Two days after the official communiqué was released, the St. Petersburg G20 Summit has virtually disappeared from media commentary. It is quickly becoming the most forgettable of the eight G20 summits held to date. If this result was due to a lack of important issues facing the global economy, this may be understandable. Sadly, this is not the case. The reality is that the G20 may be becoming forgettable as a forum to provide the global economic leadership that it was created to achieve.
The history of summits informs us that they can become overwhelmed with a major event occurring in close proximity to the meeting. Such was the case in St. Petersburg, where the horrific events in Syria dominated the media and the attention of many of the leaders present. Concerns over human rights abuses in Russia, in particular affecting the LGBT (lesbian, gay, bisexual and transgender) community, further isolated President Putin, hindering the capacity of the summit host to push for substantial outcomes.
But G20 summits are not singular events. They are the culmination of months of efforts by national officials, working groups, a growing number of international organizations and input from groups such as the Business20, the Labour20, the Think 20 and many others. The global community does not want to see a communiqué that is simply a litany of work underway — we need to know of any substantial progress that has been registered, where major disagreements exist and the plans to address them.
What is so disquieting about this most recent summit is the sense it leaves with observers that the G20 is falling into a bureaucratic morass — longer communiqués (and annexes), more words and no sense of real progress.
After its initial success in confronting the 2008 financial crisis, the challenge facing the G20 was to demonstrate it could be equally successful in addressing medium-term challenges. The Mutual Assessment Program was developed to measure countries’ commitment and progress on actions to help achieve mutually agreed objectives. The ambition was to achieve the larger global growth (and job creation) that can be achieved through concerted action as identified by the International Monetary Fund (IMF) and others. We are still waiting for credible results. St. Petersburg only delivered a long litany of already announced national actions.
Another major outcome from the first summits was the need to identify spillovers from the policy actions of one country on others, and consider ways to mitigate these. The prime example of this has been the effects of quantitative easing on global liquidity and the likely impact of the gradual reversal of these extraordinary monetary policy measures. There was nothing but recognition of the issue in the communiqué, accompanied by expressions of concern from the BRICs (Brazil, Russia, India and China) and an announcement of their intention to build up a US$100-billion fund to help confront spillover effects that may hit their economies.
The communiqué does recognize that risks to the global economy are weighted to the downside. Yet, where is the response to the call from Christine Lagarde, managing director of the IMF, for new defence lines to help protect against these risks? More broadly, where is the commitment to carry forward the reform of the IMF that had been triumphed earlier? The failure to implement the modest agreements makes the current communiqué language ring hollow.
Thanks to official briefings, media attention has been given to the G20 agreement to work on reaching an agreement on administrative measures to help confront tax avoidance and evasion. Two simple truths need to be pointed out on this agreement — this is simply a commitment to negotiate and secondly, while not unimportant, this issue hardly ranks on the same scale of global importance as the other issues that the G20 was to address. To the cynical, this might look simply like a diversionary tactic.
Perhaps the most charitable observation to be made is that St. Petersburg was a missed opportunity. The recent CIGI Survey on Global Economic Governance, released before St. Petersburg, noted the views of a number of senior policy analysts that, over the last year, there had been regression by the G20 in addressing a range of issues. St. Petersburg only adds to the sense that the group is moving backwards.
Australia, and its new prime minister, now takes over the presidency of the G20 at the end of the year. They face a huge challenge in trying to bring focus to the G20 work program and agenda, and reverse the sense of drift that exists today. Their success will hold out the possibility of important benefits for the global economy. Their failure will leave the G20 on a downward trajectory from which it may never escape. Let us not only wish them luck, but also hope the relevant actors (official and non-official) commit to doing all that is possible to facilitate a successful Brisbane summit.