Poverty lose out to ‘shirt-fronting’ at Brisbane G20

Published in EMBASSY, Wednesday, November 12, 2014—16 Opinion

Climate change, poverty lose out to ‘shirt-fronting’ at G20

It is becoming harder each year to see anything new and bold, anything that speaks to a better global future, from the G20. The 20 most powerful global leaders will gather this weekend in Brisbane, Australia, talk in private, have their photo-ops, then issue a pre-packaged communiqué that has been endlessly fine-tuned over several months to the point of tedium by twenty anonymous bureaucrats, the sherpas.

We won’t even get to see the big fight: ‘shirt-fronting’ host Tony Abbott versa black-belt holder, Vladimir Putin. (Some well-informed punters suggested 10-1 odds on a Putin win.)

Meanwhile the world outside, our world, stumbles on into another year of under-performing economies and a billion plus global citizens still living on less than $1.25 per day. This year’s rotating chair, Australia, almost succeeded in removing the existential topic of climate change from the agenda as mere ‘clutter’, until a last minute reprieve under pressure from the US and EU.

It is not clear if we are dealing with incompetence or indifference, but I fear the latter.

Of course the sherpas, respecting PM Abbott’s goals, have put together a busy but dull agenda, much of it is unfinished work from previous summits. Timely effective implementation does not seem to be a G20 strong point. Too many ‘decisions’ becomes subject to further studies. Maybe it needs a better accountability framework, one that is public and independently assessed.

Under the heading ‘a more resilient global economy’ the leaders will sign off on further regulations for those ‘too-big-to-fail’ banks that led us into the global financial crisis back in 2008. However past G20 decisions have done little for a struggling Europe. And now the German powerhouse is stalled and China admits to planning for slower growth.

PM Abbott’s favourite is a largely private sector-driven G20 push on infrastructure, to be supported by a newly created knowledge ‘Hub’ for those who don’t know quite what to do.

Meanwhile an impatient China has simply set up its own $100 billion Asian Infrastructure Bank.

There is more on the agenda – after all they have to touch at least lightly upon everything in the draft communiqué. They say they will discuss reforming global institutions – but, blocked by the US Congress, the very modest 2010 IMF reform package is still not implemented and the BRICS, in frustration at this inaction, have now announced their own IMF clone. The G20 plans to talk about ‘modernising international taxation’, a polite way of saying stopping the tax avoidance activities of companies such as Starbucks and Apple as they shuffle huge worldwide profits into countries such as Ireland and Luxembourg where very low taxes need to be paid. Will they remember to include the idea of a financial transactions tax to create new funds for climate action and development?

The meeting will plead for progress on the work of the WTO (World Trade Organisation) but the same reform package was rejected last year by veto-holding developing countries, notably India, since it failed to include any action to reduce huge US and EU agricultural subsidies that undermine the efforts of low-income country farmers. And those same G20 member industrialised countries, with Canada to the fore, are busy cooking up trade side-deals that undermine the WTO mandate for multilateralism. Sadly, the big fix idea for burgeoning unemployment, especially of the young, is discredited trickle-down economics. The G20 will call upon themselves to speed-up (+2%) growth, itself dependent on that plan for a surge in private investment on infrastructure.

All this suggests some holes in the master-plan for Brisbane. But it also points to serious structural flaws in the G20. Most fundamental is inadequately engaged leadership. There is too little focus on fundamental global challenges; too much technical clutter that should be left to others. The G20 is also institutionally weak. It has no secretariat. Its leaders probably rely too much on advice from IMF and OECD officials plus international bankers. It has no leadership continuity beyond the flimsy idea of the troika in which a team of ‘volunteers’, mainly bureaucrats seconded by the next chairman’s country, takes over afresh.

Moreover, despite being much more inclusive than the old elitist G7, the G20 needs to gain a permanent voice for the most vulnerable of low-income countries, the fragiles, known now as the ‘g7+’. Not unlike the IMF, the main problem is over-representation by Europe with 5/20 formal seats plus Spain with a permanent guest ticket. Any volunteers?

A by now perennial criticism is that the G20, both Leaders and Finance Ministers, have obsessed about mending Humpty after the global financial crisis at the expense of everything else we expect to concern global leaders. This is the last G20 before the UN membership at a summit next September sets in place a very ambitious global development agenda for the next 15 years, one set to eliminate extreme poverty by 2030. One might think the G20 would be devoting at least half of its time to this topic (and at least a sold chunk of the other half to Climate Change) leaving topics like the minutiae of new banking rules and efforts to resuscitate the WTO to technocrats. In practice the words ‘Post-2015 Agenda’ do not even appear once in the baseline framework posted on its Australian-managed website. How many lines will it merit in the Brisbane Action Plan? Perhaps a few passing words of moral support? Certainly expect no promises of aggressive unified G20 leadership at the critical Financing for Development conference next July in Ethiopia.

Intriguingly yesterday’s de facto summit of the G2 – USA and China – saw public pledges by Presidents Obama and Xi to work more closely on global issues, including specifically climate change. Is this a new opening for G20 leadership?

Is Canada a party to all this? Yes. We certainly had our sherpa at all the planning meetings. Moreover as Australia’s special ‘mate’ we have had privileged opportunities to influence them, beyond the idea of excluding Russia (something a BRICS’ public statement saying ‘hands off our G20’ quickly squelched). We probably support the incrementalist economics – but so far the Harper government has been dismissive of Opposition calls for a big infrastructure program using our new-found budget surplus. The government more broadly probably dislikes the idea of any action that challenges their dated view that the G7 is still the right place for serious global leadership. Overall we are happy to have had the Australians talking our party line, thus saving us from always being the spoiler.

John Sinclair, a Cambridge-educated economist, worked as a development practitioner at CIDA and the World Bank. He is a member of the McLeod Group. He is also a Distinguished Associate of the former North-South Institute.