The leaders of the eight leading industrialized nations meet in the G-8 summit in Italy today. This meeting comes just a few months after the G-20 summit in London, which sought to create a unified global response to the economic crisis. The IMF today reinforced the concern that much work remains to be done, and that it is too early to back away from stimulus policies and support for poorer countries.
As President Obama stops in Germany briefly before heading to France for commemorations of the 65th anniversary of D-Day, all is not well in the U.S.-German relationship. Even as Obama is tremendously popular personally in Europe, there are indications that diplomatic missteps in both Washington and Berlin, as well as frustration over policy differences on the economic crisis and Afghanistan, have led to tension in the U.S.-German relationship.
President Obama embarks on his first trip to Mexico this week in an effort to warm up a cool relationship and turn rhetoric into substance on the shared challenges the two countries face. The Obama administration has recognized that the challenges facing Mexico are serious foreign policy concerns for the United States and that they can only be overcome by both countries taking shared responsibility to address them.
The G-20 Summit represents a tremendous challenge for the Obama administration. But the US leaves London well-placed to lead continued global collaboration over the course of the year and manage disagreement productively. There would be no need for international diplomatic summits if everyone was already in agreement.
The justified outrage over AIG’s post-bailout bonuses should not be conflated with the revelation that AIG dispensed billions to foreign banks. The US needs an international recovery to sustain our own recovery, and our status as the sole global superpower and the world’s reserve currency give us a unique stake in working to maintain the global economy. Despite public anger at AIG, as President Obama noted during his address to Congress, “in a time of crisis, we cannot afford to govern out of anger.”
The Obama administration is dealing with the crisis by seeking a global solution for a global problem. Yesterday, Treasury Secretary Tim Geithner unveiled a proposal to shore up the IMF and ensure that global institutions have the resources they need to help failing economies. There is still no international consensus on this plan and much difficult work must be done before the upcoming G-20 summit in April. Unfortunately, rather than addressing these serious issues and helping find a constructive solution, conservatives in Washington are playing politics by railing against earmarks, which make up only 2% of the federal budget.
The World Bank released a report on Friday that projected the global economy will contract for the first time since WWII. This has led Lawrence Summers, the head of the National Economic Council, to call for a global stimulus effort that seeks to boosts demand throughout the world. The world will be watching the G-20 summit in April for the hope of seeing strong global action along the lines advocated by Summers and Prime Minister Gordon Brown. However, despite the need for countries to take strong action, Congressional conservatives are stuck in a mindset reminiscent of the Hoover-era. Calls for “spending freezes” and to stimulate the economy exclusively through tax cuts, are reflective of a movement that has run out of ideas and has no practical solutions to solve the economic crisis their very own policies created.
UK Prime Minister Gordon Brown arrives in Washington today, becoming the first European leader to meet with President Obama. Although British troops have fought in both Iraq and Afghanistan and the UK remains an important player on issues from Middle East peace to Iran, poverty and climate change, Brown’s visit this week will likely be dominated by the global economic crisis.
Yesterday, the new Director of National Intelligence, Dennis Blair, warned that “the primary near-term security concern of the United States is the global economic crisis and its geopolitical implications.” While Al Qaeda remains the most direct threat to the physical security of the United States, the geopolitical ramifications of the global economic crisis are truly startling. The interconnected nature of the global economy has meant that the current crisis has affected all regions of the world.
In an increasingly interconnected and globalized world, the domestic stimulus bill has tremendous international implications. Attempts to stick to a discredited economic doctrine and sacrifice economic recovery for 2010 talking points, show a dramatic misunderstanding of the leadership capital the US can gain – or lose – here. As if the welfare of Americans wasn’t enough, businesses around the world are watching and hoping that Congress shows we understand how what is in our self-interest is also in theirs.