President Obama and the rest of the G20 leaders sure have quite the task ahead of them during their summit in London this week: To Save the World! While I guess it isn’t that dramatic, but there are some pretty big expectations for this meeting, ones that go beyond what Barack Obama will be wearing. Here’s a short list of issues on the agenda:
A coordinated global response to the worldwide economic crisis, building consensus on an international financial regulatory framework, adoption of international accounting standards, coordinating Central Banks policies, curtailing any talk or movements toward protectionist measures, saving capitalism, and avoiding these guys….
The last major economic summit in DC to work out these problems did not breed much concrete success nor calm global markets, so we must temper our expectations. In fact, though there were calls for diligent openness in terms of global trade during the Fall conference, the World Bank recently reported that 17 of the 20 countries had imposed a total of 47 trade-restrictive measures, a bad sign to say the least. However, Daniel Drezner of Newsweek argues that the G20′s last summit should receive a ‘mulligan’ and offers hope that with a newly instated and popular US President, 6 months more of the global crisis to sober up the skeptics, and more time for those involved to come up with possible financial solutions something could be done.
I am far from an economic expert and am loath to recommend specific proposals to solve this economic downturn, but I have some thoughts. President Obama needs to lead the charge of anti-protectionism at this conference and show the world that we can’t tariff our way out of this mess. I am already concerned about this occurring as Obama and the EU are already bickering over the breadth of a European stimulus package. (Americans telling the Euros to spend more!). I believe these heads of state of the world’s largest economies also need to come to this conference with a sense of urgency, but not a sense of emergency. I do not think we need to tear apart a global economic system (World Bank, World Trade Organization, IMF) that has led to the prosperity we have taken for granted, in order to solve this crisis, nor do I believe we can ‘regulate’ our way to solvency and growth. These institutions need to be reformed and re-legitimized in the eyes of the world so they can continue to help bring the benefits of free trade to all states.
Conflict occurs at all times in world politics, but at times of economic distress it becomes even more likely and acute. The world must not repeat mistakes made during the Great Depression, where states looked only inward to solve their problems. We need calm, yet energetic world leadership to help get us all through this current economic crisis. Let us hope we find some this week in London.