Getting to the “GUTS” of the G8 Leaders Summit

 

 

 

[To all my US colleagues – a happy and safe Memorial Day holiday]

Two of my colleagues at the Brookings Institution and NYU – Thomas Wright and Bruce Jones – had occasion in the Argument section of Foreignpolicy.com – with the convening of the Camp David G8 Summit – to reflect on the state of the advanced economies.  Not surprisingly they were struck by this summit convening – especially in the light of the ascendancy of the G20 and the emergence of the BRICS.  As they said:

Friday’s G-8 summit at Camp David may seem something of an oddity – an archaic reminder of a time before the rise of the BRICs …

My colleagues then launched into a rather odd anti-declinist posture and then suggested that the West is not in decline but

Rather, the financial crisis has created a two-speed West.  Four large countries  – Germany , South Korea, Turkey and the United States – are actually increasing their international influence, while the others are stuck in a rut.

I have no difficulty in acknowledging that each of these identified four seems to have weathered the global financial crisis – some better than others – and that each in its own way has augmented its influence, though it would seem that Germany’s influence appears to be all negative – insisting on what it won’t do and others can’t.  But even with this odd assemblage, there appears to be at least two oddities about this GUTS list.  First of course neither South Korea (I did suggest pointedly to my colleague Bruce that Korean officials, at least,  hate the term South Korea – but leave that alone) nor Turkey are members of the old club.  Thus, if anything this new energy for the “West” – I am not at all sure what that now means when we talk of Korea and Turkey – comes from members that are intimate to the G20 – the new head table for global summitry  but not the old.  So I am puzzled.

Secondly, why these four for identifying the new energy coursing through the West.  I would be hard pressed not to include Australia – who has seen sustained growth for some time and now a strong advocate – all right I’ll admit more of an advocate when led by Kevin Rudd – than with the current prime minister – for the G20.  In addition,  and here I would suggest a country that is part of the G7 and of the G20 – my own country Canada.   Strong growth in the OECD and a joiner if there ever was one.

If those two were acceptable we could have “CATS” or “CUTS”.   The point is a range of countries – vaguely identified as the ‘West” have had robust growth and have taken action to “uphold the international order”.  Is it a two-speed West?  I doubt it and it doesn’t detract from the core of the problem – the relative decline in the US economy and more critically US leadership.  Put more positively the rise of a multipower order and how to manage global collaboration in the face of the rise of GUTS, or CATS or CUTS or whatever.

Image Credit – The United States: Official logo for the Camp David G8 Summit

The False Promise of Like-Mindedness

 

 

 

Observers of global summitry recognize how difficult it is “kill off” a summitry settings.  In 2009 when the United States was eager to promote the newly minted permanent “high table” of economic global governance – the G20 Leaders Summit – there were whispers – unnamed official sources –  that the US was encouraging the “fading away” of the G7/8.

Two problems with that scenario appeared.  First, a number of the “smaller” members of the club – Japan, Italy and Canada – clung to the decades-old G7.  They declared it more informal and intimate in contrast to the  stiffness and formality of the new club.  And the G7 was a setting where these less powerful members held greater sway.  Look at poor Japan.  In the G7 Japan was the only Asian country; but in the G20 Japan was but one of 6 (and yes I do include Australia in this Asian grouping).

The second problem was quick to appear as well.  Notwithstanding early Administration enthusiasm for the enlarged group that now included China, Brazil and India, it proveed to be very heavy lifting to move to consensus and agreement in the enlarged high table of global governance.  Look at the protracted discussion over global imbalances.  American officials began to back away from their earlier enthusiasm and determined regicide and began to suggest a rather more a la carte approach to global summitry – looking at the forum likely to achieve forward movement and to favor that gathering for the specific goal.

So the G7/8 didn’t go away and there was frequent reference to the warm like mindedness that the G7 at least represented.  Here was a club with similar norms and values that could focus on a goal and achieve forward progress in overcoming the collective action problem that plagues global governance.

