- Debt Crisis in The Third World (quicktake.wordpress.com)
- Notes On Deleveraging (krugman.blogs.nytimes.com)
- The U.S. Debt Limit (quicktake.wordpress.com)
- Macroeconomic Stabilization Policy: Should Have Listened To The DFHs Edition (delong.typepad.com)
The spirit of the Congress of Vienna, where great powers assembled to effectively govern the world, has no place in the contemporary international community. The G20 is sorely lacking in legitimacy and must change.
A number of countries that have been central to international cooperation in the past, including Norway and the Nordic countries, are excluded from direct membership. Low-income countries and the continent of Africa are almost entirely without the needed representation.
As the response to the financial crisis showed, there is value in having an effective, smaller forum of nations, equipped to act quickly when necessary. But, within that framework, there are simple ways to make the G20 more representative of the world it influences. (via The G20 lacks legitimacy).
It is every man for himself
Caught in a vicious downward spiral, Europe is at a loss. Britain is moaning about the demise of its special relationship with the USA. Sarkozy is off to the US, to mend fences with the Americans. At Copenhagen, while the BASIC countries were negotiating a ‘deal’ with the USA, European countries were sitting out. Waiting for the Big Boys to finish their talks. Japan, China, Korea – along with the USA and India are meeting at Seoul in June to create a strategic oil reserve, against possible supply shocks. To be shuttered out like this, is an unfamiliar experience to Europe.
The Norwegian appeal for inclusion in G20 is to be seen in light of the above reality.
That man with a tan – Obama
Obama has been stressing that EU needs to get its act together and speak in a common voice. The days when 6-12 European countries walked onto centre-stage, are over, seemingly. And Norway is one such victim of the changed circumstances.
The Greek crisis is stressing the weak links between European States. A ‘suspected’ withdrawal by Germany from the EMU would devastate Europe – and EU. Should the EU collapse, the Nordic countries would be shut out from many global forum.
And it is this fear that fuels Norway’s plea for G20 membership!.
In the doghouse
But it was not Obama who put European principalities (Norway, ruled by a king, is too small to be called country) in the doghouse. It started when George Bush railroaded Europe into Iraq and Afghanistan. And excluded the habitual European attendees from G20 – like Norway.
“decided by a secretive five-strong committee appointed by the Norwegian parliament. All current members are former politicians drawn from Norway’s four biggest parties. It is chaired by Thorbjørn Jagland, a former Norwegian prime minister.”
It was noted that,
“Worldwide astonishment greeted the decision yesterday to give Barack Obama the Nobel Peace Prize. The U.S. President has been in office for less than nine months, has yet to score a major foreign policy success. He had not even known he was among the record 205 nominations. The deadline for submitting candidates had come just 12 days after he entered the White House.”
At the airport, he was welcomed by the ”Norwegian Foreign Minister Jonas Gahr Støre and Kaci Kullmann Five, deputy chairman of the Norwegian Nobel Committee.” In his acceptance speech, Obama admitted that maybe there were “more deserving” candidates. Was the Nobel price in anticipation of a Nordic inclusion in G20? For turning a more benign American eye towards Europe?
Norway raised its claim for G20 membership, the Financial Times wrote
a month before Barack Obama, the US president, visits Oslo to receive the Nobel Peace Prize. Jonas Gahr Store proposed that members of the Nordic Council – Norway, Sweden, Denmark, Finland and Iceland – could share a rotating seat together with the Baltic states and possibly Poland.
Spain and the Netherlands have managed to secure invitations to all three summits since the financial crisis without being official members. But others such as Poland, Belgium and the Nordic countries have been excluded.
So much for Norway’s Nobel price.
The legitimacy of G20
Jonas Gahr Støre is stressing about the ‘legitimacy’ of the G20 group. If the G20 is indeed illegitimate, then in that case, Shri Støre, you should ask for disbanding the G20! Not make a desperate plea for inclusion into the G20. Will an illegitimate forum become legitimate by Nordic Norway’s inclusion?
