As Summit Starts, Emerging Economies Gain New Clout
Saturday, November 15, 2008
When world leaders gathered last night for a White House dinner on the eve of a major economic summit, the faces around the table were not just those of the Europeans and Japanese who normally mix in the highest circles of diplomacy. This time, heads of state from the across the developing world, from China to Brazil to India, had a seat at the table.
Their inclusion in this weekend's talks on the global financial crisis marks a historic power shift. The summit is being seen as a model of what high-level diplomacy will look like in the future, with emerging giants gaining a voice in a club that long included only the richest of nations. But at a time when China maintains the world's largest cash reserves and the United States is going deep into debt, the definition of rich has changed.
Leaders from developing countries -- which are expected to account for nearly 100 percent of global growth next year as developed countries fall into recession -- now see an opportunity to broaden their clout. At the summit today, they will push for more influence in the International Monetary Fund as well as the other institutions that are charged with maintaining global economic stability, but that still remain largely controlled by Europe, the United States and Japan.
Developing countries will also seek to cement their inclusion in global decision-making, pressing for entry into organizations such as the Switzerland-based Financial Stability Forum, which brings together developed world regulators, central bankers and financial officials.
Analysts say the shift toward global inclusion underscores how the financial crisis crippling the developed world has provided emerging giants -- which are relatively healthier -- with a chance to assert themselves.
"We must use the crisis as an opportunity to correct things that were wrong before the crisis and strengthen multilateral bodies, because in a globalized world we need serious and representative forums to take global decisions," Brazilian President Luiz Inácio Lula da Silva told reporters this week. Lula dismissed the modern relevance of the Group of Eight, an organization of seven developed countries plus Russia, that might have been called on to deliberate on the crisis in another era.
"We need to have other countries and other continents for more democratic, more plural decisions," Lula said.
With new clout, some say, comes new responsibilities. In an interview yesterday, Japanese Prime Minister Taro Aso called on nations such as China to offer up some of their vast reserves to the IMF, which has been charged with bailing out a number of countries in recent weeks. With the economic crisis deepening, he said, the IMF would need more than the roughly $200 billion in its war chest to help troubled nations.
Japan would offer as much as $100 billion more, he said, but other countries with deep pockets should fulfill their responsibilities.
"It doesn't have to be Japan alone that would provide such funds," Aso said. "Oil-producing countries, China and other countries that have ample reserves could also make their contributions."
Aso also showed reluctance to quickly cede voting power in organizations such as the IMF. "I don't think it's something that should be achieved today or tomorrow," he said. "I believe that needs to be worked out over time."
Still, most nations, including the United States, have acknowledged that a new world order has emerged and that the developing world should have a larger say in international organizations.