COMMENT: All eyes on the G20
By Chris Mercer | 1 April 2009
Hundreds of anti-capitalist protesters crowded the streets of London's financial district today (1 April) as world leaders from the G20 nations prepare for crucial talks on how to handle the global economic meltdown.
The big question is, what can the G20 summit in London realistically achieve? And, as ever with such conferences, will agreements be worth the paper they are written on?
The build-up to the talks has been rather shaky this week, with rumours and speculation of fundamental disagreements between major powers. France and Germany, particularly, appear to be setting themselves up in the opposite corner to the UK. Barack Obama is trying to be everyone's best bud, but appears to be more in-line with UK prime minister Gordon Brown over the need for coordinated 'fiscal stimulus' to rebuild a battered global economy.
Neither has the build-up to the G20 been helped by barbed comments from the developing world. Brazilian President Luiz Inácio Lula da Silva last week blamed "white people with blue eyes" for screwing up the global economy for everyone else.
Politically, as well as economically, the G20 leaders need a deal this week, which is why they will reach one. They also need to look to be tough on what the public perceives to be a bunch of scavenging, vulture-like banking types.
Even if some kind of global action plan can be agreed, however, it looks like we're in a mess for some time to come.
President of the World Bank, Robert Zoellick, said this week that he expects to see GDP declines this year across Central and Eastern Europe, Central Asia and Latin America. "Just as the global economy once helped lift millions of people out of poverty, today there's a chance of development in reverse," he told a news conference.
The Paris-based OECD added its own vision of the doom that awaits us all. It said in a neatly timed bi-annual report yesterday (31 March) that, even with coordinated interest rate cuts, fiscal boosts and bailouts, the global economy is in a hole until at least 2010.
In the UK, Bank of England governor Mervyn King appeared to suggest last week that, even if Gordon Brown agrees with fiscal stimulus, the country will be scooping crumbs out of the cookie jar in order to provide more public funds to the financial sector.
Within the EU, concerns are growing about the 12 Central and Eastern European states who have joined the bloc since 2004. Latvia's economy is on the verge of collapse, with a number of others facing heavy GDP declines this year. The International Monetary Fund coffers could be seriously bruised.
The European Commission is predicting GDP declines of more than 5% in 2009 in Poland, Lithuania, Estonia, Latvia, Hungary and Slovakia, with a decline of more than 10% predicted for Romania and more than 15% in Bulgaria.
Back at the G20, there has been much of talk about the slippery slope to protectionism. Naturally, when times are tough people tend to look after their own. Countries are no different. There is a lot of talk of protectionism having crippled efforts to pull the world out of the economic mire in the 1930s - even Roosevelt's much-lauded New Deal contained a "buy American" clause.
While most leaders this week will likely talk publicly about their distaste for protectionist tendancies, the proof of this particular rhetoric will be in the pudding. Some cynical minds might say that the UK can afford to be anti-protectionist because it has relatively little industry left to protect.
In the end, perhaps the most reassuring thing about this week's summit is that our political and economic heavyweights are at least meeting up in one place to talk through one of the worst financial crises since the Depression.
Let's hope the carbon emissions pumped out to fly the world's dignatories to London this week were not done so in vain.
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COMMENT: All eyes on the G20