In the G20 we have to trust

The G20 leaders met, talked and tried to boost the world's confidence. This is what the world economy needs most right now. However, as an Indian saying goes "confidence grows at the rate a coconut tree grows and falls at the rate a coconut falls". As the pain back home intensifies, these leaders will need all the cover they can get. Still, it is to their credit that they put up a good show and proved to be bigger than their differences and vested interests.

Will the London summit leave its mark? It is still too early to comment. Initial market reactions have been positive. Yet, it fell short of initiating a "new world order" as claimed by Gordon Brown. The fact that key global issues were being discussed within the G20 rather than the G7/8 was hailed as an acknowledgment of the start of an era marked by multi-polarity. In July 1944, all the leaders of the 44 allied countries were present at Bretton-Woods and we ended up with a bipolar global political and economic system and a Cold War. Perhaps it is legitimate to ask why the G20 was preferred, say, to the UN. Is it because the UN has become just another talking shop? Would it then not make better sense to start with reforming in earnest the UN and its many agencies?

At the London summit there was more talk about big money: trillions being pushed around. One gets a feeling that the world leaders are simply trying to throw money at the problem; once again we're taking the easy way out. There was little visionary or creative thinking. What proposed to be a new beginning ended up merely re-enforcing existing structures such as the International Monetary Fund and the World Bank. The only bold proposal came from the Chinese: to use the IMF's unit of account known as SDRs (special drawing rights) to launch a new global currency. China's proposal got Russia's support but the Western powers shot it down. China, boosted by its colossal foreign exchange reserves and its being the US's primary lender, emerged as the net winner from the summit. China was promised a bigger say in the running of the IMF and it successfully projected its new-found assertiveness.

For Barack Obama it was the first time on the world's stage. A smooth-talker, he confirmed his being "Mr Nice Guy". His wife Michelle was the real "star" of the show (she even got a hug from the usually protocol-obsessed Queen). Unlike recent US Presidents, Mr Obama adopted a paternalistic leadership style, seeking reconciliation rather than dictating matters. Is this a personal trait? Or, given that the US is largely to blame for the mess the world is in, was he suffering from a "guilt-complex"? Essentially, he failed in achieving what he was really after: to get the other countries to commit themselves to more fiscal stimulus spending.

Mr Obama's closest ally, Gordon Brown, is a political "Nobby Stiles". He does the dirty work, with others getting the credit. Angela Merkel was her usual stoic self. Her top priority was to ensure that Germany does not end up holding the baby. The two wannabes, the Latin charmers' main wish was to be seen standing tall beside Obama. Nicolas Sarkozy kept insisting about ending "Anglo-Saxon capitalism" and threatened to walk out of the summit. Tax havens, bank secrecy, hedge funds, credit rating agencies were all discussed but no action was decided on controlling the massive cross-border financial flows that undermine the international monetary system.

Sensibly the summit also promised to provide a lifeline to the poorer countries as these have no fallback position to protect their economies. The G20 agreed to provide $3 - $5billion in trade finance so as to support exports from developing economies and stated that this could be increased to $250 billion should the need arise. No real progress was achieved on unblocking the Doha Round within the World Trade Organisation. Analysts considered this a must in kick-starting the economic development of the poorer countries. Mr Obama essentially asked for more time. Maybe he did not wish to further rock the boat back home. Or maybe he believes that the proposed agreement is essentially flawed.

The London summit will be judged by posterity for its aftermath rather than what was said and decided upon. Notwithstanding all the rhetoric, the world does not seem ready yet to embark on setting up a new "world economic order". We are still far from moving towards "sustainable globalisation", what Ban Ki-moon, the UN Secretary General, labelled the "Green New Deal". This was one of the glaring failures of the London summit; in the 21st century, economic issues have to be linked to environmental ones. This may sound like utopia but the world cannot keep going as it was up to some months back. Economic recovery should not depend on debt-financed, environmentally-damaging consumption. That will only lead to future nightmares.