G20 Update #5

 

 

 

Where do we go now? New world, too many ideas?

A summary report by Sandro Gianella

 

The G20 members can be compared to a group of travellers on a journey. The first few days of the journey are full of excitement and anticipation and one is usually eager to learn from and share stories with fellow travellers on the road. Similarly, the heads of government of the newly elevated G20 were full of praise during the first summits in Washington, London and Pittsburgh, soon calling the new grouping the “premiere forum for international economic cooperation”. Much had been accomplished in a rather short time and under unprecedented circumstances; moreover, everyone was certain that this was just the beginning of a great trip. However, when travelling, soon one can experience a certain lull, maybe even become a little homesick and overall see the world through a more realistic and pragmatic lens. In addition, the people with whom one is sharing the journey may become a little boring, if not annoying, talking about the same topics over and over again. At the June 2010 Toronto summit, G20 members may have had such feelings when they were unable to agree on common principles and binding policy commitments. Rather, the participants were tiptoeing around the important issues and put many decisions on hold for the Seoul Summit in November 2010. To carry through with the traveller analogy, the summit in South Korea was a moment when the group could no longer defer the important decision on which road to take to reach the next destination. Some would even argue that the members were not even in agreement on the destination. Nonetheless, looking back at the Seoul Summit, the G20 managed to reach a minimum consensus on issues such as IMF reform, global financial safety nets, a new development action plan. Also, since their plan to address global economic imbalances is failing (imbalances are more pronounced than ever) they struggled to find solutions. Our travellers have now gone through ups and downs and know about the particular interests of each and every member of the group. As a result, making decisions and reaching consensus on how to move forward from here has become even more difficult. As it happens, a rather outspoken and ambitious member has taken over the lead and seems to be punching above his weight. At a time when some members are uncertain why they embarked on the trip in the first place, President Sarkozy remains adamant that the G20 has a tremendous role to play in global governance and that France will push through an ambitious agenda.Sarkozy has officially announced theFrench G8 and G20 agenda in a landmark speech on the 24th of January. Under the motto “New World - New Ideas” he highlighted the following key priorities:

 

‣the reform of the international monetary system

‣combating the price volatility of commodities (Sarkozy: “we run the risk of food riots in the poorest countries and a very unfavourable effect on global economic growth”)

‣the reform of global governance

‣innovative financing

 

When the UK Sherpa Jon Cuncliffe met with NGOs, he argued that the G20 is now “operating in management rather than breakthrough mode and that its work through various working groups is on-going throughout the year. Germany and Mexico will co-chair a newly created working group on the world monetary system and hold a seminar in China at the end of March. Russia will oversee a working group looking at reforms to the agricultural market, seeking ways to control what Sarkozy sees as instability in global food prices. Lastly, Great Britain has been asked to re-examine the nuts and bolts of global governance: studying plans for a permanent G20 secretariat, a world environmental body and a reform of agricultural organisations. Sarkozy also reiterated his desire for a financial transaction tax (FTT), which he hopes to hammer out during his year at the G20 helm. In his words:“France considers that this tax is moral, given the financial crisis that we have just been through, useful for dissuading speculation and effective for finding new resources for development of poor countries.” While the G20’s effectiveness in many areas is debatable, it appears that the G20 is hot-wiring global governance of international development. That is, it is identifying the mandates and agendas for the work of an array of global institutions working in low-income countries, which are excluded from G20 membership. (A car is hot-wired when it is started without the key.) In this edition of the newsletter we cover a wide array of issue-areas and opinions:

1) Kirk Herbertson of World Resources Institute and Nancy Alexander of HBS look at the G20 as a standard setter and ask whether it could push for the internalization of environmental and human rights impacts in order to lead to better investment decision-making.

2) Nancy Alexander looks at the implications of the G20 for global governance.

3) Marta Benavides introduces the Global Call to Action against Poverty (GCAP) and the important role of increased civil society involvement in the G20 process.

4) Ilcheong Yi of UNRISD discusses the financial transaction tax and its link to social security.

5) Karen Hansen-Kuhn of IATP gives an update on the on-going discussion within the G20 on commodity and food price volatility, a topic that certainly will remain on the top of the global agenda in 2011.

Product details
Date of Publication
January 2011
Publisher
Heinrich Böll Stiftung
Number of Pages
11
Licence
All rights reserved