Present at the creation was the title Dean Acheson chose for his memoir of his years in, and running, the US State Department in the Roosevelt and Truman presidencies. Kevin Rudd purloined it last week to end his address to the US Foreign Policy Association, asserting that Australia had been there with the US to witness the establishment of the post-war world order, and here we were again “for the regeneration”.
Despite what you might hear from the media, some of which has been in particularly asinine form in its coverage of the G20 meeting, it was Rudd’s sole moment of hubris during his American trip, and sufficiently obscure that he’ll get away with it. But comparing the establishment of the G20 as the formal centrepiece of global economic coordination to the establishment of the post-war international architecture shows how important Rudd believes the weekend summit was. And he was there himself, present at the creation.
Fortunately, Rudd abandoned another Acheson trademark, a moustache, decades ago.
It’s probably fair to say it won’t get any better than this for Rudd, seeing his constant efforts to promote the G20 from the outset of the financial crisis crowned with the confirmation that it had supplanted the G8. He may have inherited the G20 from his predecessor, but it will forever be linked to Rudd in Australian foreign policy.
And unlike APEC, a genuine Labor creation of the Hawke-Keating years, the G20 actually has a compelling reason for being, which is why rather more powerful players like the Chinese and the Indians were behind it as well.
That’s only half of it for Rudd. The Pittsburgh meeting confirmed the way the G20 is going to do business. And, even if Australia only had a direct role in relation to the regulation of executive remuneration, it is a way that complements the Rudd agenda and regulatory approach perfectly.
G20 will operate through transparency and openness. The efforts of the Europeans to push a more direct interventionist line, especially on executive remuneration, failed. Transparency will be the basis for the group’s own interactions, and is the basis for much of the regulation that will — if the leaders’ communiqué is to be believed — constitute the new world financial order.
There will, as a consequence, be minimal direct intervention in the behaviour of financial institutions. They will be forced to improve the quality and quantity of their capital, and an internationally-harmonised leverage ratio will be imposed. Originators and sponsors of derivatives will have to retain a component of risk from the assets involved, and sell them through a central clearing house. But there will be no direct intervention on remuneration in the finance sector, merely higher capital requirements for firms that refuse to decouple bonuses from risk. Speculation in commodity markets and particularly oil will only be subject to greater transparency. Systemically-important firms and their governments will have to develop crisis management plans. And the G20 itself, as part of its Framework for Strong, Sustainable and Balanced Growth, has committed only to agree on shared objectives, set out policy frameworks within each member, and let the IMF assess them.
That’s the Rudd way. Remember the much-maligned Fuelwatch and Grocerywatch? The principle — sound, however much it was mocked in the media — was that giving consumers greater information was better than governments directly regulating markets to achieve politically-popular outcomes. The same approach applies here, especially in areas like executive pay, where it would go down a treat in most member states for top-flight bankers to have their salaries slashed. Or perhaps even their throats.
Critics will complain that “transparency” and “mutual assessment” are no substitute for enforceability and that the G20 will just be another talkshop. That criticism is meaningless. No member state would ever have been prepared to infringe its sovereignty by agreeing to real enforceability.
Besides, there are more tangible things to be disappointed about. Barack Obama’s goal of securing an agreement to eliminate fossil fuel subsidies — which could yield real climate change benefits — gave way to a tepid commitment to their phasing out over the “medium-term” (read never). That vile word “balanced” recurs again in the commitment to “an ambitious and balanced conclusion to the Doha Development Round in 2010”. And the quota reforms for the IMF and World Bank are a start and nothing more: at least 5% in the IMF in Jan 2011; 3%, plus the current 1.46%, for the World Bank by next year.
There is talk in the European press that the likes of Belgium and the Netherlands will continue to mount a delaying action on the issue. Kevin Rudd could do worse than propose Peter Costello, one who was genuinely “present at the creation” of the G20, as a special ambassador to help resolve the matter.
Acheson’s “creation” was partly a reference to the UN and, by Rudd’s metaphor, part of the old world architecture which is in need of regeneration. Last week provided an apt juxtaposition of a reasonably effective G20 summit and the antics of posturing dictators and anti-Semites at the United Nations, which apart from the Security Council, now looks even less relevant than usual. Rudd’s speech to the UN was almost pro forma by the Prime Minister’s standards during the week; read the three key speeches he gave together, and his post-summit press conference, and it is clear that the United Nations address is longest on rhetoric and shortest on meaningful statements.
For Rudd, of course, the G20 success is already history; the challenge now is to return to domestic politics, avoid any Keating-like, APEC-style hubris, and argue that the G20 will translate into real outcomes for Australians. As always, Rudd’s real audience isn’t the commentariat, which understands the significance of what occurred in Pittsburgh, but regular voters, for whom it was only another trip in Rudd’s seemingly incessant overseas travel.
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