However, the progress of putting the global economy back on the right track is dim. The most important accomplishment of the G20 is its acknowledgment of the bigger role of emerging economies in today’s world. Though the forum seemed united in 2008, now the picture is completely different. The emerging economies continued to grow during the crisis years, while developed countries were falling back.
The main agenda of the Cannes Summit was to foster economic growth to create more jobs through encouraging domestic consumption and reducing trade imbalances between rising and developed economies. With the euro zone debt crisis, it seems that Europe would have little leverage over negotiating the exchange price of yuan, the Chinese currency. Especially with the euro zone appearing to be very close to a recession, after its manufacturing PMI for October fell to 47.1, continuing a downward trend for three consecutive months. This index measures the purchases of manufacturers, where figures below 50 suggest contraction. Moreover, Greece has dropped a bomb blowing-up all efforts to conclude a deal about the European Financial Stability Facility at the EU summit by requiring the deal to be approved through a referendum.
With Brazil showing no interest to invest in EFSF and with very little expectation of US help, China holds the upper hand with its huge reserves and trade surpluses. Developed economies, especially the US, were hoping that the G20 would agree on a plan of action for growth, including precise and concrete commitments from the main economies; to help them deal with their trembling economy. Now all the focus seems to be shifting to building a firewall around the Greek debt problem. The Greek prime minister was summoned to Cannes to meet with Nicolas Sarkozy, Angela Merkel and Mario Draghi, the new chief of European Central Bank, to clear things up before the summit starts.
With the South Korean president meeting with the Russian prime minister, and the Chinese president exploring Austria on his way to Cannes, it seems like emerging economies are keen to grow their influence over the forum. Saudi Arabia, along with the UAE which has been invited to attend the summit, can play a major role in taking the leadership of achieving both goals of the forum, fostering the global growth and helping with the euro zone debt crisis. Employing their energy and cash reserves, they can shift the gear, the global economy being stuck in right now.
