Xinhua News Global Edition
PARIS, June 27 (Xinhua)-- At the G20 summit ongoing in Canada, the United States and European Union undoubtedly play overwhelming and critical roles in ushering the world to sustained growth and international financial reform.
However, as the two sides have brought different proposals to the decisive summit in Toronto, how to tune their discordant voices becomes a challenge, not only for the two, but also for the global economy.
DIFFERENT GROWTH STRATEGY
According to the information published by the host country Canada, sustainable and balanced economic growth is one major topic of the summit, but how to succeed a sound growth, the Europe and the America own different views.
So far since the beginning of this year when the eurozone hit by the sovereign debt crisis, Germany and France, two biggest EU economies, gradually formed a united front line of taking austerity measures and cutting public deficit to solidify fiscal budget.
Germany Chancellor Angela Merkel stressed that Europe needed a healthy growth built on authentic economic fundamentals rather than debt-based growth.
The U.S. President Barack Obama, nevertheless, made a different voice ahead of the summit, underlining the priority of G20 summit should be to guarantee and boost economic recovery.
Obama called European countries to avoid too aggressive measures in tightening fiscal spending, in fear that austerity methods might stem world-wide growth and drag the resilience.
Michel Aglietta, a prestigious French economist with the Paris University, attributed U.S. and European discord to conflict between Keynesia and Mercantilism, in an interview with local media.
Facing a fragile recovery, the U.S. leaders see more hope in Keynesia, which means to take active fiscal stimulus to boost domestic demand in a bid to promote growth. They viewed tight fiscal policy not appropriate under the current weak rebound.
With an aging demography, Germany takes weak domestic demand as bigger threat, and thus preferred Mercantilism to edge its competitiveness and accumulate trade surplus.
The two opposite methods would amplify the international economic imbalance, Aglitta expressed his concerns.
NUANCE IN GLOBAL FINANCIAL REGULATION
In terms of international financial regulation, the United States and EU appeared in accordance, but there still existed nuance in regulating formats, particularly on global financial transaction levy.
France and Germany stand to levy financial transaction on international level, eyeing to form an assistance fund to offset potential bailout cost in the future, and to restrain banking groups from risky operations.
However, the United States and Canada didn't appreciated the new tax, considering it barrier to free credit flow.
A stricter financial supervision has become global consensus, so what remains are just disputes over formats, Aglietta insisted.
Accordingly, the French economist suggested to establish a global council, composed of banking and financial market representatives, to monitor financial risk and to coordinate and implement financial inspection.
Regarding the proposal of international bank tax, though Europe and the United States reached an agreement, Canada opposed it, arguing it's not necessary for countries, whose banking systems have no faulty performance, to adopt the bank tax.
While France and Britain are planning to levy banks after Germany, who announced to carry out the tax in March, Canada advocated effective international mechanism of financial regulations and establishment of emergency fund instead.
CONFLICTING INTERESTS IN G20 DEVELOPMENT
French President Nicolast Sarkozy has regarded the G20 platform a never-better working mechanism to coordinate global governance, thus he called to build it on and to strengthen the legitimacy of its resolution, in case agreements reached at the summit would degrade into empty words.
The French recommendation didn't seem to win U.S. support yet.
The founding CEO of the US Studies Center Professor Geoffrey Garrett defined G20, in his 2010 Foreign Policy article, as a non- executive board undertaking structural reform of global economic governance, but not a management committee responsible for specific affairs.
The G20 resolution, in Goffrey's opinion, is to guide, reform and oversee the Bretton Woods system, while France judged that the Bretton Woods Agreement after the Second World War was already outdated, thus new rules should better present benefits of emerging markets and less-developed countries.
Disagreement, not a tiny one, still lies in terms of international financial system reform.
The United States aimed to persuade the Europe to spare more says in financial institutes for emerging economies, whereas the Europe insisted a principle of absolute majority in making decision instead of US one-vote veto privilege.
Tuning different tones is a challenge of the G20 summit. Unlike interests of the Europe and the United States, plus distinct starts and methodologies, would surely undermine the two major powers' efforts to agreements, analysts concluded.