Column : Fear factor in global negotiations

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: The Chandrayaan has detected water on the moon. When you see the NASA presentation, you realise why physical sciences are way ahead of the social sciences. There is no machine that will detect ‘green shoots of recovery’ on any surface on Earth with the accuracy that the Chandrayaan did with the M3 instrument. No one is agreed about whether the recession is finally over or if the recovery will be this year, next year or never.

G-20 which intervened dramatically in April last, needed no subtle instruments to know that the world was facing an abyss. It acted quickly to restore confidence, suppressed its internal disagreements and came up with a fat number of $ 5 trillion for the expected reflation. Or was it just $ 1 trillion ?

The details did not matter. Six months later, there is a feeling that the output recession is over though employment is lagging behind. The worst is behind us. But while that is good news, that also creates a problem. Lacking real urgency, countries emphasise differences. Global imbalances need correction and IMF has launched new SDR bonds which have had a modest take up. But China is not ready for any greater change in its economic policy. It is easier to say that China in particular and Asia in general should abandon its export obsession and redirect itself to domestic consumption. America should stop being the World’s lone excess consumer and save and export more. The US would like everyone to agree to a sustainable growth strategy and have a global supervisor to check on national policies.

Obama may want IMF or Gordon Brown a revamped G-20 secretariat to do oversight, yet the US Congress will refuse to cede such powers to an outside agency. The Germans and French already know that their reluctance to match the Anglo- Saxon splurge of fiscal reflation has paid off and their recovery is quicker and sounder. The corner having been turned, the full recovery to a level that prevailed before September 2007 will take different shape and speed in different economies. There is no case for co-ordination let alone concerted action, even if we knew what to do.