What Can the G-20 Do in Cannes?
On November 3-4, presidents and prime ministers from the world’s 20 major economies will gather in Cannes, France, for the sixth summit of the G-20. Ever since its first meeting at the height of the 2008 financial crisis, the G-20 has been the venue where political leaders decide what steps are needed to keep the global economy growing.
In the last couple of years, the G-20 summit process has been shifting gears from the initial focus on financial crisis response to ongoing economic stewardship—serving as a public health agency for the world economy, instead of an emergency room. Yet there are lingering doubts about whether it’s too early to shift out of crisis mode. The G-20 thus faces some of the classic issues of multilateral cooperation: near-term versus longer-term challenges, the difficulty of compelling action without a crisis, and overcoming policy differences, among others.
The group’s initial efforts represented a high-water mark of unity and shared purpose, and the collective package of stimulus spending by G-20 governments kept the global recession from turning into a depression. By mid-2010, though, the moment of consensus had clearly passed. Prior to the Toronto summit, President Obama sent his counterparts a letter recommending that stimulus be withdrawn slowly, but he was rebuffed by advocates of austerity (principally British Prime Minister David Cameron and German Chancellor Angela Merkel).
As we see from recent headlines, the most urgent danger to the world economy comes from a different set of countries than the G-20: the European Union (EU) nations that share a common currency (aka “the Eurozone”). The threat that Greece might default on its debt raises the specter of another financial contagion like 2008, with similar potential consequences. At a recent Stanley Foundation conference in Shanghai, participants debated the relevance of the Eurozone crisis to the G-20 as a multilateral forum. While most participants acknowledged that a solution must be worked out within the EU itself, some argued that the G-20 plays an important role in driving home the imperative that EU nations come through with a solution. We will see whether the looming G-20 summit intensifies such pressure for action.
Meanwhile, the G-20 has been wrestling with how to stabilize the global economy for the longer term. At the top of its agenda is an effort to achieve better balance in major economies that are either too reliant on selling exports to other countries (China, Germany) or on spending by their own consumers (the US). As a first step for economic rebalancing, the G-20 has been working with experts at the International Monetary Fund to set standard criteria that will trace the causes of imbalance—and therefore point toward the steps needed to rebalance. One of the most interesting debates on the effectiveness of the G-20 as a forum has focused on this process, known officially as the Mutual Assessment Process.
While global economic growth and financial stability represent the G-20’s core mandates, the group has gradually been broadening its agenda, particularly at the initiative of the government leaders who have served as summit hosts. At the summit a year ago in South Korea, that meant the adoption of the “Seoul Development Consensus for Shared Growth,” drawn up by the G-20’s Development Working Group to extend a hand to countries that are not yet major economies. Looking toward Cannes, development ministers from the G-20 countries met recently and reported that the summit will highlight proposals for infrastructure development. This year France as the G-20 summit host has emphasized food security, mindful especially of the impact of commodity price spikes on the people with the lowest income.
As this agenda extends to a wider array of issues, calls are growing louder for G-20 leaders to keep focus and guard against becoming distracted. But this critique oversimplifies matters because not all issues are equal in terms of the demands they place on the world leaders. The Anti-Corruption Working Group, for example, shows how a G-20 initiative can generate significant activity and progress with a modest investment of high-level attention. As experts discussed at another recent Stanley Foundation conference, this points toward a new kind of cost-benefit analysis for items being considered for the G-20 agenda.
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