Business, Finance & Economics

G20 Pittsburgh: They meet again


LONDON, England — Why do political leaders do this: meet at the summit? Why do we write about it? Do you really care?

Back in early April, the last time the G20 met, I stopped off at Canary Wharf in London's new financial district to talk to merchant bankers and speculators about the meeting that was, in theory, supposed to result in measures to save the global financial system.

Many of the proposals were going to directly affect the income of these former masters of the universe. I chatted with a couple of men smoking a cigarette at Cabot Square West. One said: "It doesn't matter what they do. We'll find a way around it." His nicotine break partner added: "We're much smarter than they are."

That anecdote stayed with me as I sat sequestered in the press room of the Excel Centre a half mile from the room where U.S. President Obama, British Prime Minister Gordon Brown and the other leaders sat seeking common ground, a process that is synonymous with doing the minimum. A group commitment to pumping up the global economy with a coordinated central bank infusion of money was agreed. But the critical decisions on regulation of financial markets and the reining in of banker/speculator pay was kicked aside and left for individual governments to address.

In the ensuing months, as the big decisions have languished and bonuses at investment banks have returned to pre-crisis levels, I keep thinking of those two guys at Canary Wharf. Sadly, they declined to give me their names. Braggarts are rarely brave and they were concerned about what the Boss might say if he saw them quoted by name. I wish they had told me, though. I'd love to call them up and tell them they were right.

Their words merely underscored the futility of summitry in this day and age. It is a dangerous thing to say but governments have never been weaker. In this age of globalization, they have no effective control over mechanisms of the economy, just as the bragging blokes boasted. In an age of asymmetric warfare, they have little control over foreign affairs. The U.S. can convene a summit following the overthrow of the Taliban government in 2001 and get billions of dollars in aid pledged for reconstruction for the country. Meanwhile the Talibs lay low and wait patiently, after all it is their country, the foreigners will leave sometime. The international community provides only a fraction of the funds it promised and before you know it, the U.S. is fighting a war for Afghanistan again. For how many decades have great and formerly great powers been trying to get the Israelis and Palestinians together? Stop Iran building nukes?

There are summits everywhere all the time. The African Union's heads of government meet to discuss Zimbabwe. Nothing happens. The European Union's leaders meet and agree on the Lisbon treaty. The first time it is put to a ratification vote by ordinary electors, in Ireland, it is rejected. For years now when asked the real value of summits, beleaguered press attaches have said it gives the leaders a chance to get to know one another. Face time is really important. The importance of building a personal relationship can't be underestimated, they tell us. 

This year the government heads of the European Union's big three will attend the G8, NATO, EU, two G20s and the Copenhagen climate change summits. There was a special EU summit in Stockholm last week to prepare a Europe-wide position for the Pittsburgh meeting.

Then there are the meetings that take place at anniversary ceremonies. This year we've had the 65th anniversary of D-Day, the 70th anniversary of the start of World War II and in the autumn the 20th of the fall of the Berlin Wall. How much more face time does Gordon Brown need with Nicholas Sarkozy and Angela Merkel? How much better can these leaders possibly get to know each other?

And does it matter anyway? Gordon Brown will be voted out of office sometime next spring and there is no doubt he will be removed as leader of Britain's Labour Party. His career will be over.

And that is the crux of the problem of government in this day and age. Locally elected politicians who can be thrown out of office at any time have no hope of solving global problems that have arisen outside the framework of politically stable societies. These shows of authority — for that is all modern summitry is — have grown so hollow that they fool very few people into thinking that they can be effective. But let me not end this on so blithely cynical a note. Here are a couple of action items from the final communique of the last G20 summit. See if they are addressed in a meaningful way at this one. If they are I will write a long article recanting my errors.

Questions everyone should follow in Pittsburgh:


  • Double check that the $750 billion pledged by the G20 to the International Monetary Fund so it can make loans has actually been paid.
  • When and how will the commitment to "restore the normal flow of credit" be met?
  • Has the new international regulator, the Financial Stability Board, been established? If not, is there at least a firm timetable for establishing it? Will it have jurisdiction on Wall Street and the City of London (where the whole mess began)?
  • When will the "tough new principles on pay and compensation" that were promised in London be in place? Have they been discussed? Does the G20 have the right to tell any red-blooded American capitalist how much he or she is entitled to earn?