The upcoming G20 Leaders’ Summit will be the eighth such meeting of the leaders of the world's major advanced and emerging economies, to develop policies aimed at improving sustainable, inclusive and balanced growth, and job creation globally. To get a better understanding of what to expect from the summit, we talk to Domenico Lombardi, Director of CIGI’s Global Economy Program, who is representing CIGI in St. Petersburg.
CIGI: In a recent overview of what to expect at St. Petersburg, you speculated that this summit “may, unlike previous G20 summits, be an event with no immediate, significant deliverables.” Having followed the G20 finance and leaders’ tracks since the previous summit, how would you gauge the current prospects for progress in international policy cooperation at St. Petersburg?
Domenico Lombardi: G20 summits typically provide an important opportunity for dialogue between systemic advanced and emerging economies, as well as between the latter and formal, treaty-based international organizations.
Whenever the world economy is confronted by a systemic threat, leaders from the G20 economies may provide a fast response, unlike international organizations that are bound by the scope of their mandates and the formality of their decision-making processes. Such features, in fact, make it difficult for these international organizations to act and adapt in a crisis-driven, rapidly evolving setting.
In the current global environment, the world economy faces downside risks and various sources of uncertainty, but there is no compelling evidence of an immediate disruption. This is why the forthcoming summit will be in a “dialogue” rather than an “action” mode.
CIGI: There doesn’t appear to be a dominant economic issue that could sidetrack the official agenda at St. Petersburg, as the euro-zone crisis did at past summits. But grave security concerns in Syria and Egypt could easily overshadow the discussions. How do you expect the Russian organizers will manage attempts to introduce non-agenda items?
Lombardi: For international forums like the G20, keeping momentum high requires the international policy cycle to be aligned to, or rather dominate, the national policy cycle. This was certainly the case at the height of the global financial crisis.
Now, instead, many G20 members are caught up in their own domestic issues. In the United States, for instance, the presidency and Congress are at odds vis-à-vis their relative weights in shaping critical policy decisions for the future of the country. The US failure to ratify the IMF reform package endorsed by the G20 leaders in Seoul in 2010 means that such reform has become a victim of national politics.
In the euro zone, the conflict is twofold: On one hand, there is an attempt at defining a new, emerging policy-making process that will presumably entail a greater weight for regional institutions. On the other hand, the asymmetry in power is growing between surplus or rule-making countries and deficit or rule-taking countries.
These national or intra-regional sources of conflict do not lend themselves to be effectively appraised in the context of a global, peer-review forum such as the G20. In fact, this touches the heart of a country’s sovereignty. Moreover, other sources of conflict, such as the civil war in Syria, are a bit distant from the de facto, self-attributed mandate of the G20.
This explains the apparent standstill.
CIGI: Looking ahead to Brisbane in 2014, what can we expect when Australia assumes the G20 presidency? What steps can they take to reinvigorate the process?
Lombardi: Politically, Australia is heavily invested in the G20 process, as is clear from the last time it chaired the then-still ministerial group. Unlike many other members of the G20, Australia can effectively work as a broker between advanced and emerging economies, especially those from Asia, which is at the heart of the G20’s nature.
Issues, such as reforming international financial architecture, including the role of recently established organizations like the Financial Stability Board, are likely to receive positive momentum under the Australian presidency.
Canada has a long-standing relationship with the incoming G20 chair — and, of course, CIGI has a very fruitful relationship with Australian institutions and think tanks.