Message to emerging markets: Take it on the chin and move on
India's prime minister was referring to the impact of capital outflows from the developing world – and India in particular – triggered by statements from U.S. Federal Reserve (Fed) officials about an imminent tightening of American credit conditions. [Since the beginning of the year, the Indian Sensex equity market index and the emerging market index MSCI have fallen 5.6 percent and 14 percent, respectively.]
That would indeed be an obvious G20 issue, right at the top of St. Petersburg's agenda, as discussed by the group's finance ministers when they met in July to prepare this week's summit.
But what can Mr. Obama tell India and the rest of the developing world even if he does show up in Russia's northern capital (his Russian hosts have doubts about that). The answer is: not much. Leaders of the U.S. central bank have already answered pleas from their colleagues in less developed countries during the Fed's Jackson Hole Symposium a few weeks ago, saying that their decisions will only take into account "the best interests of the American economy."
Those comments also came with advice for emerging economies to heed the virtues of stable prices and balanced trade and public sector accounts. And if that were not enough to stem the capital outflows, they were told to adjust their monetary and fiscal policies to make their countries attractive investment destinations.
Japan echoed this message when its smaller Asian neighbors complained about the difficulties created by Tokyo's monetary tsunami overwhelming their small and narrow stock markets. All they got from the tsunami architect, the Bank of Japan's Governor Kuroda, was that if they did not like what was coming their way, they should change their monetary policies.
(Read more: Is Kuroda too 'in love' with his own policies?)
Incidentally, the perfunctory nature of G20 proceedings in the shadow of an announced Syria bombing will help Japan to get off the hook for an overdue report to its main trading partners. Prodded by Germany, Japan is supposed to present a credible program of structural reforms (not just printing money) to (a) open up its markets, (b) support economic growth and (c) stop the fiscal bleeding to return to sustainable debts and deficits. Germany's message to Japan, endorsed by the rest of the euro area, is clear: cheapening the yen to boost exports is unacceptable.
From "black hole" to a drag on world economy
Germany would also have some explaining to do to its G20 trading partners.
Falling two weeks before German general elections, the St. Petersburg summit could be a politically delicate event for Berlin. But this forum needs to hear Germany's thoughts on (a) another Greek bailout, (b) the ongoing fiscal consolidation within the euro area, (c) obstacles for completing the euro banking union and (d)the sources of growth it sees for this deeply troubled part of the world economy.
(Read more: German candidates clash on euro and taxes in tight TV duel)
Running by far the largest trade surplus in the world – $245 billion, or a whopping 7 percent of gross domestic product (GDP) – Germany's position on these issues is of particular interest to the world's largest deficit nations such as the United States, India, Brazil, Turkey and Indonesia.
Germany accounts for nearly all of the euro area's $250 billion trade surplus. With Spain and Italy also moving toward growing trade surpluses, Germany's intention of pushing the euro area -- 16 percent of the world economy – to live off the rest of its trading partners is not exactly in line with the generally accepted G20 objective of properly balanced global trade.
Yet Germany's mantra of fiscal consolidation, and its insistence on E.U.-enforced and supervised measures of structural reforms to increase euro countries' competitiveness, will continue to run counter to the G20 objective of expanding world export markets in order to help deficit countries to improve their external accounts.
These are some of the vital issues for that one billion of poor people the G20 was supposed to help through better coordinated economic policies on a global scale – a tall order in the best of times. Sadly, this meeting is a total sideshow at a time when bombs and rockets are ready to rain on Syria, with unpredictable consequences for peace and stability in the area supplying some 35 percent of world energy resources.
If you are listening to Washington's national security commentators, you may wish to join the gold bugs – if you haven't already. These analysts are saying that bombing Syria is a must to send a clear message to Iran and North Korea that they could be next in line. But they leave one important question unanswered: would the U.S. be prepared to do that without the authorization of the United Nations Security Council if, as seems likely, Russia and China were to veto such military operations?
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Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.