The Continuing Question

So Deauville has come to end; on to the G20 in Cannes on November 4th-5th 2011.  But the continuing question here at the International Media Center, and among some of the delegates is – why the G8?  What is the added value and consequences of G8 discussions; what is the relevance and scope of the G8 agenda?  More pointedly – why hold a G8 meeting separate from a meeting of the G20 leaders?

Assessing the Deauville declaration the answer appears evident.  The strongest statement of the G8 leaders  – and critically including the the Russian president – we’ll see if Prime Minister Putin will go along – says:

Qaddafi and the Libyan government have failed to fulfill their responsibility to protect the Libyan population and have lost legitimacy.  He has no future in a free, democratic Libya.  He must go.

This statement could not have been concluded I anticipate at a G20 conclave.  Beyond that the G8 leaders focused on a number of critical peace and security issues including a commitment to the extension of the Global Partnership against the Spread of Weapons and Materials Destruction launched in 2002 – focused on the destruction of nuclear weapons in the former Soviet Union – but now focused on: nuclear  and radiological security, bio-security, scientist engagement, and facilitation of the implementation of UN Security Council Resolution 1540 on the trafficking of WMD by  terrorists  Extension of funding needs still is required along with securing new partners but the commitment is a significant step in the global efforts in anti-proliferation.

These two elements of the peace and security agenda – the accepted mandate of the G8 suggest the dilemma inherent in identifying the areas of G8 competence.  Libya and the democracy process in the Middle East probably could not usefully be addressed in the larger G20 leadership – as noted earlier.  But the proliferation questions could very easily be dealt with in the larger leadership forum.  Many of the near economic issues – like economic promotion in the Middle East etc., probably could also be addressed there.

Then why the split.  Well obviously it is partly historical.  The G8 has existed as a global governance institution for some time.  And international organizations are seldom killed off.  But there is more apparently.  Liz Alderman of the NYT summarized views from some of the  the G8 leaders at Deauville (“Group of 8 Pledges to Aid Egypt and Tunisia”,  NYT May 27, 2011)

But in their closed-door discussions, the G-8 members agreed that while emerging markets, especially China, were beneficial to global growth, they were not ready to take on a leadership role in major global issues, the diplomats said. Indeed, the G-8 members said emerging markets still needed to assume greater discipline and play more by the rules of the international frameworks they wish to influence, the diplomats said.

It is both unclear who said this – and indeed about whom.  We know China is positive about the G20 – and participating there.  We are confident most of the other leaders hold similar views.  But we also know that China, for example, does not want to expand the mandate of the G20.  And I have suggested elsewhere that China is still a part-time global leader. It would seem that other G8 leaders and their officials still question the willingness of G20 leaders to step up to take greater leadership.

For many – leaders included – this confirms the gap and the global governance deficit.

The Growing Domestic Constraint

The challenge to G8 leadership today – apparent here in Deauville at the G8 leaders summit – is not only the rise of the large emerging market economies – India, Brazil, China, etc., – but the growing constraint of domestic publics – on the leaders who are here in this Normandy summit location.  As Philip Stephens of the FT suggests in his column:

The demand for a strategic perspective is colliding ever more frequently with the day-to-day pressures of domestic politics. … The challenge is to square the enlightened internationalism that slips easily into a communique with a mood among electorates that has been turning against the notion of global interdependence.

The limits of collaboration are evident at this G8 summit meeting – most notably in providing economic support for the emerging democracies in the Middle East and North Africa (MENA).  The G8 will in their declaration announce the Deauville Partnership.  This partnership is built on two pillars – a political process that will support the democratic transition and foster government reforms; and an economic framework to encourage sustainable and inclusive growth including the creation of jobs especially for the young.

But the real question is the offer of economic and development support including from the multilateral development banks, the IFIs and bilateral support.  And it is in the bilateral support you can see the growing domestic constraints.  The US to this point has offered $1 billion in debt relief and a guarantee of another $1 billion in loans for Egypt.  The EU Commission has announced an extra $1.75 billion – from its neighborhood policy.  The UK is offering $180 million over four years including around $15 million a year to to promote democracy.  It is still  unclear what other G8 countries will offer new monies for Egypt and Tunisia and also others.

These numbers, if correct tell their own story. These are not fulsome amounts. And while the G8 leaders went out of their way to argue the summit was not a pledging session these numbers are paltry.  There is no appetite among the leaders of the G8 to be seen to advancing large sums of money for the Arab Spring while debt, budget cuts and unemployment dominate the domestic agenda.

 

 

Local or Global

Notwithstanding the mandate (?) the G8 – or more likely the G7  leaders – expressed concern over the consequences of a continuing debt crisis in Europe especially in Greece.  Apparently President Obama raised concern over the decline of the euro and the possible impact on US exports.

The Greek debt crisis highlights two features of the current global governance system.  First – and possibly rather obviously – the debt crisis in Greece reminds us how integrated the global economy is.  Debt in Greece impacts interest rate spreads in other European  countries namely the other PIIGS – Portugal, Ireland, Italy and Spain raising concern over their own significant debt loads.  And with American concerns over exports there is a corresponding concern in Europe over the sustainability of the debt load in the United States.

The second – maybe less obvious feature of the crisis – seems to suggest the opposite of this tight interdependence  – where should the locus of  debt resolution lie. The Europeans have involved the IMF in the debt crisis.  The IMF has much experience in dealing with debt and the threat of sovereign default.  But the IMF should not be drawn in to guarantee Greek debt.  For the nub of the Greek debt problem is the unwillingness of the Europeans – principally the French and the Germans – to reschedule Greek debt.   The problem is political.  The  Europeans have put off resolving the rescheduling of the Greek debt. Dealing with this problem requires the institutions holding the debt – mainly French and German banks – to take a “haircut”.  Thus the Greek debt issue is principally a European one.  Neither the G8 states – nor the G20 states – or the IFIs, need to be dragged into financially supporting this European debt problem.

Let’s not turn the IFIs and others into the Irish government saving the Irish banks from rescheduling.