So putting the last items in the bag for the trip to St. Petersburg.  This one looks like trouble.  Five years in to G20 Leaders Summits and St.  Petersburg would appear to have all the characteristics of a major distraction.  This would not be the first.  I certainly remember how the Greek Euro crisis drove France’s G20 Agenda at Cannes right off the cliff.  It would appear that Syria – and the use of military force in retaliation for the use of chemical weapons –  could be even more of an agenda killer.

A quick trip to London enabled me to enjoy the valuable discussion at a small gathering brought together at Chatham House.  The conference sponsored by Chatham House and the Australian Lowy Institute spent the good part of a day examining “From the G8 to the G20 and Beyond: Setting a Course for Economic Global Governance.”  Presentations by officials, former officials and policy experts produced a rich context for informal discussion.

My own view was that the most intriguing discussion of the day was a back and forth over the evolving summitry structure. Now I know there will be an immediate chorus of sighs – oh geez architecture again – but the summitry structure has important implications for the global economy and the conduct and stability of international relations.  So back to the discussion.

I think there was a general consensus in the room that the large emerging market powers – frequently labelled  as the BRICS countries – were failing to take up leadership at the G20.  This view was aptly described recently by Harvard’s Dani Rodrik.  In a piece first posted at his blog and then slightly enlarged upon at Project Syndicate – my favorite economics blog site – Rodrik examined the recent efforts of the BRICS, most notably at the BRICS Leaders Summit at Durban.

Rodrik in these posts took the opportunity to first express disappointment in what is at the moment the signature initiative of the BRICS – the effort to launch a development bank, which Rodrik described rather disparagingly in the following terms:

This approach [infrastructure financing] represents a 1950’s view of economic development, which has long been superseded by a more variegated perspective that recognizes a multiplicity of constraints – …

But Rodrik did not stop there.  In a criticism that was reflected in various comments at the conference,  Rodrik argued:

What the world needs from the BRICS is not another development bank, but greater leadership on today’s great global issues.  … If the international community fails to confront its most serious challenges … they are the ones that will pay the highest price.  Yet these countries have so far played a rather unimaginative and timid role, in international forums such as the G-20  or the World Trade Organization.  When they have asserted themselves, it has been largely in pursuit of narrow national interests.  Do they really have nothing new to offer?

One of the conference participants took direct aim at this tepid leadership. He suggested that the premature death predicted for the G7 and now arguably countered by revival and renewed energy evidenced by the G8 or more precisely the G7, might conceivably pressure the large emerging market countries to step up to take greater leadership in the G20.  It might indeed be true that the G7 efforts especially on economic questions might give the BRICS the kind of fillip that might cause them to step up in the G20.  But equally possibly these countries, the BRICS especially, might view the G7 activism as isolating the BRICS  – not to mention the non-G7, non-BRICS countries like Australia, Korea or Turkey – and give impetus to those who see the BRICS as a conscious counterweight to G7 and its economic statements.

Certainly circumstances conspired to show the economic efforts of the G7.  For the day following the conference the G7 finance ministers and central bankers met outside London at Aylesbury. In a statement by the UK Chancellor George Osborne the Chancellor targeted the vital economic questions of the day, “monetary activism, fiscal responsibility and structural reforms.” There certainly wasn’t consensus on these difficult issues but you coud see the rising image of the established powers working on these key economic issues as they have for decades before the emergence of the G20.

It would be a terrible waste, not to mention a destabilizing step were the G20 to lose momentum and to fail to serve as the common setting for the established and rising economic powers.  Certainly the meeting of these groups at the margins of various G20 meetings can be seen to be helpful – indeed they already have – but the focus on separate coalitions is overall in my estimation unhealthy for global summitry.  The G7 needs to be sensitive, more sensitive then they appear to be currently, over their gatherings and the absence of colleagues from the rest of the G20.

Let’s not throw away the first and best setting for collaborative efforts between established and rising states.  Both form and substance are required.

Image Credit:  G7 Finance Ministers May 11, 2013 Alyesbury  – google.com

Now I think it was my colleague Dan Drezner over at Foreign Policy who spent some time – at the moment I am at a loss to remember the exact piece – defending the G20 against the dismissive attacks that members of the media are so fond of producing following a G20 meeting.

Well our friends – in this case Chris Giles and Robin Harding at FT – were hard at it at the G20 finance ministers’ and central bank governors’ meeting during the just recently concluded ‘Spring Meetings’.

