EU dreams fade of taming capitalism
By George Parker and Andrew Ward in Washington and Ben Hall in Paris
Published: November 14 2008 18:37 | Last updated: November 14 2008 18:37
For some European politicians, this weekend’s G20 summit looked like a dream come true when it was first announced: a chance to tame unbridled “Anglo-Saxon capitalism” at a time of American economic weakness.
Even better, in Barack Obama the US had elected a president who appeared to understand, like the Europeans, the importance of an active state and who seemed perfectly equipped to deliver this new economic order.
Spain’s governing Socialist party summed up the heady mood in some parts of Europe in an internal document, seen by El Mundo, that identified the summit as a moment of historic change. “The origins of this crisis lie in neoliberal and neoconservative ideology,” it said.
As the summit has approached, however, those dreams have started to fade. Some European leaders have overplayed their hand with calls for far-reaching new regulatory structures, annoying their American hosts in the process.
There has also been the crushing disappointment for European summiteers that Mr Obama will not attend, or even drop by for dinner.
Instead of photo-opportunities and face time with Mr Obama, the Europeans are left with President George W Bush, who used an eve-of-summit speech to deliver a lecture that appeared to be directed at some of his transatlantic guests. “History has shown that the greater threat to economic prosperity is not too little government involvement in the market but too much,” he said.
Mr Obama’s team is also wary of the European Union’s fondness for multilateral regulatory solutions, perhaps one reason why he decided to stay away.
The travelling delegations from European G20 members – Britain, France, Germany and Italy – have been left to make arrangements to speak to Mr Obama’s representatives to try to map out a strategy for future summits.
Nicolas Sarkozy – the French president who claims the European record, 30 minutes, for a phone conversation with Mr Obama – says he knows the incoming president’s mind on financial regulation. Other leaders have typically had to settle for 10 minutes, although UK diplomats joke that half of the French president’s chat comprised translation.
European leaders might reflect that slightly more subtle approach work could have ensured a warmer welcome from the outgoing and incoming US administrations, whose support they need for global reforms.
Gordon Brown, Britain’s prime minister, raised some hackles by proclaiming his “world leadership” in calling for a fiscal stimulus. President Bush has already launched one, worth $170bn compared with the UK’s $5.9bn. So too have the Chinese, Japanese and Germans.
Mr Sarkozy’s proposal that agreement on reforms be settled within 100 days has also irritated some in Washington, who do not like the idea of having their legislative timetable dictated from abroad. The French president has shelved his plan for the International Monetary Fund to become a “regulator of regulators”.
Silvio Berlusconi approached the summit by praising Mr Obama’s “sun tan”. The Italian prime minister went on to defend his Russian allies, criticising the US for “provoking” Moscow with its missile defence shield.