New Players Set To Make Mark On G-20 Summit

President Obama and China's President Hu Jintao meet in London Wednesday on the eve of this week's Group of 20 summit. It's Obama's first trip overseas as president. For Hu, it's an opportunity to play a leading role on the world stage. In recent years China and other emerging market countries have become increasingly important players in the global economy.

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Today's meeting in London between President Obama and Chinese President Hu Jintao is a debut of sorts for both men. It's President Obama's first trip overseas since taking office, though he did take a trip to Canada. For Hu it's an opportunity to show that his country is ready to take a lead role on the world stage.

China will be a major player at the Group of 20 Summit, which officially opens in London tomorrow. As NPR's Tom Gjelten reports this G-20 meeting shows how the world's political line up is changing.

TOM GJELTEN: For years the big economic summit was the G-7, bringing together the leaders of the United States, Japan, Canada and the four biggest European countries. These were the world's industrial powers. But those seven countries have seen their share of the global economy shrink in recent years. And now another summit is getting all the attention.

Mr. BERGSTEN (Director, Peterson Institute for International Economics): The G-20 has replaced the G-7 as the chief steering committee for the world economy.

GJELTEN: Fred Bergsten is director of the Peterson Institute for International Economics.

Mr. BERGSTEN: That's because the emerging markets now account for half the world economy and their share is growing every year.

GJELTEN: Among the new players, China, Brazil, Russia, India and developing economies like South Korea and Mexico. Kemal Dervis, a former economy minister in Turkey, says these countries in the past got to attend G-7 meetings only as guests.

Mr. KEMAL DERVIS (Former economy minister, Turkey): Some of them are invited mostly for having coffee or for a photo-op, or maybe sometimes for having a lunch, but certainly not as full partners. And indeed, I think last time China said, look, if that's all we're invited for we're not going to come.

GJELTEN: The G-20 got organized in 1999 after the Asian financial crisis, when it became clear the emerging market countries would be important players in the global economy. But only finance ministers and central bank governors bothered to attend G-20 meetings. The first G-20 summit was last November in Washington, hastily arranged as a response to the global financial crisis.

From here on, says Fred Bergsten, it will be inconceivable for leaders to discuss the world economy without including China and the other big developing countries.

Mr. BERGSTEN: Over the next year or so, as the world comes out of the downturn, the emerging markets will probably provide more than 100 percent of world growth. The U.S., Europe, Japan will all be in negative terrain.

GJELTEN: As a consequence of their growing importance, these countries have new political clout and they're likely to exercise it as this week's G-20 summit. China and other Asian countries, for example, are being asked to provide more money to the International Monetary Fund and the World Bank to help lower income countries. But until now, the big industrial powers have had more voting clout at the IMF and the bank.

Kemal Dervis, now at the Brookings Institution, says the emerging economies wonder what they would get in exchange for agreeing to step up their IMF and World Bank contributions

Mr. DERVIS (The Brookings Institution): Particularly they're saying, well ok, if we do, are you going to give us the role and the place at the table in such a way that our voting will increase and that of Europe, for example, will diminish? If you're going to do this, they say, ok, then maybe we'll contribute some of our resources.

GJELTEN: The spotlight at the G-20 summit will be on Chinese President Hu Jintao. China has financial reserves to spend and a great potential for growth. In the past, Chinese leaders have focused narrowly on their national interests and shunned a global leadership role, but that may now be changing.

Mr. JUSTIN LIN (Chief economist, World Bank): The interests of China and the interests of the global economy are consistent.

GJELTEN: Justin Lin is the chief economist for the World Bank. He says his country, China, and other emerging economic powers are now ready to become more involved in global economic policy making, if they get the political representation they deserve.

Mr. LIN: We need to have more resources for the low income country. And we need to have some reform on the voice and representation.

GJELTEN: those reforms on voice and representation will be discussed at the G-20 meeting in London, Lin says - just one of the agenda items reflecting the new political priorities of this enlarged leadership forum.

Tom Gjelten, NPR News, Washington.

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For G-20 Leaders, 1933 Summit Holds Lessons

This week, President Obama and other world leaders gather in London to confront an international economic crisis. The same thing happened in 1933, as the world was grappling with the Great Depression.

