The April 2009 London G20 Summit

Summary

Summary of "The April 2009 London G20 Summit"

Podcast: LSE: Public lectures and events
Host: Justin Guest (LSE Film and Audio Team)
Guest: David Held (Professor of Political Science, LSE)
Date: April 2, 2009

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Episode Overview

This episode of the LSE Public Lectures podcast examines the expectations and stakes of the April 2009 London G20 Summit amid the ongoing global financial crisis. Hosted by Justin Guest, the conversation with Professor David Held explores the depth of the economic downturn, the critical issues on the table for G20 leaders, and the broader geopolitical and ethical implications of the summit’s outcomes. The discussion is candid, nuanced, and deeply informed, providing listeners both context and critical questions about global governance in crisis.

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Key Discussion Points & Insights

1. Severity and Nature of the Crisis

• Depth of Economic Crisis (00:22–01:44):
  • The crisis is described as the "most severe economic crisis of the core Western economies since the Second World War" (David Held, 00:29).
  • It intertwines three crises:
    • Monetary and Financial Crisis: Led to a frozen banking system.
    • Regulatory Crisis: Rooted in failed government oversight, especially in Anglo-American economies.
    • Real Economy Crisis: Financial turmoil spills into the broader economy—falling demand, rising bankruptcies, and grave effects on the world’s poorest countries, particularly those heavily reliant on exports.
  • Notable quote:
    • “What started as an Anglo American monetary financial crisis has become a real economy crisis across the world, which threatens to push the world's poorest countries off the cliff unless decisive action is taken.” (David Held, 01:35)

2. Critical Issues Before the G20

• Key Agenda Items (01:47–03:20):
  • Deciding the scale and method of global economic reflation.
  • Rescuing and, crucially, regulating the financial sector.
  • Reforming or reviving international financial institutions (especially the IMF).
  • Ensuring that economic measures also address environmental sustainability and climate change.
  • Protecting the most vulnerable nations that lack the resources to “print money” or mitigate financial shocks.
  • Notable quote:
    • “Poor countries... can't inject liquidity, that can't roll back debt, and that face extraordinary levels of debt and bankruptcy if these issues aren't attended to. So there's a real question of the world's poorest countries that has to be attended to.” (David Held, 02:55)

3. Political Tensions and Structural Problems

• Diverging National Interests (03:20–04:38):
  • Major differences between Anglo-American countries (favoring aggressive stimulus) and Eurozone members (favoring caution against inflation).
  • Deep divides between debtor (Western economies) and creditor (emerging economies, notably China) nations.
  • Questions about whether creditor countries will simply acquiesce to Western proposals given the origins of the crisis.
  • Notable quote:
    • “There are a number of structural tensions between the United States and Europe, between the United States and China, and through this politics will have to be done.” (David Held, 04:30)

4. Realistic Expectations and Likely Outcomes

• What Will Actually Happen? (04:44–07:48):
  • The likely presence of “good rhetoric” and high-profile leadership (notably Barack Obama), but limited substantive breakthroughs.
  • Anticipated outcomes:
    • Some macroeconomic agreement on stimulus, constrained by Eurozone resistance.
    • Incremental moves on global financial regulation, especially concerning offshore havens.
    • Public relations efforts, possibly limiting bankers’ bonuses.
    • Expanded IMF facilities and gradual inclusion of emerging economic powers (e.g., China) in decision-making.
  • Concerns that:
    • Steps taken will not be “decisive solutions” for social justice, environmental sustainability, or the needs of the world’s poorest countries.
    • The G20 could reinforce historic patterns of excluding the world’s most vulnerable, with “decisions were taken in the interests of few, albeit great powers with great populations, but not in the interests of the world's poorest.”
  • Notable quote:
    • “We know exactly what's coming. And if we don't act on the basis of that knowledge... we have to say again that the G20 was unrepresentative... once again decisions were taken in the interests of few... not in the interests of the world's poorest.” (David Held, 07:27)
  • The sense that the summit represents a “step, not a solution,” with the hope—but not certainty—of lasting progress.

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Notable Quotes & Memorable Moments

• Severity of Crisis:

  • “It's the most severe economic crisis of the core Western economies since the Second World War.” — David Held (00:29)

• Systemic Impact:

  • “What started as an Anglo American monetary financial crisis has become a real economy crisis across the world, which threatens to push the world's poorest countries off the cliff unless decisive action is taken.” — David Held (01:35)

• On Political Will:

  • “There are a number of structural tensions between the United States and Europe, between the United States and China, and through this politics will have to be done.” — David Held (04:30)

• Warning for the Poorest:

  • “I doubt the G20 will act enough to protect sub Saharan Africa, to protect the 30, 40 poorest countries in the world. And I think this could be fateful in the future because we cannot say we didn't know.” — David Held (07:21)

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Timeline of Important Segments

• 00:22–01:44 — Scope and gravity of the financial crisis
• 01:47–03:20 — Key issues for the G20 summit: stimulus, regulation, international institutions, climate, and the poor
• 03:20–04:38 — Geopolitical divisions and challenges
• 04:44–07:48 — Expected (and limited) outcomes, critical warnings about the summit’s approach to justice and poverty

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Conclusion: Tone & Final Thoughts

The conversation is sobering, candid, and edged with urgency. While there is hope for incremental progress, Professor Held’s overarching message is one of caution and conscience: without decisive, inclusive action, the summit could once again fail those most in need and perpetuate a global order that favors the powerful. The insights offered provide a crucial framework for understanding not only the G20 Summit of 2009, but also the enduring dilemmas of global economic governance.

