The World is Preparing for the G20’s Failure

The world is expecting an end this week, and the end of something is usually the beginning of something else. This end and new beginning will be marked by the G20 summit, which will take place in London on April 2nd. Some countries tried to propagate their views in advance, while others stayed silent, as if they were saving their energy for battle. It’s already apparent that the summit will be anti-American, although Barack Obama tried ahead of time to urge everyone to unite. But the G20 members are clearly divided into the rich and the poor. And the poor are the ones who exemplified unity in the face of the crisis.

The world awaits the coming week with a special eagerness, hope, and anxiety. Unprecedented action will be taken on April 2nd in London to save the world economy. The world expects leaders from the G20 countries to come up with a plan of rescue, but also worries that it waits in vain. As a result, the preceding week was marked by feverish preparations for the G20 summit.

U.S. President Barack Obama, rightfully expecting that America will face the strongest criticism at the summit, asked the world to unite and begin a joint effort to overcome the crisis. At the same time, he clearly defined his own role in the proposed union. According to CNN, Obama said, “My message is clear: The United States is ready to lead, and we call upon our partners to join us with a sense of urgency and common purpose. Much good work has been done, but much more remains.”

According to Obama, the world is facing difficult economic challenges, which cannot be solved by any nation alone. He noted that the success of the American economy is closely linked with the global economy.

Apparently, Obama’s proposal didn’t stand a chance. Once again, China (which is obviously vying for a central role in the world) became the first opponent. Hu Xiaolian, Deputy Governor of the People's Bank of China, said that China is willing to discuss at the summit Russia's proposal to establish a different reserve currency. However, she stipulated that the dollar will remain the principal currency used in global investment and trade. She also said that we need to strengthen control over the financial system.

The U.S. government wasn’t going to take this lying down, and sharply rejected the idea of replacing the dollar with a new global reserve currency. First, Timothy Geithner (U.S. secretary of the Treasury) and Ben Bernanke (chairman of the Federal Reserve) had to respond in Congress to the angry Michele Bachmann (Republican representative of Minnesota). She demanded a clear answer to whether they are for or against the introduction of a new currency. Geithner and Bernanke said that they are categorically against it. A little later, President Obama made a speech supporting the dollar.

However, trouble came from an unexpected source. IMF’s Managing Director, Dominique Strauss-Kahn, said that the discussion about a new global reserve currency is understandable, and should happen.

It seems that the debate about a single (united) currency is inevitable. In response, the U.S. will actively promote its methods of dealing with the crisis, and urge other countries to apply these methods all over the world. However, the U.S. won’t get unanimous support.

For example, Governor of the Bank of England Mervyn King already expressed his attitude toward the proposals Americans will make at the G20 summit. Last week, he warned British Prime Minister Gordon Brown and the Treasury Department that their country will not be able to stimulate the economy the same way as the U.S. – by infusing it with the government’s money. Paul Krugman, an American economist, also criticized Obama’s plan. Krugman won the Noble Prize in 2008, so he can be considered the first economic crisis Noble laureate.

But there were also several examples of effective unity this week. Uzbekistan President Islam Karimov wrote a book about dealing with the economic crisis. Now, the government intends to make sure that the entire population of the country is familiar with the book. Schools and businesses will offer classes on the president's book. Afterwards, everyone will have to pass an exam. According to the news source Uzmetronom, Uzbekistan’s embassies are encouraged to promote the book in other countries.

Russia is also not far behind in its desire to encourage people to unite in fighting the crisis. According to Interfax, this week the Federal Service for Finance and Budget Supervision (Rosfinnadzor) established a special 24-hour hotline, where people should report violations of the federal spending budget. The caller gets a maximum of five minutes to record a message, which should describe in detail the event, place, date, time, and participants of the incident, and also include the caller’s contact information. I wonder how many minutes will be given to each member of the G20 summit next week.