Olaf Corry is a visiting scholar at the Centre for International Studies, Cambridge University.
Economic Interests
The UK continues to be highly dependent upon a global recovery. With its heavy dependency on the financial sector, a return to something resembling normality on the financial markets is particularly vital for Britain’s economic fortunes. Earlier this month the OECD adjusted its economic forecast downwards predicting that the UK economy would shrink by 4.7 percent as opposed to the 4.3 percent forecast in June. This meant three things for British economic priorities at Pittsburgh. The first was to make sure the stimulus packages in operation in the G20 zone were not withdrawn ‘prematurely’ to ensure as speedy a revival as possible for the UK. Secondly it was considered a priority to make sure agreement on reform of the financial sector secured more trust and stability in the world of finance, while not harming London’s (in part bonus-driven) financial industry. The third perceived priority was to help prevent the spread of protectionism which again could hurt the ‘green shoots’ of recovery thought to be discernible.
The result was a partial success in line with these aims. The final communiqué urged G20 members not to drop stimulus packages prematurely (but each country could work out when it wanted to make use of an ‘exit strategy’, albeit in ‘a cooperative and coordinated way’). The issue of bonuses stayed out of the text (a French suggestion to cap bonuses was first grudgingly accepted as something to be ‘explored’ and then dismissed as unworkable by Chancellor Alastair Darling during the meeting) but other rules to mitigate excessive financial risk-taking and anti-bubble measures were put forward including the creation or formalization of a Financial Stability Board to oversee and coordinate finance ministries. Finally, G20 leaders warned against protectionism and reiterated their collective commitment to the Doha round of trade talks at the WTO (but added nothing much new on this front). On balance, all three developments probably furthered Britain’s national economic interests understood in terms of securing short term recovery and long term durable and sustainable growth.
Political Interests
Gordon Brown is well known to be effective in matters of global governance and so another solid performance does not make for many headlines. On the other hand, although he was not seen as the ringleader (that role was seen to belong squarely to President Obama) the image of the consummate global operator was not harmed by events at Pittsburgh and may even have been enhanced when he received the 2009 ‘World Statesman of the Year’ award from the Appeal of Conscience Foundation for his global leadership. The final communiqué bore a clear resemblance to Brown’s rhetoric, warning against complacency about the nascent economic upturn, praising the stimulus package agreed upon in London, and emphasizing the need for a new “global architecture.”
However, domestic coverage of Gordon Brown’s leadership in Pittsburgh was not overwhelming, except, symptomatically, for the rumor that president Obama had snubbed the Brown camp which had apparently been pushing for a bilateral meeting. The view of the British premier as an ailing leader headed after Pittsburgh for a final desperate Labour party conference in Brighton dominated the media picture. Comments by his chancellor, Alastair Darling, that the Labour leadership had “lost the will to live” overshadowed any sense of leadership and dynamism that may have emanated from the G20 summit. Speculation regarding a possible leadership challenge to Brown inevitably resurfaced.
In a curious way, Gordon Brown’s apparent success in leading a concerted push for a global new deal of sustainable economic recovery, better global rules for finance and a reformed system of cooperation between nations tends to reinforce the negative domestic image of him as a ‘systems operator’ or lofty world actor who remains distant from and unable to cope with the realities of British politics. The dominant national narrative of failure clearly overrides the global narrative of accomplished statesmanship.
International Interests
The G20 continues to be considered an innovation which chimes very well with the UK’s post-war commitment to multilateralism – something which has only become more explicit after Gordon Brown replaced Tony Blair. Worries that Britain’s influence will somehow be watered down by the expansion from G8 to G20 are conspicuously absent from public debate. Unlike debate on reform of the UN Security Council, where Britain’s membership of an exclusive group of permanent members is seen as vital (justifying modernization of nuclear weapons capabilities, for example), there appears to be a wide, albeit unarticulated, consensus that Britain can best look after its global interests by working within a new global architecture that includes the major players and a majority of the world’s population. On the other hand, this lack of concern about being joined at the G8 table by other rising powers, such as Brazil and India, in a G20 may also reflect widespread skepticism about the efficacy of either institution, often accused by skeptics of being a ‘talking shop’. Nevertheless, the replacement of the G8 with G20 (rather than the French model of a G14) is generally seen as an Anglo-American victory and is being led by none other than President Obama – who is still hugely admired in the UK.
One important development since London was the appointment of Shriti Vadera, Brown’s close advisor on international aid and development policy, to a new post as advisor to the G20. This is seen as a move which strengthens British influence on the mould of the emerging G20 institution – although it was also interpreted as another sign of rats fleeing the sinking ship under the troubled Brown captaincy.
Global Leadership
The British government insists that the ‘common action’ taken at the G8 and G20 levels to counter the economic downturn was effective. According to the loyalist daily, The Mirror, Gordon Brown predicted a ‘new boom’ in Britain by 2010 thanks to the interventionist and globalist approach he adopted. At a news conference in Pittsburgh he said that “The action we took at the London summit has worked. The economy has been prevented from descending from a recession to a great depression as a result of co-ordinated action.” This view is probably widely shared. The impression that the US and the UK ‘won’ the battle over bank bonuses is also widespread. New standards ensuring that bonuses, though not capped, will be deferred and “subject to clawback if traders’ bets go wrong” as The Daily Mail put it, are generally approved of. The public confirmation that the G20 was now the central forum for global regulation and coordination was also met with approval, as were the agreed adjustments to the IMF giving a greater say to developing nations.
On the other hand, rumblings of disquiet about the continued size of banks and the failure to of the G20 to secure a break-up of commercial and merchant banks, leaving them publicly funded but still ‘too big to fail’, were voiced. Also the G20 is seen to have danced around the fundamental question of gross imbalances in the global economy between debtor and creditor nations. However, these critiques serve to emphasize the perceived salience, if not the efficacy, of the G20 as the forum in which such problems ought to be tackled.
Meanwhile the major question of public concern in the UK, which is not seen to be relevant to G20 action, is the question of how high public spending and debt resulting from the action taken on the crisis is to be recovered. This is seen squarely as a ‘domestic’ problem which partly explains why Gordon Brown is having trouble translating global policy success into domestic political capital.