Transcript

[A]

Hi, I'm Justin Guest. Welcome to the hot seat. London is abuzz right now with the G20 meetings. Police officers are covering the streets, as are protesters. And of course the world's diplomats are in town for meetings with very high expectations. With us to discuss these expectations and what is likely to happen is Graham Wallace, professor of Political Science here at the lse. David Helt, thanks for being here.

[B]

Thank you.

[A]

So, Professor Hell, could you give us some background on this? How serious are the economic problems that the G20 will be addressing today?

[B]

I think this crisis is extremely serious. It's the most severe economic crisis of the core Western economies since the Second World War. In my judgment, it's not yet as severe as the Great Depression, but certainly the worst crisis since 1945. And there are three kinds of crises that are interlaced monetary and financial crisis, which has created a banking crisis, which has created. Which as you know now means that the banking system is essentially frozen. It's a regulatory crisis because we partly got into this mess because the failure of government regulations, especially in the Anglo American world. And it's now becoming a real economy crisis because the financial crisis is spilling over to the real economy. Demand is falling, bankruptcies are rising. And as this gathers pace and momentum, many of the world's poorest countries that depend for their viability on exports and so on are suffering serious declines in their export, which ramifies the things throughout the system. So what started as an Anglo American monetary financial crisis has become a real economy crisis across the world, which threatens to push the world's poorest countries off the cliff unless decisive action is taken.

[A]

Ari, with that in mind, what issues need to be addressed at this meeting?

[B]

I think that there are at least four or five which are hugely important. The G20 really has to decide how and to what extent there will be a reflation of the global economy. It also has to face the question as to how the financial sector and the banking sector is not only to be rescued, but regulated in the future. It has to decide in addition, how the essentially ineffective international financial institutions like the IMF are to become once again serious players. It has to decide how any reflation of the global economy isn't going to make matters worse in the longer term because it has to at the same time address issues of environmental sustainability, climate change and so on. And finally, it has to ensure, as I've already trailed, that the impact of this global economic crisis doesn't completely undermine the world's poorest countries. Let me say briefly what I mean by that. The world's richest countries can partly escape the worst effects of economic crises by printing money. They're powerful enough to inject liquidity into the economy and roll back debts or socialize the cost of debts by state intervention, state purchasing of bad debt, the isolation of toxic assets and so on. Poor countries in this meaning are countries that can't inject liquidity, that can't roll back debt, and that face extraordinary levels of debt and bankruptcy if these issues aren't attended to. So there's a real question of the world's poorest countries that has to be attended to.

[A]

So what expectations can we hold for this meeting? What do you expect they'll be able to do?

[B]

Well, the first thing to say is there are quite serious political differences between the G20 countries. There are major differences between again, the Anglo American axis that wants a major global reflationary package and the European Eurozone economies that want a more conservative, hesitant approach to inflation, to reflation on the grounds that if you inject too much money into the world economies now, you may create an inflationary problem later down the line. That's one structural problem. But there's a second structural problem which is that there's a great difference between the world's debtor and creditor countries. It's the world's Western economies that have broken all the rules of good financial governance. It's the world's biggest developing economies which have on the whole adhered to those rules. And why would it be in China's interest now that is suffering a world financial crisis that comes from the Western core to simply acquiesce in what the British and American axis wants to develop? So there are a number of structural tensions between the United States and Europe, between the United States and China, and through this politics will have to be done.

[A]

So will it be enough in the end? What issues will be outstanding at the end of this meeting do you expect?

[B]

Well, I think the rhetoric will probably be good. I think Obama obviously attracts enormous attention and to have his presence there, I think will certainly give the talks enormous momentum. The communique will be appealing in many respects, but the key questions to look out for are will the reflationary package amount to the addition of new monies into the world economy or not? How far will the G20 go on financial regulations, the re regulation of not just national financial markets but also of the global financial economy? How far will they go in putting the agenda of the world's poorest countries at the heart of the agenda of the G20? And how far Will they go towards reforming international financial institutions? This is a mighty agenda. It could be one of those defining moments where the weaknesses and failures of the multilateral order since 1945 begin to be addressed. Or it could be one of those moments which we've seen before in history where the G20 in this case do not take the right decisions. What do I expect? I expect some macroeconomic agreement on reflation of the world economy, but it will be limited because of the strong resistance of the Eurozone. I expect some moves towards regulation of financial markets, particularly offshore businesses of various kinds, offshore taxation havens. I expect some rhetoric on restricting the bonuses of bankers at the scale they have enjoyed in previous past. I expect that the IMF will be given new facilities and China and other major developing countries will slowly be brought into the heart of the decision making process. All of this could be a step in the right direction. But what I don't really expect is a move from a management solution of the problems to a decisive solution to the problems that is both good for social justice, good for the environment, and I should add as well, in terms of social justice environments, sound for the world's poorest countries. So I would say one of the greatest worries to come from this is I doubt the G20 will act enough to protect sub Saharan Africa, to protect the 30, 40 poorest countries in the world. And I think this could be fateful in the future because we cannot say we didn't know. We know exactly what's coming. And if we don't act on the basis of that knowledge, we, we have to say again that the G20 was unrepresentative, it didn't include the world's poorest countries. And once again decisions were taken in the interests of few, albeit great powers with great populations, but not in the interests of the world's poorest. That's something we need to attend to, watch for. But whatever happens, these problems won't be solved in 24 hours. These are stepping stones. But there is a great moment, a great opportunity to take the right steps. We will see in the next 24 hours where those steps have been taken.

[A]

All right, that'll do it. Thank you very much. David Held, you're off the Hot Seat. Tune in next time for another edition of the Hot Seat here on the government department website.

[B]

Thank you, Justin, that was a pleasure.