Archive for September, 2010

The Revival of the U.S.-Korea FTA, the Global Economic Crisis and U.S. Intentions in East Asia

Posted in articles, statements on September 29th, 2010 by pssp – 5 Comments

Pilsoo Im
Policy Director
People's Solidarity for Social Progress

June 30 marked the three-year anniversary of the signing of the U.S.-Korea FTA. The agreement was negotiated rapidly over the course of 2006-2007. It took less than a year and a half from the moment President Roh Moo-hyun (in office 2003-2008) first proclaimed his intentions to pursue an FTA during a New Year's address on June 18, 2006 to the moment the two countries sign the agreement. To this point, however, neither South Korea nor the U.S. has passed the agreement through their respective legislature. In South Korea, attempts to pass the agreement foundered on opposition from minority parties, most notably the Democratic Labor Party's use of physical force in December 2008 to stop efforts by the ruling Grand National Party to unilaterally introduce the bill on the National Assembly floor. In the United States, there has been no movement on the FTA bill other than a memorandum on the revision of domestic law necessary to put the FTA into effect sent to Congress by the Bush administration and a report submitted by the International Trade Commission (ITC) concerning the ripple effects the FTA would have on the U.S. economy.

Since June of this year, however, there has been a dramatic change in the pace of the ratification process. On June 26, U.S. President Barak Obama met with South Korean President Lee Myung-bak to discuss a delay in the transfer of wartime command of the ROK forces, while in Toronto for the G20 Summit. Immediately after his meeting, the Obama administration instructed U.S. Trade Representative Ron Kirk to begin 'new discussions' on the U.S.-Korea FTA. As soon as these instructions were reported in the media, the Korean public began to wonder what 'new discussions' actually meant. According the South Korean Trade Minister Kim Jong-hoon, "President Obama stated clearly he was not referring to a renegotiation. He gave instructions that parts [of the FTA] be adjusted at the working-level to make it possible to pass the FTA in the Congress." Still, it is rather hard to suppress suspicions that the government is simply using euphemisms to cover up what will in fact be a full renegotiation.

Questions are also being raised as to what behind-the-scenes measures led to the FTA being brought up again in this way. The South Korean government has repeatedly stated that it will not accept renegotiations aimed at revising the agreement. Thus, many people have been led to believe that South Korea agreed to reopen the FTA issue in exchange for the U.S. agreeing to delay the transfer of wartime command from April 2012 to December 2015. People are also wondering what made President Obama, who as a presidential candidate emphasized that he had voted against the Central American Free Trade Agreement (CAFTA) and never supported the North American Free Trade Agreement (NAFTA), suddenly begin to push for the U.S.-Korea FTA's passage. To answer these questions we have to look at the U.S.-Korea FTA within the context of two major problems currently facing the United States: 1) the increasing economic imbalance (principally the U.S.' current account deficit), and the threat of deflation looming over the U.S. economy, and 2) the United State's diplomatic, military and economic conflict with China. If we do this, we see that the U.S.-Korea FTA is a part of the United State's efforts to extend its influence in the East Asian region, as well as being an emergency measure for saving the faltering U.S. economy.

I. Conflict with China
First off, the Obama administration sudden emphasis on the U.S.-Korea FTA, which comes in the aftermath of the sinking of the Cheonan, can be understood as an effort to demonstrate that absolutely no fissures exist in the U.S.-ROK alliance. In this case, however, the intended is not as much North Korea as it is China.

Competition between China and the U.S. is occurring on all fronts: political, military, and economic. Conflict in the politico-military arena can be seen most clearly in the area of maritime control. On 8 March 2009, 5 Chinese Naval ships blocked the passage of and generally harassed the USNS Impeccable, an American surveillance ship, as it was travelling in open waters near the Hainan Island located in the South China Sea. The United States protested against this action strongly, seeing it as an attack on a civilian vessel. China, on the other hand, insisted that the Impeccable had been carrying out spy activities in violation of its sovereignty. In March of this year, Chinese authorities notified the U.S. government that they see, "the matter of the South China Sea as related to Chinese sovereignty and territorial integrity." While China claims the area where the Impeccable was confronted as an exclusive Chinese economic zone, the United States insists it is international waters, where any vessel should be able to travel freely.

