x Abu Dhabi, UAEFriday 19 January 2018

'Currency wars' hide common ground at G20

The financial crisis starkly illustrated the risks of the interdependency brought about by globalisation – and disagreements on the right path to recovery – but the bedrock remains.

Eleventh-hour wrangling at the G20 produced a reluctant consensus this past weekend. Leaders hammered out a vague declaration of principles meant to placate tensions rather than spur definitive reform. Echoing the words of the IMF's managing director, Dominique Strauss-Kahn, the meeting seemed more of "a G20 of debate than a G20 of conclusion".

The nitpicking, infighting and caustic comments sometimes verged on the inane. "US policy is clueless," said Wolfgang Schauble, Germany's finance minister. "With all due respect," he added - a throwaway line that usually signals just the opposite.

But despite the acrimony, what unites world leaders is still stronger than what divides them. Broadly speaking, free trade and sustainable growth remain paramount goals for all of the G20 economies.

Monetary policy remains a contentious issue; the US and many others have accused China of manipulating its currency and distorting world markets to benefit its exports. It's a charge with considerable merit; Beijing itself admits the need for "steady" currency reform.

Washington wasn't spared its own whipping in Seoul, with its recent $600 billion (Dh2.2 trillion) qualitative easing package, which pumped money into the banks, blamed for exporting inflation. This provided an opportunity for not only the Chinese, but European economies as well, to gang up on President Barack Obama, who was already having a bad November after the US midterm elections.

It wasn't difficult for the media to pick the proceedings apart for some tantalising news of disagreement. After all, the Group of 20 and the upcoming Asia-Pacific Economic Cooperation forum in Japan are as much an opportunity for participants to air their opinions and grievances as actually forge meaningful economic policy.

Such short-term wrangling, however, should not detract from the broader picture. There was some consensus. Leaders expressed hope in reviving the stalled Doha Development Round talks to lower trade barriers.

More importantly, over the past decade all of these economies have grown increasingly interlinked based on the principles of liberal global trade. The financial crisis starkly illustrated the risks of that interdependency - and disagreements on the right path to recovery - but the bedrock remains. Ultimately the top 20 economies are going to have to build from there.