Does the G20 matter?

By Terra Lawson-Remer
February 24, 2012

G20 finance ministers are gathering in Mexico City this weekend to prepare for the fourth G20 Leaders’ Summit since the Group of 20 declared itself the premier forum for international economic cooperation at its 2009 Pittsburgh summit. Birthed to coordinate a response to the global financial crisis, the informal body of the world’s richest countries has seen its agenda balloon over the past four years to encompass everything from green growth (Mexico’s pet initiative) to commodity price volatility (the agenda of the French, who hosted last year) to anti-corruption.

As workstreams proliferate, consuming an ever-increasing amount of communiqué paper and government staffers’ time, the question must be asked: Does the G20 matter? Or, more precisely, what should the G20’s role be on the global stage, and what reforms (if any) are required to allow the body to fulfill this role effectively?

The informal group was elevated from finance ministers to heads of state to quickly coordinate a decisive response in the face of the global economic crisis in 2008; and effective action required a forum that included China and other important emerging economies, as the former G7/8 club could no longer really call the shots. In its important initial mission the G20 mostly succeeded, forming the Financial Stability Board and taking other critical measures to stabilize the economy. Now the G20, at a leaders’ level, is de facto the premier forum for international dialogue and cooperation on a whole range of critical global issues that have been unable to find resolution in other contexts.

Yet the G20 excludes more than four-fifths of the world’s countries, causing some critics (and excluded countries) to denounce it as unrepresentative and therefore insufficiently legitimate. And because having enough of the right actors at the table is a prerequisite for effective global coordination, these same critics contend that this lack of representative legitimacy also undermines the G20’s effectiveness. At the same time, the informal structure of the G20, with a rotating chair and no permanent secretariat, means that agendas are determined each year by the chair and so can swing widely, and formal mechanisms to monitor follow-through on countries’ public commitments are weak.

To address these perceived governance challenges, some G20 members (Korea, France, and Brazil, among others) are pushing for a permanent secretariat and formal criteria for membership selection. In this view the G20 should be institutionalized to ensure continuity and follow-through on the implementation of global commitments, and to cement the group’s legitimacy and prominence as a global forum. Likewise, some members and non-members are eager to expand the group to include more countries. On the other hand, some G20 members (including the U.S.) argue that the body should remain nimble, with no heavy bureaucratic secretariat and with a narrowly defined and focused agenda, to reduce coordination challenges and make quick responses in times of crisis possible. As the UN amply illustrates, there is a significant trade-off between inclusive membership and the ability of an international body to come to quick, decisive and meaningful consensus.

Yet fundamentally both camps miss the boat. The main constraint on the G20’s effectiveness is not whether other countries are included — the existent group already represents 90 percent of global GDP, 80 percent of world trade and 65 percent of the global population, including key emerging economies like China and Brazil. This is far more inclusive and representative than the G8, which the G20 has largely displaced, and more than adequate to make agreements to act collectively credible and effective. Nor does the group’s efficacy depend on whether the G20 sticks to financial issues narrowly conceived or expands its remit to address other fundamental global challenges that have failed to see cooperative solutions emerge in other forums. The issues on the G20’s burgeoning agenda are critical global problems, and solutions may indeed be fundamental to sustainable, balanced and inclusive growth in the long term.

The main threat to the G20’s effectiveness is its lack of domestic legitimacy within member countries. The group is widely perceived by the public as transnational elites hatching plans behind closed doors in insulated centers of power. Without genuine ex ante engagement to build trust and support with diverse domestic constituencies — labor, business, civil society, and the members of parliaments and congresses that purportedly represent these different interests — leaders will never have the space within the G20 to negotiate meaningful agreements. Finance ministers and heads of state now come to the table with their hands tied, their positions determined in advance by their governments and a formal script that precludes meaningful and creative compromises. And the problem only increases once leaders leave summits to return home. Bound internationally by public commitments, but without the ability to get those agendas enacted at home, the effective implementation of commitments is even weaker than the ability of leaders to forge meaningful agreements in the first place.

To increase its legitimacy — and ultimately its effectiveness — the G20 needs to improve transparency and accountability to the diverse constituencies that are ultimately impacted by the deals leaders cut behind closed doors in Cannes and Los Cabos. Baby steps in this direction have already been taken: The Mexican government is now tweeting about its G20 preparations, and there are parallel consultative groups for business (the “B20”) and labor (the “L20”). Yet engagement and consultation need to go beyond social media and high-level conferences. The G20 as a body, and G20 member countries individually, need to develop stronger mechanisms to seek meaningful input and build consensus from the global public that ultimately must live with the consequences of leaders’ choices and trade-offs. Ultimately, the G20 will only continue to matter if it can prove itself capable of effectively confronting the threats most existential to people’s livelihoods. In this, leaders and finance ministers require us all as partners.

PHOTO: U.S. President Barack Obama speaks during a news conference at the end of the G20 Summit in Cannes, France, November 4, 2011. REUTERS/Kevin Lamarque

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