The fact is, however, that the United States is interested in the South China Sea, both because it provides an opportunity to assert U.S. dominance in the region and because it is economically important--South Korean and Japanese oil tankers use it as a route for conveying Middle Eastern crude. This is the background behind Secretary of State Hillary Clinton statement at the ASEAN Regional Forum in July that the United States had a "national interest" in free passage in international waters in Asia. During the Forum Clinton also commented that current conflicts between China and other countries in the region over the Spratly and Paracel island chains in the South China Sea should be "settled internationally," further demonstrating U.S. interventionist intentions to China obvious displeasure.

Competition between the United States and China is being reflected as well in U.S. diplomatic efforts towards other East Asian countries. Of late, the U.S. has been rather aggressive about pursuing cooperative relationships with countries surrounding China, including Myanmar, Malaysia, Laos, Pakistan, Vietnam, and Indonesia. These moves have been threatening enough that Chinese Rear Admiral Guan Youfei accused the United States of, "plotting to encircle China with strategic alliances," during the U.S.-China Strategic and Economic Dialogue held last May.

This situation has had an impact on the aftermath of the Cheonan incident. With China showing resistance to the United State's attempts to pressure the North and impose sanctions, conservatives in the U.S. have been claiming that China's role in diplomatic efforts related to the peninsula should be reevaluated and U.S. policy towards China reformulated. These people fear that with China playing the 'good cop' next to the United State's 'bad cop', China is starting to present an alternative to the U.S.-centered world order. Therefore they wish to see a new diplomatic framework for dealing with the Korean question and East Asian relations, one that removes China's influence from the picture. For example, they are proposing that the 6-party talks be abolished and the alliance between the U.S.-South Korea and Japan made more all encompassing. To this picture they want to add a 'coalition of the willing' made up of Australia, the EU, and Russia in order to send a signal to China that it is possible to exclude it from decision-making on issue pertinent to the balance of powers in East Asia and China's national security. They suggest mediation of a peace treaty between the South and North Korea outside of the 6-Party framework, as a means for excluding China.

The United State's conflict with China has made it more urgent about strengthen its hand in East Asia in all areas. The U.S.-Korea FTA and the wider U.S.-ROK relationship that will be strengthened through its ratification are a key part of this effort. The U.S. has recently stated its intention to join the East Asia Summit (EAS), an annual meeting of the leaders of 16 countries in the East Asian region comparable to ASEAN. The U.S. hopes to see the EAS develop into a forum for consultation on regional political and security issues, through which it can increase its dominance in the region. While using the EAS to take the lead on political and security issues, it hopes to do the same on economic cooperation and free trade through APEC. In the case of the former, U.S. needs use a sturdy military alliance with South Korea and Japan as a foundation for exercise dominance as a member of the East Asian 'community'. With regards to the latter, it plans to use U.S.-Korea FTA as a foundation and a model for transforming APEC into an East Asian Free Trade Zone.

II. Increasing Economic Imbalance and the Threat of Deflation
From the first to second quarter of 2010, the U.S. GDP growth rate fell drastically from 3.7% to 2.4%. (*The GDP growth rate is the percent increase or decrease in the GDP from the previous quarter converted to reflect an annual rate.) Unemployment remains high, at nearly 10%. In addition, many economists are now saying the U.S. faces the threat of deflation for the first time since the Great Depression due to high unemployment and weak domestic consumption. Were deflation to occur, it could put further downward pressure on profits, wages and jobs. To cope with this situation, the Fed has set interests rates almost as low as is imaginable. Yet, the housing market remains in a state of paralysis. Declining income and sales tax collections are putting heavy burdens on State governments, whose fiscal woes are getting deeper and deeper. Acknowledging the precarious situation on July 21, Federal Reserve Chairman Ben Bernanke admitted to the Senate Banking Committee that the United States' economic outlook was "unusual uncertainty."
The following month he announced additional revisions to monetary policy, under which the Fed will keep its massive bond portfolio from shrinking by reinvesting money from mortgage-backed securities as they mature. This move signaled the Fed's willingness to intervene even further if necessary to prop up the shaky economy.

