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<h1><b>Responses from the South to the World Economic
Crisis</b></h1><font size=3>
<a href="http://www.venezuelanalysis.com/analysis/3879" eudora="autourl">
http://www.venezuelanalysis.com/analysis/3879<br><br>
</a>October 16th 2008, by Various Authors <br>
The International Conference on Political Economy: Responses from the
South to the World Economic Crisis took place in Caracas, Venezuela from
October 8-11, 2008, and was attended by academics and researchers from
Argentina, Australia, Belgium, Canada, Chile, China, South Korea, Cuba,
Ecuador, Spain, the United States, the Philippines, France, England,
Mexico, Peru, Uruguay, and Venezuela. <br><br>
The conference promoted a broad debate about the current economic and
financial situation of the world, and about the new perspectives and
challenges of the governments of southern peoples in the face of the
international crisis. <br><br>
The situation has worsened in the last few weeks. After repeated crises
in the financial markets of a few central countries, it has quickly
converted into an international crisis of enormous proportions. This
places the countries of the South in a compromised position.<br><br>
The crisis threatens the real economy. If energetic, effective, and
immediate actions are not taken, it could bring overwhelming punishments
upon the people of the world, particularly the sectors that are already
the most vulnerable and left behind. <br><br>
Today, the vulnerability of currencies, financial imbalances, and grave
recessions reveal the neo-liberal myth about the benefits of market
deregulation and the solidity and trustworthiness of the existing
financial institutions, and they seriously put into question the
foundation of the capitalist system.<br><br>
The contributions presented during this conference have put into
perspective the process of the crisis as it unraveled since August 2007,
and the failure of the concessions, bailout packages, and bribes by way
of state intervention in developed capitalist countries, measures which
aim to save the remnants of an already dislocated world financial
system.<br><br>
We denounce the pretension to take on our shoulders the cost of financial
bailout packages on the collective world system, which would worsen the
situation of poverty, unemployment, and exploitation of workers and the
people of the world.<br><br>
Neither the gigantic state intervention that we have observed in the last
few weeks to save disarticulated entities emptied by speculation, nor the
massive increase in the public debt are plausible alternatives to solve
the crisis. The current dynamic encourages a new round of concentration
of capital, and if firm opposition from the people does not exist, the
perverse restructuring which saves only the privileged sectors will be
emphasized even more. <br><br>
That could also bring the return of the dangerous authoritarian
tendencies in the functioning of capitalism, a regressive sign of which
is already apparent in the increase in discrimination and racism toward
the immigrant population from southern countries in countries of the
North. <br><br>
If we maintain the current policies for restructuring the capitalist
system, there will be enormous productive and social costs that could
threaten environmental sustainability even more. <br><br>
The need to re-construct the international economic and financial
architecture is unavoidable today. With this perspective, the need for a
post-capitalist outlet is evident, and Venezuela has named it Socialism
of the Twenty-First Century.<br><br>
In a critical moment such as this, national and regional policies should
give priority to social spending and protect natural and productive
resources. Governments should introduce urgent financial regulation
measures to protect savings, stimulate production, and place immediate
controls on currency exchange and the movement of capital.<br><br>
Considering this, it will be crucial to develop regional complementation
and balanced commercial integration, improving our industrial,
agricultural, energy, and infrastructure capacity. Initiatives such as
[the Bolivarian Alternative for the Americas] ALBA and the Bank of the
South should expand their radius of action and consolidate their
perspective.<br><br>
We should move toward an alternative integration that includes a common
currency, a new world financial architecture that makes viable the
insertion of the South in the international division of labor. <br><br>
In this context, we must give importance to proposals for a social
economy that promote dignified work and local initiatives to deal with
the impact of the crisis.<br><br>
On a global scale, we must continue our demands for a profound reform of
the international monetary system, which implies the defense of savings
and the channeling of investments toward the prioritized needs of the
people. It should break from the system that mainly benefits from
speculation, deepens economic disparities, and punishes the most
vulnerable people. <br><br>
In this way, we must create new foundations for new economic institutions
that have the authority to act against the anarchy of speculation. State
interventions that challenge the fundamentals of the market and protect
the finances of the affected people are indispensable. <br><br>
The crisis has awakened the common interests of people from all nations.
Building upon this analysis, the International Conference on Political
Economy: Responses from the South to the World Economic Crisis has
arrived at the following conclusions:<br><br>
<b>Conclusions and Recommendations<br><br>
</b>We start with the following characterization of the international
economic situation:<br><br>
We find ourselves in an unprecedented situation on a worldwide level. The
economic and financial crisis has worsened and accelerated enormously in
recent days. Its future development, in addition to being difficult to
predict, can take dramatic turns day by day.<br><br>
The crisis had its initial epicenter in the United States and the stock
markets, but now it is a worldwide crisis that affects the entire
financial system and increasingly contaminates the productive apparatus.
