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Friday 18 Aug 2017 | 22:38 | SYDNEY
Friday 18 Aug 2017 | 22:38 | SYDNEY

Laying the foundations for a new world order?



14 November 2008 13:07

This weekend’s meeting of the G-20 leaders has been hailed as marking a new era for international governance. At long last, it seems, the time of the anachronistic G7 has passed, and the global architecture is being brought closer into line with the underlying realities of the world economy. 

Back in 2006, the year Australia hosted G-20 finance ministers in Melbourne, my colleague Malcolm Cook and I wrote a paper called Geeing up the G-20, which argued that the G-20 should replace the G7 as the steering committee for the world economy. So I view the elevation of the grouping as welcome news. Indeed, it has gone further than Malcolm and I hoped back then, when we thought the prospects for an L-20 (a G-20 leaders meeting) were poor. Which just goes to show the difference the worst international financial crisis since the 1930s can make...

What should we expect from this weekend’s gathering? After all the initial excitement about the possibility of forging a new Bretton Woods agreement, expectations seem to have receded somewhat in recent days. In part this reflects the fact that we are in the  final weeks of the Bush presidency, which some think rules out the possibility of any truly dramatic progress until his successor takes over, although in fact both the outgoing and the incoming US administrations are reportedly indicating that they are not yet willing to sign up to dramatic change. 

Some commentators, like the FT’s Gideon Rachman, point to the major differences between participants, and predict an outright flop. So it might turn out that the biggest achievement in the short run will be the recognition of  the changing global order implied by the meeting itself, although this will only be the case if the meeting becomes part of a process, as opposed to a one-off stunt.

Not that uncertainty about the ability of leaders to deliver dramatic change this weekend has prevented a flood of advice ahead of the meetings. Some of the more interesting views I have seen so far are collected in this e-publication by VoxEU. The suggestions are wide-ranging, but the editors do a good job summarizing the main messages here

One issue for Australia is that several of the contributors argue that, rather than the G-20 itself, a new, smaller grouping would be more appropriate. As Steve Grenville noted in an earlier post, similar views have been advanced elsewhere. I think excluding Australia would be a shame for the reasons Steve sets out. Moreover, it seems to be that all of the time and arguments that would inevitably be involved in selecting the membership of any new grouping would be a waste. The G-20 is a ready-made solution. We should stick with it.

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