The United State's economic problems will not be easily solved, however, as long as global economic imbalances persist. Simply put, the U.S. economy will continue to be insecure as long as it depends on foreign financing and deficit spending, while also importing more than it exports. Unfortunately for the U.S., global imbalances are likely to go on for some time. The Peterson Institute for International Economics, a nonpartisan Think Tank in the U.S., provides analysis helpful for understanding global economic trends and their implications for the U.S. economy. The Institute notes that the sharp decline in the Euro's exchange rate is making global imbalance more severe. It points out that the OECD has estimated that the Eurozone will see annual trade surpluses of at least $3 billion in the next few years due to the Euro's rapid decline along with "tepid European growth." Moreover, strict fiscal policies now being implementing throughout Europe in response to the crisis will weaken domestic demand, and likely impel European countries to pursue easy monetary policies, which aim at further devaluation of the Euro. The Financial Times has also noted that European countries are looking to export their economic stagnation through 'beggar-thy-neighbor policies'. (*'Beggar-thy-neighbor' is an economics term for policies that are generally good for one countries national economy while hurting the economies of others such as protectionist measures and currency devaluation.) If this trend continues, the United States may see its current account deficit move past the all time high of $8 billion it reached in 2006.

The United State's biggest headache is coming from China, which refuses to revise its monetary policy to let the Yuan appreciate as much as the U.S. would like. The Chinese authorities set the stage for an upward move of the renminbi when they announced on June 19, 2010 a return to a more flexible and more market-based exchange rate regime like that they had pursued during 2005ᆜ. The results to date have been meager, however. As of September 10, 2010 the renminbi had risen by less than 1 percent. If maintained over the coming year, this pace would amount to an annual rate of only 4 percent. The Peterson Institute has steadfastly insisted on the appreciation of Yuan. It predicts that if China's real effective exchange rate were to appreciate by 10%, China's current account surplus would decrease by $170 to $250 billion annually, while the United State's current account deficit would improve by $22 to $63 each year. China, however is insisting that its currency has appreciated as much as any other currency over the last five years, that the United State's trade deficit has nothing to do with the Yuan exchange rate, and that the issue is being hyped in the U.S. for political reasons.

The Peterson Institute notes that large external deficits pose substantial risk to the U.S. economy. This is because "foreign investors might at some point refuse to finance these deficits on terms compatible with US prosperity. Any sudden stop in lending to the United States would drive the dollar down, push inflation and interest rates up, and perhaps bring on a hard landing for the United States--and the world economy at large." Continued introduction of massive amounts of foreign capital into the U.S. economy could plant the seeds for another economic crisis, they warn. The Institute adds to this the warning that, because the U.S. unemployment rate is so high, an increase in the trade deficit could lead t protectionist trade politics.

Recent fears of an increased trade deficit have made the Obama administration pay more attention to trade policy. On July 7, Obama announced the formation of a President's Export Council, made up of top business leaders, to advise efforts to double exports over the next five years, through his "National Export Initiative." The idea behind this initiative is essentially to create jobs through expansion of exports, thus tackling the problems of unemployment and low consumption levels, which its is feared will lead to deflation.

III. Cars and Meat, not the Real Issues
After the signing of the U.S.-Korea FTA the Bush government requested that the United States Trade Representative analyze the effects of the agreement. According to this analysis, if the U.S.-Korea FTA is fully implemented, U.S.' yearly exports will increase by from $10 to 11 billion a year in the areas of financial services, insurance, air transport, communications, and agriculture.

However, the U.S.-Korea FTA is predicted to have a negative effect on U.S. automobile production. This is one of the main reasons it has been delayed in Congress. Currently, one of the main issues assumed to be up for renegotiation is the plan to reduce the U.S.' 25% tariff on light trucks and SUV by 2.5% every year for the next 10 years. The tax reduction, however, is not so important as some in the U.S. think. The Peterson Institute notes that a 25% tariff in trucks and SUV, which dates back to a retaliatory measure taken against France and Germany during a trade war in 1963, is unusually high, abnormal, and therefore will be hard to maintain in the future, with or without the U.S.-Korea FTA. Moreover, the demand for these types of cars has decreased dramatically in the last few years due to the rise in the price of oil. Thus, there is little incentive for Korean car manufactures to invest in their production for export. Even if demand did increase, Korean car manufacturers would most likely employ American workers in American factories to produce their vehicles.

There are also concerns being raised about non-tariff barriers in the South Korean automobile market. The fact is, however, that with the exception of Canada and Mexico, the U.S. does not export cars produced within its territorial boundaries (in say Detroit or Ohio) to other countries. They are generally produced and sold through foreign car companies as in the case of GM Daewoo. In the area of beef, the Peterson Institute points out that the American meet exporters are feeling generally satisfied with the extent of market opening. All of this points to the fact that from perspective of the United States, renegotiations on the issues of beef and automobiles would not in fact be all that profitable. They are but secondary concerns. Thus, the U.S. believes they can be settled at the working-level, and sees the speedy ratification of the U.S.-Korea FTA as more important than harping on these issues.

