By Gideon Rachman
Published: November 8 2010 14:29
As the leaders of the world’s biggest powers gather for a Group of 20 summit, their South Korean hosts talk hopefully of the organisation as a “steering committee of the world”. But there are so many different hands grabbing for the steering wheel that the G20 will be lucky to survive without a serious accident.
In the immediate aftermath of the fall of Lehman Brothers, the world’s leaders pulled together. President Nicolas Sarkozy of France even enthused: “The G20 foreshadows the planetary governance of the 21st century.”
These days, however, the G20 looks more like it is foreshadowing the international conflicts of the 21st century. The central tension on most issues is between the US and China. But the world is not splitting into a pro-American and pro-Chinese camp. Instead, there are now seven major axes that divide the world.
Surplus versus deficit countries: Countries that are running large trade and current account deficits want the G20 to discuss global economic imbalances. But they face an “axis of surplus” that is sceptical about the need for action. America and China are at the heart of the dispute. But Germany, another big exporter, has taken an even harder line than China in criticising American economic policy and rejecting the call for numerical targets for current account deficits. Other large members of the axis of surplus are Japan and Saudi Arabia.
Manipulators vs manipulated: America accuses China of manipulating its currency by deliberately undervaluing the renminbi. China retorts that it is America that is manipulating the markets by printing dollars. The rest of the G20 worries about being caught in the crossfire of a global currency war. Some, particularly the Indians, seem more concerned about the Chinese undervaluation. Others, such as the Germans, seem more worried by the actions of the US Federal Reserve. But nobody likes being caught in the middle.
Tighteners vs splurgers: Two years ago, this was the big argument at the G20 – as America and Britain argued for deficit spending and Germany resisted. Now Britain has joined the tighteners and US politics constrain any further splurge in American spending. That could leave the International Monetary Fund as the sole voice calling for a new global spending stimulus.
Democracies vs autocracies: The list of G20 countries underlines how anomalous China’s political system now is. Of the 20 major powers around the table, China and Saudi Arabia are the only two unambiguously undemocratic countries – with Russia straddling the democratic-authoritarian divide. But, fortunately for China, the G20 rarely splits along these lines. This is partly because the G20’s agenda is still overwhelmingly economic. It is also because, even when the G20 nations stray on to political issues, there are other divisions that matter more than the one between democracies and autocracies.
West vs the rest: The very existence of the G20 acknowledges that the global balance of power has changed. The old G7 was essentially the white, western world, plus Japan. The new G20 includes rising powers that were once colonised or defeated by western powers – China, India, South Africa, Indonesia, Brazil. That means that the G20 is divided by issues of emotion, identity and race – as well as by more easily defined economic and political issues.
The complex mix between economics and emotion is evident when the discussion turns to climate change. After the failure of the UN talks, some hoped that the G20 might strike a climate deal. In fact, the divisions at the UN are replicated at the G20. The Chinese, Indians and Brazilians point out that the industrialised nations of the west put most of the greenhouse gases into the atmosphere and still consume far more energy per head than developing nations. The Americans and Europeans respond that China is now the largest emitter of greenhouse gases in the world – and that no deal can work, unless the developing world also cuts back. The result is acrimonious deadlock.
Interventionists vs souverainistes: The G20 nations face a fundamental philosophical issue – should they be looking for legally binding new agreements or should they proceed on a voluntary basis? For once, America and China – as big countries that care a lot about national sovereignty – tend to be on the same side. They are both wary of agreeing to new international legal regimes. The countries of the European Union, however, adore new international treaties and were hoping that the G20 might one day develop into the “planetary” government that Mr Sarkozy spoke of. The Europeans are liable to be disappointed.
Big vs small: There is one global divide that cannot be expressed at a G20 summit – and that is the divide between the 20 big countries that have secured invitations and the 170-odd that are excluded. The presence of organisations such as the UN and the World Bank is meant partially to compensate the unrepresented nations. But they are increasingly open in challenging the G20’s pretensions to be a “steering committee for the world”.
The conclusion is dispiriting. Far from being the solution to the world’s most urgent problems, the G20 looks increasingly divided, ineffectual and illegitimate.
Gideon Rachman is author of a new book, Zero-Sum World (Atlantic)
Copyright The Financial Times Limited 2010.
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