Is the ‘Washington Consensus’ really over?

Gordon Brown said at the end of the G20 summit in London: “The old Washington consensus is over. Today we have reached a new consensus that we take global action together to deal with the problems we face, that we will do what is necessary to restore growth and jobs that we will take essential action to rebuild confidence and trust in our financial system and to prevent a crisis such as this ever happening again.” Really? Is it going to be replaced by a ‘European Consensus’ or a ‘Chinese Consensus’? When the European Union becomes one country including the United Kingdom, only then they should talk of changing the ‘Washington Consensus’. The bigger question is whether China or Japan would accept a European Consensus!

What has really changed since the last G20 summit in September 2009 in Washington DC? The ‘decider’ has been replaced by the ‘huggers’ as the Obamas went hugging the Queen and the commoners. Other than that we see the same old communiqué and the same old speeches after the day long colorful event. Nothing is going to change for any individual country or the world as a whole. The only visible change that you see is the significant increase of IMF funding from $250 billion to $750 billion. The other visible change was a little contrived swagger of a US president. Obama appeared little defensive in a post summit conference. He advised India to resume dialog with Pakistan as soon as America starts talking to Osama!

President Barack Obama was correct when he observed that America remains the largest economy in the world by a very significant margin. It is also the most potent military force in the history of the world. He was also accurate when he proclaimed that United States is the biggest producer of goods and services and the popular culture. Obama was wrong to claim a free and vibrant press in his country. We know how free and how vibrant the American press is these days. President Obama and his America has to learn some day that the world is not happy with American Foreign Policy and that if US wants any significant cooperation from any other country, it must start listening rather than dictating and imposing its views on others!

Who should push the reset button?

American Exceptionalism has run its course over the last century. It is time to hit the ‘reset’ button! The world has changed during the last three decades. There are other cultures and civilizations that have emerged on the global stage. These emerging powers want a bigger role in reorganizing the world. This does not mean the diminution of the American power or prestige, it simply means that other countries expect similar reciprocation and respect from the United States of America.

Seventy years back another US President had to push the ‘reset’ button but those were different times and that was no ordinary President. We are talking about the legendary Franklin Delano Roosevelt, the 32nd President of the United States. The situation is as dire as it was during the Great Depression, only the then impending World War II is now replaced by the ‘War on Terror’. Roosevelt and Winston Churchill knew how to win the World War II, Barack Obama and Gordon Brown have no clue how to win the ‘War on Terror’! Do we really need to wait for four long years?

What exactly is this ‘reset’ button? It means that the world has to go back to the default position and renegotiate its way into a new world order. Just like in 1945 the League of Nations had to be replaced by the United Nations, now the UN itself has to be replaced by something else. America and China would fight hard to retain the defunct United Nations Security Council. Sooner or later the US dollar has to be replaced as a reserve currency by something else. America would fight tooth and nail to resist that! The entire global financial infrastructure has to be replaced by another Bretton Woods type system. US would fight that too. Who will push the ‘reset’ button?