ARI SHAPIRO, host:
This is Morning Edition from NPR News. I'm Ari Shapiro.
RENEE MONTAGNE, host:
And I'm Renee Montagne. One of the toughest challenges of the global financial crisis has been coordinating policies across continents. And in one of the biggest and most important international gatherings since the crisis hit, the Group of 20 meets this week in Washington, D.C. We often hear about the G-8, the major industrialized countries plus Russia. As NPR's Michele Kelemen reports, the Group of 20 could become increasingly important because it includes the world's rising economic powers.
MICHELE KELEMEN: Sometimes it takes a crisis like the current one for big powers to realize that their small diplomatic clubs simply don't look legitimate anymore. Eswar Prasad of the Brookings Institution says emerging powers need to be at the table now.
Dr. ESWAR PRASAD (Senior Fellow, Global Economy and Development, Brookings Institution; Professor of Trade Policy, Cornell University): Countries like China, India, Brazil now have much larger clout in the world economy. Leaving them out of the picture makes very little sense anymore. So I think the G-20 is going to be a very natural grouping of countries that is going to become very important in terms of setting global macroeconomic and financial policies.
KELEMEN: The Group of 20, formed back in 1999, also includes Mexico, South Africa, South Korea, Saudi Arabia, Indonesia, and Turkey. Usually the finance ministers and central bankers of this group get together for meetings. This will be the first head of state summit for the G-20, which represents about 90 percent of global gross national product and 80 percent of world trade. The Bush administration has been playing down expectations, but Prasad says the meeting will have to address calls to reform the World Bank and the International Monetary Fund.
Dr. PRASAD: That is something that definitely should be on the table right now, changing the nature of the international financial architecture to give the larger emerging market economies the seat at the table they deserve and the level of influence that they deserve.
KELEMEN: A former chief economist of the IMF, Raghu Rajan, says the U.S. and the Europeans always seem to get cold feet when it comes to reforming the international financial institutions and giving up some of their power there. He also says this is a particularly awkward time to be dealing with all of this in the final months of the Bush administration and as Barack Obama prepares to move into the White House.
Dr. RAGHURAM RAJAN (Professor of Finance, University of Chicago Booth School of Business): There is a certain amount of plausible deniability in this meeting. The U.S. can just say, well, we don't have the new administration. We hear you out. Draw some of the anger, and leave it at that. But I think there's enough that's happened as a result of this crisis that the rest of the world is not going to remain still.
KELEMEN: Rajan, who's now a professor of finance at the University of Chicago Booth School of Business, says the summit could at least set the stage for broad institutional change.
Dr. RAJAN: It does put a lot of pressure for the Obama administration to respond because clearly this is a crisis that is made in America.
KELEMEN: The Obama administration will also have to think about what sort of diplomatic grouping would be most appropriate to deal not only with this financial crisis, but other global challenges as well, from climate change to nonproliferation. Most experts believe China and India have to be invited to dinner, not just dessert, at G-8 summits. Zbigniew Brzezinski, who was President Carter's national security adviser, says the group should expand, maybe not to 20, but to 14 or 16 countries.
Dr. ZBIGNIEW BRZEZINSKI (Professor of American Foreign Policy, Johns Hopkins University's School of Advanced International Studies; Scholar, Center for Strategic and International Studies): And I think participation should be determined by some generalized definition of international influence, which means, yes, economy, money, but also military power and willingness to act on the global scene as sort of a responsible shareholder of the larger system.
KELEMEN: He was speaking at the Aspen Institute alongside a former Republican national security adviser, Brent Scowcroft, who said there is no magic number. Too big, and the group becomes unwieldy. And if it remains small, you leave out important players. Michelle Kelemen, NPR News, Washington.
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