaper subsidised rice from the United States. Local farmers couldn’t compete with US subsidies. Haiti now imports almost 300,000 metric tons of rice a year from the United States. Rather than greater growth and more jobs, IMF policies resulted in an increase in sustained poverty. Former US president Bill Clinton admitted as much, “calling his subsidies to American rice farmers in the 1990’s a mistake because it undercut rice production in Haiti”. (1)

Massive defaults

Between 1995 and 1999, the world witnessed “a string of massive defaults – first in Mexico, and then in Southeast Asia, and Russia.” (2) The devaluation of the peso in Mexico was followed by economic collapses in Argentina in 1998, and Brazil in 1999. Despite jobless riots and a sharp rise in poverty, Buenos Aires and Brasilia managed to stay the course toward better economic times. However, in 1999 after having seen how IMF measures threw one country after another into economic recession, Canada’s then Minister of Finance, Paul Martin, concluded that developing nations needed a greater say in the global economy. Martin met with Lawrence Summers, the soon to be Undersecretary for International Affairs for the U.S. Department of the Treasury, under the Clinton administration. They agreed to an expansion of the G7, and embarked on a series of diplomatic forays to achieve that end. Britain agreed to approach the International Monetary Fund. The poor state of economic conditions in the world made it difficult for the richer United States and European Union to disagree and the G20 was formed just five months later. The fact that the G20 gave everyone at the table an equal voice led to frank discussions revealing major differences of opinion between developed and developing countries on how the world economy was run.

Haves vs Have-nots

This gap between have and have-not countries, or North-South divide, became increasingly evident during international trade talks in Cancún, Mexico in 2003. The talks were aimed at lowering tariff barriers around the world to promote increased global trade. The major point of contention was between developed nations led by the United States, the European Union and Japan, and developing nations led by India, Brazil, China, South Korea and South Africa. The two blocs disagreed over the agricultural subsidies of developed nations. The Haves wanted to maintain them. The Have-nots saw them as a trade barrier that worked against them. Talks collapsed after four days.

At the time, it appeared that developing countries had more power by being able to reject an agreement that was bad for them. Over the next few years the IMF and G20 continued to meet regularly, but to little effect. American and European agricultural subsidies are still in place. According to David LaBorde, a contributor to the 2012 Global Food Policy, world food prices are high for the 5th year in a row because of severe droughts in Central Asia, Eastern Europe and the United States. That has led southern countries to push for an end to “costly and distortionary agricultural subsidies in Europe and the United States.” Still, both the US and the EU have increased their domestic agricultural subsidies. (3)

What we don’t see

As the G20 prepares for its next summit in Brisbane Australia this November (2014), agricultural subsidies are once again on the agenda. As in past summits, it’s almost certain that the media will concentrate more on security than on the substance and details of agricultural talks, which are but one point on a hefty agenda.

Already soldiers and police, with explosives-detection dogs are stopping and searching vehicles in inner Brisbane. Police officers can now legally exclude people from a large part of the city. A spokesman for the Queensland Council for Civil Liberties says that police can take photographs of anyone excluded from the downtown area, and share them with other police on duty. Terry O’Gorman says the photos will also legally be passed on to Australia’s national security service, ASIO, and the Immigration Department, and possibly even to foreign intelligence services including Russia and China. (5) Given that governments, ranging from the US and Canada, to Australia, New Zealand and the UK have all asked for increased security powers to combat terrorism, and how Russia and China have played the terrorism card to restrict liberties, the long-term implications are sobering.

Meanwhile, years of talks have failed to resolve the North-South Divide, and it seems unlikely that agricultural subsidies will be reduced, let alone lifted any time soon. The irony is that agricultural subsidies, and the increasingly sharp focus on security have one thing in common: they both undercut democracy.

Bibliography

1) O’Connor M. R., (2013) Subsidising Starvation, Foreign Policy, 11 January 2013 Retrieved Nov 6, 2014
http://www.foreignpolicy.com/articles/2013/01/11/subsidizing_starvation

2) Ibbitson J. & Perkins T., 2010, June, 28. How Canada made the G20 happen. The Globe and Mail. Retrieved Nov 8, 2014.
http://www.theglobeandmail.com/news/world/how-canada-made-the-g20-happen/article4322767/?page=all

3) Shelton P., 01 May 2013. The Hidden Costs of US and EU Farm Subsidies, International Food Policy Research Institute. Retrieved Nov 8, 2013
http://www.ifpri.org/blog/hidden-costs-us-and-eu-farm-subsidies

4) ABC News, Australia. 2014. Soldiers to man G20 checkpoints in Brisbane for searches. Retrieved Nov 8, 2013
http://www.abc.net.au/news/2014-11-03/soldiers-to-man-g20-checkpoints-in-brisbane-for-searches/5863054

5) ABC News, Australia. 2014. Concern spy services could use photos of Brisbane residents. Retrieved Nov 8, 2014
http://www.abc.net.au/news/2014-10-26/concern-spy-services-could-use-photos-of-brisbane-residents/5842446