Monday, 17 November 2008
The Australian’s editorial is a neat attempt to try and kill the ‘phonegate’ issue dead while holding on to its credibility. It maintains that its report was true but relies on the hope that there is one thing that Fairfax journalists will not want to do and that is run with a stale story from the Murdoch stable. In reality there is probably little further they can run with it anyway. Bush is going and this was the last meeting that he will be running where Rudd will want to make a splash. Rudd should have as little trouble staying clear of Bush at the coming APEC meeting as Howard did at the last one.
Nevertheless the issue has been a useful way for the Liberals to detract from the awkward questions over what they think of Al Qaeda’s preferred candidate winning the US Presidency. But the Liberals’ example is not just embarrassing, it graphically illustrates how out of line they were with the shifts in global politics last year and, judging by Julie Bishop’s inability to repudiate Howard’s comments yesterday, still are.
Because it might just not be unreasonable that Bush didn’t know what the G20 was before now. The real question for Australian politics is not whether it was Rudd or Bush who dreamed up the idea of a G20 summit, but why we are having it. The US accounts for over a quarter of the global economy and the G7 for over a half so if there was serious restructuring to be done, you would think co-ordinating it would be easier for the US to start with the main players (maybe including China and India) than having to deal with small smart-arses like Australia. When Reagan pulled together the global economy in the 1980’s for co-ordinated action, it was only the top handful that were asked to take the strain. Countries like Australia just had to follow. For the world economy isn’t a democracy. When big enough, economic quantity turns into quality and that quality is political weight.
At least that used to be the rule. Whereas the last economic superpower, Britain, clung on to its political prestige long after it lost its economic weight, the US seems to be losing its political influence while it still dwarfs its nearest economic rival. So we have a G20 that is designed to cover up this awkward fact.
The inability of the US to impose a real solution is why the summit’s announcements this weekend go nowhere near addressing the crisis. The fiscal stimulants are not restructuring, but just a way of delaying the effects of the crisis until the money runs out. Nor will more regulation do the trick. It forgets the reason why the markets were allowed to remain deregulated during the Clinton and Bush years. It was because the US needed the expansion of credit. That has now collapsed in a heap and regulation will only be stopping what has now become unprofitable anyway. Both greater regulation and fiscal spending have the potential to make the economic crisis worse. And of course, Rudd’s attack on the pay packets of financial executives is the most pointless of all, as though the economic crisis started on Wall Street instead of with the mortgage lenders in the US housing market.
However, the last initiative points to the reasons for the G20 summit that go beyond just the impotence of the US. The world’s political class must be seen to be doing something, and the more that can partake in the charade the better. Also, having small countries like Australia ready to take a moral stand on issues that don’t directly affect it very much, can be useful.
For what we have here is the resolution of an economic crisis being hampered by a political one. It is no coincidence that Bush’s death-bed conversion to multi-lateralism has coincided with a similarly late loss of confidence in the free market. In a summit of twenty global leaders there are surely a few who are willing to use an international forum to moralise in a way that a Republican US President still cannot. And mishaps aside, Australia’s diplomatic service must be pleased that we have one here.
Posted by The Piping Shrike on Monday, 17 November 2008.Filed under International relations