Strategic Panorama 2009 - 2010 - IEEE

Eduardo Serra Rexach
nation-states were losing power both «upwards» (to supranational
organisations) and «downwards» (to multinationals, NGOs, rating
agencies, independent regulatory bodies and in cases like Spain
to regional authorities), but above all to the «market». The crisis,
states the author, appears to have ground this process to a halt:
the action taken by states in programmes to bail out the financial
system, fiscal stimulus packages and regulatory reforms has restored
their legitimacy to impose their criteria on the markets. The final
outcome is unknown—it is not even known whether this new path
is the right one, but the change of direction is already a fact.
2) The second major consequence is the transformation of the former
G-7/G-8 into the new G-20 as the regulatory body of the world economy;
this is a phenomenon which had been brewing ever since the
start of globalisation and the subsequent appearance of the emerging
economies and denotes, as stated in a previous edition of the
Strategic Panorama, the loss of power of the developed countries.
However the crisis has suddenly revealed the need to incorporate
the emerging powers into the regulatory bodies. This led to the
consolidation of the G-20, which has met three times in less than
a year—a fact which should be regarded as excellent news as it
accords the organs of economic governance greater legitimacy and,
consequently, greater effectiveness.
3) Finally, the crisis has granted a primordial role to the IMF, allowing
the institution to increase its budget and improve its courses of
action, although it has also highlighted the need for a substantial
internal reform to make it more representative and, accordingly,
boost its legitimacy and efficiency.
The author ends with a reference to the implications of the crisis for
the European Union, which, he states, was prepared neither for the financial
crisis nor for the ensuing economic recession. On the contrary, the
crisis has pushed up unemployment and reduced Europeans’ well-being.
Basically, Europe has become impoverished with the crisis.
But the crisis is also an opportunity—which is how Steinberg sees
it—to win back a certain amount of political leadership. Indeed, in addition
to what has been stated with respect to the possibilities of the euro, the
necessary increase in the representativeness of the institutions of governance
and the foreseeable climate of dialogue fit in well with the European
Union’s soft power, although this requires it to give shape to a common
position, at least on economic matters.
— 15 —