– GEG Annual Lecture: Why we need a new global economic order: Brazil, the BRICs and the world economy Mr. Henrique Meirelles (Governor of Brazil’s Central Bank). Tuesday 3 November 2009, Examination Schools, Oxford, 5pm. This event will be followed by a reception; to attend, please rsvp to reija.fanous@univ.ox.ac.uk –
In a time when the world is still looking for a clear and definitive solution to the largest financial crisis since the Crash of 1929, the governments of Brazil and of other emerging-market countries have been given unusual political voice in global debates. Their presidents, ministers and central bankers have become regular guests in the G7+ meetings and have become active members in the G20 – the two informal bodies expected to lead the world economy out of the current financial mess.
But what interests and ideas has Brazil been vocalizing in such fora? Can Brazil offer an effective contribution to the mammoth task of redesigning the global monetary system and financial agencies, restoring financial stability, delivering a rapid return of economic growth? Will Brazil try to search for effective answers to the current structural governance problems in the world economy or will it prefer the face-saving strategy of voicing unreal demands and expectations in order to strengthen its traditional foreign policy approach based on North-South antagonism? In that particular regard, how serious are Brazil’s pledges in favor of a debtor-friendly attitude on credit concessions by the IMF? And, can it actually work?
Serious public discussion about financial matters tends to fall prey either of too technical economic jargonning or of the empty rhetoric of government officials, politicians, and technocrats in multilateral agencies. But that is not what Henrique Meirelles’ public speeches are known for.
After a life-time career at Bank Boston, a private US institution, Mr. Meirelles had been elected for the Brazilian Chamber of Deputies right before taking the job as Brazil’s central bank governor, in January 2003. And despite governing over one of the highest real interest rates in the world for the last six years, he has now just reentered party-politics and is expected to run for office again (either for the Senate, for state governor of Goias or, some risk saying, vice-president) in next year’s general elections.
Knowing the goals and objectives of the World Bank and his sister organization the IMF regarding the developped countries and the developping countries, Brazil is one of the few to emerge from the development project and should be amazed of their position economically. The financial crisis we are experiencing is unfortunately the consequences of deregulations of the financial system by the G7;they should take responsibility of fixing the system.Brazil should pursue their role as a guest of the G-7 and not feeling too confortable where they stand for the moment.
The lesson of this global financial crisis has exposed the flaws in our current efforts to regulate the financial market. What is needed now is an agreement on how to regulate the financial market. However, this agreement should not be tailored towards the needs of financial institutions that got us in this mess, but rather an effective and coherent framework on financial institutions is needed that does not threaten the developing world; in essence the developing world should have a say in how the news rules of the game are formulated, short of that will result in nonproductive negotiations between the developed and developing world.
The story of Mr. Henrique Meirelles, interesting as it seems, surely strengthens Philip McMichael’s argument that globalization is creating a shift in the lives of local people and governments as they no longer have control over key decisions that will shape their lives. In the new world order, immense power lies with globalist politicians, execs of transnational corporations and international banks, and senior officials of international organizations (e.g. the World Bank, IMF and WTO). In leading Brazil and other developing economies out of the recent global financial crises, I would recommend that these leading actors work hand-in-hand with the grassroots level perhaps through civil society groups and local governments. This would help to prevent the sort of globalization that is alien to local people.
In addition to the traditional developed countries like the G7, the presence of emerging economics like the BRICs has become increasing prominent. So, I think they should play an important to role to fix the global monetary system. Moreover, their involvement may help to devise a fairer system since they are very familiar with the conditions of developing countries. Additionally, their expertise of economic growth should be promoted as a reference for development project in other developing countries. Finally, I strongly agree that technical economic jargon and empty rhetoric should be avoided, and more constructive ideas should come up at public discussions.
Well stated, Denis Bogere. The financial institutions (the West) created this mess and the developing world should have its say/be given the power on the matter of solutions. I would go further and on the question of Brazil offering “effective contribution to the mammoth task of redesigning the global monetary system and financial agencies, restoring financial stability, delivering a rapid return of economic growth” that alongside India and China, I think they can and should, collectively preform to a level that reflects their needs and interests. Contrary to the above stated, “face-saving strategies” and “strengthening traditional foreign policy based on North-South antagonism,” and as Denis points out, its the only way to productive negotiations between the North and South.