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For Africa, G-20 Expected to Seek Greater Market Access, Growth in Trade


The search for liquidity -- countries' ability to get ahold of cash to counter the sharp financial downturn -- is expected to highlight today's opening of the G-20 summit in London. With US President Barack Obama and others promoting large economic stimulus packages, issues of protectionism are complicating the debate among the industrial countries.

Analysts say that for developing countries, it is most important to boost trading ties so that despite the fluctuations in global values of commodities and raw materials, these nations will be able to sell their goods to rich nations and trade among themselves to generate income. Economist Roger Bate of Washington's American Enterprise Institute (AEI) explains what is at stake for African countries at the London G-20 summit.

"If we're not buying the few things that they can sell well to us, it doesn't really matter how much finance there is out. They're not going to thrive. So ultimately, for poorest nations of the world, it's to ensure that protectionism does not rear its head, not only in Europe and the United States and in Japan, but more importantly, in fact, between those nations, because the highest tariff rates are between the poorest nations, and those can be easily ramped up without being reported on. So that's the kind of key policy environment I'd like to see discussed," he said.

Summit host, British Prime Minister Gordon Brown, said yesterday that because of globalization and pressures generated by the transnational mortgage crisis, a whole new world of remedies must be pursued. Economist Roger Bate says that such solutions as the realignment of financial structures will not translate down to developing countries as readily as they will be able to feel the impact of trade incentives and secure backing from the richer countries.

"Most of the sophisticated changes in the financial architecture related to the regulation of financial markets will have very little impact on those countries. Other areas in terms of financial assistance, in terms of more direct aid, particularly in the area of trade, will obviously have greater impact on those countries. And across Africa, I think the most important thing is that the African nations are able to trade among themselves, but also actually to increase their exports over the next two to three years into western countries. And trading globally into Asia as well, because if they can't do that, with the fluctuations in commodity prices, which is very difficult for African nations to manage -- and frankly, with global prices for most of these things, they can't manage the price -- it's very difficult for them to manage the process of knowing what new investments to put in place. That volatility is going to be hurting them, and I'm sure it already is. And we can't stabilize those markets very easily. So probably, the most important thing is that there is consistent support for those markets in terms of continuing to buy not just the finished products, but also the raw materials from these countries," he explained.

South Africa is the only African member of the G-20 grouping, although other countries and regional trading blocs are expected to be attending on the sidelines of the London meeting. Bate says South Africa will be representing the financial interests of the continent to a certain extent, but that as one of the more wealthy powers on the continent, they are more likely to endorse the interests of the large commodity market traders they associate with.

"South Africa will present itself as representing the interests of African nations, and to a certain extent, they will. My concern with South Africa is that they will probably join the rhetoric about how the financial crisis was caused in America and how they are blameless in this, and be asking for financial support, not necessarily in the most appropriate ways. They will be asking for increasing aid for across the continent. And I think that they may not be as positively proactive as I would like to see," he observed.

Thousands of protestors have filled the streets of London near the summit to demonstrate against poverty, unemployment, poor housing, and mistreatment of the environment, as well as the global recession. The AEI's Roger Bate, who has just returned to Washington from London, says much of the anti-G-20 rhetoric has been "senseless," and "a lot of the ranting that is going on is just incoherent." He says the challenge to summit participants is to adjust banking regulations, but resist making massive changes to the entire system of capitalism.

"If it just descends into rabble-rousing and calls for protectionist policies and the failed policies of what happened across much of the world from after the second World War until the late 1970's, then we really will be going backwards. And I think that's the biggest danger. And ultimately, that's the biggest danger for African nations, is that we always provide cover for those countries which are following failing policies for 30 years by saying, 'this is where the west should go now.' It's not that there have never been any problems with capitalism. The capitalist system has always been problematic. It is never as perfect as people have wanted it to be. But what we have is a crisis of the banking system – not a crisis of property rights structures and the rule of law that have brought the wealth to western nations and will bring wealth to African nations. And if we throw out the baby with the bathwater, that really will be a disaster," he advised.

Roger Bate denies the current crisis is a world depression. Rather, he calls it a banking crisis, which needs restructuring and significant regulatory changes to sort out the missteps and financial weaknesses. Wednesday in London, demonstrators shattered windows at the venerable Bank of Scotland as world leaders began arriving for their working sessions that begin today at the summit.

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