Steven Pearlstein: A Rare Triumph of Substance at the Summit

[babylonsister]

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040203743_pf.html

A Rare Triumph of Substance at the Summit

By Steven Pearlstein
Friday, April 3, 2009; A12

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What emerged yesterday from the G-20, however, amounts more to reform than to revolution. Member countries committed themselves to adding $850 billion to the resources available to the IMF and regional development banks to mount rescues of countries in financial distress, with instructions that the money be used not only for traditional purposes such as debt rollover, bank recapitalization and balance-of-payments support, but also for more "flexible" goals such as stimulus spending, infrastructure investment, trade finance and social support.

And just as the old G-7 has given way to the enlarged G-20, the governance structure of the fund and the bank will be revised to give the bigger developing countries the authority they now deserve.

It may suit the politics of Europe to portray all this as a blow to Washington's power and prestige, but the reality may be quite different. In fact, the shift is perfectly in keeping with the new emphasis on the developing world that Obama brings to international economic policy. And if any countries are likely to lose out in the restructuring, they are those of "old Europe" that, by dint of history, now wield power far in excess of their importance in the global economy.

Indeed, while European leaders were crowing that they had successfully beat back calls to step up efforts to stimulate their economies, that's not exactly true. Yesterday's big boost in funding for the IMF could well translate into hundreds of billions of dollars in fresh financing for Eastern European countries that, for political reasons, leaders of Western Europe have been unwilling to offer directly. Yesterday's communique also contains a carefully worded commitment for all countries (read: France and Germany) to increase stimulus spending if the IMF finds that current policies prove insufficient to get their economies growing again.

All in all, a pretty successful opening-night performance for President Obama on the international economic stage. He achieved most of what he wanted while allowing others to claim victory and allowing the United States to shed its Bush-era reputation for inflexibility and heavy-handedness. And by the standards of past summits, this one was full of accomplishment.

By the way, in case you're wondering -- yes, they agreed to meet again in September, this time in New York.