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December 19, 2012

What's The Matter With The G20?
Posted by David Shorr

Civil20Experts are worried about the G20. After four years and seven summit meetings, many of my fellow G20-watchers are asking why the group doesn't have more to show for its efforts? But as conventional wisdom about the problem's source starts to take hold, I think my colleagues are getting it wrong. 

Setting the question aside for a moment, this is a good time to debate these issues as the chairmanship of the G20 passes from Mexico to Russia. In fact, many of us were in Moscow last week when Russia's government -- together with leading think tanks RANEPA and the Higher School of Economics -- hosted Think20 and Civil20 expert consultations to collect ideas. Planning for next September's St. Petersburg summit is just getting underway, and President Putin's G20 Sherpa Ksenia Yudaeva hosted her counterparts for the first time, also last week.

As Australia looks toward its turn as summit host in 2014, it has set up a research center on the G20 in the Lowy Institute. The introduction to that center's new report, "Challenges Facing the G20 in 2013," offers the following critique:

Many worry that the G20's agenda has been expanding too widely and covering too many issues. Given a weak, unbalanced, and vulnerable global economy, it is essential that the G20 give top priority to reinvigorating global growth. 

I have no qualms with how the authors characterize the agenda-creep that's taken place or the G20's prorper priority on the health of the global economy. My objection is to the way they -- and, admittedly, many others -- connect the two. If you're trying to lay blame for the G20's modest progress on the leaders supposedly being distracted by secondary matters, count me a skeptic. 

Let's take stock of the shortfalls on the G20's core agenda; judge for yourself whether the its sponsorship of a few working groups on anti-corruption, development, or climate change financing seems a likely culprit: fragile economic recovery; threat posed by sovereign debt on the Eurozone's periphery; structural adjustments to economies overly dependent on exports or leverage; governance reform of the IMF and World Bank; imposition of tougher capital requirements for banks; regulation of derivatives markets... Do we really think that expert-level discussions of financial inclusion, financing for infrastructure, or commodity price volatility kept the G20 from doing more in the priority areas? 

Obviously my underlying point is about the inherent degree-of-difficulty challenges associated with the G20's main tasks. But there's also an obvious explanation that tends to be glossed over: the deep divisions among key governments over stimulus and austerity. In other words, divergence on whether deficit spending is a solution or problem has meant G20 leaders don't agree on the basic issue of how to promote economic recovery. (This split became public before the 2010 Toronto summit when Pres. Obama cautioned against hastily ending stimulus in a letter to his counterparts.)

Among other things, this has left the G20 community with contradictory impulses -- simultaneously fretting over reducing the US deficit and the threat of the fiscal cliff, which is basically drastic deficit-reduction. Indeed, one of the Civil20 conference's most interesting moments was when a light bulb seemed to go off for a development aid advocate during the discussion of fiscal consolidation. Doing the 2+2 arithmetic on austerity and recovery, she pointed out that it would be bad for the global economy for the G20 governments to fulfil their commitments on consolidation.

But let me come back to the broader matter of the G20 and its problems. I think we need to turn the idea of agenda-creep on its head. There's no denying that the G20 agenda has become messy. Critics tend to misdiagnose the problem and overstate the consequences, as I've argued, but there actually is a problem. The really problematic agenda-creep has been happening within agenda items themselves -- internal to the issue areas in the G20 portfolio -- rather than between the different topics.

Strangely enough, the problem stems from the (well-intentioned) desire to take a comprehensive approach toward problems. As issues have been added to the agenda, the impulse to identify all dimensions of those issues is a hindrance rather than a help for the G20. To get a sense of this, just scan this 2011 report from the G20 Development Working Group, which reads more like a tour of horizon for global development work, rather than a focused checklist of advances that can be made on behalf of world leaders. It is probably unrealistic to hope the G20 can catalyze game-changing grand bargains. And yet, we need to adopt a new G20 agenda discipline whereby each issue comes with a theory-of-change showing how the blessing or impetus from world leaders will contribute to progress on the issue. For an example of an agenda item with clear focus, see the latest action plan for the G20 Anti-Corruption Working Group

I believe leaders of the G20 have sufficient diplomatic and policy bandwidth to tackle issues beyond the group's core responsibilities for global economic growth and financial stability. In fact, I've heard senior officials argue the need for a range topics to complement the top-tier items on which progress will be unavoidably slow. But with that said, there is plenty of room for sharper focus across the G20 agenda. 

Photo: Russia G20

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