On the economic crisis, diverging views exist between the US president - whose diagnosis is that the situation will get worse as the unemployment rate rose to 10% - and the other leaders (at the other extreme, the Italian PM considered that the worst is over and that the employment situation is not that dramatic!). In a recent interview (FT 1O July) , Larry Summers, former Treasury secretary and chief economist of the Obama administration said: “I don’t think the worst is over ... It’s very likely that more jobs will be lost. It would not be surprising if GDP has not yet reached its low. What does appear to be true is that the sense of panic in the markets and freefall in the economy has subsided and one does not have the sense of a situation as out of control as a few months ago.” If there is no consensus on the diagnosis and the causes of the crisis, it will be difficult to find common solutions.
Most newspapers and analysts have given ample information and commentary on the main outcomes of the G-8 meeting. On Iran, there was unanimity (including Russia) to condemn violence and repression as well as the negation of holocaust. On climate change, all countries accepted the principle of 2° C temperature increase as a limit, but emerging countries did not agree to cut their gas emissions. This will be a central topic for discussion at the Copenhagen summit, but the novelty is the US commitment to make significant cuts in gas emissions and to focus on renewable energy as a basis for their economic recovery programme.
On the aid issue, - perhaps the only succesful outcome of the meeting- world leaders pledged to commit $20bn over three years for a “food security initiative” to develop agriculture in poor countries, but aid agencies responded with scepticism, pointing to broken promises and switch in aid budgets. The G8 pledge at Gleneagles four years ago to give $50bn in development aid by 2010, with half going to Africa, has left a gap of at least $15bn so far. The summit statement addressed the scepticism, declaring: “Commitments to increase overseas development aid must be fulfilled. The tendency of decreasing ODA and national financing to agriculture must be reversed.”
Last but not least: the governance rules. The Italian Finance Minister has submitted, with the support of OECD experts and the German government, a 13 p document titled Global Legal Standards, which sets out a set of principles and ethical values- e.g. transparency, fight against corruption and tax fraud, fight against monopolies- on which, of course, there was unanimous consensus. But the rules still need to be defined and agreed by all countries before they can be enforced to banks and other financial institutions.
Since its inception by Giscard D'Estaing in the Rambouillet summit in 1975, the G-8 has been a forum of discussion and exchange of views on world affairs among the leading nations. It is not meant to take decisions as no country has transferred any part of sovereignty to it. After l'Aquila- which was in fact a G-14 summit- , it will be the G-20 in Pittsburgh to take over as a governance structure including China, India, Brazil and other emerging countries.
As Shakespeare's Portia says in The Merchant of Venice, ' If to do were as easy as to know what were good to do, chapels had been churches, and poor men's cottages princes' palaces'. It might be easier to set objectives, but more difficult to deliver them - in other words we need to establish the right institutions and start the processes that will achieve these objectives.