The Economy’s Lost Keys: The Solitude of the Former Greats

The West said no to the use of force in Libya and warned about the risks of inflation that come mainly from the weakening of the dollar. As for the imbalance between different regions of the world, rather than be concerned about the huge U.S. trade deficit, there are concerns about the backwardness of the Southern Hemisphere. The problem, in short, is not the stagnation of the industrialized West but the insufficient pace of growth in emerging countries. Called BRIC [sic] (the acronym for Brazil, Russia, India, China and South Africa), they are an association of the new global economic powers.

In 2009, in Pittsburgh, the American president announced the “weakening” of the G-7 — the European-Japanese-American “control room” — for the benefit of the wider G-20. Barack Obama, still a fresh occupant of the White House, hoped to empower the new world powers. He tried to push China and others to come forward and to play a greater role in the coordinated management of markets, foreign exchange, economic relations and international trade, aiming to reduce financial imbalances and also to foster a multilateral consensus on key political issues.

A year and a half from that “new beginning,” China and its fellow travelers welcome the invitation to raise their profile, but they do not walk in the direction desired by America and the Europeans. While in Washington, the G-7 finance ministers did not make important decisions and the G-20 exhaustively sought at least verbal agreement not to derail the train of economic cooperation. But from the Chinese beaches of Sanya, Brazil, Russia, India and China concluded the BRIC summit — which expanded this year to include South Africa — with a statement full of decisive and politically disruptive slogans. These claims denote, rather than the desire to accommodate itself on a bridge of common command, a willingness to “certify” the strength of an association of countries that in three years will surpass the U.S. GDP and that threaten to surpass — in less than a quarter of a century — the entire GDP of the G-7 industrial West.

This is a new situation that will have consequences in all areas. As one example, take the U.N., where the emerging powers want more of a voice in the International Monetary Fund (which was “hyperliberal” in the era of the unipolar world dominated by the U.S. and suddenly convinced itself that checks on the movements of capital should not be demonized, and are even at times useful), now that the weight of emerging countries who base their policies on a higher level of interventionism grows.

The United States, weakened by its economic crisis, is unable to steer the helm of the international economy to a position more favorable to its interests, but it seems aware of what is happening and has some cards in its favor. India, for example, with its history of conflict with Beijing, cannot ignore its economic and military alliance with Washington. And Brazil, which suffers from the steady appreciation of its currency has, just like the U.S., an interest in pressing China for a revaluation of the yuan. Divided on Libya, immigrants and also on debt and policies for growth, Europe is struggling, however, to acknowledge the new reality. Maybe it will not last, but today it seems easier to reconcile Asia and South America than the two sides of the Alps.