Next week is the big G20 world summit where leaders will huddle to talk about the gobal economic crisis. And, in the end, will it prove to be merely perfunctory or will something of actually substantive come out of it? British Prime Minister Gordon Brown predicts there will be consensus and commitment:
British Prime Minister Gordon Brown said on Tuesday he was confident world leaders at a global financial crisis summit next week would do “whatever it takes” to create growth and jobs.
He called on fellow Europeans to play a lead role in reforming the financial sector and leading the world out of economic crisis in cooperation with the United States.
In a speech to the European Parliament, Brown said he believed the shared principles behind the U.S., British and wider European plans for cleaning up banks’ balance sheets would help rebuild confidence and restore lending to the economy.
“I believe that we are seeing the biggest cut in interest rates the world has ever seen and seeing implemented the biggest fiscal stimulus the world has ever agreed,” he said.
He called for a new, reformed International Monetary Fund which he said must have its resources doubled to at least $500 billion and be empowered to help countries facing a flight of capital.
“I propose Europe takes the lead to ensure that every continent makes the changes in its own banking systems that will open the path to shared prosperity once again,” he said.
Brown was embarking on a diplomatic offensive to win support for his plans to boost the world economy before a financial summit of the leaders of developed and emerging nations in the G20 in London on April 2.
Among other things, Brown is urging the EU not veer towards protectionism:
Gordon Brown today issued an impassioned plea to the European Union to use the lessons of the continent’s bloody history to guard against economic protectionism.
In his first speech to the European parliament, the prime minister declared that Europe’s history showed that erecting national barriers to trade only leads to “retreat and fear”.
“I know that the temptation for some is to meet this new insecurity with retreat, to try to feel safe by attempting to pull up the drawbridge or turn the clock back,” Brown told MEPs.
“But I tell you if there’s anything we know from history it’s that protectionism is the politics of defeatism, retreat and fear and in the end protects no one at all.”
The prime minister addressed the European parliament in Strasbourg just after lunchtime today on the first leg of a five-day tour that will take him to New York, Brazil and Chile. Brown will meet a series of world leaders to prepare the ground for the G20 summit he will chair in London next week.
Brown’s comments coincide with an Op-Ed piece run in various newspapers in which President Barack Obama argues that the wealthy nations should quickly stimulate growth.
President Obama is prodding reluctant G20 countries to jump on the stimulus bandwagon ahead of a London summit in April.
Obama’s remarks came in the form of an article he penned for German newspaper “Die Welt,” saying the world’s 20 largest economies needed to quickly stimulate growth and return to a wide-open market.
He added, quote, “These efforts should be robust and sustained until demand has been restored.” The contrast could not be greater between Obama and his European counterparts, who are mostly calling for tightening the reins on financial markets.
Obama has said both better supervision and easing the credit crunch are important.
The President insisted the G20 countries also had a responsibility not to leave emerging economies behind.
He called for a quick injection of G20 money into the International Monetary Fund and regional development banks.
This summit will be closely watched. The BBC’s Economics Reporter Steve Schifferes writes that the participants might ponder the lessons of the last, big worldwide economic catastrophe summit in 1933.
For those organising the current G20 summit, the lesson is that boosting confidence by maintaining a united front in the face of the global recession has to be a key objective, whatever the concrete policies that can be agreed.
Critics of such summits, however, warn that they are dangerous because the risk of failure, and its negative effect on confidence, is greater than the potential gain from cooperation.
However, many academics who have studied such negotiations draw another lesson.
They argue that meaningful international agreements are only possible when there is one dominant country that has the economic and political power to enforce a deal.
This was the case in 1944 when the US put through the Bretton Woods deal which created the IMF and World Bank, and in the 1950s when it initiated world trade talks.
But during the Depression, a weakened US had neither the economic power nor the political will to replace Europe as the organiser of the world economy.
With Europe even more divided now, the same issue could shape the G20 summit – whether the US, weakened by its own problems, really wants to take a leading role in sorting out the world’s problems as well as its own.
So, 76 years later, the fate of the world economy is again at the mercy of world politics.
UN Secretary General Ban Ki-moon argues that the G20 summit could help jumpstart the world economy:
“The stakes at the London summit are large,” Ban told the UN General Assembly, which convened to discuss the world economic downturn, triggered initially by a US financial crisis and which threatens funding for UN programmes.
“The social fallout has been so severe that it could soon evolve into a wholesale political crisis, with instability and unrest in many parts of the world,” Ban said.
He said the G20 meeting in London can kickstart the world economy, find ways to prevent a future crisis and place the world “on a more equitable, sustainable path for the future”.
He called for “global social justice” as world leaders at the meeting can institute change to help the poor around the world impacted by the recession. He called for standing against protectionism and opening up trade by breaking the deadlock in the Doha negotiations.”
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.