Originally published on the CGS blog on November 11, 2008.
This upcoming weekend, statesmen from twenty different countries will meet in the White House and intensively discuss solutions for the financial crisis. After the summit of the EU in Brussels and G-20 in Brazil last week, this November 15 the highest political representatives are heading to the U.S. capital at the initiative of the U.S. President. George W. Bush invited de facto the same countries which participated in the already-held G-20 summit, including the Group of Seven or G7 (Britain, Canada, France, Italy, Japan, Germany, the U.S.), a group of very ambitious countries called BRIC (Brazil, Russia, India, and China), and other emerging economies (such as Argentina, Australia, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey). The 27 European nations will be represented by the French President, Nicholas Sarkozy.
Aside from the G-20 countries representatives, the Washington summit will host Ban Ki-moon, the United Nations Secretary-General, Mario Draghi, the Chairman of the relatively new Financial Stability Forum, and leaders of the old Bretton Woods institutions, namely Robert B. Zoellick, the President of the World Bank and finally, Dominique Strauss-Kahn, the Managing Director of the International Monetary Fund (IMF).
This distinguished symposium is planning to discuss how to coordinate national responses to the fallout from the financial crisis and how to rebuild the international financial architecture, especially how the IMF and World Bank reflect the increasing role of the emerging economies and consequent changing economic weights in the world economy. Still, many participants do not anticipate any substantial shift of a national sovereignty towards a global institution. Neither does Mr. Strauss-Kahn from the IMF who on one hand supports more regulations in global economy, but at the same time claims that they have to be implemented by national authorities.
More positively, it seems that states have clear ideas what they want to pursue on the summit. Thanks to the regional summits and lower level negations, all the actors could have already formulated their standpoints and are well prepared for the Saturday deals. For instance, BRIC countries expressed desires to give more influence to developing economies and to secure fair representation within the International Monetary Fund or the World Bank. The EU agreed on five common principles on their summit; more oversight of ratings agencies, aligned accounting standards, closing oversight and regulation loopholes, banking codes of conduct that discourage risk-taking, and a bigger role for the International Monetary Fund. Less formally, the EU might push for removing the dollar as the world’s sole reserve currency. Even though the decrease in the role of dollar in the world economy would stir up minds of American diplomats, the Bush administration agreed with European leaders on the importance of identifying common principles to guide reforms, setting out a process to implement those principles promptly, and proceeding with actions on certain reforms immediately. These mutual aims give a good soil for further compromises.
Whether November 15 becomes a historic moment and galvanizes the preeminent authorities into a common action is in hands of 23 representatives of the international community. If everything works well, this date might become a turning point for global financial architecture.
