TODAY the G20 countries – 19 of the most important developed and developing economies plus the EU – meet in Washington to seek a collective solution to the financial crisis and growing world recession. They meet not a moment too soon. The US and the big EU economies are already contracting. This week has seen a return of turbulence in world equity markets. In Britain, sterling has plummeted in value as foreign investors withdraw their cash. We have not seen such a crisis since 1929.
All this seems a gloomy analysis. Yet, unlike the Great Depression of the 1930s, the world's leaders have cooperated to find a way out of the crisis. Political ideology has been jettisoned in the Republican White House and New Labour's Downing Street, in order to nationalise failing banks. China has cut interest rates at the same time as Europe and America. And now the rich northern economies and poorer southern ones have come together in Washington – following a joint call from Presidents Bush and Sarkozy – to discuss reforms to global economic agencies such as the IMF. It is possible to be cautious or even cynical about the extent of the outcomes from this weekend, but no-one can doubt the significance of the G20 summit.
That said, there remain considerable differences among the G20 members regarding how to reform global regulatory institutions in order to reduce the likelihood of another dangerous credit bubble. The French want greater independent intervention by the IMF; the British and Americans want a "collegiate" approach by nation states. Whatever happens, the developing states want a greater say. These differences will not be resolved over the course of one weekend. After all, the famous Bretton Woods conference of 1944, which established the present multilateral economic framework, required two years of discussion before coming up with a blueprint.
The solution is to distinguish between long-term reforms – which will require extended consultation once Barack Obama takes office – and immediate initiatives this weekend that will help restore confidence to the markets. The latter – as urged by Gordon Brown – means a major fiscal boost to reduce the depth of the downturn, implying speedy tax cuts and increased government borrowing.
But such a boost will be counter-productive unless the G20 countries are prepared to let exchange rates adjust. The current increase in the dollar will only store up trouble if it creates more of the excess liquidity in the exporting Asian economies that funded the last credit bubble. Yet if the West wants China to revalue its currency, it must offer concessions on trade reform. Restarting the moribund WTO trade talks would be a welcome result from this weekend's G20 summit.
The G20 summit is not the end of the crisis, or even the beginning of the end. But with a little luck, it might (in Churchill's words) be the end of the beginning.
Megrahi appeal must be prompt
ABDELBASET Ali Mohmed al-Megrahi, who is serving a life sentence for the Lockerbie bombing, has advanced prostate cancer. Yesterday, the Appeal Court in Edinburgh refused to grant him interim release pending an appeal. Megrahi could die in prison before his appeal is heard.
Scottish justice allows a convicted criminal to be released if he or she is close to death. That is both humane and fair. However, in Megrahi's case, the court took two points into consideration. First, he remains convicted of the biggest mass murder to occur in Britain. Whatever the outcome of any prospective appeal, that is his current status and it is not easy to ignore.
Second, while Megrahi's medical condition is serious, he is not confined in a normal cell, and he has the best of medical attention. The court said Megrahi was not at present suffering material pain or disability, but it would review his case if his medical condition deteriorated.
This is a fine judgment, and, on balance, the court is correct. However, we should note the words of Professor Robert Black, speaking on behalf of Doctor Jim Swire, whose daughter was murdered in the bombing. Prof Black said he thought Scottish justice had missed a "golden opportunity" to show mercy to Megrahi. Such magnanimity is humbling. Our response should be to ensure that Megrahi's appeal takes place as soon as possible.
Look closer to home for our flags
THE SNP Government is spending 23,000 on new Saltire flags for St Andrew's Day. Nothing wrong with that, many will argue. However, these Saltires are being imported from the Far East. Surely, at a time of recession, when many small firms are suffering, importing Taiwanese Saltires will raise a few eyebrows.
However, in all fairness, we can't export to the Far East (potentially the world's biggest market) if we won't buy from there. Taiwan is now the fifth largest importer of whisky while Scottish exports of all kinds to mainland China have doubled since 2002. Scottish exports even had a role in providing Chinese athletes with the secret ingredient that underpinned their gold medal success at the Olympic Games – the "pizzle" from Scottish deer. Asian athletes used the male deer's organ to boost stamina.
It is an international symbol. Was not Scotland's patron saint, St Andrew, himself from Palestine? Is the famous white cross on a blue background with which he is associated not also the flag of the Imperial Russian Navy (as well as Caledonian MacBrayne), Nova Scotia, and the city of Krakow in Poland?
But as many local businesses struggle, and as the Scottish economy needs every boost it can get, perhaps the nation's best interests, in the short term, are in a little bit of charity beginning at home.