That reminds me. Norway was one of the ‘moving’ spirits’ behind the Copenhagen Circus on climate change. This Copenhagen Circus sought to impose a rule of Western NGOs on poor countries of the world. Faceless NGOs, without accountability to anyone, were able to bring global political leadership, to the very brink of an agreement. How legitimate was that Shri Støre?
Støre’s logic somehow escapes me.
Norway- One Great Power
Shri Støre invokes the hoary spirit of the “Congress of Vienna, where great powers assembled to effectively govern the world” . Now, by what logic do ‘Great Powers’ derive legitimacy to govern the world? By Norway’s inclusion?
Shri Jonas Gahr Støre has sent out copies of the same PR material, to Malaysia (published in the New Straits Times), in Canada (published in the Ottawa Citizen), and in the (as per the Ministry of Foreign Affairs, Norway) in The Straits Times (Manila, the Philippines), 6 April 2010 – Al Hayat, 7 April 2010.
God has been kind to Norway! Instead of thanking God for His kindness, for underground wealth – and for natural beauty above the ground. Instead, Norway wants to be ‘recognized’ as a ‘Great Power’!
Norway’s claim to fame is oil. Some 12%-15% of Norway’s GDP is oil. A significant part of Norway’s wealth is “raw products mined and processed in Norway include iron ore, lead concentrates, titanium, iron pyrites, coal, zinc, and copper.” Is Norway’s claim to be a ‘Great Power” based on something buried underground!
15% of Norway’s GDP is Tourism! With more than 1,1oo hotels and nearly 1,000 registered campsites, with picturesque coastline and fjords plus a number of well-known ski resorts. By the way, Norway’s population is about 45 lakhs – 4.5 million.
Manufacturing accounts for an awesome, jaw-dropping 1 percent of Norway’s annual GDP.
The world must listen to
Norway’s population is lesser than Haiti! If there is one country that the world needs to hear clearly and audibly, it is Haiti. Compared to Norway, Haiti has a far superior claim to be a Great Power. Single-handedly responsible for forcing the West to abandon slavery, Haiti has been a victim of Western vindictiveness. It is time that the world listened to Haiti. And for Norway to keep quiet!
And be grateful to God!
The overarching goal of Chinese foreign policy was to “spare no effort to ensure the stable and relatively fast growth of the domestic economy”, he told a news conference held to coincide with the country’s annual session of parliament. “The pressing task now is that all countries must work together to make the upcoming financial summit in London a success,” Yang said. “We believe the summit should play a role in boosting confidence, strengthening coordination on macroeconomic policies, stabilising financial markets, undertaking necessary reforms in the global financial system and regulatory regime.” Yang’s news conference highlighted the extent to which the world’s third-biggest economy now views its diplomacy through an economic lens. He brushed aside a question about whether his government blamed economic laxity in Washington for the world’s woes. He said the two had to work together and that Beijing was off to a good start with U.S. President Barack Obama’s administration. “In the current international environment, China and the U.S. share broad common interests. We hope that each side can accommodate the other’s core interests and enhance exchanges and cooperation,” he said. Obama and Chinese President Hu Jintao will meet for the first time in London. (via UPDATE 2-China says G20 summit success a priority – News – CNBC.com).
Sometime back a Chinese newspaper said, U.S. has plundered world wealth with dollar.
China was right. The US is looking after its own – and not bothered about the problems the US has created for other countries.
“The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar’s hegemony to plunder the world’s wealth,” said the commentator, Shi Jianxun, a professor at Shanghai’s Tongji University.
Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington’s sole concern had been protecting its own interests.
“The U.S. dollar is losing people’s confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance,” he wrote.
Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.
Late In the day, Mr.Hu … This is something that the world has been talking about for a long time. China has been a major supporter (and victim) of this scam – by allowing US companies unlimited access and support. Chinese citizens have been duped with low paying jobs at these enterprises.
Is China forgetting history … Mr.Hu – Today it is the US – but yesterday, it was Europe, Mr.Hu. Europe was blockaded by the US for the last 100 years – and hence, European loot is possibly forgotten in China. European loot was accompanied by a lot of bloodshed and killing also, Mr.Hu.