IV. What are the real issues in the U.S.-Korea FTA?
South Korean capital chose to pursue the U.S.-Korea FTA as a response to the long-term economic stagnation that began after the Kim Dae-jung administration. At this time, neoliberal restructuring of the South Korean economy accelerated and a duel phenomenon occurred in which chaebols invested abroad at the same time as transnational capital's dominance in Korean chaebols and banks grew stronger. This led to an outpouring of national wealth. Long-term economic stagnation soon set in.

The Roh Moo-hyun administration had to come up with a solution to this problem. Korea's development strategy at the time was based on flexibilization of labor and increase in exports to the United States through depreciation of the won. However, many other newly emerging economies, such as China, were employing the same strategy. As such, something extra was needed. Roh saw the U.S.-Korea FTA as that 'something extra', and his administration pursued it aggressively. Roh, although with Korean capitalists seeking to transnationalize, believed the FTA would both tighten the economic relationship with the United States and force Korean industry and services to advance along neoliberal lines. Unfortunately, this strategy embodies a very significant contradiction. By accelerating transnational capital's investment in Korean stocks and bonds, the FTA will create appreciatory pressures on the won, causing the exchange rate to rise. By doing so it will bring down South Korea's current account surplus, thus creating a counter trend to the strategy of export-led growth, which is based on a weak currency.

For the U.S., facing a worsening of its current account deficit and the possibility of deflation, the U.S.-Korea FTA is a means for exporting its depression overseas. It is also part of a strategy for tying together the East Asian region as a free trade zone, and a diplomatic maneuver related to the United State's desire for political-military dominance in the East Asian region. However, unless the economic structure of the United States does not fundamentally change, it will be hard for it to achieve success through a strategy of expanding exports, at least in the short-term. For Korean capital, the U.S.-Korea FTA was a development strategy chosen in the face of crisis and in the midst of acute competition. However, because it will exacerbate contradictions within the Korean economy, it cannot be a 'crisis exist strategy' for South Korea.

The U.S.-Korea FTA is not a satisfactory solution for either country. Rather, it is being pursued as a sort of emergency plan to cope with the crisis. It is clear, however, that this plan, the choice of capital, will not be enough to overcome the structural crisis of capitalism.

Why we must build a Movement AGAINST the G20

Posted in articles, statements on September 14th, 2010 by pssp – Be the first to comment

By Gu Jun-mo

PSSP Policy Committee

The G20 Summit will be held in Seoul, from November 11 to 12. In preparation, G20 leaders are busy looking for ways to protect existing power structures and the current economic and financial order. Similarly, activists in South Korea are busy getting ready to confront the G20 when it arrives. However, there is a lack of agreement within the South Korean movement as to how we should approach the G20. Opinions range from beliefs that 'critical engagement' is the best way to go to convictions that simple criticism is not enough. The former base their position on what they see as the positive points of the G20: that it seeks to solve the global economic crisis, that it includes South Korea and other developing nations, that it is implementing certain financial reforms. Many of us believe, however, that these 'positive points' are, in fact, hollow, and that the G20 is fundamentally problematic. We recognize that the G20's fundamental goal is to manage and protect global capitalism while furthering the interests of a few dominant countries. Thus, we believe it should be the target not of 'critical engagement', but of determined opposition. Moreover, we believe that building a people's alterglobalization movement-a movement that seeks democratic alternatives to global capitalism-is vital at this moment in history, and that the struggle against the G20 is a means towards this ends. The following article explains our understanding of the G20's nature and concludes by suggesting a direction for the people's movement in relation to the upcoming Summit.

I. How should we understand the G20?

A. Unrepresentative, Illegitimate and Undemocratic

The G20 is, at its core, unrepresentative, illegitimate and undemocratic. Out of the 190 countries around the world, only 20 participate in the G20. These few countries do not and cannot represent the interests of the rest of the world. Moreover, most participating countries have been the strongest promoters of neoliberal policies, which have already been proven to create poverty and inequality around the globe. The G20 countries are also the ones responsible for the current crisis. As such, the G20 has no legitimacy. Finally, participation at G20 meetings is closed, and the decision-making process and content of discussions are not made public. This makes the space completely undemocratic.

