G20 Update #10 - The G20's New Troika

Mexico Adds "Green Growth" to G20 Agenda

Introduction by Nancy Alexander

The G20’s new troika is preparing for the G20 Summit in Los Cabos, Mexico on June 18-19, 2012. The troika is comprised of the current, former, and upcoming Presidencies of the G20: Mexico, France, and Russia. In the first article of this issue, “The G20 Under the Mexican Presidency,” Laura Carlsen, Director of the Americas Program, reflects on what we can expect from the Mexican Summit. Her article, plus a new discussion paper by Mexico’s Presidency of the G20, describes the continuity in the G20 agenda (with a Mexican “twist”), plus the new item, “Sustainable development, green growth and the fight against climate change.”Employment A primary goal of the French summit was “supporting employment and strengthening the social dimension of globalization.” Now, the Mexican focus is on “economic stabilization and structural reforms as foundations for growth and employment,” so the importance of employment has been knocked down a peg. However, as John Evans of the Trade Union Advisory Committee describes in his article, “The G20 and Jobs – Can the Mexican Presidency Deliver?” the global unions are promoting a five-point plan to restore employment as a top priority on the Summit agenda. While there were promising signs at the French G20 Summit – endorsement of a “global strategy for growth and jobs” and the case for global “social protection floors” – there is also resistance, even by governments with “fiscal space,” to providing the stimuli needed to create jobs. To advance its agenda, the Labor-20 (L20) is gaining status comparable to that of the Business-20 (B20), which meets back-to-back with the Leaders Summit. To influence G20 outcomes, Evans calls for the L20 to develop into a permanent and genuine counter-weight and counter-party to the B20.Financial inclusion In his article, “The Role of the G20 in Enhancing Financial Inclusion,” Roy Culpeper of the University of Ottawa (and former President and CEO of the North-South Institute) salutes the G20’s financial inclusion initiative for recognizing that small- and medium-sized enterprises (SMEs) desperately need credit. They provide almost half of the labor force and almost half manufacturing employment in developing countries. The G20 initiative may help microfinance institutions (MFIs) and commercial banks “upscale” and "downscale" their operations, respectively. However, Roy encourages the G20 to follow the example of several countries which made tremendous strides in financial inclusion through government agencies (such as national development banks) and programs (such as guaranteed credit).!Food security and commodity price volatility Under the Mexican Presidency, the Energy and Commodities Markets Group is being co-chaired by the UK and Indonesia. Two subgroups report to it: the Commodity Markets subgroup chaired by the UK and Brazil and the Energy and Growth subgroup chaired by the US and South Korea. Yet, the intense work on these themes does not seem to be bearing fruit. In his article, “G20 and Food

Security: High Expectations, Few Results...Yet,” Neil Watkinsof Action Aid USA describes how a single country can block consensus in the G20. On biofuels, the US and Brazil played key blocking roles; on commodity speculation, the UK was a lead opponent of collective action; and on climate, Leaders nearly avoided the topic altogether. According to Watkins, it is good news that, despite resistance, the G20 issued a negative verdict on the “over-the-counter” trading that dominates commodity transactions and contributes to food price volatility. He highlights the fact that food security is on the agenda of both the G8 Summit in Chicago in May and the G20 Summit in June, giving advocates a chance to press these bodies to tackle commodity price volatility and other underlying causes of global food crises. Global governanceIn 2012, Australia and Turkey advise the G20 on this topic. Since the G20 sees itself at the apex of the global governance system, it should lead by example in the areas of transparency and consultation with non-member governments, citizens, and elected officials on specific G20 agenda items. To date, civil society lacks the access to information and decision-makers experienced by other groups, such as:

• the Business Summit (B20),
• the G-20Y of young business leaders,
• the Think Tank-20 (TT20), and
• the Labor-20 (L20).

Monetary and financial policy While Mexico may continue work to reform the international monetary system, it is not a priority, as it was for France. In addition, whereas the French Presidency promoted “financial regulation,” the Carlsen article notes that Mexico wants to “strengthen the financial system”, perhaps without resorting to regulation. Despite signs that the world is slipping into another Great Recession, Leaders seem largely captive to the financial sector despite the fact that taxpayers are being held hostage to the survival of financial institutions which are “too big to fail.” Moreover, without regulation, markets privatize gains and socialize losses. What‘s New? Sustainable development, green growth and the fight against climate change. The world is watching Mexico’s leadership on these issues because, at present, the G20 has a “brownish” agenda for its own member countries as well as for developing countries (in its Development Action Plan (DAP).[i]There are hopes that Mexico will lead support for equitable and sustainable outcomes for the DAP and, more generally, for the 2012 Earth Summit in Rio. There are also fears that Mexico could define “green growth” in ways that expand predatory practices, such as speculation in food crops and natural resources, which maximize private gains at unacceptable social costs, e.g., high food prices, “land grabs” or global warming. In his article, “The Development Agenda of the G20,” Thomas Fues of the German Development Institute asks provocative questions: Should development be included in the G20 agenda in the first place? Second, how can we assess the development-related activities of the G20 so far? And finally, how should the G20 move forward on development challenges? Fues charts the details of how the G20 averted a stronger collective commitment on issues from social and environmental standards for responsible investment to disclosure obligations for natural resource payments to fossil fuels subsidies. He also notes the need for G20 progress in support for global public goods and consultation with countries and international organizations. Finally, he makes the case for four priority areas for G20 action on global regulatory frameworks: trade, foreign direct investment, natural resources and “land grabbing.”