The G20’s tenth leaders' summit will take place in Antalya, Turkey at the end of this week. Predictions about what will eventuate from the Summit vary from John Kirton’s declaration that it promises significant success to Matt Goodman’s cautioning against expectations of a substantial summit.
Antalya Summit preparations. (Photo: Volkan Furuncu/Anadolu Agency/Getty Image)
So what should we expect? On the balance of probabilities, I would tend towards Goodman’s caution.
The official narrative from Turkey is the summit will focus on three priority 'Is': implementation, investment and inclusiveness. As Ussal Sahbaz and Feride suggested in September, the G20 has made headway on all three. Leaders will welcome an accountability framework for G20 efforts on growth, each G20 member will deliver a strategy to boost domestic investment, and there will be enhanced support for youth employment, small and medium enterprises and women’s empowerment.
But these outcomes are modest, particularly when compared to G20 past glories.
What transpires at Antalya is unlikely to jolt global growth out of its current malaise, or address the key risks facing the global economy. The leaders communique is not expected to make a big difference in critical areas like multilateral trade, IMF reform and energy governance.
It just doesn't feel like we are preparing for a gathering that will change the world.
The G20 has made some important advances this year outside of the host’s priorities. The global infrastructure hub is now established in Sydney, and substantive progress has been seen in minimum global standards in tax and for large global banks.
The OECD's delivery of the two-year base erosion and profit shifting project will, when implemented, modernise international tax rules and clamp down on tax avoidance by multinational corporations. It should be seen as a success story for global economic governance.
Meanwhile, the Financial Stability Board flagged at its September meeting that leaders will be able to endorse what can be viewed as the final pieces in the global financial regulatory policy puzzle: the final standard for TLAC, or total loss absorbing capacity, for 30 global systemically important banks, and Higher Loss Absorbency (HLA) requirements for the nine global systemically important insurers.
Jargonistic titles notwithstanding, these are important developments. Asking the world’s biggest and most interconnected banks and insurers to hold yet more capital will go a long way towards addressing the ‘Too-big-to-fail'phenomenon, and reduce the need for taxpayer-funded bailouts.
But back to Antalya. There are three crucial questions that should be testing leaders at this Summit: can governments deliver on growth; will the G20 provide important momentum in the lead up to the Paris UN climate change negotiations, and what will governments collectively do to address the Syrian refugee crisis?
One year on from the Brisbane G20 summit, it has become increasingly difficult to overlook the G20’s growth dilemma. The Brisbane Action Plan unveiled last November contained more than 1000 measures the G20 leaders all pledged to implement. Once in place, these measures were predicted to translate into a 2.1% boost to G20 GDP by 2018. These were difficult but necessary actions affecting trade, competition, employment, infrastructure and investment that would lead to structural reform.
Turkey has claimed significant progress in implementation but the latest IMF forecasts have not attributed any increase in growth to the G20’s efforts. And in the meantime, the international economic outlook has worsened to the point where the world economy teeters on the edge of global recession.
Ideally at this week's Summit, leaders would start by recognising they can't magically dial up more growth, that more ambition is needed to implement politically challenging structural reforms, and that much more action is required to plug investment shortfalls in 2016.
On climate change, discussions are still well short on limiting warming to the agreed 2°C and there is disagreement on key issues like climate finance. Leaders will need to go much further than their energy ministers did in October if they are to make a substantive contribution to the UN negotiations and face up to the insidiously weakened state of the world’s great multilateral institutions.
The calls from the EU and broad segments of society for the G20 to address the Syrian refugee crisis highlight another hot-button issue demanding G20 attention. I have previously written in 'Syrian Refugee Crisis: Time for the G20 to Step Up' that the G20 needs to respond to the humanitarian crisis if it wishes to remain the premier international economic forum. Consistent with G20’s core mandate on economic issues, this should be a narrow discussion not focused on ‘security' elements of the crisis, nor the root causes of refugee crises generally. The G20 isn’t a 'doing' body either. A pragmatic focus will need to be on recognising the economic/humanitarian costs of the refugee crisis, and on providing political drive to bolster the UN refugee architecture.
In The G20 and the Future of International Governance, Mike Callaghan stresses the need for more and better coordination on international economic issues.
In Antalya, the G20 Leaders need to be bold and go beyond the script officials have prepared for them. They should recognise the progress to date on investment, tax and finance; answer a few big questions on growth, climate change and refugees; and set the scene for more ambition on trade, energy and the international financial architecture in 2016.
If they can do this, they will continue Australia’s efforts to put momentum into the G20 and set a solid platform for China's 2016 Presidency.
Then we would be able to declare the Turkish Summit a success.