The world's richest and its largest developing
economies made a little progress in bridging the gaps that divide them
Thursday, agreeing on the ultimate goal for climate change negotiations, and a
relaunch of stop-start trade talks that have dragged on for eight years.
But new gaps are opening up, not least a brewing disagreement over the role
that the U.S. dollar and other currencies should play in the international
monetary system. That may prove just as thorny and insoluble as trade and
climate change have been over the past decade.
Meeting close to this mountainous Italian city surrounded by green hills,
leaders from the Group of Eight rich economies and the Group of Five large
developing economies agreed that the global climate shouldn't be allowed to
warm by more than 2 degrees Celsius from pre-industrial temperatures.
And they tasked their trade ministers with reinvigorating the Doha round of
trade talks at a meeting that will precede their next rendezvous, when they
join other leaders of the G20 in Pittsburgh in September.
But those were the easier steps to take. They did not agree on specific
targets for cutting their own carbon emissions in the near-term, nor did they
explain what concessions would be made to seal a deal on Doha by 2010.
And lurking in the wings is an issue that may prove just as difficult to deal
with. Speaking to the leaders, Chinese State Councilor Dai Bingguo said that
the international currency system must become more diversified.
Dai told the leaders that "there's a need to improve the international
monetary system, enhance the reserve currency and regulating regime, maintain a
relative stability of the exchange rates of the main international reserve
currencies and promote a more diversified and reasonable international currency
system."
The Chinese government has made similar statements before, but not directly
to G8 leaders, including U.S. President Barack Obama. The issue of how nations
should store their wealth and conduct trade is now on the agenda, and can't be
ignored for long.
Developing economies, notably China, keep most of their reserves in U.S.
dollar securities, largely Treasury bonds. But they have no influence over the
policies that affect the value of those reserves. Much of their international
trade - even among themselves - is also conducted in dollars.
U.K. Prime Minister Gordon Brown said there had been no "real" discussion
about the U.S. dollar's role.
"There was not a serious discussion about this and it was not on the agenda
for discussion", Brown said.
However, he conceded that discussing the dollar's role is "something the
world has got to do."
"But the suggestion that there's something that's going to happen in the next
few weeks and months is just not realistic and therefore I don't think we can
give people the impression that there's some big change about to happen," he
said.
The White House said Thursday that it doesn't see any threat to the U.S.
dollar's status as a reserve currency, downplaying recent calls for a more
diverse set of global reserves.
"I think that despite whatever talk you might hear, I don't see that there's
any movement away from the notion of the dollar being that currency," White
House spokesman Robert Gibbs said Thursday.
Given the history of climate change and trade talks, Brown is right to doubt
that any big changes are likely to happen soon.
U.S. President Barack Obama said there's a long way to go before a deal on
climate change can be struck at a summit to be held in Copenhagen in December.
"We've made a good start but I'm the first one to acknowledge that progress
on this issue will not be easy," Obama said. "It is no small task for 17
leaders to bridge their differences on an issue like climate change."
Developing countries are unwilling to set targets to cut their emissions
until they see developed countries taking a lead. The G8 leaders Wednesday
pledged to cut their emissions by 80% by 2050, but that's a long way off, and
well beyond the political lifetimes of the G8 leaders.
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