Global Leadership at Cannes: China’s Arrival, or What Happened to America?
Much has been made of China’s new global profile at the G20 Cannes. On the day after the Cannes G20, the lead article in The Guardianwrote that Cannes “showed how power has shifted to Beijing.” The same day, Le Monde reported that China will likely become the second largest contributor to the IMF, following Cannes. The BBC then posted a piece entitled, “How did once-mighty Europe became China’s supplicant.”
The China hype is growing. But the new attention on China only makes sense in relation to the apparent disappearance of U.S. leadership at the G20.
A tipping point may have been reached at Cannes. But it was not that the Europeans approached China and the other emerging economies for support, since these advances started before the Summit. Rather, it was the role of the U.S.
The details of how events unfolded leading into and during Cannes suggest that we are seeing an American state that is now focused heavily on domestic politics, that is increasingly lacking the political will, and arguably the economic capacity, to provide leadership for global economic burden-sharing.
Take, for example, the amount of time and energy that deputy treasury secretary Lael Brainard dedicated at the White House press briefing (at the end of the first day at Cannes, 3 November 2011), to reassuring the U.S. domestic audience that U.S. banks were not overexposed to European debt, and that America’s banks had rebuilt their capital holdings after the 2007-09 global financial crisis. In short, the “point to register” was that American taxpayers would not have the foot the bill for a European bailout, that America’s financial sector is safe.
This response to the European debt crisis bears a marked difference from America’s role in resolving previous cases of sovereign debt restructuring, such as the 1994 Mexican financial crisis, when the Clinton Administration risked annoying U.S. taxpayers by agreeing to shoulder the largest portion of that bailout package. The U.S. administration countered Congressional Republican opposition to loan guarantees by raising funds from its Exchange Stabilization Fund. U.S. support helped Mexico to avoid default.
Also in contrast to the past, the aforementioned White House press briefing revealed that the major objective for the U.S. at Cannes was to make sure that the Chinese agreed to language in the Summit Communiqué about “surplus countries agreeing to increase domestic demand” and agreeing to more “market determined and flexible exchange rates.” If one tracked the statements of the U.S. Treasury Secretary since 2009, one would recognize this goal as another case of elevating U.S. domestic and bilateral trade concerns up to the global multilateral level.
Perhaps we should not be surprised by the U.S. posture at Cannes. As Thomas Wright has noted perceptively, multilateralism and global summitry have been tough sells in the United States for a while. But for a moment, we thought the Obama presidency might be different.
In fairness, the United States remains the largest contributor to the International Monetary Fund. And it was reported that the U.S. President Obama did try to encourage German authorities to strengthen the ECB. It was said that treasury secretary Timothy Geithner also attended all of the European meetings where Euroland officials tried to rework their debt bailout measures for Greece. U.S. representatives shuffled in and out of meetings, trying to nudge and encourage. But without the capacity to offer additional financing, their influence was limited.
What Cannes suggests is that we may be looking at a United States that is starting to suffer a lack of capability and will for global economic leadership. More troubling, we may also be seeing an increasingly inward-looking America, disengaging incrementally from ‘global’ economic problem-solving – and perhaps on the first steps of the steady slope to (economic) isolationism.
Where does this leave the idea of a “G2”?
If by G2 we mean only that the US and China tend to “go bilateral,” and that everyone else will have to live with whatever the Big 2 decide, then we may now be in the era of a G2.
But some mean something more by a G2. That the Big 2 will (hopefully) also provide global leadership by embedding themselves within a G20, or other global institutions, and in so doing, provide needed guidance and direction for global agenda- and priority-setting – to help break international deadlocks, to help build new global consensus. For those with this view of the G2, Cannes was disappointing.
The French G20 Summit suggests that we may not even have a “G2”.
Photo courtesy of Reuters.