Obama has little reason to fall in with the G20

“REDUCED cost of government, adequate government income, and ability to service government debts are all so important to ultimate stability . . . The United States seeks the kind of dollar which a generation hence will have the same purchasing and debt-paying power . . . Our broad purpose is the permanent stabilisation of every nation’s currency.”

By Irwin Stelzer
The Times (UK)

So wired Franklin D Roosevelt to the representatives of the 66 nations attending the London Economic Conference on July 3, 1933. Sailing on his yacht at the time, the president decided to torpedo prime minister Ramsay MacDonald’s plan for international action to deal with war debts and currency stabilisation.

Gordon Brown is less concerned about maintaining the value of his currency than that old dissimulator FDR professed to be. He needs a successful, or at least big and glitzy international conference for other reasons, not least for the political uplift that a sprinkle of Obama stardust might provide. But enough cynicism. Equally important is the prime minister’s belief in the need for international co-ordination and a strong stand against protectionism.

So he is relieved to have avoided MacDonald’s fate: the American president will attend the April 2 London conference of the G20 nations.

The important question is whether the conference can achieve its goal of a co-ordinated response to the world recession. There are reasons to doubt it.

The first is that Brown’s plea to a joint session of Congress to avoid “a protectionism that . . . in the end protects no one” fell on deaf ears. The White House and the Congress have assured their trade-union funders that Doha is dead, and there will be no more trade-opening measures. Indeed, existing agreements are to be tightened. Washington has more in common with French president Nicolas Sarkozy than with Brown when it comes to trade.

The second obstacle to close co-operation was made clear by the president in a press conference with the prime minister. Brown talked of grand bargains, a global new deal. Obama spoke vaguely of better co-ordination of financial regulation, and expressed no enthusiasm for co-ordinating American recovery efforts with those of the EU, except to call on Britain and Europe to do more. The president faces a bailout-weary Congress, and one that wants any additional borrow-and-spend directed at the plight of America’s homeowners. Indeed, even when it comes to regulation, the White House and key congressional figures let it be known that America has no intention of ceding any of its powers to an international body.

Perhaps the only area of solid agreement was a distaste for “tax havens” — those places to which over-taxed individuals and companies can legally flee. Nothing appeals to the leaders of nations such as high-tax Britain and soon-to-be-high-tax America as the possibility of a cartel that can impose its policies by disciplining “cheaters”.

The third obstacle in the path of a Brown triumph at the conference is money. The prime minister wants a larger role to be assigned to international institutions such as the International Monetary Fund (IMF) and the World Bank. But that would mean a larger contribution from cash-strapped Obama, which is not on the cards, especially since America is already under-represented at the IMF and the administration is taken with the scathing criticism of the IMF from economists it respects, such as Nobel laureate Joseph Stiglitz.

Fourth, Obama has no sentimental attachment to Britain or to Europe. He has a broadly leftist ideology, but other than that he is a “whatever works” sort of guy, to borrow from Tony Blair. Which is why his primary attention is on Asia, where Japan and China must continue to purchase Treasury IOUs if the Obama domestic programme is to be financed.

It is no surprise that Japan’s prime minister Taro Aso beat Brown for the prize of first foreign leader to be granted access to the Obama Oval Office. Or that Hillary Clinton slid over the little matter of China’s human-rights violations when she visited the regime’s leaders.

Finally, Obama knows that his presidency is doomed if there is another attack on the homeland that George Bush kept safe for seven years. That is why he has felt it necessary to make the war in Afghanistan, home of plotters aiming to do harm to America, Obama’s War. So he wants more troops from his European allies. And troops that will fight, not merely “reconstruct”, or patrol peaceful areas, or remain in barracks at night. But the Europeans are having none of it, which Obama — who already knows this — will have officially confirmed to him at the Nato meetings to which he will fly after the G20 session.

Read the rest:
http://business.timesonline.co.uk/tol/busine
ss/columnists/article5864579.ece

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