The G-20 summit in South Korea was a grim minder of the challenges of a multipolar world. Unlike the previous summits, which confronted the problems associated with the global financial crisis, there were no major fires to extinguish during this summit. Some economies, such as China, India and Germany, are actually humming along at a healthy pace. Meanwhile, other countries, such as the U.S. and most of Europe, are still nursing the hangover produced by the credit and real estate frenzies. Therefore, the spirit of consensus and cooperation that were imbued by the burning need for survival is gone. Each country is now pursuing its own narrow agenda, with little regard for the effects that it will have on other countries. China, for example, demonstrated no interest in modifying its mercantalistic trade policies. The Germans refused to boost domestic demand or make any concessions to the U.S. on its current account proposals. At the same time, Treasury Secretary Tim Geithner was forced to defend his country’s exchange rate policies, thus implicitly endorsing the Fed’s new monetary approach and undermining the independence of the central bank. Likewise, the smaller members of the G-20 were forced to fend for their own, pursuing narrow interests that provided no benefits to the international community. Even the U.S. and South Korea, who tried to cobble together a trade agreement to jumpstart the spirit of teamwork and collaboration, were unable to deliver. It was clear that the U.S. lost its hegemonic influence over the group, and it was unable to provide a leadership role. In its absence, an air of chaos is starting to appear within the international arena.
Of course, there was some progress on the multilateral front. The G-20 agreed to modify the composition of the IMF’s board. Europe was forced to surrender two seats on the 24-member board of governors, along with 5 percent of the voting shares. At the same time, China increased its stake in the IMF and moved into third place among the institution’s largest shareholders. Russia, India and Brazil also increased their participation. In the process, the IMF doubled its capitalization to $756 billion. Although the changes indicated a moderate shift, it did not alter the institution’s power composition. The IMF remains dominated by the U.S. and Europe. This may be the reason why President Hu Jintao called for a change in the composition of the IMF’s senior staff. Although there is a smattering of nationalities throughout the Fund, it is still largely staffed by North Americans and Europeans. It will be interesting to see if there are any alterations. Unfortunately, the notion of solidarity did not apply when it came to reforming the composition of the 15-member U.N. Security Council. The international body which can authorize military action and impose sanctions has five permanent veto-wielding members, Russia, the U.S., Britain, France and China. President Obama won strong applause in Mumbai when he said that the U.S. would support India’s inclusion as a permanent member of the Security Council, but the G-20 had a different view. In actuality there are three major camps when it comes to modifying the U.N. The first one consists of Germany, Japan, India and Brazil, which are seeking permanent seats with veto rights. The second one, which is led by Pakistan and Italy, wants to maintain the same number of permanent seats, but expand the group of non-permanent participants. The third one is led by Africa, which seeks to give the continent two permanent seats and five non-permanent seats. Although it is the one with the least chance for implementation, it is the one that is strongly endorsed by China—as it tries to win favour with its client states.
Therefore, the G-20 summit in Seoul demonstrated that there seems to be little spirit for cooperation. The voting changes that were achieved at the IMF were largely cosmetic. Nevertheless, they gave the added benefit in recapitalizing the multilateral lending institution. However, a recomposition of the U.N. Security Council would be a surrender of power without receiving anything in return. It is true that the institution should be reformed. At a minimum, the presence of the U.K. and France should be replaced by either Germany or the European Union. Likewise, Japan should be given a permanent seat in order to force it to shoulder more of the responsibilities of preserving international peace and security. But, it would be silly to grant Brazil and India permanent seats at this time. Their inclusion appears to be more based on the BRIC notion than anything else. There are other large developing countries, such as Mexico, Turkey and Indonesia that play an equally large role. Therefore, we can expect each state to fight on its own, as the fabric of international cooperation continues to unravel.