Filed under: Admin | Tags: Barack Obama, China, G2, G20, London Summit, politics, United States
In collaboration with CBC’s The National, contributors of this blog prepared a set of short video commentaries from behind the scenes of the G20 London Summit. Below are the two final commentaries by CIGI experts, following the conclusion of the summit.
Dr. Andrew F. Cooper CIGI Associate Director and Distinguished Fellow
PLAY VIDEO (Runs 3:05)
In this video blog, Dr. Cooper summarizes the final outcome of the G20 London Summit following US President Barack Obama’s press briefing. He notes that the core challenge the president faced at his first international summit was to bring home the importance of these brokered decisions to an American audience. Furthermore, Dr. Cooper submits that the world was waiting in anticipation of Obama’s view on how the United States could act as a legitimate force in first resolving the immediate economic crisis and second in developing an effective global architecture for preventing /resolving future crises. While London was a first step in bolstering confidence back in the US and the world economy, great challenges of delivering on new promises and meeting expectations remain in the months ahead.
Dr. Gregory Chin CIGI Senior Fellow
PLAY VIDEO (Runs: 1:26)
In this video blog, Dr. Chin comments on the growing public confidence of the Chinese government within global governance. He suggests that the G20 London Summit may well be remembered as the moment with China upgraded its status to an active global diplomatic power, and the time when a consolidated and informal ”G2″ between the United States and China launced a strategic decision-making bloc. Moving beyond the London Summit, Dr. Chin raises the issue of implementation after consensus, and that a renewal of confidence in the global economy will rely on the G20′s ability to mobilize action and resources.
Post your feedback on these videos and the conclusion of the G20 London Summit on CBC’s The National’s blog, by video or text.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Comment | Tags: Barack Obama, China, financial crisis, financial stability board, FSF, G2, G20, Gordon Brown, IMF, London Summit, politics, United States
Andrew F. Cooper CIGI Associate Director and Distinguished Fellow
On the eve of the G20 it looked as though the summit would be a marked failure. As with the first meeting in Washington DC meeting back in November the public optics were all about the clash of civilizations between the market oriented countries led by the US and the UK and the regulatory oriented countries led by France and Germany. The former pushed for a collective stimulus or ‘rescue’ package. The latter wanted to focus on putting into place constraints on the excesses of the so-called ‘Anglo-Saxon’ business model. In an unconventional move the German chancellor and the French president upped the ante via a joint appearance amidst speculation of red lines and even a De Gaulle-like empty chair.
A big crisis however did concentrate the mind of the leaders about the implications of a non result from the major economies. Cutting through the temptations to simply reinforce what President Obama called at his press conference national ‘quirks’ compromises were made to give the G20 the big result it needed to be a confidence booster.
Obama did not get national set of stimulus packages he originally wanted. But this omission was overshadowed by the announcement of the one trillion dollar initiative for the International Monetary Fund. Angela Merkel and Nicolas Sarkozy did not get a grand new architecture of regulation but they got important bits and pieces of regulation directed at hedge funds and bankers’ pay, a revamped Financial Stability Board, and an upgraded drive against tax havens.
In cliched terms this was a win-win situation as leaders on both sides of the Atlantic could claim victory. Yet it must be allowed that the scope of these wins was highly differentiated. Although Gordon Brown did a first class job as host his government is fading into certain defeat at the next election with the idea of him extracting some further personal bounce through the G20 highly unlikely. Angela Merkel acted as a solid national leader but without any image of an international statesperson. Nicolas Sarkosy blends energy and shallowness as his stylistically impressive calls for action lack substantive follow up.
President Barack Obama enhanced his reputation in an unanticipated manner. Fighting a cold at his press conference his pronouncements of the G20 achievements were fairly perfunctory. And although he flashed some of his vast store of charm he also bobbed and weaved around some tough questioning. From the US press corps the focus was exclusively instrumentally. What did the G20 result mean for main-street USA? From the international journalists in attendance the focus was on the sense of American decline.
