Analysis: In face of today's challenges, the response must be global

Published on Thursday 9 September 2010 15:19

The world financial crisis has served as a quick and efficient catalyst to the G20. The first three G20 summits of chiefs of state, in Washington, London, and Pittsburgh, will be remembered for advancing multilateralism and co-ordinated global action. But the G20 remains very much a work in progress .

The G20 summit in Washington in 2008 was the first at which members' chiefs of state met since its creation in 1997. The G8 was no longer an appropriate vehicle for global economic governance, given the need to stabilise financial markets. The voices of countries such as China, India, and Brazil had to be heard if a co-ordinated response was to be found. With the financial crisis worsening, the London summit in 2009 agreed to unprecedented fiscal and monetary stimulus and backed a stronger, more coherent regulatory and supervisory framework worldwide.

In view of the G20's success, the Pittsburgh summit recognised it as the main forum for international economic co-operation.

This recognition raised expectations for the G20 and granted it the prestige of being the only forum in which world powers and emerging countries sit as equals at the same table. The premise is clear: as the crisis made more evident than ever, the interdependence of countries is inescapable. In the face of global challenges, the only possible response must be global. But the imprecision of the agreements reached at the summit in Toronto in June has left political leaders with a bitter taste in their mouths.

Two clearly defined gaps stand out as causes of discord. The first is transatlantic divergence over how best to assure a return to solid growth. The US favours continuing economic stimulus, while the EU prefers fiscal consolidation. The other source of dissension is disagreement over a bank tax. The US, the EU, and Japan are in favour, while emerging countries, as well as Canada and Australia, are opposed.

While an agreement has been reached (2013 has been set as the year to reduce budget deficits by half; 2016 to stabilise sovereign debt), consensus is not headed in the right direction. It is not a question of stimulus versus deficit. Both are necessary. . But if we want to make progress on global governance problems we will have to work together on getting through this crisis and on other essential issues, such as nuclear non-proliferation.

The problem is that, despite the clear need for multilateralism, there is a risk of a relapse into bilateralism due to a lack of global leadership.

Meanwhile, the emerging powers continue to lean toward bilateralism and are aligning themselves with other countries.

The world remains in a very delicate transitional phase, and it is not clear yet in which direction the G20 will lean. The degree of interdependence among countries is increasing, and the global nature of our problems is inherent.Within the framework of multilateralism, countries must make the effort to smooth over their differences and deepen relations: we must conquer the inertia that moves us towards old thinking - and old alliances.

• Javier Solana, the EU's former high representative for foreign and security policy, and a former secretary general of Nato, is president of the ESADE Centre for Global Economy and Geopolitics.