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Global coordination task falls to French schmoozer

by Kevin Rafferty

HONG KONG — Pity French President Nicolas Sarkozy, and be careful what you wish for. Sarkozy has taken over as the president of the once-cozy Group of Eight developed economic powers as well as the Group of 20 countries, which combines the club of old economic powers with the up and coming new ones.

It will be a wonderful opportunity for the French president to show off his schmoozing skills, which he does so well, and to collect all the international headlines as the man at the center of the world — which he hopes will aid his campaign for re-election as French president next year.

Sarkozy will quickly learn that his dream job as economic conductor of the world is likely to turn into a nightmare. Probably the only — slim — chance he has of making it work is by reducing his other powers as president of France — which would be a potential electoral disaster for him — and of persuading other world leaders to surrender their national powers.

As champion schmoozer with a supremely self-confident ego, Sarkozy might like to bet on his chances. But he should remember that “Mr. Charm” Tony Blair, President “Yes, we can” Barack Obama and “Mr. Scowling Determination” Gordon Brown all failed to achieve global economic coordination that lasted beyond the immediate financial crisis.

The promises of the G8 summit at Gleneagles, Scotland, in 2005 to bring greater aid to Africa lasted as long as the international spotlight was on the meeting.

One of the lessons of 2010 was that the G—20 as an internationally minded body with a worldview was a myth, and that the idea of a group with the energy to take action was only a joke. Especially at Seoul late in the year, the G20 was exposed as a parade of naked national leaders incapable of reaching international conclusions.

Failure of the G20 should not be surprising. The original group of leaders of the developed world started off as a small fireside chat club where a handful of world leaders who knew each other well could smooth out their differences. By the time it had grown to seven members, it had proved unwieldy and argumentative.

So what chance was there ever that 20 different and highly assorted countries would ever be able to achieve agreement on highly disputed and contentious issues about the world economy where there is also deep underlying political disagreement?

The G20 was from the start an awkward body. If the hope was to bring China and India into international economic deliberations, then the best course would have been to expand the G8 to include them, and perhaps Brazil and South Africa to provide regional balance, and to throw out Canada and Italy to keep the group from becoming too big ever to agree on anything.

Having opened the doors to Argentina, Australia, Indonesia, Saudi Arabia, South Korea and Turkey to create a body that includes countries with 85 percent of the world’s total GDP, it will be difficult to close them. Logically why not expand the G20 to include some of the critical special interests left out, such as the densely populated poor countries (such as Bangladesh and Pakistan), sub-Saharan Africa (where Nigeria is a notable absentee), the landlocked countries, and the small island states many of which are vulnerable to global warming?

That would mean a G-25 or a G30, but G20 summits have become a regular G35 to G40 anyway with the inclusion of the European Union as one of the 20. How on earth can you justify the weaker European countries having their own separate seats as well as the EU, plus summit invitations to the secretary general of the United Nations, the heads of the World Bank and International Monetary Fund, World Trade Organization, and the rest of the U.N. alphabet soup.

The G20 has no secretariat, making it still more difficult to hammer out agreements or to keep any vague promises that have been reached. Sarkozy, true to form, has suggested Paris as headquarters for a G20.

New economic trends make it increasingly difficult to get a G20 to work, other than as a parade ground for national leaders domestically. China and India continue to rise and have been joined by Brazil, Indonesia, Turkey and others, which are showing 8 percent plus growth rates. The old developed countries are not only growing more slowly, struggling at 2 percent or so, but are fighting to tackle deep structural problems of debts and deficits.

The White House is beginning to realize the inadequacies of America’s super power status when it has to come to grips with budget and trade deficits and truculent bankers unrepentant about the mess they caused. The fact that Congress is unwilling to accept the reality of a diminished America only adds a dimension of political gridlock.

So why in this changing world should the rising economic powers accept the advice of the tired old world?

It is a legitimate question that does not make the new assertiveness of China any less dangerous, because it may lead to a perilous and potentially ruinous economic nationalism. That’s why there is a growing need for a body that can take a worldview and issue global warnings about the challenges and the opportunities ahead.

The troika of the IMF, World Bank and WTO would be a good place to start, especially in the absence of any other alternative. The IMF emerged from the financial crisis with its stature enhanced. Unfortunately Beijing’s view is not that the IMF should have a global vision, and global powers to match, but that China’s growing economic muscle and its own economic views must be reflected in the IMF.

This is the creaking and rotten economic stage on which Sarkozy has to tread. His best course would be to build a European consensus, which would, if he were successful, help rescue Europe from its own increasing irrelevance and try to create a middle way between the perilous nationalism of the United States and China. The EU, according to the CIA World Factbook, is the world’s biggest economy, even though it does not act like an economy.

To do that Sarkozy must yield his narrow national powers and persuade his friend Chancellor Angela Merkel that a blinkered German view is not good for the world any more than a blinkered U.S. or Chinese one is.

Can Sarkozy, the champion schmoozer, look beyond Paris?

Kevin Rafferty is editor in chief of PlainWords Media.