The crisis is having a special impact on Eastern and Western
Europe.<br><br>
Despite the initial expectation that Latin America was armor-plated and
would be able to remain outside the crisis, there are now decisive
indications of the certainty of coming impacts. Not only can we expect
the prolonged deterioration of international commerce, but also a very
violent financial shock in the short term. The more internationalized the
banking system, the greater the fragility.<br><br>
When we make these suggestions, we are conscious of the fact that there
are always winners and losers in crises. Our intention is to institute
measures that guarantee the well-being and the rights of our peoples and
of the collective of citizens, and not to come to the aid of the bankers
who are responsible for the crisis, as is occurring in Europe and in the
United States.<br><br>
Within this new scenario, we consider the following recommendations to be
necessary, and they should be implemented urgently by the highest levels
of political power. <br><br>
With this purpose, we should consider an extraordinary summit of all the
presidents of Latin America and the Caribbean, or at least of [the Union
of South American Nations] UNASUR, which is presided over by a broad
popular movement of our peoples.<br><br>
<b>The Banking System<br><br>
</b>Facing the collapse of the international financial system,
governments in the region should immediately take custody of the banking
systems by way of control, intervention, or nationalization without
indemnity, following the principle of the new constitution of Ecuador
that prohibits the nationalization of private debt (Article 290 says:
"the nationalization of private debt is prohibited").<br><br>
The function of these measures is to prevent capital flight to the
exterior, a run on the currency, the transfer of bank assets to foreign
banks, and the freezing of credit by banks that do not lend the funds
they receive.<br><br>
Offshore branches of the banking system in each country must be shut
down. They constitute a dangerous shield against fiscal regulation in
these circumstances, in which limited liquidity will provoke a siphoning
effect from the periphery.<br><br>
Bank accounting should be opened to the public in order to strengthen the
supervision of banks and the mechanisms of strict regulation that make
the real situation of the national banking systems more transparent.
These systems should have the character of a public service, as
depositories of the savings of the population. <br><br>
These measures should guarantee a minimum national investment of the
liquid assets of the system.<br><br>
We should encourage the promotion of non-profit investments in local
development in the territory where the banking entity is located,
administered by the local populations.<br><br>
In the case of intervention, the state should recuperate the cost of the
bailout with the assets of the banks, and the state should have the right
to regulate the assets of the stockholders and the
administrators.<br><br>
<b>New Financial Architecture<br><br>
</b>The absence of coordinated monetary policies produces a war of
"competitive devaluation" that worsens the crisis and unleashes
rivalries among our economies, impeding a coordinated response of the
region. It structurally threatens integration initiatives such as UNASUR.
<br><br>
Because of this, we should give a clear signal of a Latin American
monetary accord that immediately opens additional possibilities for
reinforcing our macro-economies. <br><br>
By defining a system of compensation payments based on a basket of Latin
American currencies, we would provide each country with additional means
of liquidity that would permit us to divest from the logic of the dollar
in crisis.<br><br>
In the context of constructing institutions for the reinforcement of our
economies, it is required that we increase the communication among
central banks, overcoming neo-liberal dogmatism with a much more
efficient and opportune management of our international
reserves.<br><br>
With regard to this, it is important to move forward on the proposal for
a Common Fund of the South as an alternative to the [International
Monetary Fund] IMF, with contingent funds available for fiscal
emergencies.<br><br>
Taking advantage of the surplus reserves of each country, brought about
by the creation of new sources of loans, liquidity, and regional money
circulation, and by the existence of the Common Fund of the South, we
will be able to mobilize resources to immediately put into operation the
Bank of the South, ensuring its democratic management and not reproducing
the logic of the multilateral credit and finance organizations.<br><br>
This bank should be the heart of the transformation of the existing
network of Latin American investment banks, oriented toward the
reconstruction of the productive apparatus based on fundamental human
rights.<br><br>
We understand all of this to be in line with the Quito Declaration of
Ministers from May 3rd, 2008, which states: "The people gave their
governments the mandate to equip the region with new instruments of
integration and development that should be based on democracy,
transparency, participation, and responsibility to their
electors."<br><br>
In order to be democratic, the Bank of the South must guarantee the
principle of one country, one vote.<br><br>
It is indispensable that currency exchange controls be ratified in the
countries that have them and established in the countries that do not,
with the purpose of protecting the reserves and impeding capital
flight.<br><br>
In the context of the suspension of credit lines that the international
financial crisis has imposed, countries in the region are forced to
consider the suspension of payments of the public debt. This measure is
aimed at temporarily protecting sovereign resources threatened by the
crisis and avoiding the emptying of countries' treasuries.<br><br>
Latin America and the Caribbean should learn from what is occurring in
Europe, where each country is trying to solve the crisis on its own. This
requires that we empower the mechanisms of alternative integration and
development in the region.<br><br>
<b>Social Emergency<br><br>
</b>We propose the creation of a Regional Fund for Social Emergencies to
immediately assure food and energy sovereignty, and also to attend to the
severe problem of migrations and cutbacks in remittances. This fund could
function as part of the Bank of the South or the Bank of ALBA.<br><br>
Following the principle of not aiding the bankers who are responsible for
the crisis, and instead aiding our peoples, social spending should be
maintained and anticipated in public budgets, and incremented amidst the
imminent effects of the international crisis on our peoples. The
priorities should be: Job security, universal income, public health and
education, and housing.<br><br>
We must establish anti-inflationary mechanisms, including price controls,
which preserve, increase, and redistribute incomes and wealth.<br><br>
<b>International Financial Institutions<br><br>
</b>The international financial crisis has brought proof of the
complicity of the IMF, World Bank, and Inter-American Development Bank
with the transnational bankers that have provoked the current collapse
and its terrible social consequences.<br><br>
That these organisms have been discredited is evident. This is an
opportunity for the countries in the region to follow the example of
Bolivia by pulling out of the [International Council of Investment
Arbitration] CIADI, and follow the example of Venezuela by pulling out of
the IMF and World Bank, and begin to help construct a new international
financial architecture. <br><br>
We summon ourselves to the Second International Conference on Political
Economy: Responses from the South to the World Economic Crisis, to take
place in Caracas in the first quarter of the year 2009.<br><br>
Caracas, October 11, 2008.<br><br>
<i>Translated by James Suggett<br><br>
<br><br>
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