Will the world come together this Thursday at the critical G-20 summit in London? The prospect for a coordinated rescue of the global economy is not good, especially after China attacked the dollar last week. Zhou Xiaochuan, the chief of the country’s central bank, suggested (http://www.pbc.gov.cn/english//detail.asp?col=6500&ID=178) a “super-sovereign reserve currency,” based on the International Monetary Fund’s Special Drawing Rights, to replace American money in global commerce and for other purposes.
So include one more contentious issue for the G-20 agenda. It’s not as if there weren’t other things to talk about. The Europeans want (http://euobserver.com/843/27801) a “new global financial architecture.” The United States does not. The United States wants (http://www.forbes.com/feeds/ap/2009/03/20/ap6191945.html) nations to spend billions to stimulate their economies. Europe does not. Everybody wants the IMF to have a bigger war chest, but some countries demand a larger say in how the institution is managed. Inevitably, there will be finger pointing, especially after Brazil’s President Luiz Inacio Lula da Silva on Thursday said (http://www.ft.com/cms/s/0/ae4957e8-1a5f-11de-9f91-0000779fd2ac.html) the global downturn was exclusively the fault of “white people with blue eyes.”
Is that so? There were many ways to divide nations, and Lulu, as the Brazilian leader is popularly known, just added another one. When global leaders should be trying to knit their nations together, the emerging states are coming up with new ways to divide the international community. And this is occurring at the same time the developed countries cannot agree what to do.
A few years ago, most everyone believed we were living in Thomas Friedman’s “Flat World.” On “Planet Flat,” as the New York Times columnist called it, political barriers to trade fell and globalization kicked into high gear. He argued that “the digitization, virtualization, and automation” of almost everything led to a level competitive field just about everywhere. In the Friedman universe, the forces of modernization gained momentum and economic development spread. Now, history is entering a new phase. A few weeks ago, the World Bank predicted (http://www.bloomberg.com/apps/news?pid=20601087&sid=an9H8wvW.yNI&refer=home) the global economy will shrink this year for the first time since the Second World War and international trade will decline the most in eighty years. Globalization, which looked like an inevitable trend just a few months ago, is now going into reverse.
The economic and geopolitical consequences could be disastrous as countries find less and less need to cooperate with one another. Further reducing trade barriers is the single most important goal the G-20 could adopt, and the leaders in London should agree how to revive the moribund Doha Trade Round. Unfortunately, that won’t happen. On Thursday, the G-20 will be focusing on the wrong things, and that will not be good for any nation.