Financial Crisis: Views on the G-20 Communique and International Cooperation

 

Dani Rodrik and Daniel Drezer both offered their views on the results of the recent G-20 meeting and communiqué. (See http://rodrik.typepad.com/dani_rodriks_weblog/2008/11/and-now-the-real-g-20-communiqu.html and http://danieldrezner.com/blog/?p=4059 respectively.)

 

In short, despite his low initial expectations, Rodrik could not hide his disappointment. His complaint, “(t)here is no coordination in the fiscal arena, the promises made to emerging markets are vague, and even though there is a clear statement on protection and export subsidization, there is no monitoring or enforcement mechanism.” Drezner is more sanguine. He actually found some laying of groundwork for actual reform of global governance structures through the IMF and an expanded Financial Stability Forum.

 

My question: Is this all the cooperation we can get? No, I am not retracting previous posts on the possibility of international cooperation in the wake of the financial crisis. (See https://fletcherfila.wordpress.com/2008/11/13/update-financial-crisis-and-international-cooperation-a-diplomatic-angle/, https://fletcherfila.wordpress.com/2008/10/12/financial-crisis-cooperation-and-a-global-new-deal/ and https://fletcherfila.wordpress.com/2008/10/06/financial-crisis-an-opportunity-for-international-law/.)

 

I think more exciting times will be upon us. When the crisis bottoms out, I sense the opportunity for greater strategic behavior from stakeholders in the international financial system. For example, the investors with liquidity at that time will start to attack and regulators can either choose to defend or play along. Perhaps, it is only then that we see some real incentives for cooperation and coalition building between domestic and international regulators and even investors. Right now, all that everyone can do is agree (weakly) that something must be done for governance. Hardly exciting news to me.

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One Response to “Financial Crisis: Views on the G-20 Communique and International Cooperation”

  1. […] That still does not resolve the question of how to achieve this cooperation. Dennis Snower suggested starting with building international consensus within the G-20 and the G-7’s FSF. This is not new. See Dani Rodrik’s and Daniel Drezner’s views linked on a previous post. (See https://fletcherfila.wordpress.com/2008/11/18/financial-crisis-views-on-the-g-20-communique-and-inter…) […]

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