Mike Callaghan is Director of the Lowy Institute's G20 Studies Centre.

Having attended the G20 sessions at the Davos World Economic Forum (WEF), Howard Davies writes in the Financial Times that 'the G20 seems condemned to drift along, unloved and unremarked, until the next crisis, when world leaders will no doubt touch a different G-spot in search of instant gratification'.

Has the G20 run out of puff?

In support of his view, Davies observed that the G20 was the topic of a long session at Davos which was full of Russians and Australians, but notably empty of Americans and Europeans. He concludes that the Americans and Europeans have lost interest in the G20. With Russia in the chair in 2013 and Australia taking over in 2014, it is not surprising that there were a lot of Russians and Australians talking about the G20 in Davos. In fact, this is a positive. The largest Russian participation to date at this year's WEF is yet another sign that Russia is taking its responsibilities as G20 chair in 2013 seriously.

But if Davies is right, and the G20 has run out of puff, then the world has a problem. It is not a case of waiting to see which 'G-spot' will emerge to deal with the next crisis, for the world has not adequately dealt with the 2008 crisis. Volatility in financial markets may have declined, and some potential land mines in Europe and the US avoided, but sustained recovery is far from assured and the risks remain very much on the downside.

The G20 was premature to declare victory at the Pittsburgh Summit in 2009 when leaders said that the world had confronted the 'greatest challenge in our generation' but 'our countries agreed to do everything necessary to ensure recovery' and 'it worked'. As the IMF Managing Director said at Davos, 'we have avoided collapse, but we need to guard against any relapse'. And as Martin Wolf has observed, eliminating financial panic is a necessary but not sufficient condition for a return to growth and the headwinds to growth remain formidable.

So will the G20 confront the headwinds to sustainable growth? We ought to hope so. And the current tension over the so called 'currency wars' is one of those headwinds. Russia has indicated that it hopes the upcoming meeting of G20 finance ministers and central bank governors will help calm the tension over currency wars. If these politicians and bankers are doing their job, it should. 

As IMF chief economist Olivier Blanchard notes, the increasing talk of currency wars is overblown: 'countries have to take the right measures to get their own economies back to health. This implies a combination of fiscal, monetary policy and other measures, and this has implications for the exchange rate'.

But it has to be the right combination of policies, not just monetary policy. The G20 has to make sure that progress is made on all policy fronts: appropriately sequenced fiscal consolidation, supportive monetary policy settings, and productivity enhancing structural reforms. One of the successes of the G20 was that it helped minimise recourse to conventional forms of trade protectionism in the wake of the crisis. In a similar vein, the challenge the G20 now faces is to keep everything in perspective and avoid a damaging cycle of attempts at competitive devaluations.

So, the world needs the G20. We have to make sure it does not run out of puff. This is the responsibility of all G20 members, including Russia as chair in 2013 and Australia as chair in 2014. Just as well there were a lot of Russians and Australians running around at Davos talking about the G20.

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