Leaders of the G20 nations, which account for 90 percent of the world economy, are set to meet in Cannes, France, this week. The summit comes at a tumultuous time for the world economy, as the European debt crisis rages on and China debates its possible role in any bailout. Challenges to global economic recovery are broader than just those facing Europe though, as President Obama wrote late last week. American action to fix problems at home, chief among them high unemployment and weak demand, is needed to spur a global response and global growth that will, in turn, lift the U.S. economy. Leadership also means looking beyond today's emergency: In order to create balanced, sustainable and equitable growth, the G20 - and Washington - must quit "careening from crisis to crisis."
Today, on the one year anniversary of the collapse of Lehman Brothers,
President Obama is speaking on Wall Street, addressing the need for
regulatory reforms to the financial sector. Since taking office the
president has led a coordinated global response to the worst economic
crisis since the Great Depression.
The inauguration of Mahmoud Ahmadinejad for a second presidential term earlier this monthhas not dissipated discontent with the regime or ended political turmoil. Political and religious leaders have organized behind the scenes and opposition leaders continue to make explosive allegations against the government. This coming month, the fractious regime will be pushed back into the international spotlight. A clogged September calendar will see Iran dominate the agenda of international meetings in Frankfurt, Vienna, Pittsburgh, and New York. Despite Iran’s political uncertainty, engagement remains the best way of forcing a decision from the regime – either move in a new direction offered by the Obama administration or face consequences from a united international community.
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.
Last night President Obama made the case for his budget, which includes important action on health care, energy and climate, and education. Taking action on these issues is vital to maintaining America’s position as a global power. Some have argued that in the midst of recession now is not the time to advance these issues. This has it backward.
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.
This weekend, world leaders will gather in Washington to discuss the financial crisis. After World War II and the great depression the world’s leaders recognized that the international financial system was too complex and interconnected for countries to go it alone and responded by establishing the Bretton Woods institutions. The international financial mechanisms they created helped war-torn economies recover – and set the stage for the US economy to grow and thrive atop the global economy for the half-century that followed.