Leading article: The most important G8 summit for three decades

The central drama is in Europe, but a special responsibility falls on Mr Obama’s shoulders

Share
Related Topics

Not to put too fine a point on it, past meetings of the leaders of the West's major economic powers have all too often been a waste of time. But the G8 gathering that opened yesterday at the presidential retreat of Camp David, and then segues into Sunday and Monday's Nato summit in Chicago, is an exception. Indeed, it may be the most important since the very first of its kind took place at Rambouillet in 1975.

The Camp David talks will be dominated by the euro crisis, while Nato will focus on speeding an exit from the 11-year-old war in Afghanistan. In Chicago, demonstrations are likely, ostensibly against the war, but in reality driven by motives akin to those behind the protests in the streets and at the ballot box in European countries buffeted by the euro storm. There is a pervasive sense that, everywhere, politicians are failing the people. The US-led system whose uncurbed excesses produced the past four years of financial turmoil and economic misery is also the one that has been unable to extricate itself from the ever-more unpopular Afghan conflict even as it watches impotently as a tyrant in Syria wages war on his own people.

Of these challenges for the West, the most pressing is the euro, whose demise in its present configuration may be only months, if not weeks, away, if nothing is done. If Greece withdraws, as may yet happen, it would be proof that euro membership is not eternal, and pressure would switch to the far larger economies of Spain and Italy.

At that point, Europe would be staring at the collapse of its most ambitious project, with consequences, economic and political, immediate and longer term, that are impossible to foresee. And in an interconnected global economy, everyone would be affected. The US is at risk, despite its banks and corporations reducing their exposure to the eurozone, and the advantage stemming from the dollar's role as the main reserve currency. Calamity in Europe might well send the stuttering US economy back into recession. And for President Obama, the timing could not be worse as he fights to win a second term in what is already likely to be a close election in November.

No one expects these four days of summitry to serve as a magic wand. Great problems are not solved by communiqués. What is to be expected, however, is a determination to deal with the crisis, and a broad consensus on how. The central drama is playing out in Europe, but, as host of the meetings and leader of the world's largest economy, a special responsibility falls on Mr Obama's shoulders.

First and foremost, he must argue that the issue is not a black-and-white choice, between "one-size-fits-all" austerity and pumping vast amounts of cheap money into already highly indebted economies.

In each country, the solution will be different. Germany, for instance, must boost consumer spending and imports, even – horror of horrors – at the price of higher inflation. Meanwhile, the profligate southern Europeans have to cut back their bloated and unaffordable public sectors, while simultaneously taking measures to boost growth.

The problem lies in buying time to square this circle. Europe's tangled history has thus far ruled out the political union that should have underpinned its leap to a currency union. If the euro is to be saved, there will have to be an ad-hoc union, most likely in the shape of new "euro bonds" guaranteed by all, including Germany.

We can but hope that the wooded tranquillity of Camp David concentrates minds on the problems at hand. The world, and history, will not wait.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Front End Web Interface Developer - HTML, CSS, JS

£17000 - £23750 per annum: Recruitment Genius: A Liverpool based international...

Tradewind Recruitment: English Teacher

Negotiable: Tradewind Recruitment: This post arises as a result of the need to...

Tradewind Recruitment: Class Teacher Required ASAP In Uminster

£120 - £150 per annum: Tradewind Recruitment: I am recruiting on instruction o...

Ashdown Group: Head of Finance - Financial Director - London - £70,000

£70000 per annum: Ashdown Group: Head of Finance - Financial Controller - Fina...

Day In a Page

Read Next
'The Archers' has an audience of about five million  

The Archers: how many sensational plot twists can it get away with?

Simon Kelner
 

Daily catch-up: winter crisis for the NHS – Miliband and Burnham don’t know how to fix it

John Rentoul
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness