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A Promising Performance:
The 2012 Camp David G8’s Economic Governance
John Kirton, G8 Research Group
May 19, 2012, 12:30 CT
The G8 Camp David Summit has largely met its central challenge of producing a clear, credible G8 growth strategy to quell the current eurocrisis and reinvigorate European, G8 and global growth. It did so by putting growth and jobs first and fiscal consolidation only fourth, a substantial adjustment of the approach centred on deficit and debt reduction agreed to at the G20 summit in Toronto in June 2010. Recognizing that this war would not be won in one short day or one short communiqué, the Camp David leaders promised to take “all necessary measures” to strengthen growth and stability, through country-specific measures reflecting the different conditions in each one. They affirmed the importance to the global economy of a strong, cohesive Europe, with a committed Greece inside and promised to take “specific measures” to this end. They made fiscal consolidation a matter for structured assessment, taking account country-specific conditions, and the need to underpin confidence and economic recovery. They sought growth not through new government stimulus spending but by productivity-boosting structural reforms, investment in education and modern infrastructure, leveraging the private sector, immediate credit growth, small business, public-private partnership, open international trade and investment, and stronger protection and enforcement of intellectual property rights.
Taken together, this strategic package should be sufficient to induce markets, European voters and others to give the G8 countries the benefit of the doubt, and the time to fill in the details about the “specific measures,” starting at the European Council summit in the following week. The G8’s strong emphasis on growth and jobs, through measures that do not require much new government spending, will be reassuring. Still doubts will remain about whether these measures will be enough in their number and magnitude to generate the large degree of growth and jobs demanded, and so in time to stop European voters from moving to the extreme right or left. The absence in the G8 statement of any targets and timetables of any sort and of measures directly designed to deliver jobs for the young, will reinforce these doubts. However, in all, the G8 has shown that it has gotten in its act together in the economic and underlying political domain. This achievement and the resulting strategy identified in a short communiqué should be enough to work on the ground in Europe in the coming weeks and months. But they will do so only if the G8’s European leaders, who have been given the G8’s full benefit of the doubt and support, do their continental job at the same time, starting at their summit on May 23.
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