G20 overshadows G8April 1st, 2009 - 9:33 pm ICT by ANI
By Smita Prakash
London, Apr 1 (ANI): It is no longer a grouping of just the rich and famous. Yes Obamamania has gripped London, but the fact is that developing economies like Brazil, India, China and Indonesia are ready to challenge Washington’s hegemony.
The US had pushed to form the G20 after the Asian financial crisis of 1997-98, though today the grouping is sometimes viewed as a challenge to American power. And by a stretch even to European power.
Under pressure from French President Nicolas Sarkozy last November, the then US president George W Bush, chose to invite the G20 rather than the G8, the rich caucuss. UK Prime Minister Gordon Brown made the same choice for tomorrow’s follow-up meeting.
G7 and then G8 struggled for years to stay relevant in solving major world issues, but the rise of emerging economies made it impossible for G7 or G8 to tackle any global economic and political issues all by itself. And today it is China that President Obama is wooing…India with which he wants to have a “stand-alone global strategic partnership”.
China is America’s biggest foreign creditor, holding an estimated US$1 trillion in US government debt. A weaker dollar would erode the value of those assets. China is expected to support the world economy with its own growth and to use its foreign exchange reserves to buy foreign assets such as the US Treasury bonds. President of China Hu Jintao will hold his first meeting with US President Barack Obama during the Summit on April 2.
Meanwhile, Prime Minister Manmohan Singh is not willing to leave the lime light to the Chinese. Speaking to the Financial Times, the Prime Minister said, “The Chinese have certain advantages: the fact that its a single party government. But I do believe in the long run in the fact that India is functioning democracy, committed to the rule of law. Our system is slow to move, but I’m confident that once decisions are taken they are going to be far more durable.”
A subtle message that is typical of Singh, stating that China lacks the one key credential to contribute to global policy debate- that it isn’t a democracy.
Brazilian Minister of Finance Guido Mantega said recently that G7 was no longer the leading platform for dealing with major world economic issues and the role of G20 should be strengthened. Western economies have been hit hard by the ongoing financial crisis whereas major emerging economies, with their sizable financial reserves, have shown more resilience. They just might be the key to the solution to the ongoing financial crisis.
With so many powerful leaders and subtle rivalries between US and Europe on the one hand and intra Europe on the other…and to add to that the G7/8 vs the G20, to arrive at a consensus is a huge task.
Obama’s mere presence is not enough to ensure success for the summit nor is Brown’s boundless enthusiasm going to urge this mammoth elephant to action. Coordinated responses by 20 states that produce 90 percent of the world GDP is a naive hope. It is going to be a photo opportunity more than anything else. A posturing to the world that the leaders of the rich countries are willing to at least talk about putting their houses in order. (ANI)
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