G20 needs new blood, sense of mission

The Hill Times  OPINION

by John Sinclair. 

PUBLISHED : Wednesday, Aug. 31, 2016

G20 needs new blood, sense of mission

Trudeau might suggest a tighter-knit forum for decisions on core global issues, starting with climate change.

As China prepares to host the G20 leaders’ summit for the first time this week, it is promising a different kind of summit, one focused on global development and the challenges of implementing the pro-poor goals of the UN’s new Agenda 2030.

But China seems fated to do little better than past chairs. The G20 is starting to look as tired as the G7. It needs new blood and a new sense of mission. Perhaps there are too many Europeans; certainly there is no voice at the table for the poorest nations.

The G20 started in 1999 as a club of finance ministers mainly G7 but augmented by the BRICS and a few other friendly minor countries, including some middle-income developing countries. The goal was to make symbolic amends for an ineffective International Monetary Fund response to the recent Asian financial crisis.

The world has avoided a new depression in 2008 via massive stimulus packages implemented by a G20, upgraded to a Leaders’ Summit. However, the regulatory reform of the flawed global financial systems that triggered the crisis is still unfinished. Indeed, the situation has been compounded by the ripple effect of recent European financial disorder. As for the upcoming United States election, it is being fought over who can most forcefully say globalization is the cause of all our social ills, including growing inequality and underemployment.

The global financial crisis continues into its eighth year. And it is in the second year of a refugee crisis, as Europe copes badly with the flow of battered humanity escaping the conflict in Syria. The Brexit referendum bombshell, driven by the UK’s own distinct crisis of unwanted migrants from inside the European Union, has stunned an already stalled Europe. Deep depression describes the mood in the very dis-united United Kingdom. Meanwhile many countries, rich and poor, are struggling with trade losses due to China’s policy of a calculated slowdown to 6.5 per cent growth.

China has perhaps over-invited developing countries as summit guests since there will be no big news, no bold new G20 action, no new aid pledges for the least developed or fragile states. Everybody is waiting for a breakthrough in the gloomy economic news.

But the latest IMF forecasts are all about shrinking growth. Global growth is down to 3.1 per cent for 2016, with most of that coming from emerging economies. They’re led by India, moving slightly ahead of China. The growth forecast for so-called advanced economies is just 1.8 per cent. All this is conveniently blamed upon Brexit. It means a major G20 preoccupation this weekend will be how to help the UK and EU find a soft landing after the folly of that referendum.

So what might we see out of Hangzhou? The working agenda is dominated by work by  finance ministers and central bank governors. There is again a pre-negotiated communiqué. The Leaders appear somewhat bystanders.

Once more there will be “almost completed” deals on structural reform, tougher regulation of footloose bankers and this year’s special innovation: promises of more infrastructure spending. Talk about reformed international financial architecture is promised, but the horse is already out of the stable, symbolized by China’s new $50-billion-plus Asian Infrastructure Investment Bank. [Canada announced plans to finally join just days before the G20 meeting.]

Another round of technical debate is needed to forge a broad consensus around so-called tax fairness reform. The present package is essentially designed for large/high-income economies.  In many European countries public pressure insists governments stop tax-avoiding, profit-shifting companies like Starbucks or Google. But the same OECD countries are home to multinational giants seeking every way of avoiding paying taxes. The weakest victims, poorer developing countries, are essentially excluded from both the design and benefits of new OECD/G20 anti-tax-evasion measures. They are to be denied access to key data on taxes evasion by multinational giants.

What key innovations for an enhanced G20 might Prime Minister Justin Trudeau press? He has gone to China a few days early to “reset” the bilateral relationship. He might use that access and Chinese respect for his prime ministerial father’s boldness to get China’s sympathetic ear for an effort to transform the G20 into strictly a leaders’ dialogue.

They need to break the common image of the G20 as a vehicle used by a tired G7 to try to get the BRICS (Brazil, Russia, India, China, and South Africa) to align with their worldview. Mr. Trudeau might suggest that leaders act more boldly to revamp the G20 as a tighter-knit forum for debate and decisions on core global issues, economic and political, starting with climate change. An encouraging precedent is that reportedly the United States and China plan to jointly announce their ratification of the Paris climate agreement on the eve of the summit.

Another G20 initiative could be a new Marshall Plan designed to assure financing, public and private, for the poorest countries in implementing the UN’s Agenda 2030.

And why not encourage the 2017 G20, under German leadership, to target a lasting peace for the Middle East?

G20 finance ministers and central bankers would still have their own high-level meetings on topics like upgraded financial regulation. They could simply mandate a small delegation to report at one session of an otherwise leaders-only G20 meeting.

Acting together, G20 leaders could mobilize the resources and political willpower to counter the economic pessimism reflected in Trumpism and the rise of the radical conservative right in Europe. They should also show the driving spirit to ensure the UN Agenda 2030 is not a fanciful dream, but something realizable.

The G20 needs a more compact forum, but one with the inclusiveness of the UN. It could start by adding a permanent seat for least-developed and fragile states, perhaps by reducing the disproportionate European presence.

John Sinclair is a Cambridge-educated economics graduate formerly with the Canadian International Development Agency and the World Bank. He comments on international development with the McLeod Group, teaches, and writes.

 

 

Advertisements