Has the Leopard Changed its spots Possibly, you dont know, Mr.Hu, because China has very little wildlife left. Leopards don’t change their spots. Europe behaves today, because it has no options.
The answers A new currency floated by the five major economies who are most affected today – China, Russia, India, Brazil, South Africa. Maybe Japan will also join in. But, the answer, Mr.Hu is with these 5 – and not Europe.
The DragoBear Dance
Russia and China as significant military powers as well as a part of P5, will want their pound of flesh. They will, of course, be afraid of being left out! The US will not have them and the EU does not want them!
China and Russia
The big issue is of course, China and Russia. China has 2 trillion of US dollars – and what does China do with this? Russia has come out from a default about a decade ago – with a nearly US$400 billion reserves – flexing its muscles in Georgia and dependent on a high oil prices. What happens to Russia if a new Pacific Republic (Cuba, Haiti, West Indies, etc) were to start drilling for oil? In 5 years, the world would be awash with oil – and Russia’s mineral earnings could evaporate. This crisis seems to have made the Chinese Premier shaky. So, the world may not trust China and Russia too much.
China’s most popular politician Wen Jiabao, the prime minister, has become a target for Communist party hardliners and could be forced from office, according to a magazine in Hong Kong.
Inner Party Democracy
Actually, if the Chinese were to open up the Communist Party also to a transparent democracy, it would be OK. Then such reports would have little meaning.As long as peaceful change in Governments and officials happen, a country /nation is ‘stable’.
While Europe and USA tussle … No clash … more like fighting over spoils …
In the last 10 years, the Euro has managed to make a niche for itself – and make space for itself. With the dollar under pressure, now the Euro wants to twist the knife into the dollar side. The Euro-zone knows that the G-5 (Russia, China, India, Brazil, South Africa) are not prepared with an alternate plan.
Without such ‘special’ mechanisms, the Euro and dollar zones have to compete, without significant weight advantage on their side. The institutional mechanisms in the G-5 have large gaps – and the Euro Bloc knows that. Hence, the Euro Bloc is trying to gain advantage over the dollar – and they can succeed only if China and Russia ‘co-operate’ with the Euro zone.
For all this time, the UK, was undecided and non-commital. But Gordon Brown’s visit to the Saudi Arabia is interesting.
BRITISH Prime Minister Gordon Brown said on Sunday he expected Saudi Arabia to give more money to boost the International Monetary Fund’s ability to bail out nations hardest hit by worldwide economic chaos.
The IMF has 250 billion pounds (S$596 billion) available to help countries struggling to stay afloat – but Mr Brown wants to increase this by hundreds of billions of dollars.
Middle East is possibly the only place where a British passport still opens doors. Most of the Gulf’s despots were put on the throne by a British dispensation after WW1. Hence, they look back at the British with gratitude and fondness – and bless themselves at their stroke of luck. Of course, the initial oil finds in the Middle East were also done by British monopolies.
Sending Gordon Brown to the Middle East was a smart move – by the US establishment, with George Bush suffering from a lame duck presidency. And the Saudi’s would have been it was payback time, as
“earlier this year oil prices soared to US$150 a barrel, allowing Gulf Arab energy producers to enjoy increased wealth.”
Now, there has been big controversy about ‘peak oil’. This should give some ideas as to what happened. This will also give an idea to everyone which way UK has jumped – not that it was ever in doubt.
Before the London Summit was global financial crisis summit on November 15- International Business-News-The Economic Times
WASHINGTON: President George W Bush will host a summit on November 15 in Washington, DC, area to discuss the global financial crisis and ways to prevent it from happening again, the White House announced on Wednesday.
“This will be the first in a series of summits that bring together leaders from countries that participate in the G-20 finance process to discuss current economic challenges.
The so-called G-20 includes the Group of Seven advanced industrial countries and the European Union as well as China, Brazil, India, Russia, South Korea and other major economies.