Although deft in these handlings of these questions (see my video blog for CBC as a G20 ‘insider’), it was his operative diplomacy not just his communication skills that deserves kudos. Behind the scenes he crafted a compromise between France and China on tax havens. He gave ground on issues without doing anything that was offside with his domestic initiatives. He gave the impression that a new type of assertive US leadership was on tap without being ‘soft’ in acknowledging that the US was the exclusively to blame for the crisis. While speaking about the flaws of Wall Street he also pointed to mistakes in the European and Asian banking sectors.
If Obama was the big winner he was not the only one. As other blogs have commented China made a mark to the extent where observers are talking about an informal G2 inside the G20. Institutionalism is back in whether in the case of the formerly obscure (the Financial Stability Forum, now Board) or the controversial (the IMF). The biggest winner of all – along with Obama – though may well be the G20. Here the parallelism about the positional ascendancy of the new US president and the new forum is striking. For if reports are right about the third G20 being in New York in September, it will be Obama who chairs the next stage of this dynamic process.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Comment | Tags: BRIC, China, currency reserve, diplomacy, economics, G20, G8, Hu Jintao, London Summit, politics, United States
Paola Subacchi Research Director, International Economics, Chatham House
From the London Summit Media Centre
It is the end of the big day and I am travelling from the Excel Centre to a Brazilian café in Acton. The BBC wants to record an interview for Newsnight there, so to add some colour – a long way to go for a couple of soundbites! Does the London Summit make any difference for countries like Brazil? What do the BRICs get out of it?
Perhaps the voice of the developing countries was a bit muted, but surely being around the table is already a big achievement. By delivering a sensible, albeit not exciting, plan of action and showing unity and cooperation, the G20 has qualified to be the key multilateral forum for some years to come. It has de facto replaced the G7 in terms of depth and scope of its agenda – the G7 will continue to be the forum for developed economies. And the developing countries are part of it. However, they will have to move from the background to the limelight and ensure that they are not ‘junior partners’ forever. How can this happen?
Assertiveness is not only a function of geopolitics, but, and foremost, of the ability and willingness to commit resources. This is the big lesson of the London Summit, and the dividing line between ‘senior’ and ‘junior’ partners, or ‘global powers’ and ‘regional powers’. Putting aside some initial reluctance – as in the G20 summit in November 2008 – in London China graduated from regional to global power. It showed political and financial muscles and the appetite to be involved in the global dialogue – with also an interest in developing a closer relationship with Washington.
China is no longer a BRIC, and should no longer put together with countries, like Brazil, that have the potential of becoming large economies and global powers, but they are not quite there. Economic figures clearly show this divide. China’s economy is about US$30,000 bn in volume, has about 10% of GDP current account surplus and approximately US$2,000 bn in FX reserves (estimates for 2008). Brazil’s economy is much smaller (slightly below US$3,000 bn), has about 2% current account deficit and just below US$200 bn FX reserves. This puts China along with the other large economies – US, EU and Japan – and, also, in a special relationship with the US – it is worth noting that President Obama and President Hu Jintao have already agreed to meet twice later this year under the framework of the China-US strategic and economic dialogue.
Political influence and economic power go together, and China seems determined to use both to shape a more global role for itself.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
By late-afternoon today, as the formal meetings were wrapping up, the G20 Leaders’ Statement was circulated to the media and online. There were reports that leaders were agreeing to the final language up until the final minutes. Largely, there are not many surprises in the substance of the declaration, while much is left to interpretation on who will deliver and enforce the key points of agreement.
These documents make clear the need to empower or reform the international financial institutions, particularly the International Monetary Fund and the World Bank, to allow for continued monitoring of G20 progress on reversing the world economic crisis. There is also mention of another G20 summit (host country TBA) by the end of 2009 to track national and international action on the statement’s main points.
The declaration came in three parts, the statement and two annexs:
Leaders’ Statement (2 April 2009)
Annex: Declaration on Strengthening the Finanical System (2 April 2009)
Annex: Declaration on Delivering Resources through the International Financial Institutions (2 April 2009)
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Analysis | Tags: debt, EU, financial crisis, G20, global South, IMF, London Summit
Ruth Davis Junior Research Fellow, International Economics, Chatham House
The Chatham House panel discussion held on the eve of the London Summit promised “Multiple Perspectives on the G20” and it delivered just that. This event marked the launch of the Chatham House-Atlantic Council report “New Ideas for the London Summit”; there is broad support for this summit and a will for the G20 to succeed in delivering the “ambitious, but manageable and focused agenda” which the report deems necessary.
