Too many summits but very little tranquil wisdom

Rupert Wright

• Last Updated: July 06. 2009 9:50PM UAE / July 6. 2009 5:50PM GMT

‘Rarely do we arrive at the summit of truth without running into extremes; we have frequently to exhaust the part of error, and even of folly, before we work our way up to the noble goal of tranquil wisdom,” wrote Friedrich Schiller, the German poet, in the 1700s.

In the past few months, the world’s leaders seem to be taking his words all too literally. Barely a week goes by without another summit, and despite all the folly, we still seem some way off the truth and nowhere near tranquil wisdom.

First it was the G20 in London, which was preceded by a similar meeting last November in Washington, then Nato’s 60th anniversary, scattered between Baden-Baden, Kehl and Strasbourg – a rather pleasant tour of Europe for all involved – then a mini summit with the EU in Prague. This week, from Wednesday to Friday, it’s the turn of the G8.

Rather extreme, you might think, when they could just pick up the phone and chat among themselves. As the leaders of the world’s largest economies meet in Italy, you might wonder what they will say that will make a difference. If they don’t have any answers, are they going to find them in L’Aquila, a town near Naples better known for hosting a horrific earthquake?

Despite the risk of summit fatigue, you have to think that it is better that these leaders are chatting, rather than fighting. And for Silvio Berlusconi, the beleagured Italian prime minister, the gathering is a welcome respite from tales of young girls and high jinks at his Sardinian holiday villa.

The G8 first met at the instigation of the French in 1975, as a way of determining a common strategy to deal with the oil crisis. The price of oil is less of a concern this year – although it was top of the agenda last year when it touched $147.

This year the heads of state will be determining how to end a financial crisis the likes of which has not been seen since the Great Depression. Governments have been printing money on an industrial scale, even if they call it “quantitative easing” – as if the metaphor somehow conceals the fact that they are behaving like Zimbabwe. Yesterday oil fell to $64 a barrel, a five-week low, indicating that the market is dubious about the prospects for a recovery in the global economy.

There are other key issues on the agenda. The ambitious goal sets out also to deal with regional crises, food safety and security, the struggle against climate change and deregulation of world trade. The scope is impressive, if daunting. Climate change was conveniently sidestepped at the G20 in London in the spring.

After years of browbeating from scientists and even the former US vice president Al Gore that we must act or fry, when it came down to it, there wasn’t enough money to pay for it. However, the problem has not gone away. But the economic crisis is bound to dominate proceedings.

The first question is whether fresh impetus is needed. Any debate will be tempered by the mini spat that has broken out over whether the US dollar should remain the world’s reserve currency. Brazil, Russia, India and China – the four “Bric” countries – have been outspoken recently in their opposition.

They will all be there in L’Aquila – Russia as a full member of the G8, the others as dialogue partners – to make their case once more. Yet why China would want to pursue this is a good question. As the largest holders of US Treasury bills, you might think it has little incentive to talk down the dollar.

The G8 must also try to determine the correct response to the banking crisis. The Europeans are keen on more regulation; Wall Street bankers and their former Goldman Sachs colleagues who appear to run the US Treasury, are reluctant to sanction this. One concrete measure that could be agreed – if the Americans could be forced to play ball – would be an acknowledgement that the crisis was caused by commercial banks acting as investment banks.

A global Glass-Steagall Act, the legislation introduced in the 1930s that forced commercial and investment arms of banks to separate, was repealed by President Bill Clinton in the 1990s. If enough of the G8 agreed to implement it, this would be a success in itself.

The other urgent problem is unemployment. Even if the downturn has ended – and that may not be the case – unemployment is rising. In much of Europe it is around 10 per cent. Europeans appear relatively sanguine about that. However, in the US, employers cut 467,000 jobs in June, pushing the jobless rate up 0.1 points to 9.5 per cent, according to the US Labour Department, its highest level for 26 years.

This was worse than analysts’ predictions. That is bad news for the Chinese, for the country must grow at 8 per cent a year just to stand still, and for the last few years it has relied on the US consumer. Nobody fears the Chinese people as much as China’s government; they know that unless they can provide growth, it could turn nasty.

We probably should not expect great things from this Italian job. But sometimes summits can be effective – even if their legacy is only intangible or symbolic.

The world only woke up to the environment in Rio in 1992. Its legacy is still being felt today in many ways, from catalytic converters in cars to protocols on global emissions. Sometimes the promises and finely crafted rhetoric soars too high. The United Nations’ Copenhagen summit in 1995 promised the world, but failed to deliver.

“In Copenhagen we promised to eradicate absolute poverty,” Mr Jan Troborg, the Danish Minister for Development Cooperation said in 2000.

“Five years later, the number of poor in the world is the same. We have not made major progress in the fight against poverty. The testimony to our failure is overwhelming. 1.2 billion human beings have to cope with less than $1 a day. Yet, we promised these people real, tangible progress.”

The G8 leaders are wiser. They will not be making any promises, but they have a chance to make a difference. They will need to talk fast. They are lucky to be in a country that makes the world’s finest espresso. The summit only lasts a couple of days, so they had better make the cups ristretto.

rwright@thenational.ae