G7, G20, .... Are We Heading Toward One World Order?

=DJ G7 Makes Room At Table To Brainstorm On Spreading Crisis. By Tom Barkley Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--Group of Seven leading industrial nations are making room at the table for other countries as they battle a fast-spreading financial wildfire that defies containment. The spirit of collaboration was displayed Wednesday when the U.S. Federal Reserve, European Central Bank, Bank of England and Canada were joined by central banks from non-G7 countries such as Sweden, Switzerland and China to conduct a joint rate cut unprecedented in scope. When the G7 meets Friday, it will try to present a unified front in the struggle against a crisis that in the past year has ballooned from a small sector of the U.S. mortgage market to envelop Europe and an increasing number of developing countries. Acknowledging the viral nature of the credit freeze, U.S. Treasury Secretary Henry Paulson called for an emergency meeting of G20 finance ministers and central bankers. Such a gathering, set for the day after the G7 meeting, will "discuss how we might coordinate to lessen the effects of the global market turmoil and the economic slowdown on all of our countries," Paulson said Wednesday. The G7 has been criticized for being slow to recognize the depth of the financial system problems and even slower to come up with a coordinated response. Infighting was on display last weekend as European officials failed to come up with a common approach to protect their intertwined financial sectors. Since then, the U.K., Spain and Italy announced their own financial sector rescue programs, though officials in France and Germany have indicated they see no need to set up similar bank recapitalization plans. French President Nicolas Sarkozy said later Wednesday that German Chancellor Angela Merkel agreed that the two countries responses to the turmoil would be "totally coordinated." Sarkozy has taken a lead in pushing for a pan-European approach and has also called for a special G7 heads of state meeting, which some media reports have suggested could be held as early as this weekend. Paulson said it doesn't make sense to have "identical" policies. "You're going to have different policies, but the key thing is that we continue to work closely together," he said, adding that he sees more signs of coordination and "very helpful statements" coming out of Europe. Edwin Truman, senior fellow at the Peterson Institute, who has worked at the Treasury and Federal Reserve, said he doubts the G7 meeting will result in any major new measures, especially with upcoming elections in the U.S. and Canada. "I suspect you're not going to have a lot of concrete initiatives," he said. "I mean, they will commit themselves, like here, to seek multilateral solutions and work together." In addition to European officials not being on the same page, there will also be an undercurrent at the meetings that Paulson "will have to eat a little bit of humble pie," he said, since the global crisis began in the U.S. World Bank President Robert Zoellick, who previously worked at Treasury, earlier this week called for a doubling in the size of the G7, which he said "is not working." While he also criticized the G20 as too unwieldy, the quickly assembled meeting of that larger group of major advanced and developing countries suggests that his idea for a "new multilateralism" to include rising powers is shared by others. The G20 includes the G7 countries of the U.S., U.K., France, Germany, Italy, Japan and Canada - as well as Russia, Australia, Brazil, China, India, Argentina, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey. The European Union also has a separate representative. By involving developing countries, the G7 is acknowledging that an effective response to the crisis requires more players, said Michael Monderer, managing director of Washington-based advisory firm G7 Group and a former Treasury official. "The G7 is not the sole actor in the world," he said. While Monderer doesn't entirely agree with Zoellick's idea of a flexible steering committee, he said, "I think that it's clear that there are other large actors in the world, such as the Chinese and the Indians and the Brazilians and the Mexicans and the Russians, that need to be part of the process." He doesn't expect any coordinated measures at the G20 level, seeing the meeting more as making sure everyone's on the same page. David McCormick, Treasury undersecretary for international affairs, said the G20 meeting will be mostly about exchanging viewpoints on the crisis. "If nothing else, what hopefully the last six-to-12 months has shown is how interdependent our financial markets are, as well as our global economy," he said. Still, Monderer said that even if no major announcements are expected out of this week's meetings, he gives the G7 some points for starting to show leadership. He expects Friday's communique to convey the sense that they are in charge. "If there were ever a time for the G7 to show its relevance, this is it," he said. "And I think they've gone a long way in that regard, actually." -By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com (END) Dow Jones Newswires October 09, 2008 09:02 ET (13:02 GMT) Copyright (c) 2008 Dow Jones & Company, Inc.- - 09 02 AM EDT 10-09-08