THE GLOBAL CONSENSUS IS STARTING TO CRACK / THE FINANCIAL TIMES COMMENTARY & ANALYSIS ( RECOMMENDED READING )

The global consensus is starting to crack

By Philip Stephens

Published: September 3 2009 19:29

The novelty is wearing thin. The eager anticipation and diplomatic hoopla that attended the London summit has given way to a certain weariness ahead of this month’s gathering of the Group of 20 leading nations. Back in the spring, leaders of the biggest economies could claim to have saved the world. What on earth do they do for an encore?

The G20 has outgrown itself. If you add in the myriad international and regional organisations, some 30 leaders will converge on Pittsburgh. The numbers could rise further. Some of those left off the guest list have gone to extraordinary lengths in the effort to gatecrash.

It matters that Barack Obama is host. Britain’s Gordon Brown won deserved plaudits for his chairmanship in London; and the glow around the US president has dimmed somewhat since those heady days of spring. But Mr Obama is still the leader everyone, including China’s Hu Jintao, wants to be seen with. The Pittsburgh pecking order will be described by who gets time with the leader of the superpower.

That said, officials preparing the summit fear it will be something of an anti-climax. In part, that is inevitable. When the leaders last met, many saw a risk that the global financial crisis could yet trigger a 1930s-style depression. For once, a summit communiqué actually mattered. But the point of maximum danger has passed.

Leaders now face the unglamorous task of redesigning the financial system and rebuilding confidence. How can they sustain a recovery led largely by the public sector? How quickly should governments turn off the fiscal taps to start cleaning up their own balance sheets? How can they rein in the banks? Averting a slump looks pretty straightforward against exit strategies, regulatory arbitrage and bankers’ bonuses.

Back in the spring, the common cause shown by leaders of rich and rising nations alike seemed to some to preface the dawn of a new global order; at the very least it marked a recognition of the new distribution of power in the world.

True, the G20 met in Washington during the twilight of George W. Bush’s administration. But that was merely a rehearsal for the main event. It needed Mr Obama’s embrace of the multilateralism disdained by his predecessor to usher in a new era of co-operation.

In spite of occasional spats, the jagged edges and the inevitable grandstanding of France’s Nicolas Sarkozy, the result was an impressive exercise in co-ordination. The recognition of mutual interest between the US and China was particularly striking.

The world is not yet out of the recessionary wood. Bankers’ bonuses may be grabbing the headlines, but the conversations that will count in Pittsburgh will be about managing the transition to self-sustaining growth. And how can Washington and Beijing avoid a re-emergence of huge economic imbalances?

A linked challenge comes from the approaching United Nations climate change summit. If the wealthy and emerging nations represented at Pittsburgh cannot sketch out a deal on sharing the cost of lowering carbon emissions, there is little hope of agreement among the 190-odd delegations due in Copenhagen.

Yet without the urgency imposed by a threat of imminent catastrophe, national politics, and prejudices, are re-asserting themselves. The financial crisis produced one of those rare moments when leaders recognised a coincidence of national and collective interests. But it was a moment.

More typically, the debates within the G20 – about climate change, nuclear proliferation and a host of other issues as well as the global economy – illuminate the tension between the two sets of forces recasting the international landscape. On one side, the re-emergence of powers such as China and India is creating a more competitive, multipolar system. These rising nations, understandably, want to assert their own interests after two centuries of western hegemony. On the other side, the fact of closer interdependence deprives even the US of the capacity to act both effectively and independently.

The result is a contest between the centrifugal impulse inherent in a multi-polar system, and the centripetal force of interdependence. Giovanni Grevi, a scholar at the European Union Institute for Security Studies (EUISS), cleverly describes this as an “interpolar world”.* But we do not know yet whether competition will prevail over co-operation or vice-versa.

There are some encouraging signs. Those who know him well describe Mr Obama as the most intuitively multilateralist US president since Jack Kennedy. Mr Obama, I heard during a visit to Washington earlier in the summer, has long grasped the truth understood by the architects of the post-world war two international order: the US national interest is best pursued through a rules-based global system.

Hillary Clinton developed the argument in a recent speech to the Council for Foreign Relations. The US secretary of state said the US would lead the effort to create “a new global architecture”. The aim was a framework in which states had clear incentives to co-operate and strong disincentives to sit on the sidelines or to foster conflict.

It was a good speech – perhaps reflecting Mrs Clinton’s hope that she can grab the opportunity that Bill Clinton let slip as president during the 1990s. But to many in the US talk of co-operation still smacks too much of world government. In Beijing and Delhi, meanwhile, the suspicion is that it is all a plot to entrench western power.

As I also heard in Washington, the task of building an international order rests largely with the US, China, India and, to a degree, Russia. Yet it is hard to think of four more jealous guardians of national sovereignty. So we should not expect any quick fixes; unless that is, the G20 manages to manufacture another existential crisis.

*The Interpolar World, Occasional Paper No 79, EUISS, Paris

Copyright The Financial Times Limited 2009