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New world order, deferred

Stephanie Flanders | 18:25 UK time, Friday, 25 September 2009

Despite speculation otherwise, the G20 will not formally announce today that it is replacing the G8 on economic and financial issues. That will only happen in 2011 - when France is chairing both of them.

The leaders would have liked formally to announce the handover today in Pittsburgh, but the Canadians - who are chairing the G8 next year - kicked up such a fuss that they had to fudge it. There will be a G20 meeting on the sidelines of Canada's G8 Summit next June, where most of the economic business of the day will be discussed. But formally speaking, the economic side of the G8 will live on another year.

Of course, in practice, the changover will start at that June meeting. But symbolism counts. The lesson of Pittsburgh is that the old world still can't bring itself to follow through on its inclusive rhetoric.

You may remember this blog is a big fan of the Canadians. But on this matter I clearly misjudged them. Turns out that Canada can be just as single-minded in defence of its historic privileges as everyone else.

But the Europeans shouldn't jump to criticise too quickly. Because if there were a prize for hanging on to anachronistic privileges, it would have to go to them. There's no detail in the communique on the new balance of power at the Fund either. Why? Because the Europeans are holding onto their ludicrous over-representation at the Fund until the bitter end.

There are now 24 members of the Fund's Executive Board. Three of the five permanent members are European. And of the remaining 19, where groups of countries are represented by a single director, seven of the directorships are currently filled by European countries (inside and outside the EU).

So, that's 10 out of 24. In a world in which Europe accounts for less than a fifth of world economic output. France alone now has more IMF votes than China - though its economy is less than half the size.

There is a "high level aspiration" to transfer 5% of the votes from old world to new. But "high level", in this context, means "something we claim to want in private but are not willing to put in writing".

Why? Because the only sensible place to find those votes is in Europe. America's voting share of 17% is controversial because it gives it - and it alone - an effective veto in the board. But at least it's roughly in line with its economic clout.

Of course, it's only a matter of time before the Europeans have to face the realities of the new world order. But one of the less high-minded lessons of today's communique will be that they are going to put it off as long as they possibly can.

The communique will commit them to resolve things by January 2011. But expect plenty of unattractive horse-trading between now and then.

Comments

  • Comment number 1.

    With this delay..does this mean that Baroness Vadera's non job is now officially a non job?

  • Comment number 2.

    Stephanie, regarding the G20 replacing the G8 you write "The leaders would have liked formally to announce the handover today in Pittsburgh, but the Canadians - who are chairing the G8 next year - kicked up such a fuss that they had to fudge it".

    In some ways of course, 'the more the merrier'; the larger the group, the more clout it will have.

    But the does seem a little arbitrary!

    It also seems odd that France, Germany, Italy and the UK are members in their own right, but the EU is also a member, effectively giving those countries two bites at the cherry. The EU doesn't speak with one voice anyway, so it's hard to say why there needs to be this double-representation.

    Perhaps Canada's position is at least partly understandable.


  • Comment number 3.

    Have you seen the wonderful YouTube bit called "Canadian, Please?"

    it will brighten your day... guaranteed!

  • Comment number 4.

    It is about time European imperialism was shuffled off to the graveyard. It is no longer relevant. We might not like Brazil, Russia, India, China and all the other fellows stepping up to the plate but it is time to accept realities.

    Empire is no more: and the lion and the wolf shall cease! Wasn't that William Blake? Maybe there are angels to be found on Hounslow Heath after all?

  • Comment number 5.

    What does it all mean? - when you have an un-elected Prime Minister? - what substance does a vote mean? - sod all - sorry excuse my poor expression and language - however I'm really frustrated and angry that we are attempting to discuss a subject of paramount importance when our PM simply does not have the peoples mandate to operate. Role on the next General Election when whoever succeeds will have true authority. So back to the "New World Order" - Brown doesn't have the authority - period. It's a disgrace of our time - the man should call an election. Win or lose we would then be on the right track with a democratically elected leader.

  • Comment number 6.

    Meanwhile, Obama and Brown have the time to make themsleves look silly in the wake of what the IAEA said to Israel (and #49) and how the latter responded.

    What has that got to do with the economies of the Liberal-Democracies?

