The War Over the Global Stimulus
The outlines of a "global New Deal" are being hashed at a G-20 meeting near London this weekend. Stryker McGuire on why no one is buying the agenda.
Few diplomatic events are more embarrassing than a summit that turns into a molehill. But as the world’s top finance ministers gather this weekend to map out plans for the April 2 meeting of leaders of the G-20 nations in London, this is precisely what British Prime Minister Gordon Brown could be facing.
Brown conceived of the meeting as a way to get the world's largest economies acting in concert against the financial meltdown, and not against each another. But President Barack Obama’s less-than-overwhelming enthusiasm for the event, and a lack of cooperation by other big players, has already raised concern in the UK that the summit could turn into something like a repeat of the Depression-era London Economic Conference of 1933, which fizzled because it was shunned by the Americans.
Obama may be the most globalization-friendly, multilateral American president in memory, but he is unlikely to sign on to anything that ties America's hands in dealing with its economic crisis at home.
The surest sign of impending disappointment came when word surfaced in London that Downing Street was finding it "difficult" to work with Washington on summit preparations. The reason? In effect, because nobody's home at Tim Geithner's Treasury Department, according to remarks leaked to the British press and attributed to Cabinet Secretary Sir Gus O'Donnell, Britain's most senior civil servant. "There is nobody there," he reportedly told a conference on Monday. "You cannot believe how difficult it is."
O'Donnell may have a valid point; the Washington Post reported this week that "every key position within the Treasury, with the exception of [Geithner], remains vacant or awaits confirmation." It is also become increasingly apparent the United States, frankly, isn't buying into Brown's "global New Deal" agenda.
Brown advocates a global framework for financial supervision and even "international principles" to guide the setting of bankers' salaries. Obama may be the most globalization-friendly, multilateral American president in memory, but he is unlikely to sign on to anything that ties America's hands in dealing with its economic crisis at home.
Washington is reticent, in part, because it recognizes that Brown’s aspirations for the London summit are patently political. A successful meeting would burnish Brown's credentials as a wise economic manager, which became his forte after decade as Tony Blair's Chancellor of the Exchequer during a time of great prosperity in Britain.
But if the meeting falls short of expectations, it will deal a near-fatal blow to Brown's efforts to improve his political fortunes before the next general election, which must be held before June 3, 2010. As it now stands, all polling data point to a defeat for Brown and his once-mighty Labour Party. But that’s not America’s problem. Obama is preoccupied with his domestic crisis and is not fixated on which party—both of which are US-friendly—wins the next vote.
Nor are Americans the only impediments to unity at the London summit. There is also widespread skepticism over Brown’s call for at least $200 billion from the International Monetary Fund to bail out cash-strapped nations, with no indication that China will pony up the amount Downing Street hopes for. At the same time, many European countries may disappoint Washington by failing to come up with stimulus plans as ambitious as the $787 billion behemoth devised by the Obama government.
Though Washington has paid lip service to the London summit, the meeting has barely registered with the American public. A review of the Washington Post and the New York Times over the past month turns up only one short item about the G-20, and this lack of interest has fueled British insecurities about the so-called special relationship between the two countries. Keen to find evidence of imbalance in the relationship, the British media seized upon the fact that during his recent visit to the White House, Brown movingly gave Obama a pen holder crafted of wood from the HMS Gannet, an anti-slavery ship, while Obama gave Brown an unimpressive boxed set of classic American films.
Lord Malloch Brown, a Foreign Office minister involved in the preparations for the summit, said the meeting must produce a substantive plan to rescue the world economy or there could be "disastrous" financial consequences. Brown, he said with admirable transparency, "cannot afford" for the summit to fail.
Stryker McGuire is an American journalist working in London. McGuire is a contributing editor at Newsweek magazine, where he was a correspondent, bureau chief and editor for 30 years; the founding editor of International Quarterly , and an associate at Lombard Street Research, an economics consultancy in the City of London.