The ambience of Cannes – holiday home to the rich and beautiful – does not suit the gravity of the situation. But this small town on the Cote d'Azur is the venue that French President Nicolas Sarkozy has chosen for the latest G20 summit on November 3 and 4.

The resort, which rolls out the red carpet for stars and starlets every spring with world's biggest international film festival, will instead play host to the leaders of the 20 most important industrialized nations and emerging markets.

It is the sixth G20 summit since US investment bank Lehman Brothers failed three years ago. Then, the world's financial system was on the brink of collapse, and a new financial infrastructure had to be established. This year's summit in Cannes was meant to provide an opportunity to look back and assess the impact of those measures. But Sarkozy and his counterparts won't be doing much of that, because, just as in Washington three years ago, the G20 has to play fire brigade to the world economy.

Born of necessity

The Washington summit took place on November 15, 2008, two months to the day after the US sub-prime mortgage crisis reached its climax with the Lehman bankruptcy. The shockwaves were racing across the globe and the financial world was staring into the abyss.

The summit of the 20 leading industrialized and emerging economies in the US capital aimed to prevent the final meltdown of the global financial system. The G20 already existed before, but only as a body of finance ministers and heads of central banks. This time the heads of state or government themselves knew they had to show up too.

"It is about truly regulating and controlling all the traders, all the financial products and all the markets," said German Chancellor Angela Merkel at the time.

The big plan

The Washington summit agreed on a package of 50 measures - to be implemented post-haste. Six months later, in early April 2009, the G20 convened again in London. Here, leaders drafted an "action plan for recovery and reform," which was meant to put reins on the financial system. Tax havens, for instance, would be black-listed.

British Prime Minister Gordon Brown waxed lyrical at the summit's conclusion. He lauded "the day when the world came together to fight back against the global recession. Not with words, but with a plan for worldwide recovery and reforms."

Next stop Pittsburgh

Fast-forward another half-year to the end of September 2009: US President Barack Obama made his debut as G20 host in the former steel city of Pittsburgh. The outcome of the meeting was a little more progress in the regulation of financial markets, more cash for the International Monetary Fund, and more influence for emerging nations in the procedures of the IMF.

Eight months into his presidency, Obama described these gains as "several significant steps" forward, adding, in Brown-esque manne: "We have saved the world economy from the abyss. Today, we have laid the foundation for long-term prosperity."

Slowing down

There were two more G20 summits in 2010 – one at the end of June in Toronto, Canada, and the second in mid-November in Seoul, South Korea. But by then the world's saviors apparently believed their work was done.

Indeed, the world economy seemed to have stepped back from the brink. Germany in particular had recovered very quickly and was showing excellent growth rates. That sparked some argument over which was the best strategy: more savings or more stimulation for the economy?

Merkel managed to get her way in Toronto, and the industrialized countries agreed to halve their budget deficits by 2013. Merkel herself seemed surprised at her success. "It's very ambitious," she said at the concluding press conference. "And to be honest it's more than I expected."

There was also some more progress in the reform of the financial markets, though the banking lobby in both the US and Europe prevented the regulations from being too strict.

The most important question, though, remained unresolved, as it does today: How can we stop a bank from getting so big that its bankruptcy would drag the rest of the financial world down with it? In fact, most of the banks that survived the 2008 financial crisis are now bigger than they were prior to the Lehman crash.

Future of the eurozone on the line

Despite the uncertainties that lingered after the close of the last G20 summit in Seoul, Merkel said the world's governments had dealt with recent crises better than their counterparts 80 years earlier, after the Great Depression.

She said they had created an international framework, made recovery packages and, not a moment too soon, begun to save money. "Now we have to make sure we don't make the third mistake that was made then – falling into the trap of protectionism," she said

But, one tumultuous year on, protectionism is not the main threat. The key problems are Greece, Portugal, Ireland, Spain, and perhaps even Italy. The risk of state bankruptcy is rearing its ugly head.

Bailouts have been hastily arranged and then even more hastily expanded. The debt crisis has had a devastating impact. This week's summit in Cannes was meant to address the world monetary system, with Sarkozy hoping to put a spanner in the works of commodity speculators.

But that won't be happening now. There are, so to speak, bigger fish to fry. Even after Europe's latest summit agreements in Brussels, the fundamental questions remain: Can the eurozone survive? Is a Greek referendum on EU rescue plans a good idea? And does the G20 itself have a future?

Author: Henrik Böhme / bk
Editor: Sam Edmonds