G20: Passing the buck in Pittsburgh

Everyone knows something needs to be done to prevent another crisis, but will the G20 leaders agree on a course of action?

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  • Dan Roberts
  • guardian.co.uk, Thursday 24 September 2009 16.00 BST
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The skyline of downtown Pittsburgh, Pennsylvania. Photograph: Saul Loeb/AFP/Getty Images

There's nothing like a crisis to bring out the best in people, particularly international statesmen. Unfortunately, the very real problems facing the world don't look like a crisis any more. The banking disaster, which temporarily united April's G20 in London, has passed before politicians had time to work out how to stop it happening again. Friday's return summit in Pittsburgh threatens to turn into a rather less dignified game of passing the buck.
Ostensibly, all sides are pretty much agreed that something still needs to be done: no one is complacent enough to believe that the few months of calm which followed that concerted global intervention in the spring means we can just go back to business as usual. But the fragile state of the world economy means America and Britain are uncomfortable with the idea of hobbling Wall Street and the City just when they are starting to become net contributors to the exchequer again. With less to lose, France and Germany find themselves playing the more appealing role of financial reformers – raising uncomfortable questions about bank bonuses and long-term sustainability.
In an ideal world, we would have a bit of everything. President Obama is right to focus on "rebalancing" the world economy – persuading the west to save a bit more and persuading the east to invest a bit more in its own citizens rather than just storing up destabilising trade surpluses. Gordon Brown is right to stress that we are not out of recession yet and should focus on restoring growth before worrying about the next boom. And Angela Merkel is right to warn that both of these concerns should not to distract us from the number one aim of reforming the banking system.
Unfortunately, instead, it looks like we're heading for a fudge. The Americans have already conceded we are unlikely to reach agreement on the key issue of bank capital ratios. This time, European special pleading looks to blame. And neither Brown nor Obama seem strong enough to tackle the equally pressing issue of bonuses. No doubt, common ground will be reached on the rather less-vexed issue of trade imbalances, but it will be the lowest common denominator.