The G20's Chance Meeting

The French have a phrase to describe the carefully crafted rhetoric that politicians use when they have nothing much to say or want to paper over fundamental differences. They call it "langue de bois" — wooden tongue — and, unfortunately, we are entering a period in which official tongues will be even more thickly wooden than usual. The main reason for that is the summit of world leaders scheduled to take place on April 2 in London. Billed as a crucially important event for the future of the global economy when it was first called just four months ago, it's now clear that this meeting is likely to be anticlimactic at best and, at worst, a dangerous failure. Clever civil servants are already working on a draft final communiqué that will suggest great progress has been made. A skeptical and worried world is unlikely to believe it.

It's easy to spread the blame for this sorry state of affairs. The meeting is being held under the auspices of the G20, an informal grouping that has none of the bureaucratic trappings that can help ensure fine words are turned into concrete action. Reaching a consensus among the U.S, Japan and Europe in the old G7 cartel was hard enough; doing so in the G20, which includes China, India, Russia, Brazil and Mexico, is exponentially harder. It doesn't help that members' interests vary so sharply. China, for example, owns so much U.S. government debt that it's publicly worrying about American financial stability. Washington, by contrast, has thrown fiscal discipline to the wind as the Obama Administration seeks to spend its way out of crisis, pushing the budget deficit into potentially destabilizing territory.

Such differing agendas help explain the unseemly bickering of the past couple weeks. Continental Europeans, with sounder banks and less fiscal room for maneuver, are rejecting U.S. calls to spend more; the U.S. and Britain, anxious not to kill off laissez-faire capitalism, are reluctant to cede to European demands for tougher global financial regulation. The old G7 countries are pushing to give the International Monetary Fund a financial boost; others distrust the IMF and want a much greater say in how it's run. Many complain that it's impossible to work with Washington because the new Administration isn't yet running smoothly.

Yet it's not too late to save the summit. What's needed is a handful of clear deliverables — specific, intelligible measures to reassure the public and financial markets alike that governments are on top of the problem. Four suggestions:

Coordinate spending programs. Instead of playing the my-Keynesian-deficit-spending-plan-is-bigger-than-yours game, leaders should coordinate specific measures in order to get more bang for their bucks. It's counterproductive and potentially anticompetitive for some nations to rescue their auto industries, for example, while others don't. Far better to agree on ground rules governing which industries are entitled to receive state aid and how it should be given.

Address the anger. The public is mad about having to bail out the financial institutions who got the world into this mess — and the recent revelations about payouts to fat-cat executives at AIG, RBS and elsewhere are stoking the anger. It's time for some symbolic action. One suggestion: an agreement that every firm receiving taxpayers' money should pay its employees the same as other public-sector workers, such as teachers. That would assuage public fury, and provide an incentive for the banks and insurers in question to sort out their problems fast.

Immediate financial fixes. Central banks and financial technocrats are moving to end some of the more flagrant abuses and rethink the financial system's rules — but, inevitably, that is a slow and painstaking task. London needs to serve up some quicker fixes. One suggestion: an immediate ban on opaque off-balance-sheet "special purpose vehicles," which played such a big role in the meltdown (and in the Enron scandal). Another: the establishment of a G20 College of Supervisors, the beginning of a world regulatory body to oversee financial markets, coordinate national responses and troubleshoot crises at cross-border financial institutions. Europe is moving in this direction; others should join it.

Top priority: restarting trade. Behind the stomach-churning drop in the world economy is a factor that governments have largely ignored: a slump in trade. The flow of imports and exports has actually contracted more dramatically than the world economy as a whole, because its lifeblood, private-sector trade finance, has dried up. This is fixable, since most governments have export-credit organizations dedicated to trade finance. Governments should instruct them to jump-start trade flows until private sector financiers return.

None of these measures is a magic bullet. But at least they're not wooden tongues.