Europe must act as one on the world stage

This article was published in the Financial Times on 20 November 2008.

When Italy takes up the chair of the Group of Eight leading nations in January the context will be very different to that of its 2001 presidency. Back then, the G8 was dealing with the consequences of a unipolar international system. Come 2009, near the top of the agenda will be the enlargement of the club to new powers, starting with China and India. But it is still not clear whether Italy will preside over the reform of the G8 or its burial; which, in a way, is the same thing.

Any reform of the G8 starts from the assumption that the current format is outdated. Until recently, however, it was not clear whether all G8 members wanted to engage in much more than an outreach exercise.

Equally, it was not clear whether a country such as China actually wanted to join the club and shoulder the attendant responsibilities. The financial crisis has overtaken such hesitation on both sides.

In 2009, as Britain chairs the G20, Gordon Brown, the prime minister, has the opportunity to take the lead on international financial reform. In a few months, the G8's own enlargement may appear superseded by the G20. Co-ordination between the Italian G8 and the British G20 presidencies is much needed: it will be crucial in defining a division of labour and allowing a smooth transition to a double-digit international club.

But is the G20 a better format? The US has never liked the idea of enlarging already unwieldy forums. This time around things are different, with Barack Obama, the president-elect, shifting the US foreign outlook from "westernism" to "globalism". Europe would find itself in a very delicate position if it wanted to object. A smaller and more effective group - yet still representative of the new global balance of power - can only be achieved by slashing Europe's delegation.

There lies the European paradox. For a decade, Europeans have been the main proponents of "reformed" multilateral governance. They have played a decisive role in responding to the financial crisis and came up first with the idea of a "new Bretton Woods" (whatever that means in detail). Yet, a fragmented Europe is also an obstacle to that very goal: why should the rest of the world have to cope with a plethora of people, each claiming to speak for "Europe"?

The simple truth is that, today, Europeans are over-represented in all international institutions. A single euro-zone voice at the International Monetary Fund, for instance, would definitely make sense. Everybody knows, however, that this is not going to happen any time soon. This contradiction cannot remain if Europeans wish to be taken seriously when they promote international governance reform. Instead of talking in the abstract about a single EU voice, Europeans should forge pragmatic arrangements to simplify and make more effective their external representation.

The lesson of the financial crisis can help. When Britain first announced sweeping intervention in the banking system, the markets did not react positively. But when the Eurogroup embraced the same proposition, it brought along the entire G7 including the US. The decisive role was played by a body that has no formal existence - the eurozone heads of state and government, plus Mr Brown, the European Central Bank and the European Commission.

The lesson to be learnt is hardly new: progress occurs in Europe only when strong national leadership combines with the collective weight of the eurozone. This suggests that we should be actively building on the "Eurogroup plus" format set in motion by the financial crisis. Such an arrangement may look like the second death of the Lisbon Treaty. But if and when the treaty enters into force, Europe could be represented by a similar configuration, gaining the advantage of a stable presidency.

There is indeed a potential mismatch between enlargement and effectiveness: Europe knows that by first-hand experience. This is why any enlargement of the G8 may ultimately lead to smaller informal cores, some of which (such as a de facto G2 between the US and China, for instance) would leave Europe aside. Yet the eurozone, which is also expanding, is simply too important to be overlooked. Precisely when the old club is opening up to new powers, a like-minded transatlantic core becomes more important than ever - provided Europe proves capable of better organising itself.

Marta Dassù is the director-general of international programmes at the Aspen Institute Italia and a member of the European Council on Foreign Relations.

Copyright The Financial Times Limited 2008