- The Washington Times - Monday, September 21, 2009

A chief objective for world leaders at summits in New York and Pittsburgh this week will be to minimize growing tensions between the rising powers of the East and the established powers of the West.

European leaders are looking to impose tough regulations on the financial industry. China anticipates to push forward reform of international institutions that continue to represent a post-World War II, Western-oriented power structure rather than modern realities.

In between the two parties stands the U.S., which still counts Europe as home to its greatest allies. The nation is trying to reposition itself for a future - which in some ways has already arrived - in which its power is no longer unlimited.

“We’re living in the middle of shifting tectonic plates of global power, and it’s the statesman and stateswoman’s challenge to navigate all of this without things flaring up,” said David Shorr, a scholar at the nonpartisan Stanley Foundation.

Charles Freeman, a former deputy U.S. trade representative to China, more bluntly laid out a measuring stick for this week.

“Success has to be measured by whether or not they leave without bickering,” he said.

Differences between rising powers and established powers will be evident at the United Nations General Assembly, from Tuesday to Thursday, on the issues of climate change, Iran’s nuclear program, and general discussions about the global economy.

But things will come to a head during the shorter summit, the Group of 20 financial summit, in Pittsburgh. Less than 24 hours is slotted for the meeting, but it could provide the forum that demonstrates clear fissures between East and West.

China’s priorities will be at loggerheads with Europe’s on financial regulatory reform and the remaking of the world’s biggest financial institutions, the World Bank and the International Monetary Fund.

“You have a group of countries that really, in many respects, are fundamentally at odds with each other about the direction that they want the globe to take,” said Mr. Freeman, an analyst with the Center for Strategic and International Studies, a Washington think tank.

“China wants the world to recognize the new realities of its place in the world and the Europeans are not so keen on that,” he said. “The United States is perhaps slightly more keen than the Europeans.”

The fact that the G-20 even exists is evidence of the growing clout of developing nations. In the wake of the financial crisis one year ago, President George W. Bush decided to expand the Group of Eight so that rising powers would be at the table for talks about the future of the global economy.

In the latest sign of China’s increased assertiveness and awareness of its growing global role, Chinese President Hu Jintao will give the first speech by a Chinese head of state to the U.N.’s General Assembly.

China will insist in Pittsburgh that IMF and World Bank reforms continue to be a focus, after an agreement at the G-20 summit in London in April that voting shares for China and other rising powers be increased.

The G-20 should “follow the timetable set at the London Summit, advance structural reform of international financial institutions,” said Jiang Yu, China’s foreign ministry spokesman.

“For Europe, this is a delicate dance. On the one hand, they do want to see reform, but to reform and to enlarge and give more space to China, to India, to Brazil, comes at the expense of European voting quotas,” said Heather A. Conley, a former deputy assistant secretary of state in the Bush administration.

Both Switzerland and Belgium currently hold more voting shares in the World Bank than China, she said. In London, the G-20 agreed to remove the requirement that the head of the World Bank be from the U.S. and the head of the IMF be from Europe, and agreed to increase voting shares for China and other developing nations by 2011.

The focus for much of the European countries, however, is on reaching agreement that each country reform its financial system to prevent economic crises similar to last year’s. One reform that has drawn the most public support from Britain, France and Germany has been to impose numerical caps on executive pay, a move that the Obama administration opposes.

“The president has been pretty clear that he supports a robust approach to executive compensation, but has been reluctant to sort of set individual compensation levels,” said Mike Froman, a top adviser to President Obama on international economic issues.

The Obama administration is seeking to carve out a leadership position as a consensus builder, in an ongoing shift from Mr. Bush’s more unilateral approach. A big part of this strategy is a push and pull with China, giving it more respect by supporting its bid to reform global institutions but also calling on it to take a greater leadership role.

Susan E. Rice, the U.S. ambassador to the U.N., said that Beijing has often contributed in the past to a breakdown of the General Assembly into “bloc politics” where developing countries work against the established powers.

Ms. Rice said that these “blocs and divisions are outdated” and called on the world “move beyond those traditional reflexive bloc affiliations and look at ways to step up individually and collectively to meet 21st century security threats.”

Former President Bill Clinton, in an interview with Bloomberg Radio, gave a candid assessment of how U.S. leaders are trying to shape the future.

“We are going to all live in a world that we can lead, but cannot dominate as we once did. That is not the end of the world. It could be the beginning of a very good world,” he said. “We should be in the business of maximizing opportunity and minimizing risk, or at least minimizing the prospect of destruction from risk.”

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