In what is sure to make all oped writers blush with envy, Obama today had an oped on the global economy published in 30 papers around the world. I believe that maybe the first time that has ever happened.
The oped was a preview of what the U.S. will call for at the G-20 summit next week. Obama argues for a concerted effort on the part of G-20 countries to stimulate their economies and stabilize financial systems. He called for boosting the resources at of the IMF so it can continue to help rescue emerging market countries. Perhaps more noteworthy Obama publicly disavowed protectionism and said other countries should avoid going down that path (I bet Mexico's truckers were amused by that). Only toward the end of the oped Obama pledges to take "coordinated international action" to form a new international framework to regulate financial markets.
It's a good oped and lays out the right points that need to be talked about at the G-20. With Obama's global and European popularity, this oped and its global scope is an aggressive attempt to rally global - and especially European opinion - to sign on to his global economic agenda - most notably the stimulus effort. But the order of priority laid out by Obama in the oped highlights the challenge he is going to face in the summit meeting. With a week to go before the meeting Europe and the U.S. do not see eye-to eye. Mark Mardell of the BBC writes:
If the European Union gets its way the London G20 summit will concentrate on new rules and regulations, not discussing how to further stimulate the world economy.
It is going to be hard for significant coordinated action to occur on the G-20 when Europe is intent on opposing a stimulus. This lack of urgency led to Paul Krugman's exasperation last week, writing that:
to hear anything in America comparable to the know-nothing diatribes of Germany's finance minister you have to listen to, well, Republicans.
The problem then is that Europe is at the point where it has become integrated to the point where national governments lack the tools to address their economic problems, but Europe is not politically consolidated enough to tackle its problems at the Union level. Combine this structural problem, with a general sense of disillusionment with the European project on the part of the Germans, a wide-spread sapping of popular support for the European project, and a rise in anti-immigrant feelings (ie the French fear of the "polish plumber") and protectionist outcries ("British jobs for British workers") - sentiments that challenge the openness which is at the heart of the EU - and you have a real problem. This is a crisis both of political will and political mechanisms.
It is therefore probably unrealistic for the Obama administration to expect to go to the G-20 and simply work it out with Europe, since all Europe can agree on right now is that the economic crisis is our fault and that global finance must be regulated. The one area where progress is most possible - unfortunately this is also the least important in the immediate term - is in laying the foundation for an international regulatory framework - which would be quite an accomplishment.
This does not mean that the administration should simply through up their hands on the stimulus, but the U.S. should perhaps try to view the G-20 as the start of the conversation (particularly with Europe) rather than the end. And over the next few months the U.S.-European diplomatic engagement (particularly between U.S. and Germany) should be ramped up. Making the case for stimulus in Europe is as much about making the case for the European Union, as it is about economics right now.