2 Nov 2011

Greece and a very exclusive club

So George Papandreou with an economy the size of Dallas Fort Worth gets to go to the summit of the world’s 20 largest economies! But not quite with the fanfare he might’ve hoped for a G20 debutant.

He gets dinner with President Sarkozy, Chancellor Merkel, the IMF and the ECB but I suspect he won’t have a huge appetite. Quite what clever plan they have for him is unclear. They might offer sweetners to the bail-out deal (v difficult to come up with) but in return for what? He’s not going to cancel a referendum he just battled through a marathon session of his own cabinet. The die appears cast: somehow the Greek people are going to get a say on all this – either through a referendum or an election – and they will pronounce on whether they want to live more like the Germans or not.

As for the G20 itself, the meat of this gathering should be in the Thursday “global economy” session. Whitehall old hands say the “tone” of this will be very important – the degree of patience or impatience shown towards the Eurozone in the room. The clues given as to the likelihood of China etc helping out. The leaders will then leave their “sherpas” or officials to work on a text for a final communique overnight. On Friday there’s chat about financial regulation, climate change, development and other issues.

Last year’s G20 in Seoul took place as “currency wars” threatened and this one starts as Japan appears to be intervening to keep the Yen lower. Many hope the G20 will probably announce some more firepower for the IMF this year, perhaps with a bigger role for China and the renminbi in that body. But centre-stage is the Euro-faltering, gasping and in some kind of spasm, just as it asks for credibility and no small amount of  investment.

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