Opinion

Is the G20 Meeting Being Wrecked Before It Starts?

Steve Sedgwick, Anchor
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I'm all too aware that the posturing from lion-like countries going into big pow-wows is all too often replaced by lamb-like tendencies when dignitaries finally make it to the table.

But two events in the past 24 hours, the State of the Union speech and the much-misunderstood G7 communique are tacit admissions that something is rotten in the State of Denmark. For the State of Denmark read globalized, cohesive reaction to current challenges.

Is the G20 finance ministers and central bankers meeting being wrecked before it starts?

I do not need to give you more comment on the G7 communique itself, safe to say there are at least three interpretations out there from G7 members themselves as to what it actually was meant to say.

That said, I think Mark Carney's testimony to the Canadian House of Commons was an insightful deciphering yesterday.

To paraphrase, the incoming Bank of England Governor backed forceful, united G7 action against the emerging nations within the G20 who were not playing by the rules with their currencies. Carney also backed this strange idea that it's OK to have policies that weaken your currency as long as you say those policies are for domestic rationale, such as inflation boosting.

Hang on a minute? Surely those same policies are just as likely to weaken your currency at the same time, if you admit it or not? Maybe I need to revisit my economics 101.

Let's also bear in mind that this is supposed to be a big week for the G20, not G7.

The G20 is supposed to have become the ascendant international forum for solving financial and economic matters. The G7 is supposed to have become a far less influential and effective informal block of western-dominated superpowers.

In the U.S., President Obama has just given us his State of the Union Address. In it, he talked brightly of trans-Pacific partnerships and the launch of transatlantic trade and investment talks with the EU. Great news, except doesn't it prove what we all knew anyway that the U.S. thinks multilateral trade talks on a globalized Doha-like basis are deader than a dodo and are unlikely to play a major part in his thinking for the rest of his term?

So with the U.S. going bilateral and the rest of the G7 showing their teeth at the emerging nations of the G20 we're in for a lovely time here in Moscow at the end of the week.