Editor's note: This roundup is a new monthly feature of the Council of Councils initiative, gathering opinions from global experts on major international developments.
World leaders at the G20 meeting will be required to scale two summits in one. The first is the official summit, with its full agenda, including stabilization and structural reforms, strengthening financial regulation and financial inclusion, international financial architecture reforms, green growth, and food security. Each of these issues will have an allotted time in the schedule, featuring set-piece interventions and earnest expressions over the need for action. While each of these topics is important in its own right, it is unlikely that substantive progress will be made on any of them. Indeed, in some respects, they will be a distraction.
G20 countries have a legitimate interest in the timely, effective resolution of the crisis in the eurozone, which, if left unchecked, will impose a cost on the rest of the world. In an integrated global economy, each country's interests are tied to those of other countries.
But with their own summit planned for later in the month, European leaders are likely to rebuff G20 efforts to secure policy commitments on measures to contain and resolve the crisis. They will argue that the eurozone is an internal European crisis that should be solved internally.
This is the problem: Whereas other G20 members have the fiscal and political institutions to support their monetary arrangements, Europe has complete monetary union and financial integration, but incomplete fiscal and political integration to share risk across the eurozone. In this respect, the continuing crisis represents a fundamental failure of governance.
Europe needs to fill the gaps in its governance arrangements. And while crises can help break a political impasse that stymies reforms, they can also create forces that broaden existing cleavages. Marshalling the former and resisting the latter will take genuine leadership.
It would be encouraging if such leadership is provided at Los Cabos. This is, however, unlikely. As a result, the prospects for Los Cabos are not terribly bright. Expect a detailed communiqué long on the specifics of what should be done with respect to official summit agenda items, but short on concrete measures to address the growing risks in the global economy.
If G20 leaders don't successfully scale these twin peaks of Los Cabos, they will face a more daunting challenge: preserving the open, dynamic system of trade and payments that has been painstakingly created over the past seventy years. The need for international cooperation has rarely been greater. The question is: Will the G20 be capable of delivering?
This is because the other summit to be scaled at Los Cabos is the increasingly fragile state of the global economy. Behind the scenes, this is what will preoccupy leaders. The global economy will be the issue to which the time and energy of leaders, finance ministers, and other senior officials will undoubtedly be directed.
Prospects for the global economy have darkened considerably over the past several weeks, with new concerns about U.S. employment growth, coupled with recent signs of slowing growth in key emerging economies. Most worrying, however, is the deterioration in eurozone growth prospects and the heightened risk of a European banking failure. Spain's decision this past weekend to seek financial assistance to address the problems in its banking system underscores the gravity of the situation and the need for urgent action.