PARIS (Reuters) – A year ago, mere mention of the notion of a multi-polar world was a sure way to lose friends and dinner invitations in Washington.

The London G20 summit shows just how far power has ebbed from the United States, and from the West in general. Until late 2008, the Group of Eight mostly Western industrialised nations — the United States, Canada, Germany, France, Britain, Italy, Russia and Japan — was the key forum for economic governance.

The new, unwieldy top table has emerged faster than anyone dared predict because a humbled America and a chastened Europe need the money and cooperation of rising powers such as China, India, Russia, Brazil and Saudi Arabia to fix the world economy.

The United States remains the pre-eminent military and economic power, and how it manages to clean up its banking system will be the biggest factor in the length and severity of the crisis. But how the emerging countries manage their currency reserves, exchange rates, trade policies and energy exports will also determine whether we recover from recession in the next 18 months or slide into a depression.

US President Barack Obama, on his maiden foray in global diplomacy, showed he understands the new dispensation by paying respects in prior bilateral meetings to Chinese President Hu Jintao and Russian President Dmitry Medvedev.

The Europeans acted as midwives to this new world (dis)order, but they have yet to accept that they too need to be cut down to size. To make way for the legitimate aspirations of emerging and developing nations in international financial institutions, the number of Europeans at the table will have to shrink. This should force them to pool their representation under the European Union, as they do in trade negotiations.

That may be unpalatable not just for Britain but even for core euro zone members such as Germany and France.

Yet French President Nicolas Sarkozy and German Chancellor Angela Merkel made the best case for a single EU seat by working like a tag team to pressure the United States and Britain into stricter regulation, notably of hedge funds, and tougher action against tax havens.

Managing the new power constellation won't be easy and may not work. It will take trade-offs between Washington and New Delhi to clear the path for a global trade pact, among Western nations, China and India to fight climate change, and between industrialised and developing powers to reallocate power in the IMF, the World Bank and the United Nations.

At least now almost all the key players are at the table, except for Iran. But that's another story.

Paul Taylor is a Reuters columnist. The opinions expressed are his own