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PARIS COUNCIL: global economy - climate change - resolution of conflicts

15-16 November 2010

Speech by Prime Minister George Papandreou, President of the Socialist International
at the Council meeting of the Socialist International, Paris, 15 November 2010

Merci beaucoup. Chers amis, tout d’abord je voudrais remercier le parti socialiste français et sa première secrétaire Martine Aubry pour avoir pris l’ initiative et organiser ce Conseil de l’ Internationale Socialiste à Paris. Le peuple français a une longue histoire au sein de l’ Internationale Socialiste : Pierre Mauroy, durant ta présidence tu as contribué énormément à notre organisation. Et aujourd’hui continue engagement actif et continus à nos initiatives. Maintenant permettez-moi chers camarades de continuer mon intervention en anglais.
Thank you Martine as well as the other peers for your public support to our candidate in Athens, Yiorgos Kaminis, who was a candidate supported by a wide coalition of progressive, socialist and green forces and of course, I am proud to inform you that he did win the Mayorship of Athens after 28 years of rule of the Conservatives.

Let me also thank the Secretary General of the Organisation for Economic Cooperation and Development, Angel Gurria, for giving us the opportunity to organize our Council here. I’d like to congratulate Angel for his unanimous reappointment as Secretary General, I wish him a successful new term and also congratulate him for his statement today and what he has said today in the G20. He plays an important role in our collective effort for global economic recovery, development and social justice. And the OECD’s engagement with emerging economies has reinforced his global relevance and role in the G20 process.

Of course, we are meeting here in Paris, just after the G20 meeting in Seoul and just before France assumes the G20 presidency for 2011. So, our movement is meeting here at an important historical junction: 65 years after the United States first took up its global role and 20 years after the end of the Cold War, a new multi-colder war has emerged in which the US is prominent and no longer unique in its power. Meanwhile, markets, especially capital markets have used the weakening of state authority and the participation of financial market power in a few key capitals around the world to reap great profits. The lessons of 2008 and 2009 are that without strong public regulation and oversight, without this strong oversight, this new concentrated power of markets will create new risks to the foundations of stability and, to democracy itself.

Seoul, the G20 meeting marks the start of a new sort of negotiation between finance capital and democratic government. One that may herald a new configuration of economic power among states. Where does this negotiation take us?

During the French Presidency many important issues will be on the G20 agenda. Real, not talking reform of the international monetary system and the IMF. Stabilisation of the commodity prices, especially those driven by speculators and not demand, have enormous systemic importance, a new democratically agreed arrangement to solve dwelling imbalances including public debt, deficits, surpluses, currencies and a world of private economic forces in creating them. I should and I would underscore here that solutions to these issues of global imbalances and inequalities must include, and this is our belief here in Social International, issues such as labour protection, collective bargaining, women’s and minority rights, support for the unemployed, thank you Angel for what you have said, protection of existing social safety networks as well as their expansion worldwide as well as social strategies for poverty reduction as a major framework for the G20 meetings.

We need urgent attention to reform our global governance system, create new global standards, governing global capital bur also economic as well as political rights for all citizens of the world. Otherwise, global leaders will face and, deserve it, criticism of billions of people across this planet.

During the last few years, the Socialist International has played an active part in bring all these issues to the forefront of the global agenda. Our parties and our organisation are active and continue to work with other organisations on these issues. The principles, democracy, social justice, sustainable and green development; these principles guide us to create tools, to shape policies. We are capable of addressing new challenges and complexities of a globalised economy. And the values we hold dear to us, those are democracy, equality, justice and sustainable development. They may be self-evident to us but they are in no way guaranteed without our constant and energetic fight to defend them. On the contrary, they are in peril.

In 2008, the great recession sent financial and economic shockwaves around the world. And these shockwaves unjustly hit pensions, creating huge unemployment, reinforced illegal migration, hiding racism and xenophobia. This great recession, as we have said over and over, had at its core the lack of democratic control and oversight of the world financial system. A financial system that could so fragile bonds with 3A ratings, a financial system that could land precariously but make huge profits for few corporations and pay billion dollar bonuses to a few individuals on a scale unheard of in human history.

