The Hindu : Front Page : Summit declaration is a hybrid, Obama advisers ‘dismissive’

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Summit declaration is a hybrid, Obama advisers ‘dismissive’

N. Ram

Focus on strengthening transparency; reinforcing international cooperation

— PHOTO: PTI

TACKLING GLOBAL MELTDOWN: U.S. President George W. Bush addresses the heads of G-20 states at a White House dinner in Washington on Friday. Among others, from left, are Chinese President Hu Jintao, French President Nicolas Sarkozy and Prime Minister Manmohan Singh.

Washington: The Summit on Financial Markets and the World Economy adopted on Saturday a declaration that was half-way between a formulation of high-sounding general principles and a ‘commitment’ to an Action Plan that the Finance Ministers of the G-20 countries are tasked to work on.

The “common principles” agreed on are strengthening transparency and accountability; enhancing sound regulation; promoting integrity in financial markets; reinforcing international cooperation; and reforming international financial institutions. Sceptics will say it is like endorsing motherhood and apple pie.

The Washington summit of leaders of the G-20 countries took place against a grim socio-economic background, the background of an economic crisis that will not end any time soon. Fifteen Eurozone countries have been officially declared to be in recession and the world’s largest and most powerful economy is also heading indisputably into a recession. The latest estimates put out by the World Bank suggest that developed economies as a whole will contract by 0.1 per cent in 2009 while developing countries will grow by 4.5 per cent.

Just as the candidacy of Barack Obama came good in a resounding way during a time of deepening financial troubles, the reading here is that major developing country economies, including China and India, have a real opportunity to increase their weight and influence in the world economic order. But spotting an opportunity and capitalising on it are two entirely different things. The Declaration — while paying lip service to the need to ensure that the growth prospects of developing economies do not suffer, indicating some practical ways in which more resources will be available to developing countries, especially low income ones, and underscoring “the critical importance of rejecting protectionism” — does not indicate any significant change in the world economic order. It certainly does not reveal any paradigm shift.

Pressure from Sarkozy

According to some Indian insider sources, lame-duck President George W. Bush has been pressured or persuaded, especially by French President Nicolas Sarkozy and British Prime Minister Gordon Brown, to go along with principles and lines of action that he is ideologically opposed to. These relate generally to the imperative of developed countries adopting fiscal and demand-creating stimulus packages, and to the need for better regulation of the financial markets and some kind of international oversight over the national regulators.

The same official sources indicate that Obama transition advisers are “dismissive” towards the idea of the Bush administration leading any serious international crisis response and therefore towards the summit itself. Meanwhile, it is clear that although there will be a short session of the lame-duck Congress beginning Monday, Congressional Democrats have given up the idea of putting together any big economic stimulus package until President-elect Obama is inaugurated the 44th President of the United States on January 20, 2009.

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