When the economic crisis spread throughout the world in the second half of 2008, the United States and hegemonic European states moved quickly to respond in the form of G20 Summits. Through the four meetings held during the last two years, the G20 has names itself the highest decision-making body on issues related to the global economy. In addition, by discussing many issues outside the realm of the economy, such as development, poverty and the environment, the G20 has sought to make itself the central instrument for the maintenance of international hegemony. However, like the G8, the G20 has no status in international law whatsoever. There is no standard for why this body includes 20 countries. Rather, the countries included were decided on through a process carried out within the G7 (the G8 minus Russia) between 1997 and 1999, at the end of which 12 developing countries were selected based on the size of their economy and geopolitical factors. It was the G7 who made the final decision on who would be invite in and who left out.

What gives these few countries the right to make decisions that affect the fate of the rest of the world? In many ways, the G20 is organized along the same line as the shareholders' meeting or board of directors of a corporation; economic scale is the basis upon which the right to participate and decision-making power are allotted. This clearly has nothing to do with democracy. Developing countries are now participating, but most of them, as the 'strong men' in their respective regions, are supporters of the U.S.-centered world order. There is means for the 170 countries excluded from the G20 to voice their opinions or represent their own interests.

This undemocratic and illegitimate character is the main reason why 900 social movement organizations in 115 countries, including Jubilee South, ATTAC (Association for the Taxation of Financial Transactions for the Aid of Citizens) and others have signed onto a "Statement on the proposed 'Global Summit' to Reform the International Financial System." This statement calls for a new framework for discussing alternative ways to solve the current economic crisis, one that protects democratic participation and debate (See These organizations propose that an international conference convened by the United Nations replace the G20 as the body for discussing reform of the international economic system. The UN conference they propose would: 1) include participation from all governments around the world, 2) include representatives from civil society, citizens' organizations and social movements, 3) have a clear timeline and process for regional consultations in areas most affected by the crisis, 4) be comprehensive in scope, tackling a full array of issues and institutions, and 5) be transparent, with proposals and draft outcome documents made publicly available with ample time for discussion. While the UN itself has clear historical and structural limitations, the fact that hundreds of organizations signed this statement demonstrates widespread recognition of the G20's fundamentally problematic nature. The simple question posed by Filipino alterglobalization activist Walden Bello-"Who gave them the authority to solve this crisis?"-speaks to the same recognition, and points to the basic premise upon which anti-G20 struggles are being carried out around the world.

The inclusion of South Korea and a few other developing countries in the G20 does not in anyway alter the G20's basic nature. Perhaps South Korea's participation, and its hosting of the next Summit, appear positive for national image and prestige, when viewed from the perspective of narrow self-interest. But the G20 should be evaluated, not in terms of its meaning to individual countries or their governments, but from a perspective that puts the rights of the common people around the world first. In other words, the G20 should be evaluated from an internationalist perspective. From this perspective, it is clear that a new democratic framework is needed to replace the G20. In particular, this new framework should centralize, the needs, not of countries from the North, which have built their wealth through histories of imperialism, and which are responsible for the current crisis, but rather of the people of the global South who have historically been victims of capitalist plunder.

B Management, not Change; Words, not Action

Despite the fact that the G20 was convened to deal with the economic crisis, it is not confronting the real issues at the center of the crisis-neoliberal ideology, the overwhelming power of financial capital, global inequality, and attendant social problems. Rather, the G20 is treating the crisis as a problem of tweaking policy. It is seeking technical and bureaucratic fixes, while strengthening the authority of the IMF, the institution most responsible for causing poverty and inequality around the world by forcing neoliberal structural readjustment programs. In other words, the goal of the G20 is to revise policy only to the extent it does not threaten the interests of participating countries and leaves in tact the structures of global dominance that have been in place for the last 30 years. It is looking for ways to manage the world system that maintain the current hegemonic system and is thus friendly to capital and dominant classes. Thus, it has no intention of overcoming financial globalization or abolishing neoliberalism.

