G20 And The Oxygen Of Hope

When the atom was first split in a laboratory in April 1932 in Cambridge in the UK, there was no thunder and lightning to herald that historic moment but those who witnessed it knew they had discovered something that would change the world and it has since then.Similarly, there was no thunder and lightning to announce the historic outcome of the G20 summit at the Excel Centre in London, a laboratory of sorts similar to the one where the atom was split to offer the world nuclear energy that generates electricity, powers aircraft carriers, submarines and whole sale death. This summit with the declared intentions to restore stability to the convulsing global economy, restart the engines of growth and create jobs did not look like it would deliver on these intentions.

 

The President of France Nicolas Sarkozy and Chancellor of Germany Angela Merkel looked ready to rock the boat. Some even said Sarkozy wanted to share the lime light that looked exclusively reserved for President Obama and his wife. But I suspect that the success of the summit and its far ranging decisions owe more to the French and German leaders’  very public vow not to sign on to anything short of a concrete plan with measurable outcomes than anyone else. They did not want compromises that would allow everyone to give the outcome their own interpretations while the global economic pain intensifies.  That they teamed up and went public was because they feared their real and urgent concerns were about to be ignored.  And they timed their press conference to perfection, Sarkozy’s body language as eloquent as his words. Consequently, the world would establish and unify banking and financial regulations that would in the words of President Obama stop ‘wild and unjustified risks’ because national ‘regulators were asleep at the switch.’ Hailing the outcome as unprecedented, Sarkozy said, ‘the time of banking secrecy has passed. We decided that from now there will be an international norm which will define capital base of banks.’ This melt down was made in the United States, partly outsourced in the UK and exported to the rest of the world.  Anyone who still doubts that the world is a global village is painfully wiser. Global financial flows demand credible and efficient global umpires, supervision, standards and practices. Anything short of this would mean recklessness would return with more severe consequences.

 

The Germans believe that a German stimulus package was not an option as long as the regulatory environment remains unchanged. They are partly right because the hazy environment which gave birth to exotic financial products that were fuelled by greed would feed on itself and grow. New rules have to be transparent and globally enforceable. The tax havens would be checkmated. Hedge funds and other institutions that operate in the misty regions of the banking and finance system have to come under the spotlight. International accounting standards designed to end accounting gymnastics will be set up along with a new financial stability board that will ensure cooperation across national borders. The world needs this breath of fresh air and got it. Take the world’s most popular sports, football or soccer for instance. The rules are the same and understood by everyone including the players, referees, the spectators and fans, the merchandisers and sponsors all over the world.  We all know when a foul has been committed and scream ourselves hoarse both at the stands and at home if the referee chooses to over look it. We know when a goal is scored, when it is off side, corner kicks and goal kicks.

 

We all know when a yellow or red card offense is committed. It is so transparent because FIFA and the federating nations agreed to a common code of conduct. Why should the banking and finance system that affects us so much for good or bad  not be as open and transparent? Remove the rules from football and murder would be committed on the pitch. Without global rules, economic murder was committed by bankers and the decomposing bodies flung across national boundaries to contaminate every one. The world wants the banking and financing sector equivalent of FIFA to put a stop to seemingly deliberate opaque rules and environments that enables bankers to churn out and baptise banking products and instruments whose boundaries are not even known to those who formulated them. Unlike medications there are no warnings of expected side effects warning of baptism of fire to come. Until now bankers were the only ones who made money come what may. 

 

It is left to be seen how the greed of bankers would be effectively held in check by a combination of principles and legislation designed to support ‘sustainable compensation schemes.’ If the world does not seize this moment, the result rather than deliver real relief would deliver the economic equivalent of radioactive fallout, a regrettable outcome of the splitting of the atom.Apart from $1.1 trillion that the summit earmarked as new funds for the International Monetary Fund, there is also a plan for the injection of up to $5 trillion into the global economy before the end of 2010. Hopefully, these measures would halt this melt down in its tracks and prevent the next big one. Sarkozy promised that if the crisis got worst they would do more and that more would predictably come from China and Japan whose coffers are awash with trillions of dollars of reserves.One fallout of this summit and crisis would be the ascendency of China who would demand and get a voice big enough to match its financial contributions and growing clout. It may also mark the beginning of a Chinese century whose economy in ten years would be the biggest, even though the western press would do everything possible to deny this fact. But it is as inevitable as the passing of the touch from Britain to the United States at the end of the Second World War.

 

Then and now it took events of global proportions to dispassionately effect the passing of an old order to a new one. The splitting of the atom in 1932 and its consequences still exerts enormous impact on world affairs. It underlined the meeting and plan between Presidents Obama and Medvedev of Russia to meet in Moscow in July to start talks to further reduce their nuclear arsenals. It is hoped that the warmth both leaders exuded at their first meeting will be enough to thaw the deep freeze of the last year of the George W Bush presidency. South Africa was the only country in Africa whose economy merited their invitation as one of the 20 largest economies of the world. With our endowments, there is no reason Nigeria should not have become one of them at least ten years ago but we were missing in action because we missed the same train that South Korea and Brazil boarded in the early 1960s to bring their economies to  be numbered amongst the first twenty.  Let us hope that as the oxygen of confidence and hope finds its way to Nigeria, it would not be hijacked by those who do not know what to do with it.

 

One image that would live on is Michelle Obama with her hand across the shoulders of Queen Elizabeth 11 and the Queen’s hand across Mrs Obama’s waist. In spite of the muffled cries of a breach of protocol by television analysts, it was a show of affection from Mrs Obama to the Queen. In reciprocating, the Queen with her crown of white not only elevated her humaneness but also came across as the doting grandmother many of us including President Obama no longer have. Even as the pain of the melt down continues to spread as if in mockery of the historic summit, the iconic image of Mrs Obama and the Queen would underpin the new beginning that neither thunder nor lightning heralded at the Excel Centre. 

 

okechukwunwobu@yahoo.co.uk

2009-04-03-565