What was most noticeable about the final communiqué issued at the end of the G20 summit that took place in London was the repetition of the terms ‘supervision’ and ‘restructure’. It indicates that the financial crisis that has engulfed the world was caused by a lack of [financial] supervision and regulation.
We know about a few of the causes of considerable financial losses such as the embezzlement of billions and mismanagement, which led to the evaporation of state and institutional funds in an unprecedented manner, to the extent that the concept of self-monitoring and the fallacy that markets would correct themselves were refuted.
Despite the optimism amongst markets and observers following the historical G20 summit in London, we still do not know whether we have gotten through the worst of the financial crisis or whether worse is yet to come, especially as some financial sectors are still at risk. In fact it is strange that some of these sectors have not collapsed already, for example the credit card sector.
In light of the statement’s repetition of ‘supervision’ and ‘restructure,’ which of course means reform, the question here is: if financial supervision and reform apply to the field of finance, then what about politics? How does the political field relate to it?
This is the crux of the matter; the G20 summit agreed to contribute approximately 1 trillion dollars to support trade finance and to help ensure stability and restore credit and growth. Let us think about which country – a country that concerns us of course – will be the first to rush to the IMF to ask for financial help.
The answer is Pakistan. The question in this case is: must the international community, or the donor countries, help towards ending the crisis in Pakistan or does its role comprise of providing funding, whereby financial aid merely becomes an attritional practice?
Along with the necessity of providing financial aid, whether to countries whose economies have lagged behind or to crisis-stricken areas, real political endeavors must be made to end the conflicts and crises, or at least to curtail them. What we are seeing today is merely the process of providing crises with funding.
With regards to the Arab-Israeli conflict, does it make sense that Israel wreaks havoc only for everybody to rush to rebuild what Israel destroys every two or three years? With respect to our region, is it right that groups or individuals gamble with our security and embroil us in wars and then come to our rescue?
We provide funding with no questions asked either due to blackmail or to score points against others, all at the expense of those who really deserve funding in search of a better education or work opportunities.
Political stability is a fundamental part of economic prosperity and sustainable development; therefore, instead of providing funding to finance solutions to crises, political solutions must make funding and financial aid a factor to end and solve conflicts.
The best example is Pakistan; it does not make sense to provide aid considering the continuation of political tension as a result of shortsightedness and political disputes whilst corruption permeates the whole Pakistani state.
In short, there must be real political efforts to end the conflicts instead of funding them as part of an attritional practice, which is no less dangerous to what the financial crisis afflicted upon us as a result of clear mismanagement and a lack of supervision.