Assertive EU leaders fly to G20 finance summit[de] 

José Manuel Barroso, the president of the European Commission, yesterday (14 November) said Europe should be proud of becoming a model for the rest of the world at this "turning point" in world history. 

"I believe no one is better prepared to shape globalisation than Europe, with its values, its unique spirit of supranational rules and supranational principles," Barroso said, adding that Europeans should be proud of this. 

At the summit, however, other European leaders are expected to steal the show. French President and EU presidency holder Nicolas Sarkozy recently took the lead, managing to achieve consensus on a common EU position following a recent extraordinary EU summit (EurActiv 07/11/08 ). 

Speaking yesterday about the forthcoming G20 summit, Sarkozy said the US dollar could no longer be the only currency in the world. "I am leaving tomorrow for Washington to explain that the dollar - which after the Second World War under Bretton Woods was the only currency in the world - can no longer claim to be the only currency in the world. What was true in 1945 cannot be true today," said Sarkozy at a ceremony during which he was awarded a prize for political courage, at the risk of alienating his American host. 

UK Prime Minister Gordon Brown is also expected to maintain a high profile at the G20 summit. The banking sector bailout in Britain largely became a model for EU-wide action, and Brown was confident that he would "send a message to the world" with his "international programme" for strengthening the global financing system, which he termed a "new Bretton Woods" (EurActiv 15/10/08). The British leader even claimed on Tuesday (11 November) that an agreement on the long-stalled Doha round of world trade talks could be reached within days. 

Bush against government intervention 

As if he was pre-empting Europe's newly-found ambitions, George W. Bush advocated free market capitalism in a speech yesterday, calling it "the highway to the American Dream". He advised against government regulation as advocated by European powerhouses. 

"We must recognise that government intervention is not a cure-all. For example, some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations, and still experienced problems almost identical to our own," said Bush. 

However, the forceful image Europe is trying to put in place could be undermined by the entry into recession of Germany, the largest EU and eurozone economy and third biggest economy in the world. But the OECD (Organisation for Economic Cooperation and Development) also slashed its economic forecasts for the entire 30-nation zone, which comprises the US and Japan. 

US U-turn 

The situation is further complicated by a surprising U-turn by the Bush administration, which has dropped the centrepiece of the $700 billion financial rescue package approved by Congress less than two months ago: a plan to buy up troubled mortgage-related securities. 

Indeed, Treasury Secretary Henry Paulson said the US government would rather buy stakes in financial institutions instead of buying troubled assets from banks. These statements did little to reassure markets in the US and worldwide. 

Absent and present 

President-elect Barack Obama will not take part in the summit directly, but has dispatched former Iowa Congressman Jim Leach and former Secretary of State Madeleine Albright to attend. Many observers claim that without Obama, the decisions taken in Washington will count for little. 

In the meantime, France played a game of musical chairs to get Spain and the Netherlands to attend the summit, where in principle only four EU countries – France, UK, Germany and Italy, were expected to attend. After long discussions with its US hosts, France, which holds two seats – one in a national capacity and another as the EU presidency, gave one of the chairs of its national seat to Spain and the other to the Netherlands. 

And since Spain and the Netherlands would not be entitled to have their flags displayed, instead having to sit behind the French flag, Sarkozy decided to replace it with the EU flag. 

Speaking at a European Network of Foundations conference on democracy promotion in Brussels on 14 November, European Commission President José Manuel Barroso made no secret that he expected a U-turn from the new US administration on all major issues. 

"When our American friends now are ready to embrace a real commitment to fight climate change, this is exactly what we are been saying and promoting for some time. When our American partners are saying they want to engage more in a multilateral world, this is exactly what the EU has been saying and promoting for some time. When our American partners now are saying they should put some rules in a financially unpredictable, sometimes unregulated market, this is exactly what the EU has been supporting for some time […] When our American friends now are saying that they should find some ways of promoting some public tools, some public systems, in terms of social security, public education, this is exactly what we Europeans have been doing at least since the end of the Second World War, with the development of social market economy," Barroso said. 

US President George W. Bush, giving a speech on 14 November at the Federal Hall National Memorial, analysed the current financial crisis, recognising the risks for the world. 

"We are faced with the prospect of a global meltdown. And so we've responded with bold measures. I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown. At Saturday's summit, we're going to review the effectiveness of our actions," Bush said. 

But the US President strongly advised against "reinventing the system". "This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed and exploitation and failure. It's true this crisis included failures - by lenders and borrowers and by financial firms and by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people all across the globe," said Bush. 

In a press release ahead of the G20 summit, Louis Michel, EU commissioner for development and humanitarian aid, launched an appeal for development to be given a place in the 'Bretton Woods II' architecture. 

"Poverty is the most urgent crisis facing the world. The 'Bretton Woods II' summit in Washington offers a crucial opportunity to integrate the development dimension into the new international financial architecture," Michel stated.