Wednesday, April 01, 2009

G20, SEIZE THE OPPORTUNITY TO TRANSFORM GLOBAL FINANCES!

The World Council of Churches (WCC), has come out strongly to challenge the leaders of th G20 to fundamentally transform the global financial system. As I watched the powerful demonstrations, bringing London to a standstill, I told my wife: we are seeing a revolution towards a new world. The current bankrupt system, which only benefits the top dogs, need a total overhaul. Governments cannot simply pump public funds into the bonusses of greedy bankers and private entities, at the expense of job creation, social spending and sustainable co-existance.


The World Council of Churches, released the following statement:

The current global financial crisis must be more than just an occasion for "short term financial bail out actions." It must be viewed as an opportunity to seek "long term transformation based on sound ethical and moral principles". As a result, a "new financial architecture" should be developed "under the aegis of the United Nations where broad participation of all countries and the civil society could take place".

This is, in a nutshell, the proposal made by the World Council of Churches general secretary Samuel Kobia in a 27 March letter to UK Prime Minister Gordon Brown ahead of the G20 summit which takes place on 2 April in London. Brown holds the rotating presidency of the G20, an informal grouping of nations that includes the group of eight the most developed countries (the "G8") and a number of emerging economic powers.

In his letter, Kobia makes the case for "radical changes" in view of a "drastic transformation" of global finances, aware of the fact that this goal would take "brave and new measures". Welcoming the idea of a "global charter for sustainable economic activity" proposed by Germany's Chancellor Angela Merkel and Holland's Prime Minister Jan Peter Balkenende, Kobia suggests 12 concrete proposals for the debate.

According to Kobia, values such as "honesty, social justice and dignity for all" need to be at the centre of a new financial architecture; in addition, mechanisms able to curb "greed [as] the basis for economic growth" are needed. Only in this way will the "moral and ethical dimensions" of the crisis be taken into account.

Setting the financial crisis in a broader context, the WCC general secretary states that "churches believe that fighting global poverty, the food crisis and climate change should be given the same attention" as salvaging institutions from the financial meltdown.


The letter of Rev Dr Sam Kobia:


 

The Rt Hon Gordon Brown MP
United Kingdom

Your Excellency,

The World Council of Churches (WCC) has been observing with deep concern the current global financial and economic crisis that has led to increased unemployment, indebtedness and poverty world wide.

At the outset, the WCC considers this crisis as not merely a financial and economic one but as a crisis that has moral and ethical dimensions that have slowly been eroding our societies over a period of time. We are witnessing an era when greed has become the basis for economic growth. It is therefore necessary, in the understanding of the churches, to go beyond short term financial bail out actions and to seek long term transformation based on sound ethical and moral principles which will govern a new financial architecture. The WCC has been expressing its concern on this since 1984, when it had issued a call for a new international financial order based on ethical principles and social justice.

We believe it is time, once again, for such a transformation of the financial and economic systems based on values of honesty, social justice and dignity for all. While I appreciate the prompt actions taken by the G20 beginning with its meeting in Washington D.C. in November 2008 to salvage the system and prevent it from collapse, we would like to raise issues that need to be taken into account in transforming the current system.

As noted by some G20 leaders this crisis has provided us with an opportunity to analyse collectively how to come up with a system that is not only sustainable but that is just and ethical. Governments are indicating that they will act decisively to stimulate global demand and to preserve the stability of the financial sector. It looks like a complete meltdown of the financial system has been prevented as noted recently by Hon. Angela Merkel, the Chancellor of Germany and Hon. Jan Peter Balkenende, the Prime Minister of the Netherlands.

Our concern is that, there is need to go beyond preventing the short term collapse of the system. What we need are brave and new measures to correct this unjust and unethical system in order to prevent such a crisis from occurring once again in the future. We believe that current financial and economic institutions need drastic transformation to avoid a repeat.

It is possible today to push for radical changes because international opinion and the commitment to cooperation are favourable. There is a spirit of shared responsibility. However, for such a transformation to be successful and sustainable, this debate should become part of the agenda of the United Nations where all countries are participants.

We do support the view that apart from the discussion on how to bring our economies back into a robust growth path, the challenge to be faced at the April G20 meeting is to build a new financial architecture that meets 21st century requirements. The need of the hour is to construct a system in which market forces are checked through ethical regulations and oversight, but also by a framework of common values that sets clear limits to excessive and irresponsible actions based on greed.

We welcome and consider significant the proposal of Hon. Merkel and Hon. Balkenende for a global charter for sustainable Economic Activity, aimed at developing a single framework relying on the unfolding of market forces but striving to ensure a stable, socially balanced, and sustainable development of the global economy. To this we add the need to ensure that this charter is grounded on ethical principles and that it is formulated on a participatory basis involving all countries in the United Nations.

But more importantly, the churches believe that fighting global poverty, the food crisis and climate change should be given the same attention as salvaging the financial meltdown.

Based on the above, allow me to outline, on behalf of the churches, some proposals for the G20 to take into consideration at the London meeting in April as well as at the UN General Assembly in May 2009.

  1. That this crisis is an opportunity for the international community to create a new financial architecture to be developed under the aegis of the United Nations where broad participation of all countries and the civil society could take place. The G20 discussion should therefore prepare the way for a fuller discussion at the May UN General Assembly debate on the issue.
  2. Set a process for democratization of all global finance and trade institutions.
  3. Deter destabilizing currency speculation by transforming and strengthening regulatory institutions.
  4. Develop a practice of ethics and social justice that can guide financial markets in the world.
  5. Establish international, permanent and binding mechanisms of control over capital flows and capital flight.
  6. Implement an international monetary system based on a new system of reserves, including the creation of regional reserve currencies in order to end the current supremacy of the US dollar and to ensure international financial stability.
  7. Prohibit hedge funds and over the counter markets, where derivatives and other toxic products are exchanged, without public control.
  8. Eradicate speculation on commodities, primarily on food and energy, by creating public mechanisms that will monitor speculative behaviour.
  9. Dismantle tax havens, bring the users to justice (individuals, companies, banks and financial intermediaries) and create an international tax organization to combat tax competition and evasion.
  10. Establish a new international system of wealth sharing by creating a system of global taxes (on financial transactions, polluting activities and high income) to finance global public goods.
  11. Cancel illegitimate debt and address unsustainable debts of impoverished countries and establish a system of democratic, accountable, fair sovereign borrowing and lending that serves sustainable and equitable development.
  12. Ensure that this crisis will not lead to the reduction of the Official Development Aid (ODA) to poor countries, nor adversely affect the Millenium Development Goals.

The essence of a new global financial architecture should be to connect finance and real economy.

It is my hope that you will take these important proposals into your deliberations and that your meeting will also not only invite emerging market countries but poor countries as well since they are even more deeply impacted by the crisis. We shall appreciate to receive a response as to how our proposals were taken into account.

We offer you our prayers for a successful and constructive meeting.

Yours sincerely,

Rev. Dr Samuel Kobia
General Secretary

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