However, there are dissenting voices or at least notes of caution too – quite apart from the much publicised intransigence shown by certain EU leaders. Dr Boutros-Ghali, the Egyptian finance minister and Chair of the IMFC, will be attending the summit although Egypt is not in the G20. He reminded the audience that these “twenty countries represent themselves. They don’t represent the rest of the world even if they work for it.” Though he acknowledged it was a strong word, he noted that the G20 is technically “illegitimate” as it is not part of an international treaty backed system. Acting as a conduit for the voices of the 172 countries not in the G20, he spoke of the crowding out taking place in the world debt market, which means that US and EU borrowing requirements are pushing out countries like Indonesia and Mexico where the human consequences of financing shortfalls will inevitably be more grave than in developed countries with established welfare systems.
Dr Boutros-Ghali also talked about the IMF: the adult meant to be supervising the global economy but who was “out of the room” when the crisis happened. He noted the problems surrounding the provision of extra funds for the IMF; although this new money is necessary to prevent the collapse of vulnerable emerging economies, refinancing by means of bilateral borrowing rather than by expanding IMF aggregate quotas negates the need for immediate governance reform and a rebalancing of country representation within the organisation.
Stephen Roach, Chairman of Morgan Stanley Asia, also drew out what he saw as contradictions in the G20′s approach to crisis resolution and sequencing of policy actions. While Lord Malloch-Brown and others feel that the global fiscal stimulus measures are a necessary and imperative short term response to substitute for the collapse in global demand, Roach challenged this view and asserted that policymakers are misreading Keynes. For Roach, “this is our time to deal with the heavy lifting” and “shame on us if we fail to do it at this summit.” This means tackling the global imbalances head on (essentially, raising consumption in the Chinese domestic economy and encouraging saving in the US) and addressing the interplay between asset bubbles and global imbalances – a complicated task that he is not convinced politicians are up to. For the sake of countries both inside and out of the G20, let’s hope he is wrong.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Analysis | Tags: Africa, Barack Obama, Bob Geldof, celebrity, G20, London Summit
Andrew Schrumm CIGI Research Officer
From the London Summit Media Centre
The massive media stage that the G8/G20 has become is a magnet for big personalities and star power. Without a doubt, the biggest star of today’s G20 meeting has been US President Barack Obama. The London Summit marks his first major international meeting, which has drawn huge attention from both journalists and state officials.
Major UK news outlets have been overcome by an Obama phenomenon, covering his every move (alongside wife Michelle’s fashion choices). Everyone has been trying to capitalize on his time in London. For instance, discount airline RyanAir even put Mr. Obama’s face on a full-page ad in Tuesday’s Daily Mail, playing off his arrival at their main depot at Stansted Airport.
World leaders too have been anxious to score time with the new president, hoping to build new relations with the Obama administration as it scales back many of the Bush-era foreign policy decisions. There is a sense the established diplomatic stiffness is lessening as Mr. Obama’s relaxed but confident style of diplomacy allows for fair and frank negotiations.
Here at the media centre, a different type of star power is taking hold. The ever-present and bombastic Sir Bob Geldof has created a stir that most leaders are unable to achieve. The most recognizable face among a crowd of journalists, he has begun to shift the ‘buzz’ back on African issues, amid heavy economic discussions. With the lead editorial in yesterday’s Financial Times, he provocatively posed the need for a global fiscal stimulus for Africa to cancel toxic debt and promote economic development. Today, he brought this message to the media centre, forming a large scrum in the middle of the room.
The magnetism of celebrities and star power has allowed some to reach a level of prominence within international affairs few occupy. And yet, such activity is easily dismissed by critics. Not without its flaws, celebrity-driven diplomacy is an emergent, albeit contested, pathway to bolster the legitimacy of international public policy.
Star power – whether employed by a president or a provocateur – is practiced in a fine balance of buzz (firm language) and bite (technical, professional support). In a sense, the power of celebrity provides an accessible a conduit between citizens, advocates and sites of power, in a fashion that no one would have imagined a decade ago.
