Colin Bradford is a senior fellow at CIGI and at the Brookings Institution.

Did Media Coverage Enhance or Threaten the Viability of G20 Summits?

The week before the Seoul G20 Summit was one in which the main newspapers read in Washington (The New York Times, The Washington Post and Financial Times) all focused their primary attention on the “currency war,” global imbalances, the debate on quantitative easing (QE 2), the struggle over whether there would be numerate current account targets or only words, and the US-China relationship.  As early as Wednesday, November 10, The Washington Post front-page headline read: “Fed move at home trails US to Seoul; Backlash from Europe; Obstacles emerge for key goals at G20 economic summit.”  By Thursday, November 11, things had gotten worse.  “Deep fractures hit hopes of breakthrough; governments are unlikely to agree on a strategy to tackle economic imbalances” read the Financial Times headline on Alan Beattie’s article from Seoul.  Friday, November 12, The New York Times front-page headline declared: “Obama’s Economic View is Rejected on World Stage; China, Britain and Germany Challenge U.S.; Trade Talks with Seoul Fail, Too.”  By Saturday, the Financial Times concluded in its lead editorial: “G20 show how not to run the world.” 

From these reports, headlines and editorials it is clear that conflicts over policy once again dwarfed the progress on other issues and the geopolitical jockeying over the currency and imbalances issues took centre stage, weakening G20 summits rather than strengthening them.  Obama was painted as losing ground, supposedly reflecting lessening US influence and failing to deliver concrete results. China, Germany and Brazil were seen to beat back the US initiative to quantify targets on external imbalances. Given the effort that Korean leaders had put into achieving positive results and “consolidating” G20 summits, it was, from this optical vantage point, disappointing, to say the least. 

How was the Rebalancing Issue Dealt With?

At lower levels of visibility and intensity, however, things looked a bit different and more positive.  Howard Schneider and Scott Wilson in Saturday’s edition of The Washington Post (November 13) gave a more balanced view of the outcomes.  Their headline read: “G20 nations agree to agree; Pledge to heed common rules; but economic standards have yet to be set.”   They discerned progress toward new terrain that went beyond the agreement among G20 finance ministers in October at Gyeongju, which other writers missed. 

“By agreeing to set economic standards, the G20 leaders moved into uncharted waters,” they wrote.  “The deal rests on the premise that countries will take steps, possibly against their own short-term interests, if their economic policies are at odds with the wider well-being of the world economy.  And leaders are committing to take such steps even before there’s an agreement on what criteria would be used to evaluate their policies.”

They continued:  “In most general of terms, the statement adopted by the  G20 countries says that if the eventual guidelines identify a problem, this would ‘warrant an assessment of their nature and the root causes’ and should push countries to ‘preventive and corrective actions.’”

The Schneider-Wilson rendering went beyond the words of the communiqué to an understanding of what was going on in official channels over time to push this agenda forward in real policy, rather than declarative terms.  As the Saturday, November 13, Financial Times’ editorial put it, “below the headline issues, however, the G20 grouping is not completely impotent,” listing a number of other issues on which progress was made including International Monetary Fund (IMF) reform which the Financial Times thought might actually feed back into a stronger capacity to deal with “managing the global macroeconomy.” 

The Role of President Barack Obama

Without doubt, the easy, simple, big-picture message coming out of Seoul was that Obama and the United States took a drubbing. And this did not help the G20 either. The seeming inability of the US to lead the other G20 leaders toward an agreement in Seoul on global imbalances, the criticism of US monetary easing and then, on top of it all, the inability to consummate a US-Korea trade deal, made it seem as if Obama went down swinging. 

But again, below the surface of the simple, one got a different picture. Obama himself did not seem shaken or isolated at the Seoul summit by the swirl of forces around him. At his press conference, he spoke clearly and convincingly of the complexity of the task of policy coordination and the time it would take to work out the policies and the politics of adjustment.

“Naturally there’s an instinct to focus on the disagreements, otherwise these summits might not be very exciting,” he said.  “In each of these successive summits we’ve made real progress,” he concluded.  Tom Gjeltin, from NPR news, on the Gwen Ifyl  Weekly News Roundup commented Saturday evening that the G20 summits are different and that there is a “new pattern of leadership” emerging that is not quite there yet.  Obama seems more aware of that and the time it takes for new leadership and new patterns of mutual adjustment to emerge.  He may have taken a short-run hit, but he seems to have the vision it takes to connect this moment to the long-run trajectory.

Reflections on the Role of South Korea

From a US vantage point, Seoul was one more stop in Asia as the president moved from India to Indonesia to Korea to Japan.  It stood out, perhaps, in higher profile more as the locus of the most downbeat moments in the Asia tour, because of the combination of the apparent lack of decisive progress at the G20 along with the needless circumstance of two presidents failing to find a path forward on something they both wanted.

From a Korean vantage point, the summit itself was an event of immense importance for Korea’s emergence on the world stage as an industrial democracy that had engineered a massive social and economic transformation in the last 50 years, culminating in being the first non-G8 country to chair the G20 summit.  No one can fault Korea’s efforts to reach significant results. However, the fact is that the Seoul summit’s achievements, which even in the rebalancing arena were more significant than they appeared to most (see Schneider and Wilson), but included substantial progress on financial regulatory reform, international institutional reform (specifically on the IMF), on development and on global financial safety nets, were seen to be less than hoped for.  This was not the legacy the Koreans were looking for, unfortunately. 

Conflicts among the major players on what came to be seen as the major issue all but wiped out the serious workmanlike progress in policy channels. The leaders level interactions at G20 summits has yet to catch up to the highly significant degree of systemic institutionalization of the policy process of the G20 among ministers of finance, presidents of central banks, G20 deputies and Sherpas, where the policy work really goes on.  On its watch, Korea moved the agenda in the policy track forward in a myriad of significant ways.  It will be left to the French and French President Nicolas Sarkozy to see if they can bring the leaders into the positive-sum game arrangements that are going on in the policy channels and raise the game level of leaders to that of G20 senior officials.