Obama Prepares For G-20
JACKI LYDEN, host:
Welcome back to ALL THINGS CONSIDERED from NPR News. I'm Jacki Lyden. Barack Obama starts his first overseas trip as president this coming week. First stop, London, where he'll attend the G-20 summit, a gathering of the 20 major economic powers.
Mr. Obama then sets down in France for a NATO summit, Prague for a European Union summit, and finally to Turkey for talks and a tour.
Here to walk us through the president's very packed agenda is NPR's Tom Gjelten. Hi there, Tom.
TOM GJELTEN: Hi, Jacki.
LYDEN: So, let's start with the G-20. The last time the full membership met was here in Washington, just after the election. A lot has changed since then.
GJELTEN: For one thing, Barack Obama, even though he had already been elected, he stayed away from that summit. He left it to President Bush. He said he didn't want to interfere. So, this is going to be Barack Obama's debut on the international stage, his first trip abroad, and of course, the financial crisis has gotten only more serious since then.
LYDEN: When it was conceived, this meeting was called the New Bretton Woods, and that of course is a reference to the conference that reshaped the world's economic system after World War II. Are we at that moment now?
GJELTEN: It's true. A few months ago - in fact, this was set, like you say, around the time of the November summit, this was seen as an opportunity to redesign the international financial system. It's actually taken on even more importance than that because the G-20 is, I think, on the verge of replacing the G-7, the major industrial countries, as the big international grouping.
The G-7 excludes some of the most important players in the world today. It excludes China. It excludes what is called the trillion-dollar club, six countries whose GDPs are each over $1 trillion whose economy together represents a quarter of the global economy.
This is the group, the G-20, that is really going to dominate the international, multilateral scene in the coming years. So a lot has changed, Jacki.
LYDEN: Well, you know, not only that, but there comes something, another challenge to the dollar, and I'm not talking about the capital markets - the creation that China's proposing of a new international currency, something the Russians had tried to do. Is President Obama going to have to defend the very notion of the American dollar?
GJELTEN: I think there is a real movement right now in the world not really to create a new international currency. It's actually to create something called the international reserve currency, which wouldn't be an actual currency. It would be more what they call - it's kind of technical - special drawing rights.
It's a way for sort of countries to put their currency reserves into a kind of assortment of currencies, the composition of which would change, you know, as exchange rates fluctuate, and this is something that has been discussed for a while.
China has invested so much in the U.S. dollar and is getting a little nervous that maybe it's invested too much in the U.S. dollar. But it's not just China. There is also sort of a feeling throughout the world that the U.S. dollar is really too dominant.
There was a United Nations panel this past week headed by Joseph Stiglitz, a former chief economist of the World Bank, a Nobel Prize-winning economist. This panel also came out for this idea of a new reserve currency that would be an alternative to the dollar.
It's never going to replace the dollar, and Barack Obama is not really going to have to defend the dollar. The dollar is here to stay.
LYDEN: So, a lot of summits coming up here, Tom. Of course, the president moves from London to Prague for the EU summit. Now, France and Germany have expressed hostility towards the president's economic policies, the stimulus plan. But now, the prime minister of the Czech Republic has called the Obama stimulus plan the road to hell. That's really something.
GJELTEN: Not exactly diplomatic language, is it, Jacki? In fact, some of the other European countries that more or less share his sentiment sort of scolded him for using that kind of language.
Now, keep in mind that his government had just collapsed, so he was probably in a bad mood at the time. But it is true that European governments are very cool to this idea of more stimulus spending, and I think they resent - you know, Barack Obama and Timothy Geithner have been putting a lot of pressure on the Europeans to spend more.
LYDEN: Do their own version thereof, yeah.
GJELTEN: Exactly. And there's a feeling that the United States is just sort of carrying the weight for them. None of them would have come out with anything quite that strong. But I think we will see a real debate between the United States and Europe over the importance of stimulus spending at this G-20 meeting.
LYDEN: Another first on this trip, the president winds up in Turkey. And of course, that's his first Islamic nation he's visiting as president.
GJELTEN: Well, you know, and Jacki, he promised at various points during the campaign that his first overseas trip would be to a Muslim country. This is his first trip, and he's making a visit to a Muslim country. It's not the first stop on the trip, but in a sense, he's keeping that promise.
LYDEN: Tom, when the trip's over and the president returns, a lot of people are saying for all the attention on the G-20, only two countries matter, and you know which two I'm talking about.
GJELTEN: It's the G-2. It's the United States and China. And the G-2 is a term that analysts are starting to use to say this is now the most important economic - international economic relationship in the world. And at the sort of the high point of this London summit will be when President Barack Obama meets President Hu Jintao of China, a very important meeting.
LYDEN: Tom Gjelten covers international economics for NPR. Tom, thank you so much for being with us.
GJELTEN: Thank you, Jacki.
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