Simon Maxwell

From Cannes to Los Cabos: the future of the G20

Global Governance

It was fascinating to spend a weekend at the annual CIGI Conference in Waterloo on global governance – focused on the G20 – and then come home and find myself glued to websites watching the unrolling (I nearly wrote unravelling) of the Cannes Summit. It was like attending a master-class theatre workshop one day, and then having a ticket the next to an opening night at the National Theatre.

There was enthusiasm at CIGI for the idea of the G20, especially when there is a crisis, as in 2009 and again this year. Experienced old hands like Paul Martin, Ernesto Zedillo and Mark Malloch Brown rightly predicted that the eurozone crisis would squeeze everything else off the stage. They and others argued that the G20 is not a treaty organisation, and lacks formal legitimacy, but acquires legitimacy by delivery. The London Summit regarded was regarded as the apogee in that regard, building confidence with an alleged $1tn boost to the world economy, even though the numbers were probably suspect.

However, participants at CIGI recognised that it is not enough to pick an important topic, refer it to leaders, and assume that a deal will be done. Timing is really important, finding a moment when opportunities arise and progress is possible. You don’t want to send everyone home with the fall-out of a bad-tempered disagreement to deal with. A good example: Doha. Another good example: climate change. I drew a comparison between two visions of the G20: (a) Desmond Tutu sits down for an impromtu and amicable tea with the Dalai Lama, or (b) the Gladiators and the Lions meet in the Coliseum. We think it is the first, but it is actually the second. Preparation is key in the Coliseum.

Despite the potential – and the investment in preparation - there was frustration in Waterloo: (a) that decisions taken by the G20 are not implemented (Ernesto Zedillo was very strong on this wrt to e.g. the surveillance role of the IMF); (b) that there is too much on the agenda, not least the process-intensive nine pillars of the development agenda; and (c) that there are perverse consequences when the G20 does pick a topic, that other fora where the topic is discussed are paralysed as a result (the Committee on Food Security was cited as an example). The lament is that the G20 has become not a ‘maxi- G8’ but a ‘mini-UN’.

Underlying these complaints is an issue about the boundaries of the G20, which I have discussed in previous contributions on shaping the mission and work programme of the G20. Is it an economic forum, really, or a global leadership body which deals with strategic global issues, whatever they may be? For example, I argued last year that the G20 should do much more on climate change – and 94.6% of those who voted on my website agreed. There were other candidates at CIGI this year, including disarmament.

This led to an agenda for change. Among proposals discussed were a permanent secretariat, longer meetings, and a different style of meetings, with more informal discussion and fewer prepared statements. There was also a lot of enthusiasm for strengthening the Financial Stability Board, originally established as the Financial Stability Forum in 1999, and strengthened by the G20 in 2009. Lourdes Aranda, the Mexican Sherpa for next year’s G20, to be held in Los Cabos, Baja California, promised a stock take of the G20 and limits to the agenda.

Some of the proposals were reflected in the report on global governance which Nicolas Sarkozy commissioned from David Cameron, and which was presented to the G20 over dinner on the Thursday evening. This is a pragmatic document. David Cameron says in his foreword that ‘the answer is not to be found in elaborate new institutions and global architecture’. Instead, he proposes building on the informality of the G20, using it to generate political consensus, and insisting that it support rather than undermine the work of other, legitimate and treaty-based organs of international cooperation, especially the UN. He recommends the formalisation of a managing troika of current, past and future presidencies, and also supports the creation of a small Secretariat, hosted by the Presidency. David Cameron also recommends a useful list of G20 working practices, to be found on Pgs 16 and 17 of the document: importantly, he emphasises the need not to clutter the agenda, and to retain the flexibility needed to deal with current crises. There should be strict limits on the number of items carried over from one year to the next. The G20 Communique more or less buys into this model, concluding that ‘We agree that the G20 should remain an informal group. We decide to formalise the Troika. We will pursue consistent and effective engagement with non-members, including the UN and we welcome their contributions to our work’.