If we have now learned the lesson that a democratic institution in this global society must not be allowed to be overridden or even usurped, captured by big and special interests. We, the public, will be paying the price for reckless speculation, speculation by the few and require financial regulation by governments in the years to come. We will be paying in terms of higher unemployment, slow or no growth and even higher levels of government debt driven by massive bank bailouts.

Yes, we need markets. But they cannot become tyrants. They must be a tool to help our economic development and serve our people. Not the other way round. Problems in the financial system remain. The causes of the crisis have yet to be properly addressed. While small businesses around the world fall and governments flow under unsustainable debt and deficit, the world biggest banks and hedge funds have not only bounced back but in many cases are recording record multi-billion dollar profits. This really doesn’t make sense in terms of social justice or even environmental justice. Indeed, unregulated speculation has not only crippled global financial systems and economies, it has allowed the critics of solutions to vital issues such as global warming to today insist that we simply can’t afford them. In short we face the day not as an ideological and political burden. This in the end is a battle which concerns the survival of human civilization as we know it. Whether we are capable in dealing with our global challenges in a coherent, in a just, in a humane way. Or on the other hand, we will spiral into violence, antagonisms, conflicts, fundamentalisms and barbarism.

We in the Socialist International know well, that we, humanity, have the potential to solve these problems. And the Socialist International was strict to point out the flaws in the global financial system. We made proposals concerning the causes of the systemic collapse. In September 2008 we admitted to set up a commission with distinguished colleagues from around the world under the chairmanship of Joseph Stiglitz. We’ve been calling for tighter supervisory and regulatory mechanisms, closer global coordination of financial markets. We proposed important ways in which to limit and confront the derivative markets, attack speculation and the lack of transparency at home as well as tax heavens abroad. We have called for measures that help the real economy, real jobs, viable development for people, people who really need, really are in need.

The financial crisis in 2008 seemed a perfect opportunity for the world to push through these and many more reforms.  However, we have seen the lack of will. Without doubt, our region in Europe has made some important steps in the right direction. Europe, however, and Martine mentioned this and I agree very much, could play a much stronger role,  a much more important role and I often find and I feel in dealing with Europe today and my position as Prime Minister of Greece that we do not realize in Europe, that the leaders of Europe do not realize, the potential and the power we have to create change not only in Europe but around the world and to deal with these very big and important problems, whether this is financial markets or global warming.
Of course, part of the problem is that large financial firms and multinational corporations have an inordinate amount of power over the real economy. But that control is not a reflection of pure economics. It is a consequence of pure intervention in democracy, in our democratic institutions, by powerful special interests, global banks, hedge funds, private equity firms, speculative traders, they have huge powers and money that reach way beyond national competencies and handle monies very often very much bigger very much more that the ones we have in our countries for our national budgets.

It’s an imbalance which is reflected in our policies. Of course politics, we all know, are still local, it’s still national.  This is where has been successful and capable. But today democracy must go global.

Because today not are the problems global but the financial economy. The media power often lies in the hands of equities that are global, transnational and can often hide from scrutiny. The fact is that no matter how powerful the country or how robust the economy, the nation state alone is no longer capable of dealing with the transnational problems we now face. Whether it is transnational speculation, whether it’s climate change or whether it is unemployment of their youth.

We political leaders must be able to think and act beyond election cycles but also beyond national boundaries. This is where organizations such as the Socialist International can have great impact. We think about the bigger picture. We speak of global democratic governance. We can give continuity to our party platforms beyond election cycles. We can show to our people, citizens and constituencies that they are not alone, that there is hope, that there is a global movement, that there is solidarity, that there is a global prospect, as long as we unite our efforts.

And what we have able to achieve over the years, these past years is to create an understanding among ourselves that our individual, national and global interest and political agenda are one and the same. But we need to communicate this to our societies and in particular to the younger generation. One that sees that we do have common problems, that humanity is united and facing common problems. But, however, we are not working and acting in a way which is cooperative and successful and that’s why our youth feels very disempowered, often very disenchanted with politics.

