Leaders of the world's 20 economies agreed Saturday to strive together for global economic recovery ― and not much more.
That had been fully expected: The Bush administration was nearly compelled to host the Group of 20 summit by reproaching Europeans, nor was it able to make any commitment of importance with its tenure nearing an end.
So it was natural the participants put off thornier decisions on how to overhaul financial regulations, let alone discussions on a ``new Bretton Woods" system, until April 30, exactly 100 days after the Barack Obama administration takes office. The biggest significance of the first G-20 summit may be that it was held at all.
This is not to downplay their agreements demonstrated in the five-point joint communique, which called for, among other things, bolstering supervision of banks, scrutinizing executive pay and tightening controls on complex derivatives. But they failed to either launch a global ``college of supervisors" or agree on more effective control of hedge funds, widely regarded as the main culprits behind the worldwide financial turmoil.
All this indicates 2009 will be the year of fierce global debates on how to reshape the world's economic order between ideologically different industrial and industrializing countries as well as between philosophically divided Europe and America. Washington, while acknowledging its regulatory faults and the need for tighter supervision, would still not budge on its free-market, free-trade principle, while the Europeans are challenging to put an end to the uni-polar global economic system. Emerging economies, including China, India, Brazil and Russia, are trying to share the global economic hegemony with industrial countries at least to the extent to which they contribute to the world's economic recovery.
Korea, Asia's fourth-largest and the world's 13th -largest economy, has been trying to serve as the mediator or ``bridge" linking developed and developing countries. This could be a wise and, at the same time, risky strategy, depending on how Seoul performs.
President Lee Myung-bak's keynote speech, which called for a ``standstill" for world trade and investment barriers, was appropriate ― or rather inevitable ― for a country which depends on foreign trade for up to 70 percent of economic growth. It was also timely at a time when the new U.S. administration is showing signs of returning to protectionism, as shown by its complaints regarding the Korea-U.S. free trade agreement, especially the bilateral auto trade deal.
Lee's calls for rich countries to provide sufficient liquidity to emerging economies, which are bearing the brunt of global financial crisis for which they are not basically responsible, were to the point for not just Korea but other struggling countries it represents.
As far as the free market principle is concerned, however, Seoul needs to decide whether to continue to follow the market-knows-everything U.S. neo-liberalism or the European system that puts priority on stricter control and regulations on wayward markets.
If Korea is to remain as ``moderator," it needs to walk a fine line without identifying itself too much with one specific principle or philosophy, instead taking a case-by-case approach based on what is best for national interests.
The mixture of free trade and disciplined market capitalism will prove to be necessary not just for economic diplomacy but also for the domestic economy to keep the already wide income polarization from growing even wider.