A new economic club of nations
The G-20 summit this weekend will grapple with a global crisis.
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Indeed, with the world's major developed economies expected to shrink next year, the emerging economic powers are suddenly cast in the unfamiliar role of posse riding to the rescue. China, for example, is still expected to grow about 8 percent.Skip to next paragraph
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"The times are over when things could be decided just by the G-7," says a high-ranking European official in Washington who spoke on condition of anonymity. "It can't be just the G-7 countries [because] we have to bring in the countries with huge reserves and growing markets."
Developing countries are welcoming the expansion of the world economic club to include them. But they are also demanding a bigger role in international economic decisionmaking.
Worried that a financial crisis spawned in the US and abetted by a weak regulatory system will bring them down as well, developing countries are expecting reforms that recognize the advent of a globalized economy. But they also will demand recognition of their particular needs.
For instance, developing countries are likely to push for maintaining and expanding mechanisms promoting access to investment funds. "I'd expect that to be quite a fixture in future negotiations, but it's not something the G-7 would have been likely to push," Mr. Williamson says.
Another area of interest is trade, especially since the economies of so many developing countries are dependent on export markets. Brazilian President Luiz Inácio Lula da Silva told a finance ministers' meeting in Brazil last Saturday that the world must "avoid the temptation of resorting to financial and trade protectionism as a mechanism to overcome the crisis."
Simply by calling an emergency summit of more than 20 countries, Bush is recognizing the growing role of developing economies. But he is also calling for the summit to take up specific reforms that acknowledge a changed world.
For example, he wants a "modernization" of the World Bank and International Monetary Fund that would include extension of voting rights and expansion of their executive boards to developing countries.
What the US under the Bush administration does not want to see is the summit and follow-on meetings turn into an assault on the postwar, free-market system. In prepared remarks he was to deliver Thursday afternoon in New York, Bush advocated "specific actions" to improve the system. But he also warned against overzealous attempts to "reinvent" it, saying "government intervention is not a cure-all."
That shot over the bow appeared aimed at some leaders like French President Nicolas Sarkozy, whose vision of a crisis fix includes a more robust governmental role and more intrusive intervention.