G20 London 2009


G20 Video Wrap-up
April 6, 2009, 11:14 am
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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.

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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.

 chin-vblog

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.



G20 Gets a Big Obama Bounce

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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.



China Upgraded to Global Power

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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.



From G20 to G2?
April 2, 2009, 7:36 am
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Hu-Obama

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.