The recently concluded Seoul G-20 summit revealed that differences between various imperialist powers are rapidly developing into belligerent contradictions.
The summit was expected to find some interim solutions to the currency crisis and to the crisis in the Eurozone, but nothing of that sort happened.
The two principal protagonists of the currency crisis, China and the US, could not reach any compromise on currency rates. The US Federal Reserve’s announcement that it will undertake a further $600 billion of “quantitative easing”, a process of paying back long-term government bonds by printing more money, widened the differences between the two powers even more. The US Federal Reserve gave the justification that this will help to bring down long-term interest rates and boost investment. The short-term rates in the US are already at near zero levels. But other countries, particularly China, opposed this quantitative easing. They felt that this move will depreciate the dollar further, affecting those powers having huge dollar reserves. So, apart from vague pronouncements that they will take action to ensure more balanced growth, the G-20 powers decided to ignore the most contentious issues that are threatening to blow up into a full-fledged currency war on a global scale, for the time being. But they cannot look right through these issues forever. China has a trade surplus of about $300 bn, Japan around $130 bn and Germany about $100 bn. The US has a balancing trade deficit of $380 bn. The G-20 also failed to bring about any consensus between the European powers on how to handle the crisis in the Eurozone. Greece has already accepted debilitating restrictions on its sovereignty after being bailed out by IMF. Iceland is in bankruptcy and Ireland is on the verge of bankruptcy. Portugal and Spain are next in the line with severe balance of payments problems. There has been pressure from Germany, which is the most dominant state in the Eurozone, on other members of the European Union to cut down their deficits by cutting down on health and other social expenditures. There have been huge rallies and protest demonstrations in France against the raising of the age of retirement and other pension reforms. In this scenario where the G-20 could not find any immediate solution to this growing belligerence between the imperialist powers, the Indian Prime Minister Manmohan Singh characterised the struggle between surplus and deficit countries as a struggle for power and suggested that India should play a more important role to sort out matters. With a fast growing economy and a huge market, the Indian ruling class has been inviting both the surplus and deficit imperialist powers to invest in India and jointly share the spoils of exploiting the natural resources and cheap labour available here. So, all the imperialist powers vied with each other in the G-20 summit to get one up on their rivals. No solutions were in sight because bailing out big business, printing more money and depreciating one’s currency, only fuelled the global crisis further. Here at home, we have to oppose the plans of the ruling class to use the vast resources and labour of the Indian people to forge ahead with their imperialist aims. The offer of the Prime Minister to other powers to invest in India and exploit the Indian people to the bone, is not in our interest and should be sternly opposed.