Global integration beginning!

It is well known that the goal of war is to increase wealth (for the aggressor), change the balance of power and reorder the world. The meeting at Yalta between Roosevelt, Churchill and Stalin did just that – countries were redesigned and cut up in order to make the victors happy.

Out of the ashes of World War II, the International Monetary Fund, World Bank and United Nations were birthed. The goal was to provide the machinery to gradually move the world from individual nation-states to a world that would be one through integration. Since then, global events have been used to facilitate economic, political, trade, legal and military integration between the nation-states.

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As a result of the 3-year global slowdown and the current war in Iraq, various economists and international organizations are calling for a special emergency meeting of the Group of Seven finance ministers and central bank governors to make emergency plans to protect the global economy from tanking by taking unprecedented and historic steps to harmonize the economic policies of countries.

Most recently, former President Bill Clinton told an audience that the biggest challenge of the current generation would be to "move from interdependence to integration." What Clinton was doing was taking President Kennedy's July 4, 1962, declaration one step further by saying we have effectively moved from interdependence to integration. Kennedy declared, "I will say here and now on this day of Independence that the United States will be ready for a Declaration of Interdependence – that we will be prepared to discuss with a United Europe the ways and means of forming a concrete Atlantic Partnership. Americans must learn to think continentally."

In his BusinessWeek column, economist Jeffrey Garten called on Bush to take Rooseveltian action and get his G8 counterparts to summon their ministers and central bank governors to look at a post-Saddam Hussein world. This meeting would help mend fences with the United Nations and our trans-Atlantic partnership, as well as give the G8 a mandate for the future.

Mr. Garten outlined four areas: (1) Deepen economic collaboration among key nations by showing that the global framework can't be tied together by "shared perceptions that the world economy should be organized according to a U.S. style capitalism;" (2) Map out a contingency plan if world markets don't respond positively after the war, or if there is a terrorist attack; (3) The G8 must "focus on preventing another global recession;" and (4) Keep the Doha round of global trade negotiations moving ahead positively. Each of these will further integrate financial, political, trade and legal ties.

It should be noted that from the beginning of the G8 in 1973, until September 1998, they always met alone. It was Clinton who requested that they meet with the world's most powerful central bank ministers. Now, together, they are being requested to shore up a shaky world. Since the central banks control the monetary system of their respective countries, Clinton's action to tie them together was monumental.

When the G7 finance ministers and central bank governors met in February, their "Final Statement" said that they would be looking to take steps to achieve higher growth rates in each part of the world, and stated that they would continue to "cooperate closely … if the economic outlook weakens to respond as appropriate." Mechanisms to be used include a number of unprecedented measures: collective-action clauses in bonds floated by emerging market countries to protect the lender in case of default, and for the International Monetary Fund to monitor these economies more closely. What this means is that they are creating a global framework to deal with countries that go bankrupt.

In conjunction with the request by Garten, another powerful organization – the Institute of International Finance, which is comprised of 300 private-sector financial organizations in 60 countries – is calling for global easing of monetary policies to help lift world economies out of the doldrums. Basically, they say that it is time for the G7 finance ministers and central bank governors to "seize the moment and take imaginative, bold steps to put the global economy back on track.'' They called on the European Central Bank to take the lead and cut their interest rates from 2.25 percent to 1.25 percent to correspond to that of the Federal Reserve.

Words that have been used to describe this new integrated world include: multilaterialism, convergence, integration, cooperation, globalization and inclusion. In an interview in February 2001 with highly respected international economist Dr. Jacob Frankel, I asked if it was time to harmonize world currencies. He paused and said that the economies must first be integrated, then the currencies will be integrated.

War and rumors of war will certainly help those who want to change the global landscape and harmonize the countries of the world. This week's G7 finance ministers meeting will be extremely important – for it will continue the integration of the world's economies, pushing the "envelope" one step further.

Joan Veon is a certified financial planner and is president of Veon Financial Services, Inc., an investment advisory firm. Visit her website, WomensGroup.org.