G-20 needs joint efforts, not talk of a 'new order'
PARIS: Nicolas Sarkozy talks of a meeting to "remake capitalism."
Giulio Tremonti, Italy's finance minister, only a little less bombastically - his country's shrillest register is always held in reserve for Silvio Berlusconi - has called for "new rules so that a new world economic order" can be born.
That sounds messianic. And it's a problem.
When it comes to looking toward the G-20 summit meeting April 2 in London, where Barack Obama will meet with the representatives of 19 of the global economy's greatest powers, the misery of having no game-turning solution for the international economic and financial crisis is creating an over-compensating language of excessive expectations, illusion, and it's-not-my-responsibility positioning.
Officially, the London summit's goals are reasonable and far from being written in letters of flame. Its logo shows a shadowy picture of a darkened earth viewed from outer space, with just the trace of a beacon glimmering from what looks like Britain. Underneath are the modest aims - Stability, Growth and Jobs.
Nice work if you can get them, even small doses. But what happens when Sarkozy tells the world, as he did once again at the Munich Security Conference on Feb. 7, that the summit's purpose is "remaking capitalism?"
You run the risk, especially in Europe where Sarkozy commands attention, of diverting attention away from the national efforts needed to right wounded economies and devaluing the practical steps the summit may achieve. Not to mention creating the allure of a global ideological struggle.
Listen to this from Henri Guaino, the French president's special counselor, who writes Sarkozy's most important speeches, and who expects the G-20's concrete results will include "the moralization of world finance."
Talking to French reporters about the summit, he said: "It will be an important step in the remaking of capitalism. In this new economic game, the state will have a greater role to play. Never before has the question of our civilization been posed as clearly! Remaking capitalism, that's a policy for civilization!"
In another, less illuminated register, Angela Merkel has called for the establishment of a charter of good practice for international finance and the creation of a world economic council as an oversight body.
It's not beyond imagination to think that Gordon Brown could support Merkel's grand idea, but a British prime minister chairing a G-20 meeting - wanting above all to save London's place as Europe's free-wheeling financial center - could hardly insist on a binding international control mechanism that would diminish London's allure.
Obama is in a parallel situation. He knows an irreplaceable part of his campaign financing came from Wall Street. And that America, traditionally, feels vastly cozier with capitalism's risk-taking, laissez-faire element than Europe.
(Mitch McConnell, the Republican Senate leader, a Kentuckian, was totally at ease last week in cursing the new president's $787 billion economic stimulus package as the "Europeanization of America.")
So re-read Obama's Inaugural Address. He tells Americans and the world the question is not "whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched."
"This crisis has reminded us that without a watchful eye, the market can spin out of control."
Yet there's no reference in the speech to the enforced international control of markets that would reach beyond the Western players to somehow take in Saudi Arabia, China, Russia, India and Brazil.
Now look at Treasury Secretary Timothy Geithner's carefully worded statement on that "watchful eye" distributed after the meeting of finance ministers from the G-7, or the West's leading industrial countries, in Rome on Saturday.
In it, Geithner said, "We need to begin the process of comprehensive reform of our financial system and the international finance system.... While this is a responsibility of national governments, our markets are global and therefore national efforts cannot be fully effective without international cooperation to implement higher standards."
Greater joint efforts - but hardly the stuff, concerning capitalism, of revolution or rebirth, or, you might say, of dramatic change.
The phrases recognizing the prime "responsibility of national governments" and the enhancement of "national efforts" - which sound like America saying it will be the sole judge of its market prerogatives - will not enchant those in Europe (cf. Guaino) who insist on seeing Obama's victory in part as a "revolt against Wall Street and pressure to be done with an era."
That's not at all to say nothing significant can happen in London. Rather the opposite.
Another French view of what might take place at the summit involves the G-20 bringing greater unification of international accounting rules, closer regulation of tax havens, hedge funds, and (why not?) the remuneration of bankers. Agreements might also touch on rating agencies, an area whose total control by American institutions has brought deep criticism.
This French voice even suggested last week that all the "new order" talk - save us, please - is really a matter of searching out domestic political cover.
In France, Germany and Italy, where the label capitalist has never been an easy one to wear, right-of-center politicians in power have reached for I-share-your-rage positions to hold off the left during a year in which they face either national or European parliamentary elections.
In normal times, that would be political business as usual. But this is a different moment, one of disappearing points of reference. There is a swelling sense of helplessness, and near total uncertainty about where the right answers lie.
In the next month, at preparatory meetings and debates running up to the G-20 summit, possible calls for moral crusades to purify economics and finance, or just fiddling at the edges of their deep problems, seem sure to make things worse.