With extraordinary speed Barack Obama has now embarked on the policy changes he promised during his electoral campaign and in his inauguration speech....

With extraordinary speed Barack Obama has now embarked on the policy changes he promised during his electoral campaign and in his inauguration speech. As the first black President of the US his election represents a victory against racial prejudice. Now he must be judged on his political choices rather than on what he represents. In dealing with the current problems there are no short cuts. The most serious, with the global financial crisis in first place, are of such a nature that no political party or nation can solve them alone. It will require many years for solutions to be found and implemented. Hence, his appeal for national solidarity and international co-operation.

Obama wishes to characterize his Presidency as a new beginning. He has, therefore, reversed many of the policies put in place by George W. Bush and initiated instead the closure of Guantanamo, withdrawal from Iraq, an economic recovery plan, and plans for the development of renewable resources of energy and the reduction of greenhouse gas emissions, plus dialogue with Russia and the Arab world.

“The world has changed and we must change with it!” Obama stated in his inaugural address. He has abandoned the illusion of the US as the solitary superpower and promises instead to launch a new political initiative based on international co-operation. He recognises that the most important challenges facing the world today – the financial crisis, climate change, nuclear proliferation, terrorism – require much closer international co-operation. But that course is far from easy.

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The benefits of globalization and a global free market can be safeguarded only by international co-operation, regulation and organization. The main risk faced by the world economic system would be a return to nationalism and protectionism. This was the major mistake made by governments after the 1929 crisis. If, in order to defend the dollar’s privileged position, the US were to open the way to an epoch of rampant protectionism, reviving the old demon of nationalism, the result would be a reduction in trade and other cross-border activities and the interruption of progress towards globalization.

In the political sphere globalization has produced two parallel trends: on the one hand, the rise of new world actors such as China, India and Brazil, until now condemned to political dependence on the West and economic backwardness; and on the other hand the decline of the US hegemony on both the economic and monetary levels and also on the military level. The novelty of the current financial and political crisis lies in the fact that the declining American power will not be replaced by another hegemonic power, as occurred when the US replaced the declining British power, but by the evolution toward a multipolar global order in which there will be no space for hegemonic powers.

The problem facing Obama is that the emerging new monetary order can no longer be governed by a national currency, although the temptation to resort to nationalism and protectionism remains strong. From the new administration we have heard appeals to “Buy American” and accusations that the Chinese government is manipulating its currency in order to promote its exports. Yet China is the main purchaser of the US Treasury Bonds and in the next few years the US will need foreign finance to feed its growing federal debt. At the same time, China needs access to the US market for its exports. This demonstrates that the world can only overcome the present crisis through co-operation.

Governments need growing financial resources to tackle the crisis. They are obsessed by the nightmare of a flight of savers from the treasury bonds. After bank defaults, there are now states which risk collapsing under the strain of the financial crisis, as shown by the examples of Iceland and Hungary. The downgrading of the so-called PIGS (Portugal, Italy, Greece and Spain) and the serious economic difficulties now being experienced by Ireland, Britain, Austria and Central and Eastern European Countries show how the belief in the “return of the state” as a regulator of the political excesses of capitalism, as praised by Sarkozy, is simply fallacious.

The effective response does not lie with states acting alone, but within international organizations. The EU, and more precisely the euro and the European Central Bank, show how international institutions can protect states against financial storms. The fact that Britain is revising its attitude toward the European Monetary Union confirms this.

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The global economy’s recovery cannot be planned without a new architecture of the global economic order. A new Bretton Woods has to be summoned to write the rules of a world economic constitutional order. A new monetary order must arise that would be representative of the principal monetary areas. The core issue is the replacement of the dollar by a basket of currencies, a world currency unit (wcu), similar to the European currency unit (ecu), which was the ancestor of the euro. The wcu would be an intermediate step towards a world currency. It is the response of reason to the economic international disorder. It is what the world needs and what the world political leaders are seeking, though in a confused fashion, in the hectic sequence of international conferences.

It is not certain that the world will run this way. An unbridled rush towards the abyss of nationalism, protectionism and even war is in progress. These are the poisonous fruits of a world that lacks government. A response to the need for a new world order can come only from politics, and more precisely from federalist-oriented politics. Since the European Union is the prime trading power in the world, it has a vital interest in keeping world markets open and strengthening those institutions that further this aim. For this reason it can and should take the lead in the reform of the international economic organizations.

The G20, the new grouping of states more representative of global economy than the G8, is supposed to widen global financial governance and to include the emerging economic powers. It represents the starting point in a process that can lead to the formation of an Economic Security Council made up of regional groupings of states as a response to the need for a global centre coordinating functions that are at present dispersed through a multiplicity of institutions operating independently of each other (G8, IMF, WB, WTO, ILO, UNEP, etc.).

Is Obama ready to take a step back from nationalism to genuine interdependence? This will be the most difficult decision that the new administration has to make in the near future. The meeting of the G20, which will take place in London in April, may clarify the intentions of the world leaders.