G-20’s shortcomings may be a good thing

The G-20 economic summit fell short of expectations — and that’s probably just as well.

President Obama did not get a coordinated, massive global stimulus initiative and with it the threat of global inflation. The summit did approve $1.1 trillion in lending authority and cash for the International Monetary Fund and that sum alone, coursing through the smaller economies of Eastern Europe and Latin America, will have to be carefully monitored for its inflationary impact as the recession begins to ease, which it will.

France and Germany were instrumental in blocking the Obama initiative but then they did not get their main objective either — a global supranational regulatory body to oversee the world’s largest financial institutions. Instead, they got the Financial Stability Board to offer advice and guidance as the G-20 nations go about reforming their individual financial institutions.

The heads of government also agreed on a joint crackdown on tax havens, with the exception of Switzerland, most of them tiny nations like Monaco, but that is one of those pledges that sound good in the concluding declaration but proves much more difficult in actual practice.

The summit was certainly a personal triumph for the president and first lady Michelle, who are enjoying superstar status. The "town hall" meeting format is wearing a little thin here — the president takes too few questions and talks too long answering them — but his audience in Strasbourg, packed with college students who are not always the biggest fans of American presidents, loved it.

Obama is off to a promising start in international diplomacy. He and Russian President Dmitry Medvedev concluded their meeting with a surprisingly positive and upbeat statement, and Obama is credited with brokering a happy compromise to a potentially acrimonious dispute between the presidents of China and France.

The leaders reiterated their support for free trade — always welcome in times when protections begins to look attractive — but tellingly they did not set a target date for the resumption of the Doha round of world trade talks.

The G-20 can be adjudged a success if the leaders don’t repeat the mistake of their 1933 precursors’ meeting to deal with a financial crisis. The finance ministers signed a high-minded communique and then went home to erect trade barriers that deepened and lengthened the Great Depression.