More than just a talk show

G20 cannot avoid the representation issue if it is to become an effective and sustainable steering mechanism

The G20 has been widely hailed as “historic progress” in the restructuring of global governance. As long as the power-shifting process does not reverse, the urgent demands on the G20 will continue to exist. However, meeting those demands is proving increasingly difficult.

Misgivings and criticism of the G20 emerged after the 2010 Toronto Summit. There is concern that it could be just another talk show like APEC. Whether it will be able to successfully transform from a crisis management approach to a long-term steering committee is uncertain and means overcoming great challenges.

The G20 needs to balance a number of conflicts. The first is to balance the immediate needs of countering inflation, unemployment and weak momentum, with the medium to long-term task of ensuring a balanced, strong and sustainable world economy. The second is to balance combating urgent crises with the comprehensive reorientation of the world economy. The third, and most important, is to strike a balance between and among divergent interests during the transformation.

The two-speed global recovery has resulted in conflicting macroeconomic policies, namely, the tightening of monetary policies to fight inflation in emerging economies is countered by the quantitative easing of advanced economies.

However, more fundamentally, the traditional dichotomy of developed and developing countries is not applicable any more. While national interests are increasingly globalized and intertwined, they are also becoming more diversified, rendering global cooperation harder and harder.

Therefore, the world is getting tougher to govern. The G20 members need to think and act more strategically and ambitiously to narrow the differences and find and realize the “contract surplus”. Major powers should not only take advantage of their structural leadership but also exhibit more intellectual and entrepreneurial leadership in this process.

At the same time, emerging economies need to be more proactive in setting the G20’s agenda and play a more constructive role within the mechanism to bridge the developed and developing worlds. BRICS is a positive start, but it is still short of substantial coordination. Asymmetric interests and different positions are limiting its ability to present a united position and collective influence on global governance.

For example, Russia does not see much relevance or gain in the G20 agenda and is refocusing its attention on regional affairs. Emerging economies are also often defensive rather than offensive. On the issue of choosing a new IMF managing director, BRICS issued a common statement expressing concern about European efforts to hold onto the position, but did not effectively nominate its own candidate. More strategic and efficient coordination among BRICS members is needed.

It is true that international institutions like the G20 usually plays a marginal role in facilitating global cooperation; but this role is never negligible. It provides a platform for members to exchange information, promote understanding, foster consensus and monitor compliance. Therefore, more institution building is needed to improve its relevance and sustainability.

Three points are worth mentioning:

First and foremost, the G20 as a leaders’ summit should be more active beyond economic governance. A more profound scope for the G20 in the future could foster strategic consensus across issues, leaving the details to be worked out by bureaucrats. As the Chinese scholar Liu Youfa said, the G20 should fulfill the roles of crisis management, economic growth and global governance analogously to the UN’s goals of “peace, development and cooperation”.

The G20 members are somewhat like elephants in the global zoo of nations, so whether their relations are harmonious or not will set the tone of peace or conflicts for the whole world. So the G20 needs to move forward from the annual presidency to system building and strengthen designing and planning. Small members tend to favor a more institutionalized structure while major powers would prefer more flexibility to enjoy the manipulation of their power. It is not desirable to transform the G20 to a formal organization like the Bretton Woods System; but a more credible G20 needs more principles, rules and mandates for its agenda-setting, proceedings and policy implementation.

If a standing secretariat is not easy to establish, a revolving troika composed of previous, present and future host states based on the majority principle could be institutionalized. The G20 needs to strike a balance between tangible benefits and intangible norms.

Last but not least, the representation and legitimacy issue needs to be taken seriously and dealt with properly. The demand for representation has been increasing in recent years due to the rise of global governance. Although the G20 is already a more inclusive architecture compared to the G8 in terms of GDP, it still leaves 85 percent of states outside the door and therefore faces more and more criticism.

The formation of the G20 actually stimulated more demands for participation and the developing world argues that the expansion of the G20’s coverage into issues that are in the domain of the UN could increasingly undermine the legitimacy of the G20.

Therefore, the G20 cannot avoid the representation issue in order to be effective and sustainable. Regional organizations, non-members, especially those from Africa, and civil society should be more involved in this mechanism. The Seoul Summit offered an invitation to up to five non-members to the G20 meeting with a range of international organizations, regional bodies, academics, and civil society, among others, but without workable rules.

The G20 needs to make a formal mandate about this issue.

The author is research fellow in the Department of World Economy, Shanghai Institute for International Studies.

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