So, we must repeat again and again “yes, we can”, “yes, you can” “yes, together we can, and together we can change this world for the better”. We have set, we the Socialist International have set a global agenda, which is based on our values and we know the world can be a better one. We know there are solutions. We can end poverty. We can end illiteracy. We can have equitable growth where everyone contribute according to their means. We can empower women and minorities. We can tackle global warming while at the same time stimulating growth both in the developing and the developed world. We must deal with the spread of weapons of mass destruction. We can have peace in the Middle East. And we in our organization, with our parties, whether it is in Israel or in Palestine have shown that there is a way, that there is a common ground, we can have peace in the Middle East. We can have fiscal responsibility, we can cut debt and deficit while at the same time contribute to green growth, jobs, education and welfare. Let me give you an example, which I now topical in the European Union. If governments today cannot borrow to invest, if private companies have problems because their banks will not lend them because of the risk. The fear of the risk that has overtaken our financial system after 2008. Then our system has deep problems.

Our governments and international original institutions such as the European Union need to find new sources of growth money, money that goes to development, money that helps stimulate growth around the world. And there is money and much so in the international markets. There is wealth, yet distributed highly unequally around the globe.

One solution, and this is our Socialist International proposal is that we need and urgently, an international financial transaction tax. For example, a 0.05% on global financial transactions, it is estimated that this could yield more than 400 billion Euros. 400 billion Euros for sustainable growth investments. 400 billion Euros for food security, illiteracy and poverty. 400 billion Euros to help finance a new global regulatory architecture that will guarantee growth and stability. One where democratic states are not isolated from one another in their attempts to tame global financial firms for the common good.

Further this tax will also be equitable. It could also face the problem that Europe today is facing but many other countries have faced in the past, in Latin America, Asia and Africa. Markets today are wary of financing sovereign debt. They also extract extravagant interest rates from countries that may be facing economic problems, the so-called high spreads, which we know very much now in Greece. Some have suggested, such as the German government, that bond markets, banks that finance nation with high debt should be prepared to take the course of a possible default or haircut in the future.

You know what the response to this proposal was, we saw it last week. Whether understood or misunderstood, it created a spiral of high interest rates for the countries that seemed to be in a difficult position such as Ireland and Portugal. This could create a self-fulfilling prophecy. It is like saying to someone since you have a difficulty, I will put an even higher burden on your back but this could break backs. This could force economies towards bankruptcy. So we need new approaches that do not simply punish, punish those who in the end have little or no responsibility, our people, but who create viable solutions. Create the financial transaction tax, through bank levies, a sort of insurance policy, create a fund to prevent haircuts and restructuring. And we will organize IMF and a similar structure that we are now talking about in the European Union. This could be funded through the financial transaction tax, a fund which could also help investment, spur growth and jobs in the midst of otherwise necessary fiscal cuts, and ensure the sustainability of recovery for all.

The millions of people today in our country who are suffering can look at the end and see that they must endure sacrifices, but they see also that everyone is contributing so that we see growth and jobs, a real light at the end of the tunnel.

That is why our organisation, the largest political collective in the world, is so important. We set an example, as a group of political parties, with enormously varied histories, contexts and challenges, yet all committed to working together to tackle these common problems and protect our shared interests.

We also are building bridges between the United Nations and the G20, the IMF, the ILO, the WTO, the UNHCR and the OECD. There are many ideas, such as ones put forward by the UN Stiglitz Commission to establish a global economic council, under the auspices of the United Nations. This commission also has made important suggestions concerning the recent currency battles. The South Korean government has proposed a global financial safety net to safeguard countries from risky outflows of capital. France will be prioritising the issue of imbalances from currency to food prices.

But beyond debating, beyond debating we need to act. I say that because earlier this year, when the sovereign debt crisis hit Europe, the European Union was criticised for taking too long to set up a financial stabilisation mechanism for ailing member states.

Ultimately we did act, and we acted much faster than every before, in order to fend off the destabilising threat of market speculation.

