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A new economic club of nations

The G-20 summit this weekend will grapple with a global crisis.

By Staff writer of The Christian Science Monitor / November 14, 2008

Hi-tech: Volunteers entered data into laptops in April at an Obama campaign office in Carlisle, PA.

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A formal farewell to the American-led postwar financial system and a coming-out party for an expanded club of economic powers that will design new rules to meet the global financial crisis.

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That is how this weekend's Group of 20 summit, called by President Bush, is likely to be remembered: not so much for the action taken, as for the milestone it marked and the emerging global economic order it heralded.

"The summit marks a more inclusive form of international cooperation" in dealing with the global economy, says Sebastian Mallaby, director of geoeconomic studies at the Council on Foreign Relations in Washington. After decades of a handful of leaders from the richest economies meeting to address the world economy, "just the creation of the G-20 at head-of-state level will be the first accomplishment."

One reason that the Washington summit, which begins Friday with a White House dinner, is not expected to reach any significant accords for addressing a deepening economic meltdown is that American leadership is in limbo. Mr. Bush invited President-elect Barack Obama to attend, but Mr. Obama declined, sticking to the long-held tradition of "one president at a time."

While a call to broad international participation in efforts to stimulate the global economy may figure in the summit's final communiqué Saturday, representatives of participating countries and international economic experts say they expect a bigger emphasis on future steps.

Working groups are likely to be set up to suggest solutions to the specific problems deemed to have led to the financial crisis. Expected areas of focus include transparency in international financial transactions and regulation of a globalized financial system.

France is expected to offer to host a follow-up summit as early as February, with some officials suggesting the first decisionmaking on new rules – and the institutions to enforce them – could come by the end of March.

What is clear is that the new international economic order, what Europeans especially refer to as "Bretton Woods II" (after the international meeting that established financial institutions for the post-World-War-II world), will reflect a diffusion of economic power and responsibility to countries like China, Brazil, and South Korea.

"This summit recognizes where the world is going," says John Williamson, a development economist at the Peterson Institute for International Economics in Washington. Although a slightly smaller grouping than the G-20 countries might have been more efficient, he says, "the fact is that decisions without China and India and Brazil at the table aren't worth very much."