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Will the G20 face up to the changing global balance of power?
John Humphrey
In the run-up to the G20 meeting, attention in the UK newspapers has begun to focus increasingly on the rift between France and Germany, on one hand, and the UK and US on the other. While the former are emphasising issues such as financial regulation and tax havens, the latter are more concerned with a stimulus to the global economy. There are valid historical and practical reasons why these countries should have differing views with respect to priority actions for addressing the financial crisis. In part, these also relate to their understandings about the causes of the crisis.
The clash of North American and European egos does, however, draw attention away from the underlying issues that using G20 as the vehicle of choice for addressing the global financial crisis has brought to the fore. The financial crisis accelerates and highlights the long-term shift of global economic and political power from the west to the east and to the emerging powers in the global economy.
In the run-up to the G20, these rising powers have begun to voice their own opinions and agendas. In some cases, this has been expressed negatively. Equally, the emerging powers are voicing positive suggestions about what they want from the G20 process; including reform of voting in the IMF, and economic stimulus and greater resources directed to emerging markets to offset foreign investment, and in the case of China, a suggestion for the creation of a global reserve currency. The latter is not a short-term issue, but the fact that it has been released at all puts it on a longer-term agenda for the future of global regulation. Concern and resentment in China about how the US has abused its position as holder of the global reserve currency should not be underestimated.
The agenda-setting capacity of the emerging economies is one indication of the global shift in the balance of power. Another is the extent to which the old powers look to the emerging powers to take on more responsibilities in global economy and politics. But responsibility without power is not very attractive. At the very least, the G20 has to make concrete proposals with respect to the reform of the IMF and World Bank, in terms of policy and in terms of voting rights. The divisions among the old powers should not distract attention from the need to take seriously the agendas of the new.
Professor John Humphrey is Team Leader of the Globalisaiton Team at IDS
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Related Publications
- McCulloch, N., Schmidt, A. and Summer, A. (2009) 'The Global Financial Crisis, Developing Countries and Policy Responses', IDS In Focus Policy Briefing 7.1, Brighton: IDS