    Sometimes the truth is revealed by the tone and emphasis in the question....

  • Comment number 7.

    This story looks like it was written by a fascist pig.
    The NEW WORLD ORDER can kiss my ass. I will fight it tooth and nail.

  • Comment number 8.

    G20 or G8 ? Who cares ? Daft politicians re-arranging deckchairs on the Titanic.

  • Comment number 9.

    Given that the current global crisis resulted from nothing more complicated than greed. The individual and collective greed of developed nations in particular. It is massively disappointing to realise that their continued refusal to relinquish control of the world's purse strings is likely to prolong both the unfairness and the pain, for the majority of the world's inhabitants... There is no old or new world in a truely 'global' economy after all, everything is intrinsically linked... So the sooner the crippling bias within and around the IMF is removed, the sooner we can get on with building a sustainable future.

  • Comment number 10.

    RichardWirral (#9) "The individual and collective greed of developed nations in particular."

    It's not just that though, the darker side is the extent to which the 'developled nations no longer protect those who are vulberable but the opposite. Recognition of true behavioural diversiy is now not just ignored in favour of caveat emptor, but if anyone dares say that groups are not equal in ability, that the sexes differ in vulnerability to predatory marketing/lending or anything along such lines, they will be shouted down, as such talk is bad for business and might even lead to the 'evils' of socialism which is anathema to Liberal-Democracy....

    What we get is just carefully scripted/directed show business from our politicians whilst the economy and culture progrssively gets worse and worse.

  • Comment number 11.

    On September 22 the worlds leaders met in New York to discuss climate change and then......

    Meet up to discuss sustainable growth (amongst other things)

    Can't these people join up dots?

    Or as my local, very busy estate agent said today... I think it means we'll all being buying new bicycles that will be made in new factories, probably in China

  • Comment number 12.

    to no. 5 - last time I checked we voted a party in and not an individual - other countries do different but this is our way, so to say he has no mandate is not entirely accurate as he has the Labour party mandate...until the election at least!

  • Comment number 13.

    Perhaps you are in need of a little history lesson. In reality it was former Canadian Prime Minister Paul Martin who as Canadian Finance Minister in 1999 was instrumental in the creation of the G20 Finance Ministers group. As the first chairman of the group he also led the push to increase the influence of the G20 a cause he continued to champion when he became Prime Minister. To imply Canada is a roadblock to increasing the status of the G20 is revisionist history at best and more likely simply ignorance of the facts.

  • Comment number 14.

    G8 or G20 who cares? We should care, it should mean something, but in effect it will mean nothing at all. The simple fact is that there is no true consensus about what should be done or how we should go about doing it.

    Is that so suprising? Probably not. The EU cannot speak with one voice. The BRICS do not have exactly the same economic realities. The USA has not yet come to terms with its own economic position. Therefore 8 or 20 all that will be acieved is so much hot air. It would appear that the maintenance of the status quo is beyond them and therefore the IMF is directionless.

    We need a complete re-evaluation of the purpose of the G whatever and the IMF itself. We need a complete re-evaluation of the rules and regulations of world trade. We need a complete re-evaluation of the world market structures - financial and commodity. Are any of these 'on the table' as matters of high priority or are we still fire-fighting and defending our own positions?

    The world has waited long enough for these leaders to step up to the plate and take positive corrective action. None has been forthcoming and is unlikely to be for at least another 2 years! Perhaps our only hope is that the whole system collapses and we are forced to start again

  • Comment number 15.

    Even if this kind of "international organitations" change the representation some how, the economical power is not just in the goverments, world economy is ruled by enterprises and goverment are some kind of assistant of this powers... Dont forget that::
    Stephanie::: I really liked this article though.
    (The other 'fellows' historically have been supporting world economy::: )

  • Comment number 16.

    Just thought i would add a little Canadian input.

    The current Canadian government, under Stephen Harper who is a Right wing Ideologue is a constant source of embarrassment on the world Stage. They are often the Butt of jokes whenever they go near the world Stage.

    If , as you say, this site is generally a "big fan of the Canadians" then please find the time to have a closer look at this particular Canadian Government.

    I think Canada needs a change away from the American style Politics and political games of our PM.

