In the run-up to the Los Cabos G20 Summit, there were expressions of concern in several circles in various countries that the G20 is running out of steam, as the world economy is losing momentum, given slower growth in Europe, the United States and China. This skeptical view derives from a number of dimensions: lots of words, little action; more discord than concord; and a poor track record of implementing commitments.
Words and Actions
Los Cabos produced four documents: The Leaders Declaration; The Los Cabos Growth and Jobs Action Plan; Policy Commitments for each G20 country; and The 2012 Progress Report of the Development Working Group. In addition, the Business 20 (B20) produced a set of Task Force Reports, and the Labour 20 (L20) also produced a short report and engineered a joint B20-L20 meeting with G20 leaders.
These documents are thick with details of actions taken now and in the immediate future by governments since the last G20 summit in Cannes in November 2011, and undertakings by a myriad of international organizations on a wide range of issues. Some of the highlights are:
- more than two pages per country of detailed objectives, policy commitments/timeframes and updates on progress on fiscal policy, financial sector policy and structural reforms;
- a focus on European actions to delink debt and sovereignty, ameliorating the fiscal impact of public debt that has been crippling Europe;
- full G20 support for Europe’s formation of a banking union involving banking supervision, bankruptcy resolution, recapitalization of private banks and region-wide deposit insurance;
- European Union commitment “to move forward expeditiously on measures to support growth”;
- nine specifically named G20 countries agreed to “stand ready to coordinate and implement additional measures to support demand…should economic conditions deteriorate significantly further”;
- $456 billion more in resources for the International Monetary Fund (IMF);
- strong evidence of progress on financial regulatory reform, highlighting national actions and leadership by the Financial Stability Board in Basel in harmonizing them for consistency, which is vital;
- linking financial inclusion to financial stability, explicitly acknowledging the impact of under-regulated financial markets on income inequality;
- the creation of a B20-G20 Green Growth Action Alliance that will forge a framework for public-private sector collaboration and reporting to accelerate sustainable economic growth;
- pushing best practices for urban mass transit infrastructure projects and integrated strategies for cities that will contain seven out of 10 of the world’s people by 2030;
- accepting the L20 proposal for nationally determined social protection floors to cushion the impact of downturns on the most vulnerable; and
- pushing for completion by 2014 to reduce the global average of transferring remittances to five percent, down from 9.12 percent today.
This gives a sense of the level of detail on issues — large and small — that were dealt with at Los Cabos by the G20 leaders, their Sherpas, their ministers of finance and finance deputies. On the pressing issue of Europe and other core issues such as financial regulatory reform, IMF reform and resources, job growth and economic vulnerability, the Los Cabos G20 scrubbed the policy menus and inventories to ferret out actions that could make a difference now and over the longer term.
There is evidence that work was done, issues were struggled with and agreements were forged. There is a sense of soothing in the words coming out of Los Cabos, which is reflected in the real world.
More Discord than Concord, from Steam to Heat
One of the most interesting moments at this G20 summit occurred during the press conference by José Manuel Barroso, president of the European Commission, and Herman Van Rompuy, president of the European Union, on the morning before the summit opened. In response to a tough question by a Canadian journalist asking, “Why should North Americans put their money at risk to save Europe?” Barroso roared back, saying he did not come to Los Cabos “to take lessons from anyone.”
This incident revealed the pressure that Barroso and other European leaders are under from the rest of the world, which also has a stake in the outcome of their efforts.
It also revealed a reality of summit processes, which are meant to turn up the heat on governments to do not only what is in their national interest, but what is also good for the world. Barroso responded that he expected an expression of confidence in Europe from the non-European members of the G20. He did receive both, in the documents and in Mexican President Felipe Calderón’s remarks at his press conference at the end of the summit. Policy pressure is the currency of summits. No tension, no results. Barroso’s anger revealed there was work being done at the leaders’ level during the summit.
Blah, Blah, Blah without Follow-through
Attached to the Los Cabos Growth and Jobs Action Plan are two documents: The Los Cabos Accountability Assessment Framework and The Los Cabos Accountability Assessment.
The Accountability Assessment Framework agreed to at the summit is meant to be country-owned, “based on a rigorous comply or explain approach;” concrete, using quantitative measures; consistent across countries; and fair, open and transparent. It is to rely on peer review processes informed by third-party assessments and progress reports, the first of which is due in November 2012.
The Los Cabos Accountability Assessment acknowledged that the common goal of achieving strong, sustainable and balanced growth “has remained elusive,” and stated, “a more determined effort across all policy areas is required.” It also specified actions on fiscal policy, monetary and exchange rate policies, structural policies, and trade, financial sector and development policies, in which it names countries and calls on them for specific actions.
On structural polices, for example, the Accountability Assessment called on the euro area and Japan to “make more progress on product market reforms, on the United States to encourage private savings, Germany to promote domestic demand and emerging markets to increase domestic consumption.” All of these issues can be monitored, reported and peer reviewed. Accountability is feasible and inevitable in this setting.
G20 summits are massive, complex enterprises. Approximately 12,000 people went to Los Cabos for the summit. Non-governmental organization leaders, journalists, business executives, labour leaders and experts — not just officials — showed up in droves. There were nonstop conferences, meetings, briefings, seminars and special events. Officials from the BRICS (Brazil, Russia, India, China and South Africa) met on the sidelines and hatched a first-ever, pan-regional set of swap lines and financial arrangements as part of the financial safety-net system among major countries. Everywhere, there were people pushing issues. The summit is not just about the leaders. I was surprised that the B20 business leaders’ forum, which I attended, is not just an ornament, but a serious effort by international business to be heard, form coalitions and put forward ideas. The B20’s task force reports were taken seriously; its work on green growth engaged the likes of Nick Stern, famous for his report that made the world aware that small investments now could ward off larger costs later to mitigate climate change; Rick Samans, executive director of the Global Green Growth Institute in Seoul; and Andrew Steer, newly named president of the World Resources Institute.
After attending Los Cabos and being part of the summit, my conclusion is that G20 summits now consist of a broad and deep set of processes and forums for engagement in forging and advancing the global agenda on a myriad of issues, involving hosts of players and actors. G20 summitry is an ongoing process that is carried out among officials and others throughout the year, not just at peak moments when leaders are directly involved. It is eclectic, multifaceted and dynamic, oscillating between focus and diffusion, orderly preparation and spontaneity, depth and superficiality, and despair and a sense that it matters. G20 summitry is a human undertaking full of aspiration and hope, grounded in reality and constraints. It is real; it is not a pretense. It is a huge effort to do what can feasibly be done to create a better world — one that is better than it would be without the G20 summit.