It will shut down a city for two days, cost hundreds of millions of dollars and oblige 20 of the world’s top leaders to make long journeys to the east coast of Australia. So it would be a bit of a letdown if theGroup of 20 summit meeting in Brisbane on Saturday and Sunday failed to accomplish very much.
Expectations are that the gathering will be a disappointment. Past summit meetings have fallen short of their goals, and the latest meeting will take place when collegiality among leaders is at a low ebb, strained by conflict in Ukraine, territorial disputes in Asia and war in the Middle East.
Failure of the G-20 meeting would be more than just a diplomatic setback for the countries involved, which include the United States, China, Russia, Japan, Germany and France. If they fail to coordinate their economic policies — the forum’s primary goal — the leaders will squander an opportunity to make the global economy grow faster and improve the living standards of millions of people, economists say.
John P. Lipsky, former first deputy managing director of the International Monetary Fund, has said that the Brisbane summit meeting is a make-or-break moment for the G-20. If the leaders fail to achieve anything concrete, or fail to follow up later, it will raise questions about whether they are capable of working together in service of global prosperity, Mr. Lipsky told an audience in Melbourne this year. During a recent telephone interview, he did not sound optimistic.
“In the way of these summits, agreements will be announced on all the principal agenda items,” Mr. Lipsky said by phone from Washington. “What remains to be seen is whether the specifics will be sufficiently credible and whether they will receive strong enough political backing by the G-20 leaders to make them politically convincing as well.”
The G-20 nations held their first summit meeting in 2008, at the height of the financial crisis, when the world was in danger of falling into economic depression.
Initially, the leaders, including those from developing countries like Brazil and India that had been excluded from the Group of 7 summit meetings — focused on creating a financial system less vulnerable to the kind of crisis that was then raging. Later, a more ambitious goal evolved — coordinating economic policies with the aim of lifting world growth.
World leaders would work together to remove the roadblocks to economic progress, including corruption, trade restrictions and regulations that discourage hiring and firing. Countries would spend more on research and development, create more equitable tax systems, and invest in public infrastructure like transit systems.
The stakes were big. In 2010, the I.M.F. estimated that if the 20 leaders could follow through on their commitments, global growth would have been 2.5 percentage points higher. The extra economic output would be worth $1.5 trillion, the I.M.F. said, while 30 million new jobs would be created and 33 million people would escape poverty.
The I.M.F. also sketched out a worst-case scenario in which members of the G-20 did not follow through on their promises and growth missed forecasts. The difference between the best-case and worst-case scenarios was $4 trillion in output and 52 million jobs.
In fact, it was the worst-case scenario that proved to be the more accurate prediction. If anything, Mr. Lipsky said, it was too optimistic.
Strictly speaking, the G-20 is not a forum to achieve rapprochement with Russia over Ukraine or adjudicate conflicting claims to waters in the South China Sea. The G-20 is supposed to be about economics and finance. The United Nations is supposed to be responsible for geopolitical issues.
But heightened tensions will inevitably affect the mood in the Brisbane convention center, where the leaders, 4,000 delegates and an estimated 3,000 media representatives will gather. Security precautions will be even more intense than usual because of conflict in Syria and Iraq and heightened fear of terrorism. A public holiday has been declared in Brisbane for Friday.
The government of Australia will spend 400 million Australian dollars, or about $350 million, hosting the event, according to local press reports. That figure does not include what the G-20 leaders and their entourages will spend during the meeting.
The summit meeting is the culmination of intense preparation by officials below the rank of head of state. In September, central bank governors and finance ministers from the G-20 countries met in Cairns, farther up Australia’s eastern coast, and agreed to a range of measures designed to add 1.8 percent to global growth by 2018. This included more investment in public works and measures to combat tax evasion.
But such high-minded policy declarations often prove to be inconsistent with the domestic politics of individual members. Germany, for example, has been reluctant to spend more fixing roads and bridges, even though the government has a budget surplus and can borrow money on international financial markets at interest rates close to zero. Cautious German voters would rather save than invest in, say, their country’s overcrowded public universities.
Mike Callaghan, director of the G-20 Studies Center at the Lowy Institute for International Policy in Sydney, said there should be more rigorous monitoring of whether leaders delivered on their promises, and peer pressure when they fall short. In fact, one outcome of the G-20 in Brisbane could be a stronger mechanism to name and shame laggards.
In addition, Mr. Callaghan said, leaders need to spend more time explaining to their own citizens why the G-20 and its aims are important.
“The biggest step is to maintain the momentum, to actually implement these reforms,” he said. “We won’t know that until the fullness of time. It’s going to depend on winning domestic political battles.”
Even under the best of circumstances, the G-20 is an unwieldy group. Unlike the G-7, whose members are all wealthy democracies, the G-20 includes authoritarian countries like China and poor countries like India. But is it all just a waste of time and money?
The G-20 has arguably had a significant impact in addressing one pressing global issue: the fragility of the financial system. G-20 support has been crucial in addressing the problem of banks that are too big to fail, an underlying cause of the financial crisis that brought the world leaders to Washington in 2008 for the first summit meeting. Another likely outcome of the Brisbane gathering will be to endorse rules that further strengthen banks’ ability to absorb losses.
“Has the G-20 done enough to support a vision of well-functioning, integrated financial markets? I would say no,” said Nicolas Véron, a senior fellow at Bruegel, a research organization in Brussels. But he said the progress on bank regulation “has been useful.”
Moreover, he and others pointed out, there is something to be said for getting leaders together in one room where they have a chance to take each other’s measure, where they must deal with each other as mortal human beings.
“Maybe there are too many people attending and too much taxpayers’ money spent,” Mr. Véron said. “But the fact that we have these meetings to discuss the world economy at the highest level with the most important leaders is useful.”
No comments:
Post a Comment