WILL G-20 BE 2ND BRETTON WOOD?

(WIIL YOU CARRY ME TOO ?)

Will the forthcoming G-20 be 2nd Bretton wood or the media hype will collapse like the financial architecture of the west including America? It will be unravelled within a couple of days from now.

All developed nations seems divided on the issue as to what strategy should countries adopt so salvage the sinking economy. The Anglo-American lobby is of the view that all nations including the developing third world countries should imitate and prescribe for stimulus packages in order to inject liquidity into the economy. Before Obama, Bush has also enacted TARP in order to rejuvenate the ailing US economy. The 700 Billion dollars rescue and bailout package has sunk after making initial ripples. The 800 plus billion dollars 2nd rescue and rehabilitation Act enacted by Obama is yet make its healing effect felt. 

UK has already unveiled 786 US dollar rescue package but it too has failed to give any impressive positive improvement in the economy. Gordon Brown, one the other hand is to face general elections in his country next year. Tony Blair, his predecessor, who has earned a reputation of being a satellite to Bush has made his countries economy only subservient to the USA. His most of the statements used to be in resonance with that of Bush. Brown wants that this legacy of his predecessors to be carried forward. Thus, both Brown and Obama are staunch supporter of the view that the present global economic downturn can be turned around by stimulus packages and injection of more and more money into the financial systems. They advocate for more free trade, more lending by banks and more innovating steps by the financial systems, but conversely in their respective homes, they resort to protectionist measures. 'Buy American clause' in the Obama’s much publicised economic drug therapy to jerk start the terminally paralysed US economy, is an living example of protectionism trade policy. The restriction in H1B visa is another example of similar protectionist attitude of the Americans. The British followed the same trend. British's call 'british factories for britons' augument this trend and it seems that the champions of free trade and free society are scared themselves and are shutting down their own shutters to stop apprehended influx of job seekers.

Germany and France on the other hand are averse to those steps in which more and more money is injected into the economy . Markel is wedded to the idea of tightening the screws of financial institutions. She has blatantly refused the line of treatment prescribed by the duo,Brown and Obama.

Sarkozy also did not favour Obama-Brown’s prescriptions of pumping money into the economy. In fact in the garb of this whole financial and economic muscle flexing, the politics is being pursued that who emerges the leader of the world. Sarkozy and Brown, on the other hand are hornlocked to win the game. Those who win will be the european leader. Thus behind the curtain the issue is that who will lead the world. 

America revealed its unhidden desire to lead the world when Obama reiterated that US is ready to lead the world and the world should follow it. He has forgotten that US is no more in the pre-global recession period. Moreover, this contageion has originated and exported to the rest of the world by none other than the US itself. The unquestioned hegemony of Americans in the field of economic arena is being undermined. It has already under stress. Its treasury bills have been purchased by Asian giant, China. The new term ‘Chimerica’ coined by Niall Ferguson has projected the forthcoming global economy and position of China in it. ‘Together we swim and separated we sink’, a slogan given by Americans has made it clear that Chinese would definitely get a lion’s share, and not dragon’s share in the new emerging global financial order which is likely to emerge out of the G-20 London Summit.

Obama’s assertion that world needs America and so does America, discloses the gravity of situation. US, hitherto the self acclaimed economic and military leader of the world, has started talking about philosophy of coalition, cooperation and partnership. What a huge change of attitude! Continuing its state of inertia, even Obama is not pursuing consensul politics. If you continue to take unilateral decisions and expect that everyone would follow it, is not going to serve the purpose.

America needs world more desperately than ever before, but at the same time, it still wants to drive the vehicle of global economy by itself, a vehicle which met accident ( global economic downturn) due to its recklessness only. We therfore, need to change the driver itself and assume the steering the economic vehicle of the world so that the next journey is safe and it could reach destination. 

What, then we, ought to do at the G-20 summit? The world is standing at the threshold of a new era, a post American era. Let the leadership be changed. Emerging economies of the world, china, India, Brazil, South Africa, Japan, South Korea etc are in the waiting queue. Not only the World financial architecture but in fact the entire world order as whole, need to be changed. After all Obama, himself had said that the change has arrived.

BERLIN CONFERENCE; PRELUDE TO G-20

MARKEL AND BROWN; WHO WILL BELL THE CAT?

Leaders of major european countries have assembled in Berlin in a prelude to G-20 summit (India is also a member of G-20) which is scheduled to be held on 2nd April this year in London. This meeting is being attached immense singnificance because leaders of all major european economic powers have accepted officially that recession has arrived into their countries. Although no consensus is likely to be arrived at here also, but all leaders have unanimously argreed to the fact that this is a " global crisis and therefore it needs to be tackled globally", an acceptance which had been conspicously absent in all previous deliberations on economic matters. The change in attitude is significane and it seems that they are making themselves prepared to give a big say to other countries of third world, vis-a-vis new 'global financial order'. Markel went upto saying that this is the ' extraordinary international crisis' that means they want it to be solved with global participation.

Underpinning the significance of forthcoming London Summit, President Sarkozy said that ' summit would bear historic responsibility to reform global system. Apprehending the advent of trend of protectionism, Gordon Brown said that it would undo all the progresses which we have made over these years in terms of prosperity, liberty and democracy. Brown further said that an economy should be created which is based on ' soundest principles' and world needed a ' global new deal'.

Although all participating leaders have divergent views on majority of issues, but all of them reiterated the need of conferrement of major role on global financial institutions like IMF and world Bank.

The leaders also expressed their anguish and concerns on the system of giving hefty bonuses to the corporate managers at the cost of tax payers money. It should be born in minds that Obama have strongly warned against such practises. In India our PM had raised voice of concerns months ahead of this crisis when he had requested the corporate houses to trim the salaries of CEOs because it not only widens disparity but also instills frustrations in different classes of society. Unfortunately this appeal was not taken by Industrial and corporate houses in its spirit. Many laughed saying 'pay gram and you employ monkeys' 

This prelude conference at Berlin gives some idea about the agenda of the London summit on which India and other developing nations must do home works.

What actually India and other such countries want from the London summit? BRIC ( Brazil, Russia,India and China) and IBRA and other such blocs must prepare their agenda well before this summit so that they can put their case in a more cohesive and coordinated way. India has not yet started Institutionalised official deliberation on it as to what we are looking for in the forthcoming ssummit. It is the high time that we must stake claim a big role in the proposed global financial order otherwise there is no use crying over spilt milk.