At the first meeting, working groups will be set up to develop recommendations to be considered by leaders in subsequent summits.
Earlier Quicktake Tripolar Currency System – Connecting the dots – Part II recorded what is the likely outcome – which has happened till now.
The New 5
The real action will be 5 countries – Russia and China on one hand – and India, South Africa and Brazil on the other.
Safe, Steady and Sure
Between ASEAN and IBSA, India needs to take such groupings from talk-fests to action-teams. Western clubs like UN, IMF, World Bank, G-7, P-5, etc are all heavily weighted against ‘outsiders’ like developing nations. We can keep banging our head against these altars, for another 60 years. It wont work.
We need to move – not necessarily fast, but surely and steadily.
Three Horsemen Of Apocalypse
The G3 (i.e. India, South Africa and Brazil) have functioning democracies, decent regulatory systems (which can be ramped up), the technology platforms, the trading systems, a vibrant entrepreneurial class – all of which is powering their economies forward. What they don’t have is P5 status – which is useful, though not essential.
This Washington meeting
During the con-fab, ‘committees will be set up’ which create mechanisms for this management.
The big issue for the developing world will be obtaining assurances against predatory raids by the dollar bloc and the Euro-zone to dismantle any new system – like the alleged plot of 1997 Asian crisis.
The lesser issues will also be inter-bank settlements, anchoring currencies (the role of gold or bullion).
Contours Of The Deal
The EU-USA-Asia may agree on a broad a global regulatory and oversight body to monitor and maintain oversight over a multiple currency regime. The new currency may an Asian-Developing world currency. Some of Asia may want to cling to the dollar skirt.
The new 3rd currency may take some time to figure out.
Like the Chinese and Russians, the Indian outline of steps to deal with global financial crisis too was superficial and patchy.
India … outlined the steps it wants taken to lift the global economy out of the current financial morass. Addressing leaders of 45 Asian and European countries at the ASEM summit here, PM Manmohan Singh said the first step would be to “de-clog” the global credit markets which had choked up as a result of the crisis.
Second, multilateral financial institutions (MFI) like World Bank and IMF should step in with larger resources to invest in large infrastructure projects in developing countries, which can act as a stabilizer in the global economy. …
It is now clear that India would certainly be present at the November 15 G-20 summit in Washington. … US President George Bush has called up Singh to personally ask him to be present. In what was clearly a global reversal of roles, European countries repeatedly asked Asia to lead the way out of the crisis. N Ravi, secretary (east) in the MEA, told reporters that all EU leaders asked Asian countries to refrain from withdrawing into “economic nationalism”.
Either … or …
India seems to completely lack direction on how to move independently in times like these. After, all why should India even look at IMF and World Bank – which are fig leaf organizations of the West, as transfer mechanisms of wealth from the Third World to the rich.
Or India is working on a different plan, of which we know nothing. After all, India does believe in moving steadily (even, if slowly).
Russia and China
US and EU have their own reserve currencies – leaving Russia and China out in the open. Russia and China (as full P5 powers) will want a ‘lion’s share’ of influence in any new architecture. Which any Third World grouping will not give.
Japan + ASEAN
China-leaning Lee Kuan Yew with an Islamic Malaysia may not be very hot about ‘giving so much influence’ to a ‘new member’ like India for an ASEAN initiative.
Any action which hurts the US, their largest market and patron, will be something that will make Japan and ASEAN hesitate. The very economic model of ASEAN + Japan is undervalued currency + exports to the USA. Hence, they will be wary of any initiative that affects the USA – and the West.
Status Quo …
Manmohan Singh is the only educationally qualified leader in the leadership line up of major world economies.
Lee Kuan Yew’s diatribe against ‘Western democracy’ fails on this point. What happens after the Lee family dilutes its holding in Singapore – due to family size and age. Singapore has become a ‘democratic’ monarchy’. Which would be fine – if it were to declare itself so, and define succession laws.
It is this lack of political transparency, which stops many awaited changes from taking place. And that is one thing that differentiates India.