The shifting axis

When Barack Obama became the President-elect of the United States, it was as if Europe had elected its own leader.

When Barack Obama became the President-elect of the United States, it was as if Europe had elected its own leader. At last, Europeans could speak of the US with some respect, if not awe. Obama is, after all, the first cosmopolitan person to be elected President of the US. By this I mean he is the child of a Kenyan professor who taught at Harvard and a White American from Kansas. He was born in Hawaii and grew up there with his mother and grandmother. He then went to Indonesia to live with his mother’s second husband. Returning to America, when he hit mainland, he began to live like a Black American, which of course he isn’t. As he puts it himself, he’s a ‘mutt’—a man of mixed race.

Obama has raised tremendous expectations. Not just because of what he is but also because of the moment of his election. The world is in despair. The financial meltdown started in the US with the sub-prime mortgages and has now spread far beyond that, both in the US and in many other parts of the world. It has also begun to affect the real economy, which is sliding into a serious recession for the first time after 16 years of unprecedented boom.

The crisis originated in the US and its solution requires American leadership. Europeans, especially the British and the French, are concocting ambitious plans to restructure the international financial system. In a desperate hurry to grab the world’s attention while he is still President of the EU till the end of this year, Nicolas Sarkozy has insisted on a meeting on November 15 in Washington to discuss redesigning the international financial system.

Of course, it is far too soon for that. Obama insists that the US has only one President at one time and he won’t be there in Washington at the G20 meeting because this is George W. Bush’s responsibility. Obama is not even willing to receive the leaders and has sent some aides to meet them instead. But the Europeans are panting to be first in line when he takes up office. Sarkozy has boasted that he talked to Obama for 30 minutes after he was declared President-elect. Gordon Brown as Prime Minister of the UK, which boasts of a ‘special relationship’ with the US, got only 10 minutes but he is plotting to travel to the US soon after Obama’s Inauguration Day on January 20 and be the first European leader to meet him.

In contrast, the response of India and China to Obama’s election has been fascinating. Indian Prime Minister Dr Manmohan Singh missed Obama’s call at first and Obama called him again. The Chinese are not hotfooting to Washington after January 20 to see Obama. While the Europeans are competing to be the new puppy that Obama can take to the White House (while his two daughters get a real one), the Asians are being cool. What’s going on here?

The world is at a serious turning point as far as the international power structure is concerned. While we have all been talking of ‘emerging nations’ and of China and India as likely superpowers, the financial crisis has brought the matter home most cogently. The US and the EU are no longer the rich and wealthy nations they used to be. They are debtors with financial systems that are bust and their coffers are fast emptying. They saved little over the last 10 years and had a good time over-consuming. Asia in general—but particularly China, Japan and to a smaller extent India—has been saving and accumulating reserves. Asian countries are the creditors.

So, the G20 meeting in Washington is a misplaced event. It will seek to reform the IMF and recapitalise it. But while Brown and Sarkozy may think they are leaders, there is no reason why the redesign of the IMF should be in the hands of borrowers. In 1944, the US as the most powerful creditor country laid down its scheme and overruled Keynes who was leading the UK delegation. This time China and Japan and India have to lay down their ideas. They are the top dogs now.

Story continues below this ad

The cosmopolitan man that Obama is, he entirely understands the shift in the global power structure and that a new world order is emerging in which the so-called Third World will demand its proper place. About time too.