What's happening at the
Monday 21 Aug 2017 | 01:53 | SYDNEY
Monday 21 Aug 2017 | 01:53 | SYDNEY

One 'G' to rule the world?

By

COMMENTS

9 October 2012 12:36

The G20 Leaders' meeting started out in 2008 with some tangible successes, but the general consensus is that it has now lost its momentum. Can it be reinvigorated before Australia hosts the 2014 meeting in Brisbane?

In 2008 there was a very real concern that the global financial crisis would trigger competing rounds of trade protection, repeating the implosion of world trade during the 1930s depression. Mutual peer pressure at the first G20 meetings avoided that outcome. Similarly, countries feared their own fiscal stimulus would largely overflow overseas to benefit foreigners more than themselves. But coordinated fiscal expansion reassured them that every economy would benefit. The comprehensive failure of financial regulation in the crisis countries provided the impetus for urgent financial sector reform. The hitherto lethargic pace of governance reform at the International Monetary Fund was given a solid jolt forward by the G20.

All this took place in the fraught atmosphere of the GFC. 'Lifeboat camaraderie' allowed petty jealousies to be put aside. The existing G20 finance ministers group was taken, without too much questioning, as an appropriate basis on which to bring the world leaders together, replacing the unrepresentative G7/8.

This group worked well under the pressure of the crisis, where the priorities were well-defined and the urgent circumstances allowed no place for prevarication. But what does a crisis-resolution group do when the nature of the problem changes? As the immediate crisis receded, G20 members were reminded of their domestic priorities. Non-G20 members began to ask why their views were excluded. The lifeboat camaraderie faded.

There's no shortage of challenging international issues. Even leaving aside security issues, economics provides ample unfinished business. The Doha Trade Round is on life support. Concerns about food security have encouraged countries to take selfish export restrictions. Copenhagen demonstrated the difficulty of getting agreement on climate change. Tom Friedman's Golden Straitjacket   might suit some, but is not always equitable or even efficient. Agreements on international trade, standards, intellectual property rights and legal infrastructure are ad hoc, inadequate and uncertain.

No-one is suggesting that G20 alone can do all the detailed rule development that effective globalisation requires; but it could be a top-level steering committee or 'ginger group' to sit over (and whip along) the various specialised agencies which attempt to formulate internationally-acceptable rules. The interminable trade negotiations, the pathetically tardy addressing of governance issues in the UN specialised agencies, together with conflicting standards all attest to the need for such a spur to energise the global rule-making process.

But there is little hope that the present G20 format can successfully address this task. It has no formal linkage into the United Nations hierarchy and will tread on toes if it tries too hard to tell them what to do. G20 is constantly fighting to contain participation bloat. Membership quickly degenerated from the initial 19 countries (already pushing the limits of a feasible face-to-face meeting) into 35 participants with the addition of UN agencies, regional groupings and another half-dozen countries which have managed to get invited. By the third meeting, there were 55 people around the table.

With these larger numbers, the intimacy and like-mindedness of the old G7/8 group was lost. The earlier group may be been unrepresentative, but it had an informality that could sort things out over dinner. Contrast this photo of the smaller group watching football (below) with the formality of the G20 meeting (top).

Mission creep presents a further obstacle. Without the urgent focus of the 2008 crisis, the array of topics rapidly gets out of hand. Development, trade and climate are all failed discussions at other forums, with interminable talk and no resolution. G20 presents an opportunity to transfer this failure to the G20 group. The futile hope is that a collection of political leaders, whose main priority will inevitably be the interests of their disparate domestic constituencies, will somehow be able to solve issues that years of expert discussion have not been able to resolve.

Weighed down by these obstacles, the main G20 meeting has been reduced to little more than a photo opportunity and chance for the leaders to get to know each other. Any real business will be done in smaller groups, spun off from the main meeting. Issues such as IMF governance will be decided by a sub-set of countries which have common mindsets and enough votes to impose their view when the vote is taken. This format has its value, but will this be enough to keep the leaders meeting year after year, waiting for the day when a crisis forces some collective action?

Perhaps this is all that the international system can handle at present. Ian Bremmer argues the wider case that the diminished role of the US in world affairs has removed the possibility of effective economic cooperation, leaving a G-Zero world. Rule-making will be done via groups such as the Trans Pacific Partnership, where America can still dominate the agenda and build on the Golden Straitjacket, which reflects its interests in intellectual property and international capital flows.

It's clear that the answer is not to be found in widening G20 membership to make it more representative. We already have international bodies using this universal model, bogged down in the futile search for consensus. There is no point in repeating their shortcomings.

 Perhaps the answer is to re-think the format, confining participation to the original member countries plus the regional groupings which have formed around the world. At present these are at different stages of development, but if we take the European Union as the model, they have the potential, within their various and frequent internal meetings, to build up refined positions which go beyond the interests of individual countries, with these brought together in the G20 to arrive at consensus which cannot be achieved in the current format.

Photos by Flickr user G20Mexico and Wikipedia user The White House.

You may also be interested in...