The world's emerging nations have challenged America and other established industrial countries with a demands for reorganization in the global regulatory and supervisory financial system. The Group of 20 wants a greater say in the decision making. There are indications they will flex their financial power to take advantage of nations such as the United States and Britain. This will be one of the many international challenges that have not waited for President-elect Obama to take office.
Obama and the Group of 20
The organization, as it stands today, called the Group of 7, was made up of the industrial nations of Canada, France, Germany, Italy, Japan the United Kingdom and the United States. Now, if the demands of of Group of 20 are met, this will also include Argentina, Australia, Brazil, China, India, Indonesia, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa and Turkey.
World Bank President Robert Zoellick says that the Group of 7 doesn't adequately represent a global financial system that is dispersed and endangered. (Business Week, 10/7/08) He explicitly aimed his remarks at the next U.S. President as global markets succumbed to the same crisis of confidence that has pummeled the U.S. economy. Zoellick's remarks are thought to be aimed at the finance ministers of the G7 countries that met on October 10, the day before the annual meeting of the World Bank and the International Monetary Fund that was held in Washington.
Group of 20 Challenge to G7
The Group of 20 did not mince words before their meeting on November 7, 2008. They blamed the United States and the Group of 7 for the economic debacle that has effected other nations beside themselves. (Financial Post, 11/7/08). Brazil's finance minister, Guido Mantega, indicated that the emerging economies are set to flex their financial power and take advantage of the weakened industrial nations, such as the United States and Britian. According to John Kirton, a foreign policy expert at the University of Toronto, "It was indeed a shot across the bow. There was a fairly clear demand that the G20 should be the new center of the new architectures that's needed due to the financial crisis." However, the first response from the G7 seems to be that governments should focus on their own domestic systems before trying to introduce binding worldwide regulations.
Obama's Challenge
According to Aljazeera (11/8/08), Brazil, Russia, Inda and China are closing ranks to demand a bigger role in negotiations to create a new global financial order and prevent another economic meltdown. After meeting with senior economic officials from the four nations plus Mexico and South Africa, Brazil's finance minister, Guido Mantega said they would insist that developing nations have a significant say in deciding how to fix the problems which lead to the global financial crisis.
If Obama does not make a statement before before taking office in January 2009, it could be interpreted as a sign of indecisiveness that could empower those demanding a greater role in the global financial regulatory and supervisory decision making.
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