Well, how’s that view holding up?  Not so well.  So, there we were with about as intimate and informal a setting as you could achieve – Camp David – and what we got was – very little.  And why.  Well, there was deep contention between Germany and the rest over the question of the resolution of the eurozone crisis.  The officials struggled long into the night but the Camp David Declaration failed to deliver.  No agenda – no targets – but strong rhetoric “Our imperative is to promote growth and jobs” and:

Against this background, we commit to take all necessary steps to strengthen and reinvigorate our economies and combat financial stress, recognizing that the right measures are not the same for each of us.

Read that as  – We agree to disagree over growth and austerity.   And as the Multilateralist, David Bosco, chronicled recently in his post “Can the Obama administration get the G8 back to basics?” the US sherpa, Michael Froman turned the agenda in to a grab bag of global governance issues:

But Froman then proceeded to outline an agenda that included a remarkable number of things under the sun, including Syria, Iran, Burma, Afghanistan, energy security, the Eurozone crisis, the Arab Spring, and food security. The scattershot agenda is a reminder of how much the forum has changed from its original economic focus.

So the “like-minded”  – what a number of the original G7 had pinpointed as a peculiarly relevant aspect of this gathering – failed to prove its value.  Sorry global summitry is hard! And whether states are democratic or not provides no guarantee of achieving success.  It remains unclear what the G7 forum, let alone the G8, is all about other than a caucus of states drawn from the larger G20. It might then make greater sense to hold this meeting at an extended meeting time of the G20 – two days plus – rather than one for the G20.  And eliminate the separate time for the G8.  Global Summitry is too precious to squander – like-mindedness or not.

Image Credit: Xinhua/AFP – G8 Summit

Global Summitry in the Context of Global Governance – But Distinct

 

As mentioned in the last blog post I was in Princeton revelling in the company of colleagues on the question of liberal internationalism – its present and future.  Not content with such a feast of expert views, this last week I travelled to Chicago to continue various dialogues.

The Chicago meetings were not coincidental.  Chicago is soon to host leaders for global summitry.  First there is the G8 Leaders Summit (well it at least it had been planned for Chicago but is now relocated to Camp David) and then the NATO Leaders Summit. The G8 Leaders Summit – the 38th in a series (if you count G7 as well) – will now take place on May 18th and 19th.  It will be followed immediately by the NATO Leaders Summit in Chicago on May 20-21st.  Well there you are: back to back leaders summits.

In part, I suspect, to capture the summit setting and media focus, a second one-day gathering was held by the the Chicago Council on Global Affairs, on Rise of the BRICS.   Rich Williamson the senior fellow project head called together a group of experts to Chicago as he had earlier in New York.  On this occasion Rich had the experts examine the international financial system, economic growth, trade and finance and energy security.

Then on May 10th and 11th the Stanley Foundation, the Roberta Buffett Center for International and Comparative Studies at Northwestern and the Global Summitry Project from the Munk School of Global Affairs put on the conference  “The Apex of Influence – How Summit Meetings Build Multilateral Cooperation” (by the way you may view the entire Conference at fora.tv).  The Apex of Influence Conference was designed to both examine the big picture questions of global summitry definition and evaluate success/failure and also to look more directly at the upcoming key global summit meetings – holding panels on the G8, the G20, NATO and then an examination of the financial crisis in Europe and its consequences for European unity and indeed for global governance.

The “Apex of Influence” Conference included a host of experts and proved to be an illuminating series of panels.  I am going to divide my remarks – looking first at what constitutes – and therefore what doesn’t constitute the scope of global summitry and then in a follow-on post I want to examine the impact of the G8 meeting at Camp David and possibly say something about evaluating success/failure for global summits.

In trying to tease out the contours of global summitry, we created two panels – bookends so to speak with a panel that commenced the conference and then a panel that concluded discussions for this conference.  We were very pleased to include both experts, officials and former officials in our two panels: “What Makes a Summit More Than a Photo-Op?” and “Fair Standards for Summit Success/Failure – Keeping Sight of Diplomatic, Political and Bureaucratic Realities”.

Dan Drezner from Tufts and foreignpolicy.com and David Shorr from TSF led off.  Dan in particular was good about trying to provide a precise definition of global summitry.  As you can see Dan focused on the institutions of global governance that in his mind make up global summitry.  His definition:

A problem solving forum that includes the regular participation of heads of government.

