Group Grope

The world isn’t flat. When it comes to the global economy, the world slopes upward. The 190-odd countries in the world, roped together in various-sized groups, are groping their way toward the top of this mountain. The summit — and now you know why they are called “economic summits” — is shrouded in mist. The mountaintop has a most annoying habit of appearing to retreat into thin air the higher we climb.

The climbers are assembled into three main groups: leaders, risers, and sherpas. The leaders, an elite group of mountaineers, are the best equipped, accumulate the most corporate endorsements, attract the lion’s share of the media attention, and leave behind most of the garbage that litters the snowy approaches. The risers aspire to join the leaders. Often willing to do whatever it takes to jump the line, the risers are delighted to be invited to elite confabs on mountain-climbing strategy. And then there are the sherpas, the heavy-lifters, who do so much of the world’s work and get so little of the world’s rewards.

Because the world is sloped, and because we are all linked by myriad connections of aid and trade, the pitfall of one can be the pitfall of all. The tumble of the lead climber can pull everyone down the mountain in one gut-wrenching zip, fellow leaders, aspiring risers, and sherpas alike. It’s no surprise, then, that when the Group of One, the United States, begins to slip, all the other climbers dig in their crampons and cling to the side of the mountain for dear life.

Last week, the lead climbers and a few select risers met in Washington, DC to address the looming tumble of the G1 into a crevasse. This Group of 20 (G20) produced 11 pages of general mountaineering principles. Alas, because the G1 acted much as lead climbers do — sometimes lack of oxygen befuddles the brain — it blocked consensus on key items. So, there will be no coordinated stimulus effort and no cross-border regulatory agency. Efforts to rein in executive compensation to discourage reckless corporate behavior will be voluntary rather than mandatory. And there will be a moratorium on protectionist measures.

Also missing from the mix is a large bailout for the poor who, unlike the banks or the auto industry, are really going to feel the pain. As Foreign Policy In Focus (FPIF) contributor Salil Shetty writes, “Independent assessments estimate that developing countries’ losses between now and 2010 will be in excess of $300 billion. The International Labor Organization estimates that an additional 20 million people will be unemployed before the end of 2009 and the number of people living in extreme poverty may increase by 40 million. Increased food prices cost poorer economies $324 billion last year.” He proposes a $300 billion bailout to help the world’s poorest people cope with these challenges.

It might seem strange that, after the G1 led its fellow climbers onto a particularly dangerous patch of the mountain, the G20 still deferred to the head climber. The G1′s allergy toward anything smacking of a managed and marginally more equitable global economy will only delay the implementation of effective measures. Indeed, the G20 promised to release a detailed plan only on April 30, which just happens to be 101 days into President-elect Barack Obama’s term. Of course, the United States isn’t the sole power responsible for the current predicament. Other lead climbers actively or passively endorsed its path of market fundamentalism. As former International Monetary Fund chief economist Kenneth Rogoff says ruefully, “Anyone looking for the G20 to issue a mea culpa on the global financial crisis will be sadly disappointed.”

The G20 is composed of all the lead climbers (the G8 of Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) plus a handful of risers (Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey). It’s not as inclusive as the G189 — the group of countries that endorsed the Millennium Development Goals, which included a pledge to eliminate extreme poverty by 2015. Rather, it’s like a country club that has instituted new affirmative action guidelines. As Brazilian president Luiz Inácio Lula da Silva said at the recent summit, “We are talking about the G20 because the G8 doesn’t have any more reason to exist.”

That the lead climbers, with a modicum of input from a couple risers, would guide us out of the crisis has struck many as absurd. Protestors arrayed outside the G20 meeting dismissed the entire exercise. “With the unfolding financial collapse on everyone’s mind, the major powers want to ‘re-found capitalism’ and try to breathe life into the ideas that have failed us for the last 60 years,” reads the description on Global Justice Action’s site.

But this, too, is Obama’s likely strategy, inherited from President Franklin D. Roosevelt, who saved capitalism from itself by incorporating many features of state socialism. Even if he does adopt FDR’s mantle, Obama will still have some important choices to make with regard to the global economy: how managed it will be, how Green, how redistributionist. In Swear Off Market Fundamentalism, a Seattle Post-Intelligencer op-ed, FPIF contributors Robin Broad and John Cavanagh provide a few recommendations: “We are calling for rules that would reconnect finance to the long-term productive and green investments that make economies strong and healthy, and for democratic checks and balances aimed at preventing future financial crises. As some of the first steps, we propose regulation of derivatives and a transactions tax to curb speculation.”

