Thoughts from the 'father of the G20'

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

Former Canadian Prime Minister Paul Martin is often referred to as 'the father of the G20’. While Canada’s finance minister, he was the driving force behind the establishment of the G20 and was selected by the G7 in 1999 to be the first G20 chairman.

Paul Martin took part in a series of events organised by the Lowy Institute in Sydney, Canberra and Brisbane last week as part of the preparations for Australia chairing the G20 in 2014. He had many insights on the establishment of the G20 along with guidance as to how Australia should approach its term as chair.

On membership, Martin said there was never any question Australia would not be a part of the forum when it was established in 1999.

The G20 has only 19 countries as members. This led to jokes that finance ministers could either not add up or that they treated one country as a rounding error. However Martin said Nigeria was the twentieth country when the group was first conceived, but given political difficulties at the time, it was deleted from the list. As a result, Martin believes the main membership issue facing the G20 is the under-representation of Africa.

There has been some debate in Australia over who was responsible for the establishment of a leader-level summit in 2008, including Kevin Rudd’s claims that he was instrumental in its formation.

During his term as Canada’s Prime Minister, Martin campaigned for the G20 to meet at leaders’ level. He said that before 2006 every G20 leader agreed to a Leaders’ Summit except for President George W Bush, who said neither yes or no. Martin gave President Bush credit for finally calling the G20 leaders together in November 2008, although Martin emphasised the extensive preparatory work around the idea in the preceding years.

Looking ahead, Martin thought Australia had a critical role to play as G20 chair in 2014.[fold]

His overriding message was that the G20 was adrift because Western leadership is deficient. If the G20 is going to be the premier international economic forum for the future, Asia has to play a much bigger role. Martin believes Australia, with its Western traditions combined with its geographic position and economic integration in Asia, is in a unique position to be a bridge and enhance Asia’s role in global economic governance.

Martin observed that Korea successfully promoted the fact that it was the first emerging market to chair the G20 with the Seoul Summit in 2010. In a similar way, Australia needs to establish its credentials as a G20 chair by shifting the focus of the forum away from its European and North American bias and to help lift the voice of Asia.

As an example, Martin emphasised the need to extend the role of the Financial Stability Board (FSB), which is responsible for oversight of international financial regulation. It is still dominated by European and American financial issues. However, Asian financial institutions are likely to become increasingly significant global financial players in the future and it is important that the FSB be seen as being relevant to Asia. Martin believes the FSB will eventually need to become a full treaty organisation with its membership augmented, facilitated by reducing European representation.

In addition to the FSB, Martin said the G20 should focus on strengthening the other multilateral institutions. He is particularly concerned that the WTO is at risk of being marginalised by the emergence of a series of regional trade agreements. The dispute settlement process of the WTO is a critical global resource that needs to be preserved. Martin suggested that strengthening the WTO be a major G20 priority.

Martin is also concerned that the IMF has severely damaged its reputation with its involvement in the European crisis and is in need of reform that goes beyond improving the distribution of its quotas.

Leader summits bring protesters and, drawing from the experience of the violent protests during the Toronto Summit in June 2009, Martin observed that much of the good work in the lead-up to a summit can be lost in the eyes of the public with lasting images of violence. Martin recommended intensive training and preparation to deal with protesters and prevent unpleasant images and headlines.

While he had much valuable advice for Australia, Martin was also impressed by the extent of the preparations Australia has underway for its role as G20 chair.

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