There's a danger we're already sowing the seeds of the next great financial crisis. We need better global coordination to address the biggest transformation of the world economy in history. In our interdependent world, only concerted action across continents can tackle these challenges.
Two years ago, the formal creation of the G20 helped prevent the world recession from becoming a world depression. World leaders agreed to a $1 trillion underpinning of the world economy, and strengthened the World Bank, the International Monetary Fund (IMF), and the World Trade Organization. In its concluding statement, however, the G20 promised more: that it would work towards implementing new global standards and regulations across the world’s banking system, and that it would be the architect of a global growth agreement designed to deliver rising prosperity and create jobs in the decades ahead.
Two years on, what some now call mini-lateralism seems to be the order of the day. The immediate crisis has passed, and despite outstanding leadership in our international institutions and bold international initiatives by some national leaders, many governments have retreated into their national shells. We cannot agree on the proposed “global growth pact”; a world trade agreement is yet again stalled, risking the first failure of a planned trade agreement since 1948; and even after a nuclear catastrophe in Japan and a period of violent volatility in oil prices, there is still insufficient momentum for a global climate change agreement.
So what has happened? The need for cooperation cannot be in dispute. Indeed, this year the world is facing an unremitting onslaught of new challenges – food shortages, commodity price increases, youth unemployment and social unrest, and large imbalances even as inflation reappears. Some now talk not of a crisis but of crisis-ism, a state of ever-recurring crises that cannot easily be resolved by nations acting autonomously.
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