In the context of the continuing global economic crisis, two summits of the world's leading capitalist countries were held in quick succession in end-June of this year in Canada - the G8 on June 24-25 and the G20 on June 26-27.
The G8, which originated in 1975 as a group of 5 countries and later expanded to include 3 more, consists of the U.S, Canada, U.K, France, Germany, Italy, Russia and Japan. The G20 was established in 1999, in the wake of the 1997 Asian Financial Crisis, to bring together major advanced and emerging economies, including China and India, to "stabilize" the global financial market. The G20 members have been meeting more often in recent times, in an attempt to agree on fiscal and monetary measures that will help prop up the capitalist system in each country and on the world scale.
The announcement in April that the G8 summit would be immediately followed by the G20 summit was based on an uneasy agreement reached among the leaders of the G8 to make the Group of 20 the main international body addressing global economic conditions. There was good reason why some, like the US, pushed the proposition that hereafter it would be the G20 that will be the main international body addressing global economic conditions - they were hoping for support for their stand from countries outside of those most affected by the crisis.
The real crux of the matter is that the inter-imperialist contradictions are intensifying. Already existing differences in setting interest rates, currency exchange rates, import duties and subsidies, etc by each country have become more acute in the wake of the current severe crisis and in the absence of concrete signs of recovery. In such a situation, the positions of some of the G8 countries appeared to be getting more and more inflexible; it was evident in the months running up to the G8 Summit that they are unable to come to an agreement on the steps to be taken to stall the downturn in the global economy and push it towards recovery.
On the one hand, the US wants to continue the ‘stimulus’ – meaning schemes to transfer more and more money from the government budget to the big banks and monopoly companies. On the other hand, the Europeans, with Germany in the lead, want to cut back on government spending for fear of inflation and another outbreak of the recent debt crisis that hit Greece and sent waves of shock and fear across Europe and the Atlantic. On the eve of the Summit, the US government indirectly chastised the European plan to cut back on their deficit financing and argued that countries like Germany and China whose economies are relatively stronger at this point, must not “undercut the momentum of the recovery”.
The US is the only state that never bothers about high deficits and borrowing thanks to the hegemony of the Dollar as the preferred currency of international trade and credit. The US imperialists are using this advantage to shift the burden of the crisis on others, which is being resisted by Germany and some other European imperialist powers.
Further to the budget deficit issue is that of a universal levy on banks. Britain, France and Germany argued for the proposal that a global tax on banks would curb the type of excessive financial risk-taking that pushed the global economy to the brink. But the idea was opposed not only by the US but also by Japan and Canada within the G8.
Yet another point of conflict was the proposal to introduce rules to make banks increase their capital holdings in order to better withstand future financial turbulence. Having strengthened and consolidated its major banks, through a series of mergers and government-funded bailouts, the US has been pushing for the new rules to apply by the end of 2012. But European governments, whose banks remain severely weakened as a result of the losses incurred in the financial crisis want to slow the process down. They fear that if the new rules are introduced too rapidly, stronger American banks will make further inroads into European markets. Consequently, European governments have been pushing for a delay in accepting this proposal.
The contradictions being the most severe among the G8 countries, especially between the US and Germany, the former pushed for the larger group of G20 to sort out the issues. The US believes that it can find more support from China, India and Brazil than from member countries of the G8! It is a fact that governments such as Argentina and Brazil are worried that budget cuts in rich countries would hurt their export-dependent economies and so at this time, their position is more in agreement with the US than the European stand. The Indian bourgeoisie is eager to take advantage of its relative strength in the global context and has set rapid capitalist growth as its top priority, and is also opposed to any taxing of banks. India is thus acting as a useful ally for the US.
Moving from the G8 to G20, however, did not resolve the contradictions between the most advanced capitalist governments, while it did give the US a little more power to push its position. A former G20 negotiator under the Bush administration pointed to the growing divergences among the major powers, observing that “Before this no other G20 summit has had so many leaders writing so many letters seeking to shift attention to other countries’ shortcomings.”
The final communiqué of the Summit clearly reflected the absence of a solution to the main conflict. It called for governments to halve their budget deficits by 2013 and for the ratio of national debt to gross domestic product to be stabilised by 2016. This was seen as a win for Germany and other countries backing deficit reduction. But the document made it clear that these targets were not binding and, in a concession to the US, expressed the hope that governments would follow “growth-friendly fiscal consolidation plans”.
These developments reveal the major contradictions of the imperialist system, which have been aggravated by the crisis. Side by side with the contradictions between the exploiters and the exploited within each country, and between the imperialist powers and dominated nations and peoples, the contradictions among the imperialists are also intensifying, notwithstanding claims of "shared vision" and "continued cooperation".