Moscow is out to put the United States and European Union under external financial control COMMENTS ON MOSCOW'S PROPOSALS FOR THE APRIL G20 SUMMIT [The things Russia is going to offer at the G20 summit are correct but they will probably be turned down all the same.]
The impression is that Russia is trying to stun the rest of the world with the scope of suggested rearrangement of the global financial system and, if luck is with it, to strike at the positions of the United States and European Union in global economy and finances. Yesterday, web site of the President of Russia posted eight proposals for the forthcoming G20 summit in Great Britain. In a word, a dramatic alteration of the economic world order is suggested. For example, Russia will suggest external financial control over the largest countries - emitters of reserve hard currencies. It will also suggest establishment of new supranational centers of reserve hard currencies emission. Experts view the Kremlin's initiatives with a certain grain of salt. They know better than expect the United States and European Union to let control over their finances out of their hands.
Moscow's principal proposals suggest enforcement of more rigorous financial discipline on emitters of reserve hard currencies, establishment of new supranational hard currencies emitted by the International Monetary Fund or some other international financial center. The Russian leadership officially proclaims that "openness in the monetary policy of emitters of reserve hard currencies is of paramount importance." As far as the Kremlin is concerned, these emitters should "follow international rules of macroeconomic and financial discipline." The document does not directly mention the United States or European Union, but that this is a reference to them goes without saying.
Moscow advises other countries to restrict encouragement of domestic demand for the duration of the crisis. As far as authors of the document are concerned, encouragement of domestic demand should be restricted by requirements of a low inflation rate, acceptable budget deficit, and state debt.
Economists do not think much of Moscow's initiatives. "I do not really expect the United States to forsake all benefits of being emitter of the USD, the global reserve hard currency. Neither will other countries aspiring to issue regional hard currencies be happy with external control," Mikhail Delyagin of the Institute of Globalization said. As for the idea to ask foreign governments to restrict price-rise, the economist called it "weird" because foreign countries bother do not really bother to fight inflation when there is the global crisis to grapple with. "Russia is one of the few countries where corruption and undue infatuation with monopolism permitted inflation to keep going up even during the crisis. No need to emphasize this Russian distinctive feature in a speech before foreign leaders," Delyagin shrugged. "
Some major EU countries care nothing for financial discipline even now. Try as I might, it's hard for me to imagine the European Union or United States accepting additional restrictions on their struggle with the crisis. Generally speaking, the proposals are fine... meaning that they stand for all the correct things. All the same, it will be foolish to expect their acceptance in the foreseeable future. Political interest in their acceptance is lacking, you know," Bretislav Tikhanek of NOMOS-Bank commented.
"However much the Russian leadership wants its voice in the G20 to be decisive, it is anything but. The United States and European Union will remain economic leaders and retain the right to dictate terms on the rest of the world and create a new financial framework," Action-Digital General Yelena Avilova said. As for establishment of a global hard currency, odds are that it will take official Washington's initiative and even then it will be a coin toss.