The G20 is able to act this way because of widespread belief that the crisis can be solved without fundamental change. This, however, is not the case. The current crisis is a systemic one that cannot be overcome without extensive structural change. Neoliberal financial globalization is the result of efforts to respond to capitalist crisis in the 1970s. At that time, capital"s strategy for getting around a lack of profitability in the real economy was financialization, in particular speculative investment in stocks, bonds and real estate. Speculative activities grew deeper and deeper, getting more and more out of control… until the system collapsed. If we survey the capitalist economy now, we see that there is no clear area for investment that might function, like real estate did, as a bubble for financial accumulation, nor is there a new source of growth within the real economy. As such, the capitalist economy is facing the likely prospects of a long period of low growth and instability. During this period, the problems of poverty, climate change and agriculture will only get worse. The time is ripe, now more than ever, to break from the current order and look for an alternative to capitalism.

Rather than taking action, the G20 is disguising the severity of the situation through clever words and packaging. When, beginning in the second half of 2009, the economic crisis looked like it was weakening, the G20 began to make references to issues like employment, development, and the environment. We have, however, seen little real progress in these areas. G20 leaders boast of their friendship and unity and put on nice performances before the cameras. But as time goes on, promises made fall to pieces. We have seen all of this before with the G8. When G8 leaders found themselves on the receiving end of criticism for pursuing neoliberal policies, they began to claim they also saw issues such as foreign loan write-offs and development aid as important. These proclamations succeeded in giving the G8 an air of legitimacy. In fact however, very few steps were taken in these areas. Most of the talk was just that-talk.

It is the same with the G20. G20 leaders have made public promises in the areas of labor rights, the environment, and development, but there is no real substance. They have said they will work towards achievement of the Millennium Development Goals, take interest in the problem of climate change, develop policy concerning the use of renewable energy over fossil fuels, make efforts towards job creation, respect labor rights, etc., etc. But in each country, these pledges are already being broken. South Korea is case in point. At the G20 Summit in Pittsburgh, leaders promised that international labor standards would not be ignored or deteriorated. However, in South Korea the government of Lee Myeong-bak is weakening labor law protections and repressing labor activities. In addition, while stricter financial regulation is being discussed on an international level, in Korea the law maintaining a division between financial and industrial banks and regulations on financial commodities are being weakened and more power is being given to investors.

II. Financial Regulation: Implications and Limitations

A. Stronger Regulation and Taxation

The G20 has been promising stricter financial regulations since its first meeting. However, it has very little to show after two years of discussing reforms. Therefore, social movement organizations around the world have been calling for stronger controls on financial capital than those being discussed at the G20. A statement released by ATTAC in October 2008 entitled, "The time has come. Let"s shut down the Financial Casino: ATTAC"s Statement on the Financial Crisis and Democratic Alternatives" represents one of the most comprehensive statements of this position. ATTAC puts forth 4 demands: 1) the creation of a new democratic economic order, 2) breaking the dominance of financial capital and putting the real economy and social needs first, 3) making those responsible for the economic crisis pay for its cost, and 4) policies for controlling finance through reform of central parts of the financial system.

The financial regulations being pursued by the G20 cover only a very limited part of only the fourth demand. They are therefore, clearly insufficient to bring about substantial change to the current economic order out of which the crisis developed. Yet, many movement forces are focusing only on what is being said within the G20, demanding that the regulations being discussed are strengthen. For example, demands are being made that hedge funds and private equity funds be required to reveal to the public the exact portfolios and extent of leverage of the assets they have invested. Demands are also being made that the system for regulating financial commodities be changed from a negative system (listing only the types of commodities prohibited) to a positive system (listing all commodities that are allowed) so that each new financial commodity with be clearly brought under public supervision. And, demands are being made that tax havens for speculative capital and offshore financing centers be completely abolished.

In addition, a movement has developed calling for the implementation of what is being called the Robin Hood Tax. The Robin Hood Tax would be a tax of 0.001% ~ 0.05% on all financial transactions, including those involving stocks, bonds and foreign exchange. The idea for the Robin Hood Tax grew out of the Tobin Tax concept. The Tobin Tax would tax only foreign exchange transactions. Proponents of the Robin Hood Tax believe that the principle of taxing the profits made on commodity transactions should be applied to the financial sector without exception. They hope that such a tax would reduce the scale of short-term financial transactions. Moreover, they are calling for a fixed amount of the massive resources procured through this tax to be used to battle climate change and contribute to the development of impoverished countries-hence the name, 'Robin Hood Tax'.

