The faces were familiar. The rhetoric of the statement concluding the summit was for the most part, familiar. And yet it was clear to the world watching this latest gathering of the G20 in Seoul, that the mood had changed. The show of unity was less convincing than in London two years ago at the height of the financial crisis, when co-operation at the highest level between the G20 was a necessity not a choice. The final leaders’ statement to emerge from Seoul has been criticised in the media for being too vague and failing to provide measurable targets for reform at a global level. From another perspective though, the subtext of the statement and its lack of specifics was confirmation, if it was needed, of the degree of discord and debate taking place behind closed doors.
One of the causes of the tension both before and during the summit was the issue of how to address current global trade imbalances between those nations with surplus funds and strong export-led growth (China and others) and those nations with huge deficits and comparatively poor growth:
“Some of us are experiencing strong growth, while others face high levels of unemployment and sluggish recovery. Uneven growth and widening imbalances are fuelling the temptation to diverge from global solutions into uncoordinated actions... uncoordinated policy actions will only lead to worse outcomes for all.”1
Another topic of tension discernible in the sub-text of the statement was the ongoing furore over currency exchange rate practices viewed as anti-competitive. The US was under attack before and at the summit following accusations of actively pursuing a weaker dollar following the Federal Reserve’s renewed quantitative easing programme. China was also under continuing fire for the competitive advantage given to it by a pegged and undervalued renminbi. The leaders’ statement included a commitment to move towards “…market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals, and refraining from competitive devaluation of currencies.”
Perhaps this G20 summit, even more than Toronto in June, provided evidence of the increasing polarisation between those countries which had taken the brunt of the financial crisis and those which had emerged relatively unscathed. In our most recent of six surveys2 tracking sentiment from the early days of the credit crunch through to the global recovery, 73 per cent of respondents agreed or strongly agreed that polarisation was increasing between those countries where support of the financial services was needed and those where it was not. 'Seoul even more than Toronto perhaps confirmed the perception that those nations amongst the G20 who “escaped the worst effects of the financial crisis no longer subscribe to a collective response.” '3