Obama, who arrived Tuesday in London ahead of a summit with leaders of the Group of 20 countries, says he will push for international action to restore economic growth. The statesmen who gathered 76 years ago had similar goals. But the parallel is disturbing: The 1933 economic conference collapsed in failure.

The world was in desperate economic shape at the time. Banks were failing everywhere. People were hungry and out of work. Global trade had come to a screeching halt. The World Economic Conference in London in June 1933 was seen as a last chance to turn things around. King George himself greeted the delegates in somber tones.

"At this time of widespread economic distress, it is with a feeling of deep responsibility that I welcome you to this country," he said at the time.

Optimism Despite Dark Mood

The thousand or so conference attendees filled the lofty hall of London's Geological Museum. Almost every nation on Earth was represented. In his keynote address, George V pleaded with the delegates to look beyond their narrow national interests.

"In the face of a crisis, which all realize and acknowledge, I appeal to you all to cooperate for the sake of the ultimate good of the whole world," he said.

The mood was dark, but there was still hope: The United States had a dynamic new president, Franklin Delano Roosevelt. He had taken office just three months earlier, and the world was waiting to see what he would do.

"In 1933, you want to imagine Europe on the brink: Hitler has just been elected. France is wondering: What next? We have Mussolini in Italy, all this is going on, and countries are looking to the U.S. to show leadership," says Amity Shlaes, the author of The Forgotten Man: A New History of the Great Depression.

Actually, it was the United States that was largely responsible for the collapse of global trade. The Smoot-Hawley Act, passed in 1930, raised tariffs on more than 20,000 imported goods and triggered retaliation by countries around the world.

Fighting Protectionist Tendencies

A top priority of the London conference was to reverse the protectionist trend. The U.S. delegation was led by Secretary of State Cordell Hull, who saw the need to revive international trade. Before leaving, he asked Roosevelt to undo Smoot-Hawley.

"What Cordell Hull was saying was, 'Please let me have some new freer-trade legislation in the U.S. Then I can come with something in my hand to London and maybe we can agree again and stop our reprisals and our tariffs,' " Shlaes says.

Another parallel with today: Countries have again moved toward protectionist policies — from the "Buy America" provision in the U.S. stimulus bill to import tariffs in countries like South Korea.

Martin Wolf, economics commentator for the Financial Times newspaper, says during times of high unemployment, it is natural for politicians to want to protect domestic industries.

"They start looking around, and they think, goods coming into their country, that's not helping us," Wolf says. "They look at domestic workers, and they think: 'How can I make work for these people?'

"They find dealing with their foreign counterparts very difficult; it takes a long time. They want to do things at once and urgently. So they start taking action at home."

In 1933, the temptation to protect U.S. workers was so strong that Roosevelt was unable to overturn Smoot-Hawley.

Shlaes, now a fellow at the Council on Foreign Relations, says Hull was still on a ship en route to the London conference when, to his great dismay, he learned he would have nothing new to offer on trade.

"Hull said, 'Here I am traveling to London in the hopes of negotiating free trade, and my hands are empty.' By the end of his journey over, he was already disappointed and yet he knew, and he was prophetic, that trade was an important part of peace," Shlaes says.

Lessons From The 1933 Conference

The London conference lasted about six weeks, but it accomplished little. Hull went home in despair. Hitler proceeded in Germany with the program he called "national socialism." Other European governments concluded that the United States was ignoring the developing threats on the Continent. The Depression deepened and, within a few years, the world was at war.

Could it happen again? Not likely. There is no Hitler lurking in the shadows. International organizations now bind countries together. And the Financial Times' Wolf says we're all wiser.

"Though it's a long time ago, at some level, everybody does know what happened in the '30s," he says. "There is a pretty strong sense, even now, that this is not an experience we want to repeat.

"We know how bad it is, and it's terrifying we've gotten so close. We really don't want to repeat all that."

Still, there is a lesson to be drawn from the London conference of 1933: King George urged nations then to work together for "the good of the whole world." They chose not to, and the whole world paid the price.

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