Prime Minister Gordon Brown has seemingly risen from the ashes. His actions to protect the financial institutions in the United Kingdom and his call for global cooperation and a kind of Bretton Woods II have revitalized his leadership image.
On October 17th, in the Washington Post Prime Minister Brown penned an op-ed, “Out of the Ashes” The Financial Crisis is also an Opportunity to Create New Rules for our Global Economy.” In the opinion piece Brown casts a view backpraises the effort by officials at the end of World War II to build a new international economic order. And he urges, “Today, the same sort of visionary internationalism is needed to resolve the crisis and challenges of a different age.”
Brown in his editorial to underline that governments across the world were and are prepared to act in a coordinated manner and, “do whatever was necessary to stabilize the system and address the fundamental problems.”Brown’s hope, “… to rebuild our fractured international financial system.”
Brown also noted that the following day that President Bush was to meet with President Sarkozy of France, and the current EU President, along with Jose Manuel Barroso the President of of the European Commission. President Bush announced at the meeting on October 18th that the United States would host a meeting of world leaders following the US election. And the President noted that both developed and developing nations will be represented. Such a meeting would review progress in resolving the current crisis and, according to the President’s statement, “… seek agreement on principles of reform needed to avoid repetition and assure global prosperity in the future.
Two aspects of these statements and ‘action plans’ are notable. First, that the thrust of coordination is not global notwithstanding the comment from President Bush that leaders from both the developed and developing nations will be represented. The statements and behavior seem very much G8 focused. Notwithstanding the enormous surpluses of the BRICs especially China, there is little public discussion and dialogue with BRIC leaders. Same old; same old. Maybe the new architects will be the G13 or G20 but the organizing appears to leave a lot to be desired.
Secondly what little evidence one gets on what is likely to be recommended – especially looking at Brown’s editorial – the discussion is long on rhetoric and short on specifics, especially when it comes to the new Bretton Woods. Though there is an appeal to new architecture and global governance what Brown is raising is effectively greater national policy coordination. Agreed accounting standards, pay and bonus policies for executives, solvency and liquidity standards and then a new Bretton Woods. These recommendations will not provide the basis of new financial global governance. Why a new Bretton Woods?
It may be that the international financial system does require such enhanced national policy coordination but it would be prudent for G8 leadership to call the reform what it is and avoid the ‘high blown’ rhetoric around new global architecture. And let’s think about who the players are. That would be a good start.