But we also saw the speed of the markets. They are much faster than our democratic institutions, when a crisis hits. And this is a threat to democratic stability. This is why we cannot wait for the next crisis to hit. And we know what the problems are. Solutions do exist. We need to act now, and do so in a coordinated way.

We need to do so, so that we can create more efficient mechanisms, mechanisms that will hit global imbalances, imbalances that are often created by inequalities. And I say this because the crisis in Greece, which we had to take on after we took over in the elections last year, was one where we had to make very difficult decisions, very harsh decisions.

And very often we hear the conservatives saying the problem is the social welfare system, and it is being attacked. I won’t disagree that we need to make our social welfare systems more efficient, cut waste, cut inequalities, if they exist.

However, we also know that the real problem is global imbalances, imbalances in wage, imbalances in workers’ rights, imbalances between social security systems amongst different countries, imbalances in the cost of medicines, imbalances in how we protect or destroy our natural resources.
And these create very often competitive advantages, to the detriment of our social welfare systems.

So a more equitable world for all, whether it’s in the developing or developed world. Defending the rights of our people with changes. Focusing therefore on fiscal discipline alone would be a mistake, because there can be no economic stability without sustainable growth.

And this is, again, where we can see the financial transaction tax in Europe as an important source of revenue to invest in infrastructure, in education, in innovation and in the greening of our economies.

Again, our movement has been in the forefront when we talk about the greening of our economies. The Commission under Ricardo Lagos – Ricardo, thank you very much for your very important work. You and Göran Persson, and all the members of the Commission, have come up before Copenhagen with a very important paper on the low-carbon economy.
Unluckily, Copenhagen was not a success. Cancun seems to be still at a stalemate.
But again, our movement has taken initiatives. And we can take initiatives. We can develop a more grassroots movement around the world on certain issues such as the issue of global warming.

I say this because we recently took an initiative: Greece launched a Mediterranean climate change initiative, where we had over 20 countries, many NGOs, non-governmental organisations such as Greenpeace and the WWF, and also private and public partnerships, in order to look at how we at the regional basis can deal with the issue of global warming.

I think we can take similar initiatives through our own organisations and parties, where we can make them showcase solutions for pilot projects around the world.

As so many countries struggle to get their debts and deficit under control and struggle to maintain social cohesion in the face of brutal austerity measures, we are in danger of losing sight of the bigger global picture. We need to, and we can combine solutions that simultaneously tackle a totality of issues.
And we can do so if we have the political courage. As I have said, we have the capability of dealing with very important problems. We need to deal with the financial system, because today it is not only undermining our economies but also our democratic structures.

We all know that fossil fuels are running out. We all know that climate change is real, with devastating impacts. We know that we must reorganise our global governance. We know what must be done.

We know that we could prevent the cholera outbreak and spread of cholera in Haiti. And we again expressed our solidarity with the Haitian people and our Vice President, Victor Benoit. Victor, you have all our solidarity.
But why aren’t we moving? What is lacking is quite simple: political courage, political will, for a new agenda and new policies.
And we must fight the politics of fear, the politics of fear that conservatives are adopting.

As we face global challenges, the right, the conservatives proposed that we hide our heads in the sand, that we seal off our borders lest by doing so we solve our problems. That we become more nationalistic in rhetoric, yet we damage our nations in reality.
That we look for scapegoats, whether they are foreign threats or foreigners, rather than looking for solutions.

But the politics of fear cannot hold us back. We represent the politics of cooperation. We represent the politics of solidarity. We represent the politics of logic, but a vision, rather than fear. And fear will never move us forward.

We can build inclusive, open and tolerant societies. We can improve people’s quality of life through sustainable green development. And I call it, we call it the humanisation of globalisation.

And our movement has always stood for and fought for a more humane society.

The world cannot afford to wait. We need to act now, and we need to act together.

Most people’s everyday reality is dominated by uncertainty and insecurity. And the politics of fear is infecting our democracies.

In the face of fear, we must put forth a credible alternative. And that is the politics of hope. That is what we represent, as the Socialist International. Thank you again for all your support.