[Editor’s Note: The picture is of the ‘super’ team of experts and media that Digital20 Project from the Munk School of Global Affairs, University of Toronto and the Stanley Foundation (TSF) gathered together for the Cannes Summit. From left to right – Don Brean, The Rotman School of Management, University of Toronto, Netila Demneri, Munk School of Global Affairs, David Shorr, TSF, ‘Yours Truly’ Munk School of Global Affairs , Hugo Dobson, Sheffield University, Sean Harder, TSF and kneeling Yves Tiberghien, University of British Columbia. You can see more about the Digital 20 Project at its new web portal http://www.digital20project.ca]
I woke up this morning to the media harangue – I expected it actually – that the G20 was irrelevant – and worse unhelpful in resolving the challenges of global governance.
In this instance it was Wolfgang Münchau, currently the associate editor of the FT – I kinda thought it would be my old colleague Daniel Drezner – but he just linked to Münchau in his most recent foreignpolicy.com blog post and left the rest to Wolfgang.
So here we are again with ringing accusation of G20 irrelevance – and possibly worse:
Yet last week’s summit proved almost comically irrelevant to the future of the global economy. … The actual outcome summit leaves us in a void, with no crisis resolution strategy in place. In the previous decade, the old Group of Seven failed to prevent various financial crises. This decade, the G20 is failing to solve them.
And it continues on from there. But when Wolfgang feels called upon to then come up with a successful strategy for the challenges now facing the global economy, what do we get:
Unless we are ready to reverse monetary integration and financial globalisation, and accept the economic and political consequences, there is no alternative but to create a new institutional framework, with new rules, both within the eurozone and at the global level. Our policies have run out of control.
So there it is – our institutions have proved irrelevant so let’s build another set of institutions. Oh please!
So the media continues to get it wrong. First there was a collective effort to help protect the global economy from Greek – and presumably – Italian contagion. Amusingly, the piece disclosing the deal that almost was – and is likely to be in the near future – comes in part from Chris Giles, Münchau’s colleague. It is evident from this post that the Leaders were working on a three-part economic package that would at least act as an international firewall around Greece. It would seem that the deal failed to be announced when the German Bundesbank vetoed one of the three elements. The G20 leaders hope that G20 finance ministers will meet again soon possibly before Christmas if the German central bank can be reassured over the element that it failed to agree to at the Cannes summit. But as a result of this disagreement, the final communique was rather vague simply saying that the finance ministers were being asked to draw up options for additional fire-fighting resources by their next meeting – see paragraph 11 of the leaders’ communique.
It is a reminder – including a reminder to ‘yours truly’ – that policy solutions move rather more slowly than we’d like and that the politics of these countries cannot be ignored just because we are working at the international multilateral level. I have to keep reminding myself that what we see at the G20 leaders level is a prime example of the “Iceberg Theory” of global governance. Yes, periodically leaders come together but officials are engaged continuously including ministers, Sherpas and Sous-Sherpas, working committees of the G20, representatives from the central banks and national regulators of all stripes brought together in various international governmental institutions, IMF, WTO, World Bank, OECD, etc., international regulatory agencies – FSB, BCBS, IOSCO and many more. This “messy” transgovernmental pyramid is what my colleagues in international law refer to as transgovernmental regulatory networks (TRN) and my IR colleagues, especially Dan Drezner at Fletcher and Anne-Marie Slaughter at Princeton, refer to more simply as “networks”. Tasked work from the leaders proceed a pace – maybe at too slow a pace for many – but a pace.
And if you look at the communique you see that policy is proceeding on many fronts:
- paragraph 8 and 9 on global imbalances including greater market-determined exchange rates and commitments by the surplus countries;
- paragraph 10 on strengthening global financial safety nets;
- paragraph 11 including a commitment to greater IMF resources;
- paragraph 13 that details the work of the FSB on G-SIFIs (global systematically important financial institutions);
- paragraph 14 the commitment to regulate and oversee shadow banking”;
- paragraph 17 that commits the G20 to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and ‘encourages’ non G20 members to join the Convention;
- paragraph 18 to endorse the recommendations of IOSCO with respect to regulation and improved supervision of commodity derivatives; and
- paragraph 19 where the leaders decided to invest and support research in agricultural productivity including the AMIS and the Rapid Response Forum detailed in the Action Plan on Food Price Volatility and Agriculture from the G20 Ministers of Agriculture that was released in the summer.
There is more. But the point is that the G20 is, as the international lawyers, declare is, “dialogical, norm-generating and incremental”. This giant iceberg of global governance is messy and slow but progress is present. It may seldom contained in dramatic leaders’ announcements in the way that journalists hope for, but the hard work goes on incrementally and progress is made.