A G20 Divided

Koffi Annan advises new members of the G20 to remember their impoverished roots, as China and the U.S. duke it out over whose currency is worth less.

As the G20 summit kicks off in Seoul today, former UN secretary general Kofi Annan writes in the Globe and Mail of his hope, albeit tempered, that the financial crises of recent years will lead to some better cooperation between nations. “The global repercussions of the financial and economic crises have clearly nourished an understanding of the true extent and consequences of our interdependence,” he writes, and yet warns that some nations are already retreating into protectionist policies with little thought for how they will affect poorer countries. Annan sees some hope in the fact that some G20 countries, like India and Brazil, “have only recently graduated into major economies, and their developmental experiences are still fresh.” Unless they have willfully short memories, they’ll show some consideration for other countries trying to pull themselves up by the bootstraps. Even Annan, ever the optimist, acknowledges that there is little chance of a major agreement being reached in Seoul but, “What really counts is that each member of the group internalizes the concepts of fairness, balance and the common good and adapts its behaviour accordingly.” Let’s hope he’s not holding his breath on that one.

The Toronto Star editorial board says the consensus that saw the world’s richest governments unleash $5-trillion of economy-saving stimulus funding two years ago is evaporating rapidly. After tackling the messiest part of the financial meltdown, “the G20 is playing mop-up, and the cooperative spirit is faltering … this time there’s no consensus on how to get through the rough patch.” The problem is that the world’s major players, the U.S. and China, are still economically fragile, and have begun actively devaluing their currency so that their exports will remain affordable to foreign markets. The least that can be expected from Seoul is to agree on “on rules to determine whether currencies are over- or undervalued,” says the Star, which is a modest goal indeed. “Turning on the spending tap last year was relatively easy. Agreeing on common rules of the road going forward will be trickier.”