Many commentators and even the Obama administration have built up expectations for this week’s G-20 Summit. For the record, the G-20 nations are the 20 largest economies, who together account for 85% of the global economy. Though Gordon Brown, the British Prime Minister, hopes the meeting will begin the restructuring of the world economic system, much like the Breton Woods agreement did after World War Two, there is reason to be skeptical.
First, we need to keep in mind that the situation now is not the same as the one the world was facing after the Second World War. At that time, though Europe was wrecked, the United States stood as the economically strongest victor after the war. Then the American model stood out, and the political weakness (or non-existence) of governments in post-war Europe made the remodeling of the system dependent on far fewer interests.
Now the situation is fundamentally different. In many parts of the Europe and the world people blame the Anglo-American model of free market capitalism for the crisis. Rather than looking to the United States for solutions, many are looking to blame it. And they find the importance that President Obama places on government stimulus as misplaced, instead relying on their own social welfare systems. Instead many continental Europeans want stronger regulation of the financial markets. France has even threatened to walk out of the G-20 meetings unless an international financial regulatory body is agreed to. Most entertainingly, Czech Prime Minister Tobalanek called President Obama’s stimulus package a ““road to hell”.
Clearly then, crafting a consensus is not going to be easy. Here I’ve only taken a look at European opinions without looking at those from the developing world, including China and India, that will become more and more important to both stabilizing the current system and crafting the future. We are experiencing the relative decline of American power vis-à-vis the rest of the world and now the choice is ours. How are we going to respond? Instead of a new Breton Wood Agreement, I think that will be the most substantive thing that comes out of the G-20 summit.