This institutional definition is useful.  It sweeps in a number of forum including:

  • routinized gatherings – the G8 and the G20 of course but also APEC, the Summit of the Americas, the nuclear security summit, NATO and ASEAN;
  • instances where leaders frequently show up – e.g. when leaders gather annually for the opening of the General Assembly;
  • large annual gatherings where some leaders frequently attended, e.g. the World Economic Forum (Davos);

The definition and the  instances cited do help distinguish global summitry from the broader category of global governance.  Thus, annual meetings where leaders do not attend e.g., the Fall and Spring meetings of the IMF for instance are not included.  Other routinized meetings are excluded as well especially those where transgovernmental regulatory agencies meet with officials including public and private regulators but not with leaders, e.g., the FSB, the BCPS, IOSCO,.

The definition provided by Dan is very helpful but the institutional focus may in the end be both too broad and too narrow. In the final session I gave a definition that was more functionally focused, which picks up on Dan’s “problem solving” aspect in his definition.  Thus, the definition for global summitry that I gave was:

The political architecture in which the organization and execution of global politics and policy take place.

This more functional approach targets outputs as well as actors.  Thus, the gathering of leaders at the annual General Assembly opening would fail to qualify as would Davos.  On the other hand it would take the broader element offered by architecture into account including  ministers, ministry officials, working parties, IO (International Organizations) and the vast structure of transgovernmental regulatory networks that get tasked to do things by those up the governmental hierarchy and that find their way to Reports, etc., that leaders then discuss, ratify or request further work.  Dan’s leader focus approach to global summitry, though useful, does separate out the “worker bees” from those at the top.  I see global summitry as a an authority decision mechanism that links together this complex of leaders, officials, representatives – public and private and their agencies, boards and organizations – my so-called “Iceberg Theory of Global Governance”.  It is messy and certainly not “your mother’s international decision structure” – but it has the value of reflecting the politics and policy for today’s global governance.

The question then is global summitry successful?  How can we know?

 

Image Credit:  Wikimedia Commons – Chicago Landscape

 

A ‘Temperature-Taking’ on Global Summitry Health and Well-Being

 

[Editors Note:  This post is somewhat long – too long –  my apologies, as I am attempting to describe the meaning of ‘Global Summitry’.  The explanation follows.]

It was the receipt of a very informative piece by Mexico’s Minister of It was the receipt of a very informative piece by Mexico’s Minister of Foreign Affairs Patricia Espinosa-Cantellano that got me thinking about success and effectiveness in global governance.  We are closing in on another G20 Leaders Summit – this Los Cabos in June – hosted by our Mexican colleagues.  This will be the seventh Leaders Summit since its inauguration with the global financial crisis in November 2008 in Washington.  As one of the Editors of the soon to be launched ejournal – Global Summitry – look for it! I am fortunate to be in possession of an upcoming article from the Mexican Foreign Minister.  I am not about to ‘spill the beans’ here – but stay tuned for its appearance and also possibility of further examination of the role of Mexico as the host of the G20 summit.  But receiving that first article got me to thinking about the progress of the G20 specifically and in fact more generally global summitry.

This original impulse to examine the progress of global summitry was further encouraged by several upcoming conferences in Chicago – the first organized by the Chicago Council of Global Affairs – I’ve already commented on the New York Workshop in the recent post “Strange Members“.  It will be held on May 8th. The next conference – commencing on May 10th is organized by the Stanley Foundation, happily a frequent partner with us at the Munk School of Global Affairs and additionally in this case the Roberta Buffet Center for International and Comparative Studies at Northwestern.  In the “shadow” of the G8 Leaders Summit – though the President very inconveniently switched the venue to Camp David  – and the Leaders NATO meeting, the partners organized a Conference entitled “The Apex of Influence – How Summit Meetings Build Multilateral Cooperation”.  By the way you will be able to livestream the proceedings of this conference – if you are so inclined at fora.tv.  Join us virtually if you cannot be with us in Chicago.  The topic directly raises the question of global summitry health. And a quick read of the conference agenda will identify as an early panelist – our colleague Dan Drezner from the Fletcher School at Tufts University.  You need not wonder any further why Dan raised the question of summitry success/failure in his recent post at Foreignpolicy.com.

