G-20 Differences: Half-Hearted Promises and Mutual Blame

• Print
• E-Mail
• Feedback

The G-20 is now threatening to become a club of members that blame each other for their problems. Even before the summit, the Europeans had reacted with annoyance to Washington's lectures. "Governments should not become addicted to borrowing as a quick fix to stimulate demand," German Finance Minister Wolfgang Schäuble said. "The greatest risk, if there is a risk out there, is the sovereign debt risk," said the British finance minister, George Osborne, in an interview with the Globe and Mail. The dispute, it seems, is set to continue.

China, meanwhile, managed to cleverly avoid having the alleged undervaluation of its currency become an issue at the summit, by announcing prior to the meeting that it would allow the renminbi to appreciate slightly against the dollar. Optimists saw the move as a signal that Beijing would stop subsidizing its exports through an artificially low exchange rate. On the sidelines of the summit, Obama promptly invited Chinese President Hu Jintao for a state visit to the US.

But the Chinese delegation put the brakes on the exuberance, leaving no doubt that China will in the future continue to make currency-related decisions independently and not in response to external pressure.

"Beijing is practiced at making concessions that are just enough to cool external pressure without really amounting to substantive policy shifts," Andrew Small, an expert on China at the German Marshall Fund, told SPIEGEL ONLINE in an interview. The currency concession "does not represent some greater move towards responsibility on Beijing's part," he explained. "The goal is still very much to use China's stronger power position to ensure that it can concentrate on a relatively narrow set of domestically focused interests."

Creating Jobs at Any Price

Now, regulations for the global financial system are to be discussed further at the next summit in South Korea. It won't be easy, particularly given the different strategies in use to combat the crisis.

The International Labour Organization, for example, issued a report earlier this month which found that global unemployment rose by 212 million as a result of the crisis -- an unprecedented jump of 34 million, despite economic stimulus measures. The report did find, however, that without such measures, a further 55 million jobs would have been lost.

The big question now is: Will the stimulus efforts already undertaken be enough? Or will the bad economic news once again dominate the headlines?

In the US, the unemployment rate has so far refused to budge from 10 percent -- a level that is unusually high for the US. The number of long-term unemployed is growing. Obama wants to create jobs, no matter what the cost, and he has little time to reflect on his setback on the global stage.

Indeed, the White House released details of the president's next trip even as he was attending the G-20 summit in Toronto. He will be flying to Racine, Wisconsin on Wednesday for a town hall meeting. The subject: the situation of the US economy.

• Back
• 1
• | 2

• Part 1: Half-Hearted Promises and Mutual Blame
• Part 2: The Mutual Blame Game