    I can understand your having used the phrase "the Canadians ....... kicked up such a fuss". This is a common trait of our Mr. Harper. He decided not to attend the UN meetings in NY, although he dropped in for a Formal dinner! He also flew home to Canada to get a donut, and a photo opp instead of taking the time to be seen listening to other Heads of State.

    Stephen Harper is a Rather Petulant Child in many ways. And this trait alone makes him a man to keep an eye on.

  • Comment number 17.

    As a Canadian I am disturbed at some of the comments posted here regarding our Conservative government, firstly because the Brits can't help saying "Canada kicked up such a fuss". Let's remember your PM Brown fell over himself to be patted on the back by Obama. This isn't quite as bad as being in the lap of the president as your former PM Blair was accused of so often. However, as has also been indicated, it was Paula Martin who envisioned a larger G group. This would diminish Canada's influence to a larger and more equitable world group. This is the Canadian way. If you remember it was a Canadian Prime Minister, Lester Pearson who won a Noble Peace Prize for his work in creating the United Nations. We don't need to be the centre of attention, like others, but the world does need more Canada.

  • Comment number 18.

    Capitalism isn't working!

  • Comment number 19.

    "The world does need more Canada"

    hahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha

  • Comment number 20.

    At 9:28pm on 25 Sep 2009, GrecianWebb wrote:
    "to no. 5 - last time I checked we voted a party in and not an individual - other countries do different but this is our way, so to say he has no mandate is not entirely accurate as he has the Labour party mandate...until the election at least!"
    Agree with your comment above. However, in reality most of the elections in the UK over the past 50 years have created governments whose parties actually attract less than 50% of the popular vote. Our anachronistic 'First past the Post' system, as opposed to Proportional Representation means that the British people are usually governed by a party which is wholly unrepresentative of the marjority of UK citizens. In the last election (2005), Labour won 35.3% of the popular vote, yet gained 55% of parliamentary seats. The Lib-Dems won 62% of the number of votes cast for Labour, yet ended up with only 10% of the parliamentary seats, i.e. one fifth of Labour, despite having gained more than 50% of Labours votes! Enough said about the sham of democracy!

  • Comment number 21.

    New world order?

    A case of rebalancing world politics to the new economic order, i.e. a reduction in US influence and an increase in Chinese influence?

    Firstly, history shows that such rebalancing usually takes the form of war (two world wars for the US to truly surplant Britain and destroy German and Japanese competition).

    Secondly, this time around it may not be as simple as passing the capitalist batton.
    The limits to growth are seemingly being hit (e.g. ecological crisis).
    As Rosa Luxemburg argued, capitalism needs to loot to accumulate.
    But as capitalism is now world-wide there is less to loot (in the sense of primitive accumulation, i.e. stealing the common land and forcing peasants to work in the factories).

    Socialism, by freeing humanity from production only for profit (i.e. producing only if it makes the rich richer regardless of need) offers a truly new world order.

  • Comment number 22.

    -You may remember this blog is a big fan of the Canadians. But on this matter I clearly misjudged them. Turns out that Canada can be just as single-minded in defense of its historic privileges as everyone else.-

    And you you will keep on misjudging as long as you restrain yourself to appearances. One thing Canada knows about is proper transition time from G8 to G20. Maybe that's because they have pushed since day 1 for a G20 when a lot of EU-US were cold to the idea.

    Only one who is cynically overdosed from UK politics would project such a thing. It is actually those who want to rush into the G20 mode that are preoccupied with political appearances. The G8 is not administered by 8 people, it is administered by a multilateral agreement employing an heavy bureaucracy with separate and common issues with the G20.

    Sure, Canada has historic privileges. Especially one of living next to an unruly dangerous elephant that has partially alienated itself from the rest of the world for the last 8 years and then with the election of the democratic saviour make everyone instantly forget. Maybe you should ask someone from Canada why they do not to scrap months of careful preparations (multilateral) just so the new US wonder boy gets something to announce. Do you really think that Canada could host the G8 if 7 out of 8 participants did not want to? Do you really think that Canada has that clout?

    Why don't you ask the Canadian government if they have another reason other than historical privilege? Afraid to get an intelligent answer? RL

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