Serious activists like Geldof – and his regular compatriot U2 frontman Bono – are changing the diplomatic discourse. Their ability to gain extended face-time with prominent national leaders, while their message is heard at both the mass and elite level means that they are engaging in the kind of widespread communication that underpins successful diplomacy. At the other end, the presence of Mr. Obama and his fresh diplomatic approach appears to draw huge attention to otherwise dry and technical international issues.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Comment | Tags: China, financial crisis, G2, G20, Gordon Brown, London Summit, United States
Gregory Chin CIGI Senior Fellow
From the London Summit Media Centre
As the global financial crisis has grown into an economic crisis, there is a sense that this time in London, there is more at stake than diplomatic poker. At one level, people are tried of summits. Yet at another, people get it that leaders need to go solve the brewing crisis at the global level.
The financial crisis has turned into one of confidence, beyond financial markets. Commodity prices have fallen. It is affecting peoples’ jobs and livelihood, spreading across the globe. In Africa, fragile states that have depended on exports in niche sectors have seen their trade dry-up. It has become a crisis of real life, fuelling insecurity and uncertainty for households. This explains the surge in expectations for the G20 London. This is one of the differences between the G20 Washington last November and London this time.
In the lead up to London, the leaders themselves seem more engaged – more personally involved. World leaders have become their own sherpas, driving the agenda for the meetings. The host, UK Prime Minister Gordon Brown, has expended tremendous personal energy and political capital to set the tone and provide leadership for this summit. There is recognition among world leaders that they need to restore confidence and demonstrate there is “someone in charge out there”. The top advisors to the host have called for concrete and realistic goals; a focus on first priorities; and objectives that give a sense of “the beginning of the end” of the global crisis. This has required fighting off the temptation to expand the agenda to include, for example, climate change. The focus has been on economic problem solving. In this regard, G20 London is turning out to be different from recent G8 Summits.
At the same time, the host government has encouraged broader participation at this summit beyond the G20, based on the reasoning that the world is facing truly global problems, and that fixing the global system will require a broader international effort than “the 20”. While such an approach offers legitimacy gains, it also accentuates existing collective action challenges.
The G20 London Summit is expected to bring stronger domestic pledges on ODA commitments to developing countries, as well as increased commitments to the international financial institutions. London is expected to result in a stronger package of regulations, including principles for strengthening national banking and financial regulations, and more robust peer pressure mechanisms via the Financial Stability Forum, Basel, and the International Monetary Fund. However, the word is that there will not be a new global stimulus package. Instead there will be a commitment to monitor closely, and add at the later date if more is needed, or step on the brake to prevent inflation. While the above would represent an advance on the Washington Summit last November, it will likely not be enough.
Here we should note that we are seeing the rise of a new informal “G2” – between the United States and China. And this is the crux of the challenge for the G20. If an “expanded G20” cannot deliver, it will feed Great Power withdrawal into the bilateral track to deal with matters of highest strategic importance. This could mean confining the multilateral track to implementing the decisions made by the Big 2. The result would be a more varied architecture, which in itself, is not a negative outcome. But the reality of an informal G2 should serve as a warning to those who are playing a soft power hand. That expanding the G20 could impair the role of “the 20” in setting the agenda – not to mention its effectiveness.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Analysis | Tags: China, G20, Gordon Brown, Hu Jintao, London Summit, Obama, Russia
Andrew Schrumm CIGI Research Officer
From the London Summit Media Centre
It’s early morning here in London, and the G20 meetings have just begun. UK Prime Minister Gordon Brown, the eager summit host, is welcoming all the leaders now, in advance of the traditional “family photo”and their working sessions. While the G20 is a fairly new leaders’ grouping, the familiar G8-style of informal interactions (working meals and press briefings) has found its way into the process.
Most significant so far has been the series of bilateral meetings, particularly by US President Barack Obama. As his first major overseas trip, a priviledged few national leaders have had the opportunity to sit down with the president one-on-one. Yesterday, his meetings with both Russian President Dimitri Medvedev and Chinese Presiden Hu Jintao made international headlines – while mainly congenial and a demonstration of good will, these meetings surprisingly engaged in substantive dialogue. With Russia, the US will begin a new conversation on global nuclear disarmament and a broader security agenda. With China, the US is anticipated to launch a renewed dialogue, leading into an official state visit by President Obama to China in late-2009.
