Versailles, Take II? - by Ttephan Ritcher - The Globalist -
At the outset of the Paris Peace Conference in January 1919, there were high hopes associated with the effort to negotiate the end of World War I.
As soon became clear, though, the Treaty of Versailles signed in June 1919 ultimately did not provide a suitable foundation for a lasting peace among the major powers.
Unlike at Versailles, this time the roles are reversed — with Europeans given to idealism to remake the financial world and Americans inclined to hold on to a world that has passed by.
And so it seems to be the case with the G20 process after Washington and London summits. The big difference this time around is that the roles of who plays offense and who’s on defense have changed completely.
These days, it is the United States that is cast in the role of Germany circa 1918 as the principal “war criminal.” This assessment, while overstated, springs from the fact that U.S. financial institutions are widely viewed as having been relentless in pushing the envelope when it comes to product innovation — even though the risks contained therein proved ultimately uncontainable. Of course, as was the case with the outbreak of World War I, there is plenty of blame to go around to other nations as well.
And today, it is the French who are positioning themselves in the idealistic role played by the United States in 1918. President Sarkozy has developed a true missionary zeal that is perfectly in line with the way Woodrow Wilson tried to shape the events after World War I.
Full of principle and idealism, Wilson then and Sarkozy now are arguing for a fundamental departure from the past. Wilson’s Fourteen Points, enshrining most famously the principle of self-determination of nations, are finding their logical equivalent in Sarkozy’s endeavors to rein in unbridled capitalism — in his eyes, the modern-day equivalent of militarism — as we know it.
Meanwhile, the British government has positioned itself in a dual-minded — some would say Janus-headed — fashion. While Prime Minister Brown’s true passion is reforming the international financial institutions and the international financial system, he also realizes full well how his nation’s bread (read: GDP) is buttered — by being effectively a low-regulation financial center.
By necessity, the British strategy in the G20 process is twisted. It is to march at the head of the effort to re-stimulate the global economy, but to control (or slow down) any true efforts at reshaping the financial system.
From Berlin to Brasilia, from Beijing to New Delhi, there is a realization that their failure to insufficiently question U.S. leadership led to the present calamity.
Understandable as that is from a self-interested perspective, it also shows supreme confidence — and chutzpah.
The Americans, for their part, seem to be of two minds. President Obama talks about the need to make real changes. Others in his camp, such as Larry Summers, are not so sure.
They are keenest on focusing on a global stimulus — to enhance the odds of the Obama Administration's GDP growth assumptions to have at least a prayer to become reality, lest they will have to revive their future budgets almost completely.
The U.S. government also feels taken aback about the fact that the usually disunited continental Europeans — in a remarkable alliance spanning Germany, France and Poland — have worked very hard to get their act together and come up with a united negotiating stance.
The biggest concern from Washington's perspective must be that much of the rest of the world shares the European sense of unease. Take, for example, how China’s Wen Jiabao views the penchant for extreme risk-taking in the U.S. financial system.
In January 2009, he blamed the economic crisis on "inappropriate macroeconomic policies of some economies, their unsustainable model of development characterized by prolonged low savings and high consumption [and] excessive expansion of financial institutions in blind pursuit of profit."
In short, from Berlin to Brasilia, from Beijing to New Delhi, there is a pervasive sense among these nations that their own past failure to insufficiently question U.S. leadership led to the present calamity. That is a failure that cannot be laid at the U.S. doorsteps.
At the same time, it is crystal clear to most nations that a repetition of this false kind of followership must be avoided at all costs.
President Sarkozy has developed a true missionary zeal that is perfectly in line with the way Woodrow Wilson tried to shape the events after World War I.
Whatever comes of it, one can only hope that the final outcome of the G-20 problem will not be a twist on Henry Kissinger’s apt assessment of the Treaty of Versailles. He called it a “brittle compromise between American utopianism and European paranoia — too conditional to fulfill the dreams of the former, too tentative to alleviate the fears of the latter.”
Only this time, the roles are reversed — with the process guided by European idealism to remake the financial world and American paranoia to hold on to a world that has passed by.
A final note: If G-20 governments proved the above scenario to be too pessimistic because, in the continuation of the G20 process, they will steadily agree on a full range of measures which will address many of the pitfalls that have become apparent in the world's economic and financial system, all the better.
That would be cause for jubilation. And then, the age of true — read: constructive and cooperative — globalization would have finally been launched.
Editor's Note: This is an updated version a strategy essay in The Globalist Executive Edition that was first published in November 2008.
posted by Macro at 01:11
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