Here is a gem of a comment from these two media souls:

Since 2010, it has turned from being a cohesive group of te world’s most important economies, ensuring they took collective decisions to solve difficult problems, into a body that spends hours negotiating the punctuation in a communiqué that adds little.  … Countries still value the G20 greatly as a forum for dialogue, but complain that too many nations sit round the table and make unnecessary interventions, with little genuine discussion.  It has turned into a talking shop without much bureaucracy or idea of its role.  Outside a crisis, when nations want to solve problems and are willing to make sacrifices, the G20s relevance to people and companies is diminishing rapidly.

Mean spirited at least.  But are the two right?  Their judgment seems to me to ignore again,  the “incremental” but necessary efforts of contemporary global summitry decision-making.  The contrasting views expressed are bit like a “hare and tortoise” assessment of the G20.  Media looks for the success of the hare and is continually disappointed; for some of us this is about the tortoise and we remain patient.

Look it would be great to have this grand bargain-style G20 – the kind these two media folk and other media types seem to crave but that is not what the G20 offers – nor indeed do many other global summitry settings.  These summits are iterative and depend on the hard work of working groups, ministerial gatherings, sherpa meetings, secretariat work and the work of developed transgovernmental regulatory networks.  The constant reference by media and experts to the actions of the G20 at the abyss in 2008 and 2009 hardly defines the manner in which the G20 acts.  The current efforts on financial reform and SSBG – strong sustainable and balanced growth – are difficult policy developments.  So a quick look at the boring communiqué is required.  Some takeaways:

• advanced economies will develop medium-term fiscal strategies by the St. Petersburg G20;
• setting a global standard for public debt management – the IMF and the World Bank will consult with members on implementation and review of “Guidelines for Public Debt Management.” A progress report will be made to the Leaders Summit;
• The possibility of providing additional policy recommendations to the Leaders Summit on regional financing arrangements (RFAs) and strengthening cooperation between the IMF and RFAs;
• The efforts to mobilize long-term financing that includes adoption of the Terms of Reference of the new new G20 Study Group with input from the IFIs, OECD, FSB UN and UNCTAD with possible recommendations for the finance ministers and central bank governors later in the year;
• assessments from the Basel Committee on Bank Supervision (BCBS) on the compatibility of Basel III and the BCBS regulations including a report in July on risk-weighted assets;
• the FSB will report to the Leaders Summit on the efforts to identify the policies on how resolve financial institutions in an orderly manner – the “too big to fail” issue;
• FSB concluding the legislative and regulatory reforms for OTC derivatives reforms;
• The FSB providing to finance ministers and central bank governors the macroeconomic impact study of OTC regulatory reforms;
• Policy recommendations for the Leaders Summit on oversight and regulation of the shadow banking sector;
• A call from the finance ministers and central bank governors to the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) US  to conclude by 2013 the work of achieving a single set of high-quality accounting standards;
• Recommendations from the Bank of International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO) on short-term interest rate benchmarks with recommendations for reform by July and in turn oversight and governance frameworks for financial benchmark reform to be presented to the Leaders Summit;
• the launching by the FSB of a peer review of national authorities’ steps to reduce reliance on credit rating agencies’ ratings – with a status report to be provided to the Leaders Summit;
• a report from the OECD on progress toward countries signing or expressing interest in signing the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and a report back from the OECD -following work with the G20 – on new multilateral standard on automatic exchange of information; and
• a July report from the OECD with comprehensive proposals to the finance ministers and central bank governors on tax base erosion and profit shifting.

Worthy of headlines from the media – probably not.  To the extent that these actions and reports don’t lead to key national commitments – meaning regulations and laws – then our media friends may be right.  But progress in some or all of these many initiatives warrant some attention.  And it is all this work that media folk are quick to just ignore.

I would also say that collective discussion – contentious though it may be – over Japan’s quantitative easing policies – is important.  For the moment,  it would appear that most of the G20 are prepared to accept that these Japanese actions are not steps in competitive devaluation, which might, if so described, lead to national responses that could harm many.   We will have to see, however,  the impacts on some of the large emerging market countries and then their responses.

Finally, on the economic growth front it is evident that the G20 believes that not enough is being done to counter global economic weakness.  Clearly a key culprit in this is the EU and in particular the eurozone, though the UK figures in as well.  This of course appears to be a continuing drama from the close to irresponsible actions in the eurozone.  I have consistently argued that the G20 has little role here – but  to urge a change of course which it appears now to be doing.  But the G20 is constantly being dragged into this European drama.

The bottom line is that the media misses the work in progress – and announces failure.  I think that is going too far at this point.