B. Enough to Propel Change?

How should we view these various demands for stricter financial regulations? Simply, they are needed, but they are nowhere near enough. First of all, these demands are asking for only micro-level changes. They do not address most of ATTAC"s demands, namely the call for a new framework to replace the G20, for fundamental policy reform to control the power of financial capital, and to make those responsible pay for the crisis.

A tax on financial transactions is part of one of these demands-the call for fundamental policy reform to control the power of finance. But a financial transactions tax has to be coupled with other measures, including prohibitions on Large and Complex financial Institutions (LCFI), prohibitions on privatization of public enterprises and pensions, and transformation of distribution policy, if it is to be effective. If these elements are brought together something close to fundamental change is possible. However, many social movement organizations are focusing on just the financial transaction tax or just one or two other measures in isolation. Or, they are trying to make the reforms being discussed within the G20 a bit more progressive through lobbying-based strategies. In taking this approach, they are forgoing the goal of systemic change.

It is not possible to truly constrain the power of financial capital through a piecemeal approach. Because the opinion of each country is different and financial capital is still powerful, reform policies discussed within the G20 necessarily get distorted in the process of trying to mediate competing interests. The G20, which is linked to the interests of the U.S. and European powers, and through them to the interests of financial capital, has no reason to promote real change.

Without a complete change of direction based on agreement about the need to root out neoliberalism and financial globalization, individual policy reforms cannot be effectively implemented. Therefore movements that focus on the possibility of implementing micro-level policy reforms will also have a very difficult time even achieving their stated goals. Beyond this problem however, is the problem of seeing limited financial regulation as an end in itself, rather than as one step in a larger process of transformation. We need use the fight for financial regulation as a means through which to expose the essence of neoliberalism and create the force necessary to propel a movement for an alternative to global capitalism-an alterglobalization movement. Therefore, we must frame demands for thorough financial regulation within the context of wider demands for systemic change.

III. What should the goal of the G20 Struggle be?

So, what should be the goal of a struggle confronting the G20? In short, we should see this struggle as a chance to build a people's alterglobalization movement. The strategy of movement building has three component parts. First, the G20 struggle should be an opportunity to expose the fact that the economic crisis and the related social crises we are currently facing are deeply systemic and endemic to the capitalist mode of production. The reason that some people have hope that the G20 will provide solutions and believe critical engagement with the G20 is possible is that they misunderstand the economic crisis as temporary and superficial. When we understand financial globalization in terms of series of connected policies and act as if tweaking these policies will solve the problem, this misunderstanding is reproduce. It is also reproduced when we act as if climate change can be confronted simply through implementation of a few policies, introduction of new technology, and carbon emissions trading, rather than a fundamental revision of how we produce and consume. It is reproduced when we think of dealing with poverty and inequality only in terms of achieving the Millennium Development Goals, rather than in terms of new methods of distributing wealth. The struggle against the G20 needs to be made into an opportunity for expanded debate and discussion about the current political-economic conjuncture, not in terms of individual policies, but in terms of the root causes of inequality and of fundamental transformation. If we can do this, we will begin to be able to conceive of the alternatives we wish to pursue and the type of movement we need to build.

Secondly, we must use this opportunity to expose the real nature of the G20 by making it the focus of our struggle. It is, of course, important to use this opportunity to raise individual related issues, such as ending practices destructive to the environment and development aid to impoverished countries. Our main target, however, should be the G20 itself. The South Korean government's main propaganda thrust is to link the G20 to South Korea's prospects advancement. In response, we must expose the fact that the G20 is set up as an instrument for managing a capitalist system faltering on its own structural contradictions, that it is making a concerted effort to avoid rather than bring about real change, and that South Korea's role is to support U.S. hegemony while acting as if it represents developing nations. The Lee Myeong-bak government is planning to use every means available, including enactment of new laws and methods of intimidation, to shut down protests during the Summit. Therefore, strong resolve and great effort is required from social movement forces. It is important that the South Korean movement takes up this responsibility collectively and is not divided by the effort to focus on too many separate single issues.

Finally, we need to use this opportunity to develop our creativity and to begin discussing concrete alternatives to the current system-in other words, we need to use this opportunity to expand alterglobalization discourse. In the first part of this decade the alterglobalization movement was strong. Within it, people actively envisioned what a new society would look like. After the world economy plunged into serious crisis, however, this sort of thinking has actually decreased. The struggle against the G20 is an opportunity for as to being again to talk seriously with one another about the type of world we want to live in and would look like. Let's use this moment well.