The commitments that G20 must make
The leaders of the world's 20 biggest developed and developing economies meet in London today. In the four hours and 35 minutes of talks scheduled between meals and tea breaks they face an onerous task: to fix the broken global economy. What needs to be done is plain, but getting such an unwieldy and diverse group to agree on a common strategy will not come easily. A decisive way forward can be forged only if national self-interest and protectionist ways are set aside - and for the global good, this is what must happen.
Scepticism over whether this can be achieved is high in some quarters. The world has so far been unable to adequately agree on how to tackle poverty, global trade and - perhaps most worryingly for the sake of humanity - climate change. Each of these issues is on the agenda. If the gloom weighing the world down is to begin lifting, deals in principle must be the least that is achieved.
But more is needed. The global economy is in dire circumstances and the livelihoods of untold millions of people are in jeopardy. Uncertainty abounds. No-nonsense statements of unity - followed by action - are needed in London to seed the confidence we seek.
The data is grim and constantly being revised down. International Monetary Fund estimates for this year show the world economy shrinking for the first time in 60 years; overall output may fall by between 0.5 and 1 per cent, with the richest economies declining by up to 3.5 per cent. The International Labour Organisation thinks that the least number of new unemployed in the world will be 38 million.
Global trade and financial flows that have been so crucial to international growth have been rapidly unwinding. The World Trade Organisation has warned that trade will shrink by 9 per cent in volume terms, the worst performance since the end of the second world war. Protectionism is on the rise. World Bank research shows that since the financial crisis began, governments have imposed 47 trade-restricting measures. This is despite Group of 20 leaders at their first summit in November signing a pledge to avoid protectionist measures. Depressingly, 17 have failed to make good on that promise.
Dramatic developments are not in the offing at today's gathering. The restructuring of the financial system that got us into the mess we are in will not be accomplished that quickly. The least we can therefore expect - and must have delivered - are firm commitments. Broadly, these are: a united effort to restore growth through fiscal and monetary stimulus packages; ways to deal with toxic assets; to reform the IMF and World Bank; and above all else, to hold to the principles of free trade by fighting trade and financial protectionism.
G20 finance ministers have already included these in their suggestions. Leaked draft communiqu?s point in this direction. Hard-and-fast pacts complete with facts and figures will be difficult to shake hands on in so short a time. Tens of billions of dollars for economic stimulus is needed for developing nations alone; precisely how much is for future meetings to agree on.
The US took a valuable step by helping put in place the G20, an organisation better equipped than any before to handle global economic challenges. Such a grouping needs leadership and co-operation to succeed in its aims. Differences between and among developed and key developing nations such as China have to be surmounted. Joining hands to fight the worst economic turmoil in four generations is the only way to bring back growth. Agreements made in London today have to be embraced and adhered to.