Image Credits:  logo – www.pnswb.org and picture – www.nannewsngr.com

So a quick trip to Moscow!  Moscow you say – in December?  Yes indeed.  Russia took over hosting of the G20 Leaders Summit on December 1, 2012 and decided to declare a kind of G20 ‘Party’ of sorts.  To initiate Russia’s leadership in organizing the agenda for the G20 and to then actually host the G20 Leaders Summit in September in St. Petersburg, the Russian President and Russian officials called for a Sherpa meeting for December 11^th but added additionally a B20 meeting, a Think20 meeting and a civil society.  There was much ‘hustle and bustle’ of the G20 sort.

And of course lot’s of thinking!  This from all the gatherings including the G20 business, civil society groups now identified as the C20 and experts from the G20 think tanks.  I couldn’t resist, therefore, picturing all that thinking.  So there I am on the official Russian website – presumably thinking quite a bit.

Now the Russian President in his first remarks as G20 Host struck this very broad consultative cord – which G20 leader hasn’t – but here is President Putin:

Russia is ready for the broadest possible cooperation on reaching the G20’s objectives.  In order to make the G20’s work more effective and transparent and increase trust in what it is doing, we will hold the broadest consultations with all interested parties, with countries not part of the G20, and also with international, expert and trade union organisations, and business community, civil society and youth representatives.  Practice shows that global measures are only effective when they are based on the views and take into account the interests of different groups.

All right so broad consultation it is.  But where are the Russians hoping to take the agenda for the G20 leaders summit?  In his remarks President Putin identified Russia’s G20 priorities:

• Growth through Quality Jobs and Investment;
• Growth through Effective Regulation; and
• Growth through Trust and Transparency in Markets

With these priorities, so the President claims, G20 policy progress will occur with further efforts on:

• A framework for strong, sustainable and balanced growth;
• Jobs and employment;
• International financial architectural reform;
• Reforming the currency and financial regulation and supervision systems;
• Energy sustainability;
• Development for all;
• Enhancing multilateral trade; and
• Fighting corruption.

And the President identified two additional issues on the financial agenda:

• Financing investment as a basis for economic growth and job creation; and
• Modernizing national public borrowing and sovereign debt management systems.

In a column from Sergey Strokan a Russian journalist posted by Russia’s RT titled, “Uphill battle: Russia at the helm of G20“,  Strokan reports:

The key issue Russia’s G20 presidency needs to address is the restoration of investor confidence, adds Russia’s Finance Minister Anton Siluanov. In a situation, when economic growth in the locomotives of the world economy, including China, is still slowing down and the southern countries of the EU are in recession, global investor confidence is crucial for meeting the main global challenge of jump-starting economic growth, says Mr. Siluanov.

It appears the Russian Presidency hopes to hold – beyond the usual Sherpa and Finance Ministers and Central Bankers gatherings, a meeting of Finance and Labor Ministers as well as a meeting of Energy Ministers.

What can we make then of all of this?  First, as usual there is far too much G20-speak; for the ordinary citizen from the G20 and beyond, this appears like a lot of ‘gobble y-guck’.  It is hardly transparent to them.  Even to the G20-types there is much vagueness and a lack of clarity over the specific policy objectives – probably to satisfy large and disparate interests in the G20.  Then there appears to remain a conundrum at the heart of G20 policy – a key clash by G20 countries that appeared at the Toronto Summit – and remains to this day.  That is which lever should G20 countries pull – the austerity and fiscal consolidation lever, or the stimulus lever.  Now it is likely that the answer lies in timing and reflected in the specific conditions of various country budgets, job creation, debt accumulation and most critically economic growth.  But the fiction remains of an overarching  G20 policy agenda.

It would also appear that Russia can’t help but poke at the traditional economies with calls for monetary reform.  What is urgently needed is a more serious discussion over currency manipulation whether China’s or the United States or now with a new Prime Minister in Japan.  This is a tough issue but currency reform starts here.

And then there is hollowness of the consultation process.  While it is valuable to encourage the various interests – business, think tanks, youth and labor – it lies rather uncomfortably with a government that still retains legislation that requires foreign-funded NGOs to declare themselves as “foreign agents”.  It is dispiriting to witness this Janus-like behavior and the willingness of NGOs largely to ignore, this oppressive domestic behavior in the face of what appears a seat at the table – if a small one and far from the core table.

So the picture remains clouded but let’s see if the Russian presidency takes it upon itself to order transparency and accountability in the G20 agenda and policy process.  There is time yet.

Image Credit: Official Russian Website of the G20.