The industrial world through the G-8 Camp David meeting in the US last week concluded that neither pure austerity measures nor the unregulated pumping of cash resources into EU economies is the road to economic revival, both for the EU and inevitably the rest of the world economy.
Rather, the leaders of the strong-est economies and politically most powerful countries in the world opted for a strategic and appropriate combination of the two economic approaches to assist weak European economies out of the present and enduring debt crisis.
From reports in the international press it would seem that combined pressure from seven of the industrial economies, reportedly led by the US and France, forced German Chancellor Angela Merkel to compromise on the German position that only severe austerity measures could return stability to Greece and the other ailing European economies.
Indeed, after the general meeting of the G-8 forum, US President Barack Obama met with Merkel perhaps to assuage and persuade that the austerity measures being insisted upon by the Germans, without the potential for growth, will lead nowhere for the likes of Greece, Italy, Spain, Portugal and other fragile economies in the EU.
What is most interesting for developing countries and regions such as the Caribbean is the recognition by G-8 countries that the blanket economic prescriptions imposed with a vengeance on developing countries a couple decades ago by the International Monetary Fund can be counter-productive to growth and development.
Therefore, the G-8 declaration out of the Camp David meeting sees the need "to strengthen and reinvigorate our economies and to combat financial stresses, recognising that the right measures are not the same for each of us." Back in the 1970s, 1980s, with a few adjusted tag lines in the 1990s such as "adjustment with a human face," imposition of the standard IMF prescriptions as a prerequisite for borrowing purposes caused havoc in developing countries, Jamaica and T&T being two victims.
But the even more important commitment made by the G-8 countries on the weekend revolves around the assurance of assistance with the development of production capacity, investment in infrastructure, with fiscal responsibility to be sure and, most importantly, making markets truly open with fair and transparent trading rules.
It is an acknowledgement by the G-8 leaders that it is not sufficient to refinance debt, allocate large sums of financial resources to countries to engender growth without, one, assistance with the development of capacity to produce, and two, for there to be open markets for export and trade.
"We underscore the importance of open markets and a fair, strong, rules-based trading system. We will honour our commitment to refrain from protectionist measures, protect investments and pursue bilateral, plural-lateral, and multilateral efforts, consistent with and supportive of the WTO framework, to reduce barriers to trade and investment and maintain open markets. We call on the broader international community to do likewise," states the declaration.
But the G-8 leaders' statement went even further and reaffirmed "commitment to the world's poorest and most vulnerable people, and recognises the vital role of official development assistance in poverty alleviation and achieving the Millennium Development Goals."
Taking the statement at face value, governments and the private sector in the developing world must now be in great expectation that the new international economic order pleaded for in the 1970s will be given an honest chance to emerge. But there is much cynicism in the developing world and the emerging markets of the so-called Brics (Bra-zil, India, China and South Africa) about groups such as the OECD, G-8 and even the G-20 keeping to nice-sounding promises given at international conferences.
At the onset of the international recession (2008) the wider G-20 summit in April 2009 agreed to make $750 billion available to the IMF for lending to emerging market and developing countries for trade financing and the development of production capacity etc. I could not find any information on whether the promised funds to the IMF has been made available.
Making the funds available would give confidence to the developing countries that this time the industrial rich north is serious about keeping its promises to transform international economic relations. If the world economy and polity are about to be transformed, that imposes a serious responsibility on the developing world, in this case we in Caricom.
For instance, it cannot be that Caricom continues to push the full implementation of the Single Market and Economy into an unknown future. The architects of the SME premised competitive export production on the resources of the entire region being brought into pro- ductive ventures. Small regions have little choice but to bet on multilateralism.
