After The G20 Summit, Where Do We Go Next?
The Obamas leave the UK today (fog permitting), and in their wake lies a touchy-feely Queen with an iPod, a rocketing stock market, and G20 with a lot of promises to keep.
So Berlusconi turned on the cheeky-chappy charm to retina-scorching wattage, Stephen Harper missed out on the official photo because he was in the toilet, and Dmitry Medvedev said, worryingly: “The speed with which we are acting at least makes me think that many of the decisions we are taking will be pretty effective” – just do everything as fast as possible, and everything will turn out just fine, was the Russian’s prez’s advice.
But while Medvedev is happy that things are going quickly, the press impressed that Gordon Brown looks “statesmanlike”, and investors convinced enough by the numbers with lots of zeroes on the end to start trading on the markets again, the confidence borne off big gestures is going to deflate rapidly unless concrete action is taken. And at the moment, some of the G20 agreements are little more than rhetoric Sellotaped onto keen hopes and already-existing promises.
Witness: world leaders “preparing for a conclusion in the Doha trade round”, referring to the universal agreements on global trade starting up again that should have been made three months ago; a free-market expert interviewed by the FT called this “a non-commital commitment”. It allows the creeping protectionism that we saw recently to carry on creeping.
Or the fact that the US, Saudi Arabia, Japan, China and the EU allowed existing pledges of cash to be repackaged into £500bn given to the IMF to lend to countries facing a liquidity crisis – the whole sum is eyepopping, but it hasn’t exactly taken much diplomacy to cobble it together.
More encouraging, though obviously in need of ongoing fleshing-out, are promises on regulatory reform. They include a Financial Stability Board, a G20-wide body designed to maintain tighter regulation across the whole sector. Despite a tangible whiff of bureaucracy about it, it’s certainly what’s needed. And it also forms a convenient jumping off point for the real success story of the conference, Nicolas Sarkozy.
He and Angela Merkel formed a tag-team of pro-regulation a couple of weeks back, and carried it through into the summit (despite Sarkozy thinking Merkel’s accent is a hoot). Sarkozy threatened to walk out if the regulation reforms weren’t carried out, and when they were, he capitalised, saying “Ango-Saxon”-style free markets, born at Bretton Woods, were over. He’s been calling for a new form of regulation since the crisis began, though at the time of his election he was rather more pro-free market.
But as well as cleverly casting essential reforms as being all his idea, Mighty Mouse took on Hu Jintao as well this week. Sarkozy met the Dalai Lama last year, much to the anger of China, and Sarko was also pushing this week for the publication of a blacklist of tax havens, to include Hong Kong and Macau; in the end, good ol’ Obama weighed in and brokered a compromise between Sarko and Jintao. As happened so often in the summit, there was an agreement to merely promise action against tax havens, and just “note” the blacklist rather than endorse it. Expect a lot more diplomatic bickering over this issue in the coming weeks.
Sarko is now looking forward to his private audience with Obama in Strasbourg – after getting battered over his reaction to the financial crisis, he’s now appearing strong and cruising in Obama’s golden slipstream. But unfortunately he’s yet to win over the last crucial giant on the geopolitical landscape – Bob Geldof, who said: “Let Sarkozy walk out. It’s not important”.
Geldof actually raises quite an interesting point. Sarkozy led a successful charge against free markets, leading to a more tightly regulated system. Yet the other major prong of the summit is to reinstate a global marketplace, and resist protectionism. Steering the G20 between these two poles is the major task over the coming weeks.
Posted by Ben Beaumont-Thomas in Hot Money | April 3, 2009 12:03PM |