International economic summits deserve to be regarded with skepticism: The most important decision to come out of them is usually the call for another meeting.
But this week's G-20 meeting in London was an exception. While President Obama may have overstated things a bit when he declared it a "turning point" for the now-shrinking global economy, the meeting did manage to boost the confidence of financial markets, inject another trillion dollars into the system and provide needed political cover for leaders to take unpopular actions at home.
Ever since this round of G-20 consultations was launched last year by an insistent President Nicolas Sarkozy, there's been a distinctly French accent to the process. Implicit in the agenda has been a critique of the Anglo- American economic model that, in the European imagination, was the root cause of the current economic crisis. Sarkozy's aim was nothing less than a rewrite of the rules for global capitalism to conform to the more civilized norms of the continental European model.
At the same time, British Prime Minister Gordon Brown was keen on creating a new global financial architecture to replace the creaky Bretton Woods financial institutions that failed to prevent a series of international financial crises and now seem oddly out of sync with the global economy.
To the American ear, much of this sounded overdone and overly ambitious.
While the financial crisis revealed an urgent need to better coordinate regulation of global institutions and capital flows, nobody seriously thought that any country — not the United States, and certainly not France — would cede its sovereign powers to an international bureaucracy.
The push for broader, tighter cross-border financial regulation, in fact, came largely in response to the light-touch approach of the Bush administration. But whatever trans-Atlantic tension once existed over that issue pretty much melted away last week when Tim Geithner outlined the new administration's regulatory reform proposal, which could as easily have been written at the French Finance Ministry as at the U.S. Treasury.
In the end, this week's communique, with its promise of a global regulatory crackdown, was an easy win for all concerned. While it may constitute a turning point for Anglo-American capitalism, it is hardly the death knell.
What emerged from the G-20, however, amounts more to reform than to revolution. It may suit the politics of Europe to portray all this as a blow to Washington's power and prestige, but the reality may be quite different. In fact, the shift is in keeping with the new emphasis on the developing world that Obama brings to international economic policy. And if any countries are likely to lose out in the restructuring, they are those of "old Europe" that, by dint of history, now wield power far in excess of their importance in the global economy.
All in all, a pretty successful opening-night performance for President Obama on the international economic stage. He achieved most of what he wanted while allowing others to claim victory and allowing the United States to shed its Bush-era reputation for inflexibility and heavy-handedness. And by the standards of past summits, this one was full of accomplishment.