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Friday 18 Aug 2017 | 01:57 | SYDNEY
Friday 18 Aug 2017 | 01:57 | SYDNEY

Zoellick is wrong about the G20

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8 October 2008 09:28

World Bank President Bob Zoellick seems well outside his allocated territory in his speech on modernizing multilateral economic institutions. When Wayne Swan meets him at the Annual Meetings in Washington next week, he might ask him who he speaks for in writing off G20 as 'unwieldy'.

Its precursor group during the Asian Crisis did a far better job than the Bretton-Woods institutions (IMF and World Bank) and showed what can be done with a group this size, given preparation and good chairmanship. If G20 has done less than it could have since then, it is because G7 and the IMF, while unable to adapt themselves to the needs of the current world economy, have at least been able to prevent a rival group from succeeding.

Judging from Zoellick’s speech, he didn’t notice the efforts to rework the international architecture after the 1997-8 Asian crisis (from which G20 sprang). Nor does he seem to have noticed that central banks are at least as important as Finance Ministries in responding to the current crisis (which is why G20 has both represented).

So when he calls for an informal video-linked 'Facebook' steering group of 14 Finance Ministries to sort out the world’s economic problems, he starts as usual with the G7 (so Italy and Canada keep their seats) and adds just enough to achieve geographic inclusiveness (what will South Africa contribute?). Three Asian G20 members (counting Australia as Asian) are excluded from his cut.

When he talks about it as 'numberless, flexible and over time it could evolve’, it is vague enough to ensure that substantial time will be wasted sorting out just who is included. Don’t look to it for anything relevant to the current crisis. Swan might make the case that the starting point should be G20 rather than G7, and that if it needs bringing into the cyber age, then have it meet more often and less formally (yes, why not by video-link).

On a more positive and realistic note, Zoellick seems to have written off the IMF’s attempts to play a central role in such coordination. If he could get broad agreement on this point, that would be a good start towards a better multilateral system.

(Ed. note: Here's a handy guide to the various international financial comittees and clubs.)

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