G20: Success or failure?
London G20 summit took place on April 2nd
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Friday, 03, Apr 2009 03:22
By Alex Stevenson
Did Gordon Brown succeed in reaching the impossibly difficult targets he set himself at the G20?
The answer is: nearly. But there can be no doubt the summit will go down as a huge success for the British prime minister.
Initially it seemed the ambitions of reforming the global financial system were unrealistically bold. At the ExCel centre a Canadian journalist gave his verdict: "He seems a bit grandiose, a bit idealistic."
Twas ever thus. In the two months leading up to April 2nd Brown talked of the summit in the same tones as Bretton Woods, the infamous negotiations which led to the post-war establishment of the international financial institutions.
Eyebrow-raising, to say the least. Which is why, in the final week, the downplaying of expectations came to be seen as such a crushing disappointment.
Division between Britain and the US, on the one hand, and France and Germany on the other lay behind this. Their rift over the utility of domestic fiscal stimuli threatened to lay bare the attempted unity of the G20. Officials started describing the London summit as merely being part of a "process" – and one nearer the beginning than at the end.
When Angela Merkel and Nicolas Sarkozy held their own press conference on Wednesday threatening to walk out if they didn't get their way, it seemed the stakes had been raised and Brown would have to cave in as a result.
Somehow, through sheer hard work and a relentless schedule of meetings and negotiations, the prime minister hammered through agreement.
When he strode out to announce the $1.1 trillion deal which had been reached the statement was as grandiose as ever: "This is the day that the world came together to fight back against the global recession."
This time, however, he was able to back up his claims with a final agreement.
There they were, on paper. Resources available to the IMF for emergency lending, previously at $250 billion, were given a major boost. There had been calls for it to double; in the end it trebled to $750 billion.
Trade finance was another area of success. Brown had previously talked of $100 billion as the minimum acceptable amount needed to help developing countries through the recession. In the end they got $250 billion.
And then there were special drawing rights, a financial measure controlled by the IMF which allows its members additional access to gold and dollar reserves. The total level available had stood at $20 billion. A decade ago an attempt was made to double this, but got bogged down in bureaucratic difficulties. The G20 agreed to increase them to $250 billion.
These huge numbers were backed up by a plethora of detail tackling the political hot potatoes of the day: bankers' bonuses, tax havens, even a commitment on climate change. The only area of disappointment lay in the paragraph on the Doha trade round, which was somewhat hesitant. There are bigger fish to fry, it seems.
Mobilising the world's resources as effectively as possible has been Brown's central preoccupation and his success in doing so has answered his critics.
Yes, agreement could not be reached on a global fiscal stimulus package. But, the PM pointed out, the G20 provided an extra $1 trillion in addition to the same amount collectively provided by individual budgets.
Yes, Sarkozy and Merkel did challenge Brown's authority. But far from walking out they stayed till the end, avidly engaging with reporters.
And yes, there will be another summit this autumn; but this will only serve to fill in the details about what has been agreed at this one.
This was never going to be another Bretton Woods. The formation of the world's financial system can never be repeated and was a process which took months, not a single day.
It was a genuinely historic moment, however, when the international community came together in a way unthinkable not so long ago. It may have taken an economic crisis to force the G20 together in this way. But there was no guarantee of success.
"I think that this kind of coordination really is historic," US president Barack Obama said as he wrapped up proceedings yesterday.
"I said in the meeting that if you had imagined ten years ago, or 20 years ago, or 30 years ago, that you'd have the leaders of Germany, France, China, Russia, Brazil, South Africa, a president of the United States named Obama - former adversaries, in some cases former mortal enemies, negotiating this swiftly on behalf of fixing the global economy, you would have said, that's crazy.
"And yet it was happening, and it happened with relatively few hiccups. I think that's a testimony to the great work that Gordon Brown did, and his team, in organising the summit."
Next the prime minister must turn his attention to the Budget, which chancellor Alistair Darling is preparing to deliver on April 22nd.
Saving the world economy is one thing. Saving the British economy is quite another.