G20 meeting in Seoul: bleak future for a new world order

Leaders of the world’s top Group of 20 (G20) economies, who collectively produce over 85 percent of global wealth, meet in Seoul from November 11-12, to coordinate collective efforts aim at redressing world economies following the global recession.

The meeting will be held amid general chaos in the sociopolitical and economic spheres in the world.

Leaders at G-20 Summit

“Twelve months on, nationalism has replaced globalism. Peace and love have given way to currency wars. The imbalances are as entrenched as ever. And, most frightening, the battle drums are beating for protectionism and trade barriers,” Philip Aldrick and Emma Rowley wrote in their article, G20 tensions rise over the future of the global economy.

It has become obvious that G20 leaders have divergent opinions on how to cope with the financial crisis which has left a strong effect on the world economy. There is also no unity on the new financial world order that was originally intended to be created.

There are growing worries as the economy faces uncertainties. Now is the time for the world to cooperate.

“In that sense, the Seoul G20 summit has various pending issues to discuss, including exchange rates, which need international coordination,” South Korean President Lee Myung-bak said during a meeting with financial experts.

“Having won the war, industrial-country societies are in the process of losing the peace,” Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said in a speech in Washington during the annual meetings of the International Monetary Fund and World Bank. “If they are not careful, they risk slipping into a lost decade of low growth, high unemployment and welfare destruction.”

Bloomberg reported that El-Erian, who popularized the phrase “new normal” to describe how growth will be depressed by consumer retrenchment and financial regulation, said governments and central banks haven’t detected the “ongoing paradigm shift” in their economies that will require remedies beyond stimulus programs.

According to Russian Informational Telegraph Agency (ITAR-TASS), one of the British HSBC bank representatives said “there is a struggle over who will be the “head” throughout the whole 21st century.” The source said the issue was very serious. Will the West be able to maintain its control over the global financial system, and at the same time, the major international economic institutions, or whether there will be a change of eras, when new market countries, especially BRIC (Brazil, Russia, India, and China), will take on the burden of leadership.

Thus, according to analysts, the G20 summit in Seoul will have no economic but political importance. According to ITAR-TASS, Western experts do not exclude the chance that the U.S. will keep on with the efforts to mobilize the anti-Chinese front to tie down Beijing’s actions.

“The Obama administration, facing a confrontational relationship with China on exchange rates, trade and security issues, is stiffening its approach toward Beijing, seeking allies to confront a newly assertive power that officials now say has little intention of working with the United States,” Mark Lander and Sewell Chan wrote in their article, Taking harder toward China, Obama lines up allies.

“In a shift from its assiduous one-on-one courtship of Beijing, the administration is trying to line up coalitions — among China’s next-door neighbors and far-flung trading partners — to present Chinese leaders with a unified front on thorny issues like the currency and their country’s territorial claims in the South China Sea… But Germany, Italy and Russia balked at an American proposal to place numerical limits on these imbalances, a step that would have further isolated Beijing,” they added.

According to experts, the peculiarity of the situation with the G20 summit is that only few understand the depth of the crisis and its implications for the global economy and geopolitics. As Mohamed El-Erian noted, the crisis has not been fully grasped by the global elite.

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