What might be described as the Cameron settlement will not please everyone. The idea of the G20 as the ‘premier forum’ is put rather firmly in its place. There is an underlying tension about how much preparation is needed to underpin ‘informal’ discussion at the Summits. And some will be unhappy that the boundaries are set so firmly within the realm of economics: the report says that ‘leaders should focus their sustained effort on the economic challenges of globalisation broadly defined’, listing the challenges as mainly to do with coordination of economic policy, banking, finance and trade. In this respect, the G20 betrays its origins as a grouping of finance ministers. I still think climate change should be more prominent. Perhaps it can be redefined as an economic challenge of globalisation! That would certainly be consistent with re-branding climate change as being about green growth and industrial policy.

Anyway, that was the master-class. How did the G20 perform on the stage at Cannes? And what did we learn about the art form? There are three main lessons.

First, it seems to be true that short-term economic crises trump long-term global challenges. It’s all very well to talk about the ‘economic challenges of globalisation broadly defined’, but both the communiqué and the supporting Action Plan for Growth and Jobs have a short-term feel about them – a lot on the eurozone, quite a bit on issues like exchange rates and free trade, acknowledgement of social protection, but nothing serious on global income inequality or long term issues of sustainability. Leaders need to watch that one. They need to watch for potholes, but also keep their eyes on the distant horizon.

Second, we can see that informality is a great idea in principle, but hard to turn into practical action, at least in a one day meeting. The lack of agreement on support for the eurozone or further bolstering of the IMF are cases in point. That is not surprising. Training gladiators takes time. The lions need to have their claws sharpened. Different perspectives and cultures need to be bridged. It was interesting, in this connection, to hear from Asian participants in Waterloo how much Asian leaders like the choreography to be in place in advance, and how much they dislike spontaneity at this kind of event. From that perspective, the Troika and secretariat proposals seem sensible.

Third, there does seem to be a strong case for scaling back the agenda – with the so-called development agenda being first in the firing line for execution. This may sound like apostasy, but I find it difficult to see the value-added of work on the nine pillars of the development agenda. In fact, on food security, one of the two principal items (along with infrastructure), I have commented before on the idiosyncratic and incomplete coverage of the G20 agriculture ministers who have led on the topic, focusing too much on market regulation and not enough on shock facilities and social protection. The G20 could have done something big and strategic and political – but didn’t.

When I wrote on this back in the summer, one authoritative commentator, David Nabarro, wrote on my website that I shouldn’t worry because social protection was being dealt with by another pillar – but an insider in that process told me privately that the people concerned were so immersed in their own meetings and drafting sessions that there was neither the will nor the opportunity to make connections across pillars. Was there any discussion of food issues, for example, when global shock facilities were being discussed?

Further, it was fascinating at the Waterloo meeting to hear Jennifer Clapp report her impression of FAO’s Committee on Food Security, that it felt constrained in what it could discuss and recommend by the G20 process. That problem of being pre-empted is probably not limited to food. It would be interesting to hear the experience of infrastructure.

I want to be clear that this does not mean that development issues are not important – nor that some should not appear on the G20 agenda. As a start, global macro-economic stability and growth are essential to development, and it does developing countries no service to have so-called ‘development issues’ hived off into a separate box while the ‘grown-ups’ discuss the world economy. Then, it is important to seek real value-added, and that means cross-cutting and political, where deliverables are possible and the intervention of Leaders is really necessary. Many of the development issues currently on the agenda belong precisely to the category identified by David Cameron, of issues that can be dealt with satisfactorily elsewhere. As someone remarked in Waterloo, it would be good to avoid name-checking issues for the sake of it, as well as the inclusion in the communiqué of ‘banal paragraphs’. But not all issues are like that, if dealt with properly. Did I mention the world food crisis? Or climate change?

The Koreans, who established the development agenda, were right to see the need for poverty to be taken seriously, but perhaps they will now agree that there is little value-added to such an inclusive way of structuring a solution. Certainly, the Mexicans will want to take a close look at this area of the G20’s work.

Lourdes Aranda made it clear in Waterloo that the Mexican Government will want to simplify the G20’s work. She identified three main priorities, in addition to global macro-economics, viz: (a) green growth, (b) food security, and (c) jobs and youth unemployment. That’s not a bad list, provided that the new Troika and Secretariat can use the preparations for Los Cabos to build the trust and leadership that David Cameron has called for. The word ‘Cabo’ in Spanish has multiple meanings, but one is Chief or Commander. That’s encouraging.

To vote on whether the G20 should drop its development agenda, click here.