CIGI Commentaries

At 10 years’ remove from the sturm und drang in American policy circles over China’s accession to the WTO, the entire episode rests more quietly. So much has happened in China, in the world economy and in US-China economic and political relations since 2001. The burning questions that surrounded discussions in the run-up to China’s accession to the WTO seem, to many observers, muted and diminished. The multi-year “phase-in” process accompanying some of China’s most far-reaching adjustments has expired.

Most world leaders left the recent G20 meetings in Cannes with little to show and with great disappointment at failing to come to any detailed resolution over many of the key systemic issues that were on the agenda. Yet, there appears to be one unintended winner of the Cannes summit: Christine Lagarde and the International Monetary Fund (IMF). The managing director of the IMF and former French finance minister, who played a key role in organizing the G20 agenda under her former — and known to be prickly — boss President Nicolas Sarkozy, left the meetings with promises of additional funding, boosting of global confidence in IMF surveillance roles and endorsements from China and Brazil in the IMF as the credible monitor of Europe’s promises at reform.

The Cannes G20 Summit was almost blown off course by the sovereign debt crisis, which euro zone members tried, but failed, to stem in the days preceding the summit. In spite of the economic storm, the G20 managed, on a number of important files, to reaffirm and clarify directions taken and commitments made at earlier summits. Arguably, however, the summit also represents a step back from some other aspects of the G20 economic cooperation agenda, which, while more daring and difficult, could have fostered a more dynamic response to the unfolding crisis.

On the day after the Cannes G20 summit concluded, the lead article in The Guardian stated that Cannes “showed how power has shifted to Beijing.” In Le Monde, it was reported that China will likely become the second-largest contributor to the International Monetary Fund (IMF). It would be wise to avoid the China hype. Nonetheless, the signs are that Beijing will increase its contributions to the IMF in the not-too-distant future.

The heady days of the London and Pittsburgh summits of 2009 are gone. The spectre of the advanced world entering a “lost decade” is a real prospect. Governments are withdrawing stimulus as quickly as it was introduced. Mismanagement of the euro zone has largely eroded confidence to deal with the crisis that threatens to tear apart the single currency area. We are no nearer to a resolution of the euro crisis.

The media doesn’t get it. John F. Kennedy observed that “The great enemy of the truth is very often not the lie — deliberate, contrived and dishonest — but the myth — persistent, persuasive and unrealistic.” The media perpetuates the myth that 20 political leaders can crunch long-standing issues and solve complex problems in one and a half days.

It is easy to think that the French G20 was all about Greece all of the time. Certainly the media did their best to convey this impression, with journalists reacting to every new event (or rumour) from Athens. This impulse was especially noticeable on the first day of the summit, when most people at the media centre were watching the referendum-non-referendum saga, rather than what was happening at Cannes.

The G20 is at a crossroads as the world economy once again stands on a precipice. At the beginning of the year, and before the dimensions of the current economic crisis came into sharp relief, President Sarkozy set out an ambitious economic agenda for the G20, overcrowded with new priorities and issues — reforming the international monetary system; strengthening financial regulation; combatting commodity price volatility; supporting employment and strengthening the social dimension of globalization; fighting corruption; and working on behalf of development and infrastructure.

With the world economy beset again by financial turmoil, the G20 leaders’ summit will return to its original raison d’etre — global crisis management. While this may be comforting, ironically, to the proponents of global macro-coordination, it should not be overlooked that the ongoing G20 discussions to put the world economy onto sustainable, and balanced growth had already entered a state of semi-paralysis before the current financial plunge.

As a global leadership forum, G20 summits provide an opportunity to transform international interactions into new patterns of negotiation and new forms of behaviour, resulting in new global breakthroughs. So far, leadership within the G20 forum has, however, been tentative, minimalist and too often narrowly circumscribed by the primacy of member governments’ domestic concerns and constraints. G20 leaders have yet to hit their stride in finding modes of discourse, debate and decision that strengthen global regimes for managing global challenges and that convincingly address the anxieties and concerns of their publics.