With stock markets in almost free fall, blue chip companies losing value and customers, workers being laid off in the millions in the United States and Europe, world leaders and bankers have been scrambling to halt the slide in global economic markets even as some experts are warning that darker days are ahead.

CLAUDE ROBINSON

In these circumstances it is understandable that the focus has been on the urgent need to fix the world's larger economies because of their global impact, praticularly on developing countries like Jamaica.

As President Luis Inacio Lula daSilva of Brazil told the leaders of the rich nations at the G-20 Summit in Washington recently: "We are not asking for assistance; we are not asking for you to give us funds. What we want you to do is to fix your own economies. The best thing you can do for us is to return to growth."

That's according to a New York Times account from people at the state dinner hosted for the leaders by outgoing US president George W Bush.

American and European political leaders are pouring truckloads of cash into ailing banks and manufacturing industries in the hope that the recession will not be very long or very deep, and that a turnaround should be evident by 2010.

But it is not a sure bet. Indeed, US President-elect Barack Obama has told Americans bluntly-on the eve of Thanksgiving indulgences last Thursday-that things will get worse before they get better.

Once they figure out whether the bailouts and rescue operations are delivering the expected results there are the long-term issues to be addressed. What is required is a comprehensive reconstruction of the global financial and economic architecture set in place more than six decades ago.

Any new arrangement must reduce the risk of repeating the same mistakes and deliver greater equity within and between nations.
The world of unregulated free markets and unchecked greed, promoted by the Washington Consensus after the collapse of the Soviet Union and championed by President Bush and friends over the past eight years, has come to an end. So too has America's unrivalled hegemony.

A New York Times account of the seating plan for Mr Bush's state dinner, November 16 illustrates the change.

"There, in the State Dining Room beneath a massive portrait of Abraham Lincoln, to Mr Bush's right was President Luiz Inácio Lula da Silva of Brazil, who has complained loudly that developing nations like his were being "infected with problems" not of their making. To Mr Bush's left sat a leader with a fat check book and the power that comes with it, President Hu Jintao of China.

"It was a startling illustration of the way the financial crisis, which originated on Wall Street and has spread around the globe, has remade the international economic world order", the paper concluded.

A NEW INTERNATIONAL ECONOMIC ORDER

There's no doubt we are in a new order although the contours and leadership are not yet clear. This may begin to take shape when the G-20 meets again in April, with Mr Obama as the United States president.

Developing countries have a huge stake in ensuring that their voices are heard in the new debate and their interests protected in the expected reforms of the international financial institutions which impact our economies in fundamental ways and over which we have little control. That's because governance of these institutions has been the exclusive preserve of the United States and Western Europe.

Developing countries have long complained about the western dominance of these institutions from back in the 1970s when our own Michael Manley was in the forefront of progressive Third World nations calling for a new international economic order that would be democratic in structure and fair in outcomes.

The call then was for better terms of trade, more equitable access to capital and democratic participation in global institutions. The results are well known as the calls went unheeded. There now seems to be an opportunity for new thinking and there may be some cause for cautious optimism.

For starters, the influence of the wider G-20 group of nations is a step in the right direction as was pointed out in an Observer editorial a week ago.

First, the inclusion of emerging global economic players like Brazil, India, China and South Africa in what used to be an exclusive white trans-Atlantic club "signals an end to the antiquated international governance system embedded" in the International Monetary Fund (IMF), the World Bank and the World Trade Organisation (WTO).
Reform of the governance of the IMF and World Bank will formally give more voting representation to the BRIC (Brazil, Russia, India and China) and developing countries.

But it is critical that something be done to help the majority of countries like Jamaica that had no seat at the table in Washington, the more than 100 small and poor developing countries whose economies are the most vulnerable to unfavourable external developments.

Against that background, we are disappointed about the lack of clarity and urgency from the Bruce Golding administration either on how it will respond to the present crisis or the alliance it will have to seek to protect Jamaica's interest in the longer-term refashioning of the global economic system.

The government seems to be speaking out of different sides of its mouth with Audley Shaw, the Minister of Finance and the Public service sending one message while Labour Minister Pearnel Charles and Dwight Nelson, Mr Shaw's colleague at Finance, seem to be sending another. And Tourism Minister Ed Bartlett is demonstrably less joyful these days.

Mr Charles and Mr Nelson, as experienced trade unionists, are concerned about the impact on workers and the real prospects of lay-offs in the tourism sector and redundancies elsewhere. The ever proactive Mr Charles convened a meeting with business leaders and trade unionists to at least, begin sober assessment of what is at stake.

Meanwhile, in a national broadcast last Sunday night Mr Shaw reaffirmed his position of September that there was no cause for alarm. The financial institutions are "fundamentally strong" and the banking sector, "subject to strict Central Bank supervision, has remained resilient". Maybe.

We did not hear how he proposes to plug the US $250 million hole he identified in the 2008/2009 budget. Nor did he address how he proposes to stimulate an economy which, according to the latest data from the PIOJ, is slowing down and which could worsen in light of the gloomy forecasts from the hotel interests who were making calls for additional incentives last week.

The agency cited Jamaica's "modest and deteriorating" international liquidity, large current account deficit and comparatively high public debt burden as factors in the decision.

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