Obama will also have considerable say over the fate of the International Monetary Fund, which was teetering on the brink of irrelevance not long ago but has been revived by loan requests from Iceland, Hungary, Pakistan, and Ukraine. As FPIF contributor Sameer Dossani points out in The IMF is Dead; Long Live the IMF, French Economy Minister Christine Lagarde spoke for many when she said after a G20 meeting in Brazil “that the Fund has acted in a ‘very orthodox and imperialist’ way in the past. ‘The old-school IMF has left some scars,’ Lagarde said.” Obama could decolonize the IMF and turn it into a force for positive economic change.

Our next president could indeed turn out to be a very able and skilled mountain climber. Many expect him to scale hitherto unreached heights, saving not only the national economy but the global economy as well. Imagine, for instance, what might happen were he to appoint economist Paul Krugman as Treasury Secretary. Actually, you don’t have to, because the Yes Men and their allies have done it for you. Their faux New York Times from July 4, 2009, handed out on the streets of New York last week, delightfully foretells how Krugman and Obama work together to overhaul the U.S. economy. That’s the first priority: to regain our footing. If we can get our own climbing team in order, then we can follow James Baldwin’s advice and “go tell it on the mountain.”

More Obama

Clarence Thomas, Colin Powell, Condoleezza Rice, and Barack Obama. What distinguishes the first three from the last is not only age and political perspective. Thomas, Powell, and Rice all gained their positions through appointment. Barack Obama has achieved the highest office in the land through an election. His victory is not just White America’s acknowledgement of a demographic shift toward Black and Brown. His is a victory of the demographic shift.

FPIF columnist Laura Carlsen calls the result of this demographic shift the “minority majority,” for non-Whites have become a major political force. In fact, the Democrats have not won a majority of the White vote since the 1960s and that includes four presidential victories (Carter, Clinton twice, and now Obama). This newly emerging majority will have a distinct impact on foreign policy.

“The minority majority that elected Obama overwhelmingly believes the United States should renounce its role as global cop and protector of elite economic interests and rejoin a global community governed by international law,” Carlsen writes in Obama and the Minority Majority. “The Obama team has already announced that foreign aid will be reduced due to the economic crisis. Obama supporters must now pressure the new administration to channel the gargantuan military budget into development goals that do far more to stabilize international relations than the U.S. military presence, which has caused resentment throughout the world.”

The tremendous turnout in the Latino community in favor of Obama may push the new president to recast U.S. immigration policy. It may also influence his approach to Latin America. “In the campaign, Obama’s positions on Latin America were many times more progressive than Republican nominee John McCain’s,” writes FPIF contributor Cynthia McClintock in Latin Americanists Urge Obama to Recast Policies. “Whereas McCain excoriated [Hugo] Chávez as a dictator and ridiculed Obama’s openness to dialogue with him, Obama said that ‘it’s important for us not to over-react to Chávez….we are interested in having a respectful dialogue with everybody in Latin America in terms of figuring out how we can improve the day to day lives of people.’” At the same time, McClintock points out, Obama’s positions are not fully consonant with a new Good Neighbor Policy: in September, for instance, “Obama’s national security spokesperson Wendy Morigi said that Obama was ‘very concerned’ about President Evo Morales’ decision to expel U.S. Ambassador Phillip Goldberg from Bolivia and suggested that Morales was ‘attempting to lay blame on outsiders.’”

The Southeast and the Middle East

Turkey can go either way. With its toe in the southeast corner of Europe and the rest of its territory in Asia, Turkey aspires both to join the European Union and to act as a bridge to the East (variously defined as Russia, Central Asia, and/or the Middle East). A few years ago, Turkey’s membership in the EU seemed inevitable, and Turkey’s ruling Justice and Development Party (AKP) hitched its domestic reform program to this lofty goal. But then key European leaders like France’s Nikolas Sarkozy started to get cold feet and wanted to keep the largely Muslim country at arm’s length.

“Growing resentment of European demands, returning problems with Cyprus and the Kurds, and a revamped Turkish nationalism have all contributed to muting the hopeful ebullience of the early years of the reform process,” writes FPIF contributor Ragan Updegraff in Turkey Between East and West. “While the AKP’s recently proposed third national program to accelerate accession is designed to reignite the process, many within and outside the party still seem largely ambivalent. Turkey’s relations with Europe and the United States — and by extension Turkey’s future as a stable democracy allied with the West — thus remain largely up in the air.”

Finally, FPIF contributor Benjamin Tua reviews a recent book on the Middle East by Aaron David Miller, The Much Too Promised Land. As Tua points out, “Miller believes that the uncritical identification of the United States with certain Israeli policies has significantly eroded our influence and interests in the Middle East. The United States largely ignored the Arab-Israeli issue for most of the past eight years, and continued inattention will diminish our standing even more in this critically important part of the world. In arguing for a course correction, he details the biases that led the U.S. government and the negotiating team, of which he was a member, to ‘see things mainly from an Israeli perspective’ and made it difficult to ‘challenge or second-guess’ Israeli leaders.”