So I propose to do two things here.  First, I wanted to examine the scope of what we at the Munk School refer to as ‘global summitry’.  Is it different/the same as global governance – the now accepted term – I think – for what the international relations types generally referred to in the past as  ‘multilateralism’? And does the addition of ‘global’ alter significantly the scope of inquiry?  And then what I want to do – as the title suggest is do a bit of ‘temperature taking’ on the matter.

My effort to describe the scope of global summitry and distinguish it from global governance is enmeshed today in a strong and loud debate over the changing power distribution among the leading states of the international system and indeed in the overall shape of the international architecture as a result of that changing power equation.  A ‘hot’ and continuing debate rages over whether the United States is in decline and whether it is fading as the hegemonic leader in global politics.  Linked to this decline debate is the ‘Rise of the Rest’ and the consequence for governance of both US decline and the rise of the emerging market countries, especially China but also Brazil and India and occasionally throwing in Russia and South Africa.  At the one end is Charlie Kupchan at Georgetown who in his recent book, No One’s World: The West, The Rising Rest, and the Coming Global Turn determines the west is declining including, possibly especially, the United States and that the Rise of the Rest will end the current liberal internationalism order as those rising powers will be unwilling to adopt the norms and rules that US hegemony created and shaped after World War II.  The outcome of such a change will be that there will not be a single power there to replace the leadership of the United States, nor will there be defined ‘rules of the game’ for states in the global order. By implication disorder will reign.

Now firmly in the debate over decline, rise and transformation is Princeton’s John Ikenberry. John acknowledges the decline of the United States (see his Liberal Leviathan: The Origins, Crisis, and Transformation of the American World Order) but believes that Rise of the Rest will remain attracted to, or committed to, the current order – capitalism, open markets, rule of law, etc., Liberal internationalism will continue to frame the political order in some significant fashion.  As the title implies there may be a crisis but if there is, it is a crisis of US leadership not of liberal internationalism.  And of course there is Robert Kagan of Brookings, at the other end – his recent book, The World America Made – who suggests that the declinism thesis is well, overdrawn and that the United States will remain the continuing leader, or it better for the sake of order.

Now Dan Drezner in a broad-ranging review of Kupchan – not to mention some of the variants authored by others in the May/June issue of National Interest – places the variants of the current global order debate before us this way:

  • Power is diffusing from the United States to developing countries;
  • Power is diffusing from states to non-state actors; and
  • As a result of the bullet points above, global governance is going to be horrible for quite some time

In the opening of the recent special issue of The National Interest on crisis of the old order titled, “Crisis of the Old Order” Brent Scowcroft the former national-security adviser to President Ford and then to George H.W. Bush suggests this sharp picture of the changing international political order:

We are struggling with institutions and practices of an Old World when the Old World is fading.

How then do we best describe the current architecture of the international political order?  How does it operate? And who are the principal actors and what are the drivers that describe its operation – and ultimately its success or failure?  There is little question that the old order is changing – but how?

The concept of global governance really took off with the end of the Cold War.  This sudden revolution in the international political order is the exclamation point in the evolution of the geopolitical landscape of the international system.  There were, and are, both analytic and practical, or real-world reasons for the emergence of global governance discourse.  On the analytic side the demise of the Soviet Union completely altered the shape of the international political order.  As Michael Barnet and Raymond Duvall wrote in their edited volume Power in Global Governance in 2005:

The Cold War was not only a description of a bipolar system; it also represented a mode of organizing the analysis and practice of international politics.  With the end of the Cold War, the issue became what would and should take its place.  For many, global governance represented a way of organizing international politics in a more inclusive and consensual manner.  … Alongside the eclipse of the Cold War was the emergence of globalization.  Although globalization had various dimensions, a unifying claim was that intensifying transnational and interstate connections requires regulatory mechanisms – governance, although not a government  – at a global level.

