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| G-20 in search of an agenda | | Scepticism about G-20 meetings will be reinforced if nothing of substance emerges in April meet |
| Business Standard / New Delhi Mar 19, 2009, 00:31 IST |
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The finance ministers of the G-20 countries met last weekend. The heads of government will now meet, a fortnight from now. Little of note happened at the ministerial meeting, and not much should be expected from the coming summit, where the principal element of interest might end up being the photo opportunity, or a bilateral meeting or two—given that this will be US President Barack Obama’s first international outing. At a time when the world economy is in trouble, and when there have been many calls for co-ordinated international action to prevent the global economy from sinking deeper, the general scepticism about the value of these G-20 meetings will be reinforced if nothing of substance emerges from the April summit.
The hard truth is that countries still look out for themselves, and are not thinking globally. The US wants the rest of the world to do what it is doing domestically, which is to announce massive stimulus packages. President Obama has even put a number to what he thinks is required: a package that is equal to 2 per cent of GDP. India will have passed that test with flying colours if the oil and fertiliser subsidies this year are taken into account, but not otherwise. Europe is less than convinced about the need to open the tap in this fashion, and is more concerned about financial regulatory reform, seeing that it was failure on this front that provoked the crisis in the first place. But the US is not interested in going down this road. Therein lies one crucial difference that will be aired at the summit in Britain.
Meanwhile, the emerging market giants represented in the G-20 (India included) have got a new voice, given that some of them are financing the deficits of the big western powers, notably the US. Some of them came together last week to ask jointly for two sensible steps: doubling the International Monetary Fund’s resources (to $500 billion), and underlining national commitments to free trade. The G-20 finance ministers endorsed both calls, heedless of the irony in the situation—lest anyone has forgotten, the IMF used to be seen as a handmaiden of the rich countries in their nefarious goal of pushing unpalatable medicine down the throats of their poorer cousins.
The point, of course, is that the G-20 is a talkshop, whereas international action has to flow through institutions, of which the three principal ones relevant in this context are the IMF itself, the World Bank and the World Trade Organisation (WTO). The WTO’s predecessor, the General Agreement of Tariffs and Trade, was also viewed once upon a time as a body that set rules to suit the rich countries. Now the WTO is seen as the principal bulwark against protectionist tendencies. In other words, the institutions created at the Bretton Woods conference in 1944 are the ones that could play a role at the international or global level, in doing something of substance in today’s context. The G-20 could do worse that focus on strengthening all three institutions. On a side note, the western powers seem to have agreed at the finance ministers’ meeting that the heads of the IMF and World Bank should not any longer be selected from just Europe and the US.
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