Die Homepage wurde aktualisiert. Jetzt aufrufen.
Hinweis nicht mehr anzeigen.

The World from Berlin: 'G-20 Solidarity Is Crumbling'

With significant squabbling in the run-up to the G-20 summit in Seoul this week, particularly between Germany, China and the US, observers expect few results of substance. German commentators argue that there is a lesson to be learned for Berlin.

US President Barack Obama (L) meets with Chinese President Hu Jintao in Seoul. Zoom
AFP

US President Barack Obama (L) meets with Chinese President Hu Jintao in Seoul.

The world's major industrialized and emerging nations have gathered in South Korea for a two-day summit, with their eyes firmly focused on fixing problems that continue to thwart a return to global growth. Whereas the G-20 group had managed resolute togetherness during the darkest days of the financial crisis, the mood ahead of the Seoul summit has been fractious.

Ahead of the meeting negotiators have struggled to come up with a closing statement that all the leaders can agree on. In the runup to the summit many of Washington's G-20 partners, particularly Germany, had voiced irritation at the move by the Federal Reserve to pump $600 billion (€437 billion) of new money into the American economy.

The US, for its part, is most concerned with the continuing low value of the Chinese currency, the yuan, which it claims gives Beijing an unfair advantage on the export market. But a US proposal to limit trade surpluses to 4 percent of gross domestic product was flatly rejected by Germany, the world's second largest exporter after China.

Speaking on the opening day of the meeting US President Barack Obama insisted that a strong US is crucial for a wider global recovery. "The most important thing the United States can do for the world economy is grow," he told a news conference, "because we continue to be the world's largest market and a huge engine for all other countries to grow."

The German press on Thursday is not optimistic that much will be achieved during the Seoul summit and some are criticial of Berlin's reliance on exports.

The center-left Süddeutsche Zeitung writes:

"German exporters are not to blame for the US trade and budget deficits -- but they have profited from them. In this regard, the latest triumphs of the German economy are in part borrowed successes. An export surplus of 6 percent of gross domestic product, such as achieved by Germany in 2010, is not sustainable. The debts of one are the assets of another. The G-20 had essentially set itself the task of dismantling these global imbalances, but it hasn't accomplished this."

"Nothing substantial will be decided in Seoul. The real task will be to keep the G-20 intact as an instrument, something that is far from trivial. The summit in its current form is a product of the financial crisis. The US recognized that the old industrialized nations could not solve their problems by themselves and pushed for the emerging nations to be given an enhanced status. Since then states like China, India and Brazil have been playing a role on the world stage that would have been unthinkable three years ago."

"The dismantling of global imbalances won't happen without an upgrade of the value of the yuan. The Europeans will continue to be occupied with securing the currency union and preventing a new debt crisis. The latest news from Ireland shows just how dangerous the situation still is. And everyone has to get used to the idea that America is weakened as a leading power -- yet no global problem can be solved without America."

The center-right Frankfurter Allgemeine Zeitung writes:

"Washington may have insisted that it is interested in a strong dollar but even its closest partners don't really trust these words."

"America's partners will be seeing a president in action who has just suffered a heavy defeat and who probably has not yet decided what conclusions to draw from the Republicans' victory in the Congressional elections. Since his domestic agenda has little prospect of finding a majority in Congress … he may turn to the prerogative that presidents are usually entitled to -- foreign and security policy."

"If it is the economy that trumps all other issues then the US government is going to have to go on a foreign trade offensive. For example, they could dust off their plans for a trans-Atlantic market or a free-trade zone over the Atlantic. That would be a brave lesson to draw from the financial and economic crisis."

The Financial Times Deutschland writes:

"Once it would have been a scandal. No German chancellor would have allied with China, particularly against the US, prior to an important summit without provoking an outcry from the trans-Atlantic lobby. They would have warned about a break with Germany's most important ally."

"Merkel is acting as always: pragmatically. In order to deflect international annoyance over the German trade surplus, she has chimed in with growing criticism of the American money printing machine. Although tactically canny, the chancellor will have to watch out that she doesn't get on the wrong track."

"Merkel is surely right when she warns that a lot of cheap money could feed into a new speculation bubble. But the chancellor is overlooking the fact that monetary policy is the only hope for the US in its current predicament and that the US Federal Reserve simply has to risk this experiment. Secondly Merkel -- like the whole government -- is completely masking how dangerous the German trade surplus is."

"It isn't just that imbalances in the euro zone are threatening the continued existence of the currency union, it's also the danger of speculation bubbles world wide. If a country such as Germany exports considerably more than it imports over a long period of time, the income has to be invested somewhere."

"As a rule, it then flows into wherever yields are highest -- thus inflating the next bubble. It wasn't by accident that German banks put a conspicuous amount of money into the US sub-prime market."

"Merkel would do well not simply to join in with criticism of the US at the G-20 summit.... Instead she should recognize that Germany (and its new ally China) also contributes to global imbalances."

The left-leaning Die Tageszeitung writes:

"(Protectionism) doesn't look like it used to, when nations used to place a cap on foreign imports with high tariffs. Today governments are trying to leverage their own industrial competitive advantages in another way. They are keeping their currencies, and therefore the prices of their exports, low. Or they ensure unbeatably low prices with the help of low labor costs."

"The latter is the German way. Since Chancellor Gerhard Schröder, a low wage sector has been consciously nurtured. Temporary work, short-term contracts and the threat of the rapid descent into Hartz IV unemployment benefits have contributed to every demand for higher wages being nipped in the bud. The consequence has been that real wages -- that which remains after inflation has been taken into account -- have shrunk year on year."

"That was just fine by the business sector. While wages and prices rose abroad, German companies were able to throw their goods to the market at dumping prices. The Chinese government has followed the same strategy -- with the difference that they have kept export prices low not by low wages but by currency dumping. It's a subtle difference for the German government: The message is that the German surplus is good because it is based on a competitive advantage whereas the Chinese surplus not good because it has been achieved through unfair means."

"With its radical export strategy on the backs of the wage earners, Germany has come out of the crisis astonishingly quickly. That's what the government is proudly using to arm itself against all calls for it to strengthen domestic demand. Berlin is telling G-20 nations to be as hard working and thrifty as Germany. But the German government also needs to learn a lesson: If everybody tightens their belt and exports, who will buy all the products made in Germany?"

The left-leaning Berliner Zeitung writes:

"Currency wars, trade barriers and capital controls are leading to fears of a repeat of the 1930s, when national egotism ruined the world economy."

"The solidarity (of the G-20 countries) is crumbling. Some have even written off the G-20 because of growing tension in the group. But it's too early for that."

"Despite all its inadequacies, the G-20 is indispensable if even a minimum of coordination in the world economy is to be secured in the 21st century. But the club has to reinvent itself. In this sense Seoul is a transition summit."

"For the first time, world leaders want to talk about development policy, climate protection and trade. For the first time China is willing to enter into a debate about exchange rates at a G-20 level. Here lies the key to the group's successful future."

"The G-20 cannot end the dispute (between surplus and deficit nations) because the interests of the US and the exporting nations China and Germany differ too widely. But it's only the G-20 that can alleviate the dispute -- if every nation takes responsibility."

-- Siobhán Dowling and Josie Le Blond

Article...

© SPIEGEL ONLINE 2010
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH



Graphic: Trade imbalances among G-20 nations. Zoom
DER SPIEGEL

Graphic: Trade imbalances among G-20 nations.



International Newsletter
Sign up for our newsletter -- and get the very best of SPIEGEL in English sent to your email inbox twice weekly.
Twitter
Facebook