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The St Petersburg G20 blues

The St Petersburg G20 blues
Published 9 Sep 2013 

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

The St Petersburg G20 summit is over. Now the hangover. In assessing its significance and implications for Australia when it chairs the G20 next year, here are nine questions to consider.

1. What was the impact of Syria?

Syria dominated. The post-summit press conferences were all about Syria, as evident in President Obama's press conference. Most of the press commentary on the summit was about Syria.

The G20 is an economic forum, but it should be expected that when leaders gather and there is a pressing global issue, it will be discussed. It would be extraordinary if this was not the case. Moreover, the fact that G20 leaders were meeting and had the opportunity to discuss the Syrian crisis was a positive, notwithstanding the absence of any agreement. Talk is always good. But unfortunately, the absence of an agreement on Syria will be remembered as the main legacy from St Petersburg.

2. Did Syria detract from the economic agenda? [fold]

Leaders did discuss Syria at their dinner, rather than the post-2015 development goals. But it is hard to see that tensions over Syria prejudiced negotiations over key economic issues, because none seemed to be on the table. Carsten Volkery in Spiegel reported that the G20 was a 'failure on all fronts', both foreign policy and the economy. But it is going too far to suggest, as he did, that Syria prevented stronger outcomes on shadow banking and tax evasion. These issues were settled prior to the Summit, in the FSB and OECD, respectively.

But the headlines were not good for the G20 cause, many saying the summit ended with acrimony, division and name-calling.

3. How many people have read the 27-page St Petersburg declaration and the 200- pages of supporting documentation?

The leaders’ declaration is too long. It is full of 'welcoming, endorsing, or noting' of reports and work by international organisations and officials. Much of the accompanying material was not needed.

4. What was the basic message from the summit?

The preamble to the declaration does little more than list the topics on the leaders' agenda and the action plan mainly lists previously announced commitments. What was new? What was achieved at St Petersburg that brings the global economy closer to the objective of strengthening growth and creating jobs? The messaging is not clear.

Moreover, the G20 has gone through a period of policy discord, particularly around the so called 'growth versus austerity' debate and the implications of quantitative easing by central banks in advanced economies. The G20 needs to develop a clear, consistent and coordinated economic narrative.

5. What were the major economic outcomes?

Dominico Lombardi said the St Petersburg Summit did not result in any immediate, concrete deliverables and what was missing was 'how leaders intend to address the global demand deficit the world economy is still experiencing, especially given the slowdown in the emerging economies'. Susan Schadler noted that the communiqué 'is full of "we reiterate..." and "we recognize the importance of..." but virtually nothing in terms of concrete decisions to advance any economic agenda'.

These are harsh but accurate assessments. However, two significant commitments were the extension of the stand-still on protectionist pressures until 2016 and the commitment to automatically exchange tax information among G20 members by end 2015. The endorsement of the OECD Action Plan on combating corporate tax avoidance is also significant.

It is interesting that the White House fact sheet lists the first of three major outcomes as being the agreement to 'phase down the production of hydrocarbons through the Montreal protocol.' This has received no coverage elsewhere. The other major outcomes listed by the White House were on trade and tax.

6. Will any G20 member do anything different following the summit?

This is the acid test. The leaders' declaration says 'we have reset our reform agenda along more relevant, concrete and well-targeted lines.' But how and where? It is difficult to see if any G20 member will be doing anything different in support of the commitment to closer cooperation as emphasised in the declaration.

7. What was the most important decision that flew under the radar?

A significant but under-reported event was the agreement by the BRICS to establish a $100 billion fund to deal with their short-term liquidity problems. This could be seen as a substitute to the IMF, and comes against the background of the G20's failure to deliver on quota reforms in the IMF in favour of the emerging markets.

8. What was the most embarrassing event at the summit?

There are two candidates. First, the senior Putin spokesman calling the UK a 'small island nobody pays any attention to'. Second, Australia cancelling a press conference at the end of the summit, leaving foreign journalists puzzled given that Australia is about to take over as G20 chair.

9. What are the implications for Australia chairing the G20 in 2014?

Not having Australia's prime minister participate in the St Petersburg summit was not a good look. It may come back to haunt Australia in 2014. Unfortunately, the main thing the St Petersburg summit will be remembered for will be the divisions over Syria. But on economic issues, St Petersburg continued the trend where leaders come to summits to largely endorse the work of officials or international institutions. This is an opportunity lost.

Furthermore, the material coming from the summit is increasingly bureaucratic, as evidenced in the G20 work plan on financing for investment and the St Petersburg accountability report on development commitments. The measure of progress appears to be the completion of reports.

Australia has its work cut out if it wants to rejuvenate the G20 and engage leaders in making substantive progress in dealing with some major international economic issues.

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