September 27th, 2009
12:24 PM GMT
LONDON, England - When it comes to the number three, there are two conflicting philosophies: The first says everything comes in threes, the second says third time lucky (or unlucky.) This weekend the G-20 leaders have been meeting for their third meeting in a year.
G-20 leaders are all smiles, but for how much longer will the unity last.
For an organization that had never met before at heads of state or government level, this is something of an achievement. But then rarely have they had to ride to the rescue of the global economy that was about to collapse.
Twice before when they met, they agreed to halt the blame game of how we got into this mess. They worked together to get us out of it. This was no mean feat since it involves countries from communist China to capitalist America and all shades of political persuasion in-between. Their ability to coordinate and cooperate has been noted time and again as one of the great advances in summitry.
In Washington last October, they ignored the fact President George W. Bush would be out of office within months and built a plan, calling it "The Washington Action Plan." By the London meeting at the beginning of this year, trillions of dollars had been spent and the leaders met to coordinate how their posh-sounding plan was performing. They tinkered and tweaked and gave some more money to the IMF and carried on cooperating. They didn’t have any other choice. Now, with Asia decoupled from U.S. and European growth, what next?
Everyone agrees it is too soon to take away the stimulus that is keeping developed economies afloat. Everyone agrees that they will have to coordinate their exit strategies when that time arrives. Oh yes, they even agree banks need to have some strict reform of the rules (and, yes, that includes big bad bonuses.) This is all done on the basis that "we are not letting this happen again."
But the issue is whether they can keep agreeing. France, for instance, is keener on stricter regulatory reform than, say, the UK. Britain has much to lose if Europe’s financial headquarters, the City of London, becomes over-regulated. French Finance Minister Christine Lagarde told me that restricting bankers’ bonuses was a symbolic way of proving no more business as usual. Only by imposing discipline and regulatory systems could we reign in the financial world, she said. Such a view of course, is very much at odds with what might be expressed in Washington.
The G-20 now finds itself rather like a group of passengers who have just been rescued from a sinking ocean liner. When facing disaster, all classes from captain’s table to steerage, share laughter, friendship and love. Now as the good will of rescue starts to disappear, old rivalries resurface and political ideologies put to one side are restored.
Which brings me back to my first point. Can the G-20 hold it together for a third time? They probably will, simply because this crisis is not over yet. Longer term, as the G-20 presidency passes from the UK to South Korea, the axis of power shifts. Well, I have more doubts.
Crises breed cooperation. Recovery may well breed resentment. Even if the third summit works, don’t bank on success for the fourth and beyond.
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