Less than three weeks before the next G20 meeting in France, the eyes of the world are firmly fixed on Europe. President Nicolas Sarkozy seems to share the desire of many of his predecessors for grand global meetings. Well, this one is going to be just as, if not more, important than many such meetings of the past. The power of the G20 meetings in the spring of 2009 in London, the success of the Plaza September 1985 gathering and the Louvre Accord 1987 will need to be matched, if not exceeded, if we are to get past the current eurozone crisis.
A number of key policymakers from outside of the eurozone, including Tim Geithner and George Osborne, have highlighted the November 3 meetings as critical in setting global financial markets on a better footing. On Sunday Mr Cameron urged European leaders to take a “big bazooka” approach to resolving the crisis, warning they have just a matter of weeks to avert economic disaster. Unsurprisingly, expectations have been raised. The credibility of the Europeans’ stance will be crucial, possibly in a way that it hasn’t been at any global leaders’ gathering yet.
Unfortunately, eurozone’s policymakers seem to be fond of the “muddle through” approach to policymaking. This has been a feature of European solutions to issues arising from the European Monetary Union since its creation in 1999, through dealing with challenges such as the adjustment of the Growth and Stability Pact and, of course, repeatedly since the Greek debt crisis exploded last spring. Yet it seems as though muddling through is no longer enough to keep financial markets at bay. If no credible “big bang” is unveiled next month, consequences are likely to be severe.