The G20 summit, which concluded its two-deliberations in Cannes on Friday, can hardly be described a success.
“Since our last meeting, global recovery has weakened, particularly in advanced countries, leaving unemployment at unacceptable levels …tensions in the financial markets have increased due mostly to sovereign risks in Europe… there are also clear signs of a slowing in growth in the emerging markets…Commodity price swings have put growth at risk…Global imbalances persist.”
This was the grim overview of the global situation offered by world leaders in the concluding document of Summit which ended on a note of disappointment.
The only concrete measure to emerge from the summit is that debt-ridden Italy has agreed to place itself under the trimestrial supervision of the International Monetary Fund. Other than that, weary delegates here admitted that the results of the meeting that brought together leaders of the world's largest economies were meagre when compared to earlier encounters marked by a real sense of progress ad international cooperation.
French President Nicolas Sarkozy tried to put a brave face on it saying: “We have come up with an Action Plan for Growth and Employment that will reduce certain weaknesses and strengthen the fundamentals of long term growth. Countries like China or Germany whose public finances remain strong have agreed to address themselves to increase internal demand and to act as stabilising agents.”
“Countries that are today relatively inflexible will become rapidly more flexible and that includes China,” he said echoing the final document of the conference.
However, observers remained sceptical about the real extent of concessions wrenched from China, especially on the upward re-evaluation of the Yuan. “It is very easy to come out with fine words but extremely difficult to translate them into action,” investment analyst Nathalie Rioux told The Hindu.
While Mr. Sarkozy was keen to emphasise the “progress made on social issues”, especially through the Business Summit and the Labour Summit (meetings of Business leaders and trade union representatives) held simultaneously, it became clear that no concrete commitments were made by developing countries to counteract “social dumping” (low salaries determined by the fact that employers paid little professional taxes for worker protection). The West blames developing countries and their “social dumping” for increased delocalisation and outsourcing with a consequent increase of unemployment in developed economies.
World leaders also failed to agree on how to strengthen the IMF to reverse the European debt crisis. They struggled to reach concrete resolutions and the Summit was completely overshadowed by Greece's political turmoil and worries about Italy.
As German Chancellor Angela Merkel pointed out, no country outside the eurozone had committed any money to the region's bailout fund.
Growing powers like China, Brazil and South Africa will have to decide whether helping Europe is a worthy investment and these countries were quick to indicate that they would channel their money through the IMF.
So far they have refused to give any concrete commitments. So just where the Eurozone will find the money to boost its bail out fund for debt-ridden economies such as Greece, Italy or Spain remains unclear.
“We will now accelerate our work on the guidelines of the EFSF and then call on IMF members to contribute to the EFSF,” said the German Chancellor.
But Ms. Merkel's declaration could well remain a vain hope.