Sorting Out the G20 Role

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The Airport is always a good place to collect one’s thoughts.  And I was struck by an op-ed by Canada’s Prime Minister Stephen Harper placed in Canada’s Globe and Mail prior to soon to occur meetings of G20 Finance Ministers and Central Bankers in Paris.

What Harper does right in my opinion is to sort out the actions that should be taken by different major actors in the global economy.  The key crisis point in the global economy right now  is the European sovereign debt crisis and the failure of European governments – particularly the French and the Germans – to take decisive action to deal with the sovereign debt crisis and the contagion that the continuation of the crisis threatens.

Again, rightly in my opinion Harper urges the Europeans to:

  • take decisive action;
  • increase the flexibility of the European Financial Stability Facility ; and
  • implement plans for debt and deficit reduction that are clear and credible to the market.

Then Harper urges action – indeed coordinated action – by the G20.  And here Harper urges the G20 to ‘stick to its knitting’ – that is to focus the collective efforts not  on the immediate sovereign debt crisis but on the medium term agenda that is the remit of the Leaders Summit.Get it done.

Thus, Harper encourages the G20 Leaders Summit to:

  • further develop the SSBG (Strong Sustainable and Balanced Growth Framework) Framework;
  • meet clear and concrete medium term debt and deficit reduction plans –  set, as he points out, at the Toronto Summit;
  • provide meaningful action to increase exchange-rate flexibility;
  • commit to implementation of the financial sector reform agenda agreed to at previous summits; and
  • to resist – the old G20 saw but still important – trade protectionism.

As Harper suggests

While the efforts made so far by the G20 are significant, more action by some is needed.  Only with a clear plan will the citizens of countries in crisis accept in crisis accept the painful compromises they are being asked to make for their nations’ future well-being.

Harper points out a needed leadership lesson. Focus on what you are called on to do; avoid the distractions that can undermine your legitimacy and effectiveness.

 

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