While this G20 seeks to address a range of domestic and international issues, the agenda should be squarely focused on the reform of global governance structures.
The declared objective of the Australia’s G20 Presidency to promote a concise agenda focused on a few key issues is laudable. However, this streamlining and prioritization, which was also attempted by previous presidencies, has always proved challenging not least because it tends to collide with the need to take other participating states’ preferences into account. Moreover, some choices of the Australian Government could make it even more complicated. This applies, in particular, to the emphasis it has placed on the role of G20 in providing targets for domestic economic reforms as part of an economic growth agenda. The February 2014 G20 Finance Ministers meeting set the ambitious objective of lifting global GDP by 2% above current growth trends over five years.
Balancing Domestic and International Agendas
Given the huge differences in the economic regimes and fiscal positions of G20 members, this risks embarking on a fruitless and frustrating endeavor, as happened under other presidencies, with a negative impact on the credibility of the group. The domestic economic reform plans of the EU states are subject to a peer review process fostered by common institutions on the basis of a comprehensive set of indicators and parameters which is much more severe and demanding than anything the G20 can plausibly develop. The added value of a G20 focus on domestic reforms is highly doubtful.
The Australian Presidency should rather concentrate on those problems that cannot be solved domestically and hence call for common international action. One of them is to make the global economy more resilient to future shocks; this has also been identified by the Australian Government as a central objective. Priority should be given to the stability of the global financial system: the great recession that continues to affect several countries originated from financial excesses and imbalances of a global nature. In the last few years, substantial financial stabilisation measures have been taken by the EU, the US, China and other countries, but the G20’s role in fostering financial policy cooperation remains essential.
Key Issues for the G20
International cooperation against tax evasion and avoidance—an issue of central importance for Italy and other EU countries—has recently gained momentum. The G20 can contribute to reinforcing this encouraging trend by supporting the OECD program. Moreover the G20 cannot abstain from addressing the causes of the new forms of turbulence in financial markets, notably capital outflows from emerging economies and the impact of “tapering” by the US administration. The G20 should also play a substantial role in supporting the trade liberalization agenda re-launched by the successful WTO Summit in Bali in December 2013. The Brisbane Summit should assess the compatibility of the ongoing plans for regional free trade zones with the global trade liberalization regime. The environment is another vital global common to be preserved and it would be a huge mistake to exclude it from the Brisbane agenda.
Unfortunately, it is unlikely that the Brisbane Summit will make any significant progress towards the badly needed reform of the Bretton Woods institutions: the prospect of completing reform of IMF quota and governance structure has become increasingly remote due to continued resistance from the US Congress. This is a subject that cannot remain unaddressed in the final communiqué and requires increasing the international pressure on recalcitrant actors: particularly the US, but also the EU. The G20 should continue to be seen as a forum for promoting not only cooperation in specific sectors, but also the reform of global governance to establish a more equal distribution of powers and responsibilities within international institutions. Finally, the fact that the Summit will be probably attended by Russian President Vladimir Putin can offer the opportunity for discussing how to manage ongoing conflicts, including in the Ukraine.
Ettore Greco is the Director for Istituto Affari Internazionali.
This is an extract from G20: Words into Action Brisbane 2014, to be published by Faircount Media in association with the Australian Institute of International Affairs in October 2014.