In my experience as a Canadian representative to many summits, G20 and G8 summits are usually shaped by three factors, in descending order of impact: The immediate context, the priorities set by the host and the follow-up on previous summit decisions. The St. Petersburg G20 Summit on September 5 and 6 will be no different.
While the issue of Syria – depending on developments ahead of St. Petersburg – will certainly be present in corridor discussions and side meetings and will drive media attention (much to Russian dismay), it will not be a topic of discussion at the summit table. Members are not yet collectively ready to put a political issue into play in the G20, especially one as divisive as this.
Over all, leaders will focus on the economic business at hand. While some decisions still depend on discussions in St. Petersburg among officials and leaders, signs point to a modestly productive and workmanlike economic summit, with some practical outcomes. There will be some “misses,” but overall, this could be a good summit for a G20 that is now out of crisis mode.
It should also be a good summit for Canada’s Prime Minister. Many outcomes will be consistent with Stephen Harper’s priorities since 2008 for the G20, including promoting economic growth and jobs, fiscal consolidation and good macroeconomic policy, better financial regulation and more open international trade. The agenda should play well to Mr. Harper’s strengths and experience as one of the veterans at the table.
Contextually, there are no immediate economic or financial emergencies. The global economy is still struggling (the International Monetary Fund has recently pared back its 2013 growth estimates), but slow improvements are evident in the United States, Japan is on the move and there are indications that the European Union may be coming out of its slump; as a result, leaders will want to sustain the slow course of global recovery and send positive signals to markets.
As regards advanced countries, we should expect a repeat of the June G8 summit formula, in which a fine balance was struck between stressing the need for medium-term fiscal consolidation plans (as set out in the Toronto communiqué in 2010 – and still more or less on track) and allowing for case-by-case variations in countries still struggling to rekindle growth.
Businesses will look for leaders to support the launching of negotiations on trade facilitation when World Trade Organization ministers meet later in the year. They will also look for a renewal of the Toronto G20 “standstill” commitment against taking new protectionist trade measures, although the record has been mixed in its implementation.
The only new concern for St. Petersburg will be the slowing of growth in China, and the doldrums now evident in India, Brazil and other emerging economies. But it is still be too early to push any panic buttons. In the meantime, the juxtaposition of this development with the apparent, if uneven, economic revival in the developed world is causing fault lines to re-emerge within the G20 on such issues as capital flows (this time away from emerging markets) and currency weaknesses in places such as India, Indonesia and Turkey.
Sooner or later the G20 will need to discuss the impact of this structural slowdown on the longer-term outlook for the global economy, and what it means for G20 policies and collaboration in meeting the group’s 2009 objective of achieving “strong, sustainable and balanced” global growth. Perhaps that discussion is something for the 2014 G20 summit in Australia, a country very much feeling the effects of China’s moderating growth rate.
To the surprise of some, Russian President Vladimir Putin did not succumb to the temptation of coming up with a list of ambitious new “signature” initiatives. Instead, the Russian chair has largely emphasized continuity and stewardship through a set of priorities that picks up or builds on past themes.
For instance, in the realm of macroeconomic policy, the Russians have focused on the timely subject of jobs and employment, and how governments can best tackle structural unemployment and promote employment of vulnerable groups such as youth. From within the G20’s lengthy “development agenda,” they are looking for ways to enhance long-term financing arrangements for badly needed infrastructure projects in developing countries. They have predictably taken ownership of the G20’s Energy Sustainability theme, focusing, for example, on the transparency and functioning of international commodity and energy markets.
In these and other areas the Russian president is looking for some “wins” to put in the window as his G20 achievements.
One practical and timely “win” will be the decision in St. Petersburg to adopt an Organisation for Economic Co-operation and Development’s “Action Plan,” which offers a road map for G20 governments to follow in cooperating on setting new international taxation standards and processes, to prevent “double non-taxation” by multi-national companies looking to reduce their tax load.
Some good outcomes will also lie in progress with the G20 work plan. Accountability for results (promoted by Canada ahead of the Toronto summit) is slowly becoming an accepted principle underlying G20 credibility.
The G20’s anti-corruption initiative, which dates from the Toronto summit, is said to be nearing some solid outcomes for delivery in St. Petersburg. The irony of Russia driving this item is hard to miss: the positive view is that many in the Russian government believe that a strong outcome will help them deal with the problem at home.
Also on the very positive side, leaders should be expected to welcome progress and call for further work on the G20’s technically complex, but enormously important, financial regulatory agenda. This year it is has focused more on the effective regulation of “too big to fail” financial institutions, of insurance companies and “shadow banking” entities.
Finally, leaders must urge their finance ministries to meet the end-of-year deadlines for the reform of the governance of the International Monetary Fund, as agreed in Seoul three years ago. This reform would give more voice to emerging economies commensurate with their share of the global economy.
In sum, if all goes well (and differences over the Syrian issue do not spoil the working atmosphere) the St. Petersburg Action Plan should contain some solid outcomes.