Today, we are anticipating the final language on the summit declaration which will outline the G20′s major initiatives to correct the world economy and establish an international financial regulatory framework to avoid future crises. The exact language here must be both cautious and aggressive at the same time; cautious in that leaders will be held to account on their agreements by national groups and international civil society; and agressive in that strong corrective measures are needed to stimulate national economies and bolster international financial institutions.
As posted yesterday, Lord Mark Malloch-Brown (UK’s G20 special envoy) set some clear expectations for the summit declaration, noting that it will avoid setting strict standards on national stimulus programs and will leave climate negotiations to the UNFCCC. Clearly the G20 won’t be able to accomplish everything in one day – as things continue, CIGI and Chatham House will continue to provide commentary and analysis on develops here in London.
Disclaimer: This blog is solely intended to spur discussion, while the opinions expressed are those of the author(s) and do not necessarily reflect the views of CIGI, Chatham House or their respective Boards of Directors.
Filed under: Analysis | Tags: climate change, economics, G20, Gordon Brown, London Summit, stimulus
Andrew Schrumm CIGI Research Officer
From the London Summit Media Centre
This morning, Chatham House hosted a high-level panel on the G20 London Summit. As both a launch of its new report, New Ideas for the London Summit: Recommendations to the G20 Leaders, and as a public forum on the eve of the major international meeting. Chaired by Chatham House Director Dr. Robin Niblett, the panel included Lord Mark Malloch-Brown, UK prime minister’s G20 special envoy; Dr. Youssef Boutros-Ghali, Egypt’s minister of finance and chairman of the International Monetary and Financial Committee (IMFC); Stephen Roach, Morgan Stanley Asia Director; Dan Price, Sidley Austin Senior Partner for Global Issues; and Dr. Paola Subacchi, Chatham House Research Director of International Economics.
The panel rasied a number of critical questions on the state of the global economy, the nature of the response, and the style of crisis management through the G20 process. The full-length audio of the event is available online at: http://www.chathamhouse.org.uk/events/view/-/id/1105/
Amid high expectations for the G20, the panel acknowledged that there will need to be compromises in both substantive areas and in the process. In his remarks, Lord Malloch-Brown attempted to set expectations for tomorrow’s meetings, by giving insight on the declaration. He noted that there will not be specific agreement on two major items – climate change and a global stimulus benchmark. First, as many participating countries urged that the climate change process continue through the UNFCCC, the G20 should not disrupt the discussions leading in to the major meeting in December at Copenhagen. Second, as many nations are in mid-course of stimulus infusion, a technical judgement was made that the G20 should not promote a standard stimulus rate at a time when most are sorting out the true demands of their domestic economies. Lord Malloch-Brown emphasized, however, that as a peer group the G20 will continue active monitoring and coordination of national economic stimuli, observing and advising one-another on adequate measures to avoid inflation.
These two hesitations emphasize the limitations of the G20, primarily that it is not a legislative body. Any summit declarations must seek compliance first at the national-level after the leaders return home, and second on the international regulatory institutions to employ the G20′s prescriptive measures. With this in mind, Lord Malloch-Brown suggested that the summit declaration will include commitments in a number of areas. First, a strong package on regulation, with broad agreement on enhancement of the Financial Stability Forum (FSF), Basel discussions, and IMF functions. Second, an international emphasis on trade promotion and reduction of protectionist measures. Third, a recognition of stability in poor economies will rely on continued /increased development assistance by industrialized countries to the global South. And forth, a strengthening of the international financial institutions – particularly IMF and World Bank – but with economic support must come reform.
These insights, from a key insider of the G20 process, are telling. Lord Malloch-Brown modestly acknowledged that the world’s economic problems will not be solved in a few hours of meetings, and that progress will have to come over a long period of time. However, he remains optimistic that this phase of international economic diplomacy will mark the ‘beginning of the end’ to the global crisis.
