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January 17, 2013

Does the G-20 Have Too Much on Its Plate?
Posted by David Shorr

Seoul summitOver at the interpreter blog of  Australia's Lowy Institute, Mike Callaghan and Mark Thirlwell kindly responded to a recent post I wrote on the G-20 (the major focus of my Stanley Foundation program). Their piece helps sustain an important debate regarding the proper role and scope of that high-level diplomatic process. Let's see if I can keep this exchange going. 

It can only help the G-20 to make an honest inventory of its strengths and shortcomings. With the benefit of four years' experience since it first convened world leaders in the middle of the financial meltdown, we can surely fine-tune the process for improved performance in its next phase. As with any multilateral forum, the G-20 is judged by whether its deliberations help address real-world problems. The value of the process lies in its ability take the issues on the agenda and prod them toward resolution. 

The debate between Callaghan, Thirlwell, and myself is about how many issues are on the G-20 agenda, and what kind. We're in agreement about the group's core mandates and top priorities: global economic growth, financial stability, and IMF governance reform. The dispute is about G-20 involvement in matters beyond those priorities. According to Mike and Mark, G-20 leaders have been distracted by too many peripheral matters for them to accomplish their main work. I think there are valid reasons for the G-20 to maintain a diversified portfolio. 

First off, if we're trying to explain why the G-20 has fallen short, distraction is a pretty weak alibi. The newer topics on the G-20 agenda are being scapegoated for the modest progress on the group's priorities.

It's plain to all of us G20-watchers what is needed on these issues, but we lay blame for the hold-up differently. Let's go through the major issues. While the G-20 performed heroically in warding off a global great depression three years ago, it has not given us a very strong recovery. The action plan from last June's summit offers a clear to-do list for the major economies to get in better balance and stronger performance; now those countries must take the prescribed macroeconomic steps. The Financial Stability Board has been plugging away at the problem of too-big-to-fail banks, but derivatives market regulation has been a struggle, and there are fears that Basel II and III capital requirements are too weak to prevent another crisis. As I've said, I don't think you can blame this state of affairs on the G-20's forays into development, climate, or anti-corruption.

There's an elephant in the room here, and it's the debate over austerity. I've seen this many times in discourse regarding multilateral bodies; in the rush to criticize the collective entity, the policy and political divisions among member governments get overlooked. So we can debate the wisdom of tight fiscal and monetary policy, but the G-20 has clearly given its leaders ample opportunity for, as they say, a full and frank exchange of views. The November 2011 Cannes summit, for example, was pretty much consumed by the Greek political crisis.

Disputing my claim that the G-20 has enough diplomatic bandwidth to tackle a variety of issues, Callaghan and Thirlwell respond:

But do leaders have the time? Meetings of G20 leaders, finance ministers and central bank governors are very crowded affairs. There is already little time to focus on the core responsibilities.

If we asked world leaders to delve into the details of every topic on the agenda, they certainly would not have the time. But then, that's not really how it works. For many issues on the docket, leaders simply give their blessing to the agreements and work that were hashed out by lower-level officials. (Callaghan probably knows this better than I do, having been deeply involved in the G-20 process as Australia's deputy finance minister.) Some items are handled mainly in expert-level working groups such as development or anti-corruption -- which hardly place strains on the prime ministers and presidents themselves. 

How do we know efforts at this level pose no major threat of distraction? Because despite a push by the current Russian G-20 presidency for a back-to-basics agenda at St. Petersburg, my understanding is that they intend to leave all working groups in place rather than shut any of them down. My point, though, is more general. All the warnings against distraction are painting with a pretty broad brushstroke, while the demands on officials' time and attention are, in fact, as different as the issues themselves. 

As Mike and Mark noted, we all agree on the need for greater discipline. The Development Working Group agenda, for instance, cries out for focus and prioritization. But I want to warn against being too narrow or rigid. There was another notable chink in Russia's back-to-basics approach as G-20 chair: sustainability and green growth. I suspect that many world leaders are worried they're not doing enough about the climate, and rightly so. The G-20 now has a working group on climate change financing, a key pillar of the Copenhagen accord. Perhaps they could also take a cue from the United States and focus on vehicle fuel economy standards.

The G-20 is the only major recent global governance innovation that brings together rising and established powers as peer equals. At a time when international cooperation is falling short of our major global challenges, we have to get as much out of the G-20 as we can. 

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