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Jones: How can the G20 help save the euro zone?

By: /
7 November, 2011

It’s sad but true that Europe seems to act most effectively when under pressure from outside forces. The analog is the way that IMF governance reform was handled. Everyone involved knew that the goal was to give the emerging economies more seats on the Board; and that to make that happen, Europe had to give up some percentage of its over-representation. In round after round of negotiations within Europe, the Europeans couldn’t come up with a formula or agree among themselves. So the negotiations moved to the G20. There the Americans worked with the Chinese, the Indians and the Brazilians to push the Europeans to agree to a sensible reduction in European seats; and agree they eventually did. The episode was humiliating for many within Europe, but they made their bed. Now, we’re facing a similar dynamic, just with far more urgency: Europe needs G20 pressure to actually complete a detailed rescue package. China and other outside actors might end up contributing to a fund, via the IMF, but that will be secondary. Europe will have to provide the bulk of the response. That it needs G20 pressure to do it is further proof that Europe is only a semi-power on the international stage. 

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