Despite President Bush's attempts to talk up the 20-country emergency summit on financial markets and the world economy, it was hardly surprising that the outcome yielded little in terms of substantive solutions to a problem that goes beyond the immediate threat to global growth.
Certainly, little could have been expected from just six hours of deliberation among 20 leaders with individual agendas and problems. As a result, the 8-page Washington document represents an elaborate stable-door bolting exercise after the sub-prime and related horses have bolted, without actually going beyond first principles.
Among other things, the Washington Communique expresses a commitment to reform financial markets by ensuring transparency and accountability, aligning regulatory systems, and keeping tabs on complex derivative instruments, disclosures and executive compensation. All these are important but why does the communiqué not have specific commitments to steps like re-capitalising the World Bank and IMF, which India as demanded?
Still, there is value in stating the agreed positions. So the communique speaks of a commitment to an open global economy and resolves not to raise new barriers to investment or trade over the next 12 months and to expand the representation of the emerging economies in world financial institutions.
Global meltdown: Complete coverageIn the general mood of giving expression to good sentiments, there are also commitments to reducing poverty, addressing climate change and fighting terrorism. A detailed action plan has been drawn up in which the 20 finance ministers have been tasked with a set of "high priority" actions to be taken before March 31, 2009, ahead of another leaders' summit in April. The question is, could more have been done now?
It is arguable that the serious work will be done, not in the G20 talk-shop, but in the organisations that have the power to do something. The World Bank and IMF, the World Trade Organisation, the Bank of International Settlements and the Financial Stability Forum are the bodies where serious issues should be addressed, and decisions taken quickly.
And it so happens that the WTO has been paralysed by disagreements, the IMF has a shortage of resources, and so does the World Bank. The BIS was warning of the present crisis, but no one listened. The G20 can play an over-arching role, by providing air cover with good ideas, but that cannot be a substitute for the work at ground level.
Meanwhile, it is surprising that Prime Minister Manmohan Singh should claim that his government anticipated the likely slowdown during the Budget this year, and therefore took advance action in the form of an expanded fiscal deficit.
There is nothing to suggest that the government was anticipating anything less than 9 per cent growth at the time, a figure that the finance minister gave up reluctantly much later, even as he promised 9 per cent growth next year.
Many of the steps for which the PM has taken credit - higher subsidies for commodities and poverty alleviation schemes under the National Rural Guarantee Employment scheme - were under way long before the crisis manifested itself in India. And the Rs 71,000 crore (Rs 710 billion) farm debt waiver was less about "pump priming" than a sop for a large vote-bank in a pre-election year.