The G20 summit failed utterly to secure any resolution of the eurozone's economic crisis.
Yet two decisions were taken that may at some future point contribute to a solution:
First, the G20 agreed to continue to consider increased involvement of the International Monetary Fund to stem the crisis. In practical terms, this means that the United States and Canada have agreed to consider putting some of their own funds into the rescue pot..
Second, Italy agreed to submit to IMF inspection of its government operations. (Although the Italian parliament could still veto this agreement.
Both items count as good news for Euro bondholders. They also count as bad news for Euro-democracy. As I've been arguing throughout this crisis, Europe can save the euro. Or it can save national democratic self-government. But not both. Getting the IMF involved means less power for voters, more for non-accountable international investors. As Joseph Stiglitz reminds us, the IMF:
does not report directly to either the citizens who finance it or those whose lives it affects. Rather, it reports to the ministries of finance and the central banks of the governments of the world.
Globalization and its Discontents (2002), p. 12.
If, as it appears, there is not enough money in the eurozone and probably the Union to save the euro from the Greek and Italian government assaults on its solvency, can the IMF really accomplish these bailouts on their behalf? Can and will the IMF actually treat Greece or Italy like some desperate LSE-grad-run African country from the 1960s and enforce stringent conditions before aid follows when the eurozone has apparently already cut Greece off? The G20 and the IMF cannot fix the unfixable, so it remains to be seen whether the eurozone can convince them that the crisis can be solved. This week in Paris was not a good sign.
This blog first appeared on FrumForum.com.