EDITORIAL from the Korea Times on Nov. 17)

Aftermath of summit
World takes first step toward new economic order

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.
(END)