Crisis at Cannes

The G20 summit in Cannes has not gone according to French President Nicolas Sarkozy's plan. Although Sarkozy may have envisioned leaders from the industrial and emerging economies discussing a visionary agenda aimed at making the world a better place, the "Greek tragedy" has instead overshadowed the entire summit.

The Europeans alone are to blame for hesitating and delaying decisive action to address the eurozone debt crisis, and now they are paying the consequences for bad crisis management. German Chancellor Angela Merkel and President Sarkozy's powerful words of warning to Greek Prime Minister George Papandreou should have come much earlier.

Improvised crisis management

Hectic crisis sessions to address the developments in Greece had already taken place in Cannes on Wednesday and continued as the G20 summit officially got started on Thursday. Agenda items were set and then cancelled shortly thereafter while bilateral meetings took place as news kept coming out of Athens.

Merkel reacted coolly when Papandreou backtracked on his call for a referendum on the eurozone's latest rescue package. The German chancellor said that "only actions count." It's not entirely clear what will happen at this point, and as a consequence the next tranche of aid money to Greece has been put on ice.

The other G20 states warned the Europeans to decisively address the crisis, which affects not just the stability of Europe, but the health of the entire global economy. US President Barack Obama praised the "leadership of Angela," meaning the German chancellor, but also did not shy away from pointing his finger. A recession is the last thing Obama needs if he wants to get re-elected in 2012.

Emerging economies feel the pain

Chinese President Hu Jintao and his Russian counterpart Dmitry Medvedev also pushed for the Europeans to act without delay. The two powers' economic relations are strongly shaped by Europe, and their economies have begun to suffer as a consequence of the debt crisis like the other emerging nations such as Brazil, India and South Africa.

It's no surprise, then, that the G20 states announced at the end of the day that the global economy needed stimulus. A so-called "Plan for Growth and Employment" should help create more international cooperation in economic policy and target, above all, youth unemployment. The emerging economies should also carry a greater weight in decision making, according to Chancellor Merkel. A new monetary system has to be developed that reflects the increased significance of these states, and their weight within the International Monetary Fund (IMF) has to be adjusted to the new realities, she continued.

Other problems overshadowed

With all the talk of the debt crisis and economic growth, other issues that originally had high priority slid to the bottom of the agenda like, for example, the fight against hunger. Non-governmental organizations (NGOs) are outraged. As important as the current financial crisis may be, said the World Wide Fund for Nature (WWF), it should not be allowed to overshadow the rest of humanity's problems.

The organization ONE, which devotes itself to fighting extreme poverty and preventable diseases in Africa, expressed concern about the developments at Cannes. Tobias Kahler, the director of ONE in Germany, worries that "cooperation in development and with the entire continent of Africa have slid to the very bottom of the agenda and the heads of state and government won't even have the chance to talk about it."

"Most countries, including Germany, are limping very far behind in reaching their financial pledges in the area of development cooperation," Kahler told Deutsche Welle.

Transaction tax dead in water

Multi-billionaire Bill Gates at least provided a glimmer of hope. President Sarkozy had asked Gates to come up with suggestions for how to finance development aid in the future. Gates proposed to the G20 states that an international tobacco tax, a tax on emissions from air traffic and shipping as well as a financial transaction tax could all help bring in money to help the UN accomplish its development goals.

But the US and the UK have put the breaks on the financial transaction tax. Of course the banks should participate in the costs of the crisis but there are other ways that can occur without such a tax, according to US President Obama. It's possible that the eurozone countries might decide to implement such a tax on their own. That would at least be some good news from Europe.

Author: Henrik Böhme, Cannes / slk
Editor: Richard Connor