The G20 summit is headed for disaster. The Europeans have circled their wagons and determined that no sensible policy proposal shall pass. The background briefings indicate (a) the US has given up on global fiscal stimulus (“declare victory and retreat” springs to mind), (b) and the manifest failures of financial regulators will be addressed through, well, a manifest of failed regulators.
None of the important issues are on the table or even allowed in the building: changing the European Central Bank’s monetary policy, persuading European politicians to acknowledge they were and largely still are asleep at the wheel, and the future of big banks everywhere.
The summit will begin with dinner on April Fool’s Day. The organizers have clearly not thought much about the symbolism.
Yet, there is still a slim chance that President Obama can snatch victory from the teeth of West Europeans. He has to stare them down on substance, pushing hard the line that the US is doing everything it can, while Europe is largely standing idly by.
It’s an uphill struggle to force Europe to save itself, but with the discussion around the IMF, the President has a chance to move things in the right direction — and to back Secretary Geithner with actions as well as words (for more on this, see TNR online from March 28). The Europeans do not respond to sweet talk; only tough pressure will bring results.
As I suggest in my latest piece (this morning) in The New Republic online, the Europeans have left themselves open to effective confrontation on a key point; if the President can seize the day and really push the Europeans hard on this dimension – and tell me if you see other ways he can make European complacency painfully evident – we might actually make some progress.
By Simon Johnson