Developing countries and transition economies, many of which are not responsible for the crisis or can contribute to its solution will be paying for the real culprits with more poor and unemployed people, and fresh indebtedness, in exchange for promises for larger decision-making power somewhere between 2010 and 2011.
From the developing countries of the Americas two signals are to be considered. Brazil will provide US$10 billion to recapitalize the IMF, while Mexico is requesting a credit line from the Fund, on the amount of US$47 billion. A third sign to be borne in mind is the lack of a political forum enabling the Region to operate as a block more effectively than through individual countries to try and avoid the more serious consequences of the downturn and get something in exchange of footing the bill for other actors.
In turn, China – the third economy of the world – is becoming a stronger decision-maker, and demanding a seat in the small table. In exchange, it is prepared to provide more resources to revitalize the global economy, while maintaining its new de facto trade leadership strategy through bilateral and regional agreements and swaps.
During the last three months, the Asian giant has signed six swap agreements totaling over US$100 billion, become a member country of the Inter-American Development Bank and led the claims for a reform of IMF conditionality and voting powers (China has only 3.67 percent voting power, while United States has 16.83 percent).
The industrial and not-so-industrial nations put the blame for the crisis on the United States, which contend American consumption cannot be the only growth engine, and drew the world during the recent upswing. However, this crisis shows many shared responsibilities and guilts.
The current crisis was the most predictable one in recent history. All too many warnings were uttered about growth rates unsustainability and about the storm in the offing. However, as remarked to a reporter by Charles Prince, President and Director General of Citigroup in early July, 2007, "as long as the music is playing, you've got to get up and dance". This is as valid for the private sector as for the public sector.
However, the crisis roots are now relatively irrelevant, save, at most, to avoid them in the future. Even that is questionable, since the talk is about designing new rules and institutions that reduce systemic risks, "without imposing unnecessary burdens and stifling innovation".
The urgent job, in London, at this stage, was stopping the fall.
Meanwhile, an economic and monetary debate – almost a monetary war – has been staged around the crisis. Some world leaders mention a new economic order; other leaders foresee a new multipolar world order.
Since early March, a series of obstacles dotted the road to the London summit. This was particularly apparent in terms of immediate measures, with the US demanding large fiscal stimuli measures and rejecting the idea of creating a super-regulator, while the EU opposed the idea of injecting public monies in the economy, and only stressed added domestic and international regulation and supervision.
Other debates, also significant, surfaced, on the role of China in the decision table; the urgent financial needs of some emerging economies and developing countries, fiscal havens, and the reform of the multilateral credit agencies.
