The Perils of Efficient Diplomacy

Ahead of the G20 summit, I was struck this week by a comment by Angela Merkel, in a very interesting piece in the NYT:

“ ‘International policy is, for all the friendship and commonality, always also about representing the interests of one’s own country,’ Mrs. Merkel said in an interview with The New York Times and The International Herald Tribune.”

Germany seems hell-bent on blocking new stimulus spending to try to lift the world out of recession. Merkel is playing hard-ball, even (allegedly) trying to spike plans for a $2trn stimulus package by leaking it to the press at the weekend. France seems to agree, but Sarko emphasises the regulatory agenda, and is even threatening to take his ball away if he doesn’t get what he wants. Nicolas and Angela, hitherto incompatible have even managed to cosy up together.

But what are the French and Germans trying to achieve? There appears to be a G20 majority in favour of a stimulus. The population (and GDP) of the US, UK and Japan, who are all clearly for it far exceeds that of Old Europe or even the EU as a whole. And it’s hard to believe that the developing countries – including potential Franco-German EU partners in Eastern Europe – wouldn’t be very much in favour.

And surely the spillover effects of economic dislocation and political instability and extremism in Russia and the countries it considers fall within its sphere of influence would not be in the interests of Western Europe.

At the end of the day, much of the G20’s output will be just words. Compliance with a woolly agreement such as a fiscal stimulus is hard to verify and there are no effective sanctions. Countries are ultimately going to make their own spending decisions.

If France and Germany find themselves in a small minority, they will be forced to go along with a stimulus, and their leaders will lose face at home.

But if France and Germany succeed in blocking an agreement to take action, they will most likely also fail to achieve agreement on the regulatory changes that are so important to them. And agreements to establish regulatory organisations and protocols are more concrete, verifiable and permanent than spending increases compared to uncertain baselines.

Old Europe seems to have put itself in a lose-lose position. And perhaps they should bear in mind that this is the G20 and not the G7. Indeed, they may have already been outmanoeuvred (for once) by the Anglo-Saxons into a diplomatic forum where it is more difficult for them to block progress than the G7 or to get their own way as in the EU.

It could be very interesting this week. The cards are up in the air. How will they fall? If the emerging countries use the (I suspect temporary) “multipolar moment” to assert their influence, then France and Germany could be the losers.

Perhaps Old Europe is adopting a negotiating position. But the US will remember that their position on Iraq did not turn out that way. And freeloading in Afghanistan, with German soldiers notoriously not allowed out after dark, is a source of continued irritation. From a UK perspective, the French and Germans have stacked the decks in the EU for a long time. The common understanding here and in much of the world is that the CAP is an outrageous subsidy to the wealthy. The fear must be that France and Germany intend to use all their diplomatic weaponry to try to achieve their own national goals, regardless of collateral damage.

But the worst aspect is, win or lose, Franco-German obstructionism might change the mood. At a time when the world needs greater international cooperation on a host of issues.

Ango and Sarki really should take a step back and think about what they are doing. They are saying they are worried about agreeing to concerted international action that might damage their economies. In a few months, at the Copenhagen climate negotiations, the boot will be on the other foot. They will be hoping the US, China and India will agree to concerted international action that might damage their economies.

Merkel’s attitude rather reminds me of transport decisions in Cambridgeshire, where, as I reported, South Cambridgeshire District Council opposes plans purely on the grounds of their perception of the narrow interest of their own residents.

Many difficult collective decisions can only be made if the interests of narrow constituencies are put to one side.

Come on Angela, Nicolas, let’s have a bit of give at the G20, as well as take!

PS Nic, Ang, here’s another bit of pre-G20 reading.