G8 / G20 Differences Everywhere At Canadian Meet

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Never since the commencement of the G20 meet have the G8 the original power block of OECD economies plus Russia look as divided as now. Even as President Obama flew to Toronto carrying with him the watered down version of a rushed Financial reforms bill jointly passed by the Senate Comittee of Banking Reforms and the Congressional Financial reforms comittee he was aware of the obstacles ahead. Everyone in the block of nations of G8/G20 knows what to do today,having worked their way through the harsh realities of the recent economic crisis. Problem is each one has different solutions and are sceptical of what others in the peer group offer as solutions.

The American President Barack Obama wants stimulus to continue, while European powers Germany , Britain and France have already started curbing spending to reduce fiscal deficit and debt burden. Avccording to IMF the debt burden of the OECD economies is today 107% of their GDP, whereas that of the emerging nations of the G20 like China, India and Brazil are around a third of their GDP. Strangely, none of the OECD nations barring Japan and Russia are holding high foreign exchange reserves, whereas China, India, Saudis and the Asian Tigers are saving billions. The European countries made vulnerable by the Eurozone debt crisis are facing a run on both the Euro as well as the Government bonds and have to cut debts and bring their budgetary deficits under control. US by being the holder of the worlds reserve currency may still not have faced a run on the Dollar, but the Euro has.


The Global Bank levy is another major area of difference of opinions. Whereas US has levied a one time asset based levy of $19 billion on Wall Street Banks, the Germans want a global bank tax to be universally imposed to pay for the cost of financing the restructring of the global economy. Japan and Canada whose Banks had nothing to do with the global credit crisis however reject this suggestion and rightly so. For them priorities are entirely different and so are the solutions to the path of recovery.

Moving out of the G8 into the G20 forum the divisions become more sharper. China which has grown in power and clout since the 2008 crisis, today has friends in the
Arab block, South America as well as Asia and will push forward with a broadbased goal of bringing structural reforms to its overheated economy. For China Korea and India it is not growth or curtailing debt that matters, it is a balanced growth and control of inflation without which their societies are being torn apart by strifes, voilence and dissensions.

Other invitees to the session are poor nations of Africa, Haiti, and South America to whom promises of help made at the last suimmit by the rich nations remain unfulfilled. China incidentally has made friends amongst this block investing in Africa and South America judiciously to gain access to energy and metal deposits. It is understood that this block as well as the thousands of anti G20 protesters outside the summit veneue will grab eyeballs as well for their protest at being left out of the cream pie.