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. The catchphrase of France’s G20 presidency is, “New World, New Ideas.” But the reality is that the challenges facing the G20 are not so new.
The economic agenda will once again dominate the summit discussions as we edge towards recession. The focus at this year’s summit will most likely be on the euro zone collapse and the Greek insolvency. G20 leaders are not out of options, but the major economies have lost their unity of purpose. Technical solutions can be found, but governance questions are preventing action from taking place. There are domestic political hurdles to clear in Europe and in the United States. The G20 cannot operate in isolation to current political environments. But the focus on events in Europe (and to a slightly lesser extent in the United States) risks masking the broader agenda for global economic cooperation that the G20 committed themselves to pursue. Indeed, it is only through a common sense of purpose and credible policies for cooperative action that the world will be able to successfully address its current challenges.
As leaders of the G20 nations prepare for their summit at Cannes, France on November 3-4, this series offers expert policy analysis and prescriptions dealing with the discrete facets of the G20 work and issues. Focusing on the core economic agenda, Paul Jenkins argues that the global economic recovery has lost considerable traction; one of the major obstacles to essential medium-term recovery and growth is uncertainty about the direction of global economic policy. In Cannes, leaders must agree on the policies necessary to secure global economic growth. Regarding the international financial regulatory agenda, Eric Helleiner emphasizes the importance of carrying through on commitments to create prudential standards for global systemically important institutions, while strengthening the regulation and supervisions of over-the-counter derivatives markets, and boosting the standing and abilities of the Financial Stability Board. Gregory Chin makes a case against stovepiping issues to resolve global imbalances; burden-sharing negotiations under the Mutual Assessment Process should not be separated in the G20’s work from the benefit-sharing discussions on global development.
Jennifer Clapp, Daniel Schwanen, Andrew Cooper and John Curtis address other issues facing G20 leaders focusing on food security, employment, anti-corruption and trade.
In terms of the G20 process, Gordon Smith focuses contextually on creating an informal atmosphere at summits to promote frank discussion among leaders on broad strategic and political issues to maintain their focus. Colin Bradford urges G20 leaders to use summits as moments to publicly communicate key messages on the links between global forces and domestic conditions to demonstrate how their concerted leadership can result in positive feedback loops. Beyond the core participants, Deanne Leifso argues that the G20 can achieve wider global buy-in through the development of permanent and transparent outreach mechanisms to non-members, international and inter-governmental organizations, and other key stakeholders.
Mistrust in the ability of governments and the G20 to respond to today’s problems is growing, as most recently evidenced by the global “Occupy Wall Street” demonstrations. The reputation and credibility of the G20 as a global governance institution is at stake. The world is looking for the Cannes summit to provide realistic and meaningful steps towards solving the crisis and moving forward. The challenge for Mexico will be to sustain whatever momentum may come out of Cannes from November to the June 2012 Los Cabos summit. Barry Carin addresses prospects going forward.
The time has come for leadership and for concrete proposals. Leaders are publicly expressing their frustration over the inaction of their counterparts in other G20 countries. Leaders must go beyond rhetoric; they must be willing to act. Can they in Cannes? The clock is ticking.