That last comment by the authors is telling.  Global governance language initially evoked concern among many international relations experts that the in a post Cold War world the political order that was being described by analysts was moving to global government.  US scholars in particular stuck rather overlong to “multilateralism”.  But slowly the language of global governance assumed something of primacy in international relations discourse.  As Margaret Karns and Karen Mingst in their text International Organizations: The Politics and Processes of Global Governance in 2010 suggested:

Thus global government is not global government; it is not a single world order; it is not a top-down, hierarchical structure of authority.  It is the multilevel collection of governance-related activities, rules and mechanisms, formal and formal, public and private, existing in the world today.

Many who have come to examine global governance have focused particularly on its non-hierarchical dimensions and on the informal structures that have emerged.  They have emphasized non-state actors in many varieties including individuals.  While global summitry acknowledges – embraces even – the flattening of authority structures, the state and institutions of the state remain at the heart of global summitry.  But as Princeton’s Anne-Marie Slaughter suggests in her examination of governmental organizations and networks, the state does not disappear but it does often find itself “disaggregating into its component institutions.”

Thus global summitry remains focused on state institutions and its numerous variations.  It consciously eschews, however, a focus on just traditional formal treaty-based institutions.  Global summitry is tuned to leaders summits for sure but it acknowledges and  focuses on the many organizations – governmental, and non-governmental, formal and informal – that constitute the galaxy of global summitry.  This examination adopts the “Iceberg Theory of Global Governance”.  Below the leaders, lie the growing system of meetings and work of ministers, and their ministries, international institutions but also transgovernmental organizations and regulatory networks with formal and informal regulatory actors.  These actors are all part of global summitry.  As Klaus Dingwerth and Philipp Patterberg described in their article in Global Governance in 2006 “Global Governance as a Perspective on World Politics”:

In essence global governance implies a multiactor perspective on world politics. … the term global governance conceives of world politics as a multilevel system in which local, national, regional, and global political processes are inseparably linked.

Global summitry accepts this far more complex political order where the sharp boundaries of international, regional and national policy have been partially erased but where the leaders and governments remain at the heart of international politics.  International institutions have also not disappeared but traditional institutions, the UN and Bretton Woods systems are now in many instances displaced or supplemented by informal organizations.  And the world of traditional diplomacy conducted by foreign ministers and their officials have been remade with the appearance of many meetings of their mainline ministers and their officials – finance, and trade, central bankers, etc., and the numerous meetings of regulatory officials both public and self regulatory of many varieties.  Again Princeton’s Anne –Marie Slaughter, a strong proponent of international networks since the turn of the century suggests:

From a theoretical perspective, government networks straddle and ultimately erase the domestic/international divide.

Global summitry examines all these actors in the organization and execution of global politics and policy.  The focus is then theoretic but more centrally, empirical and policy-attentive.  It is alert to the repositioning of global politics and policy premised on changing dynamics and dimensions of international relations.  Besides the redistribution of power among states there are other changing dimensions that are very much a part of global summitry and impact this redistribution as well.  The international system has seen a marked shift, some of which I have talked about earlier: from ‘hard’ law to ‘soft’ law; from formal institutions – often hierarchical – to informal ‘flattened’ or horizontal institutions; from national sovereignty to globalization.  The last dimension marks a continuing struggle of states and their leaders with many both offensively and defensively asserting national sovereignty. The rhetoric remains fixed on national autonomy yet reality is often matched against the reality of globalization and the impact of tight and possibly ever-tighter interdependence.

Finally a word on the term ‘global’ in global summitry.  A perspective could well be that global is exactly that – universal such as the UN – especially given the focus on states.   The term should not be taken as that.  Even in the UN the critical UN Security Council is not universal – far from it.  And so many institutions – often described as regional – seem perfectly a part of global summitry especially those that are not particularly geographically narrow in scope but generate policy that impacts the global order.

Global summitry remains focused on state actors but in many new arrangements and again examines all these actors in the organization and execution of global politics and policy.  And because it focuses not so much theoretically but more analytically and empirically on policy and policy impacts, it is sensible to assess the success/failure of the actors and their global governance policies.

But we’ve gone on far too long already.  So, that’s for another day.

 

 

 

 

 

 

Forward – Not Forward – Success and Failure at the G20!

 

 

The G20 Finance Ministers and Central Bankers met this past weekend at the Spring Meetings of the IMF and the World Bank. The news story was the success of the IMF’s Managing Director Christine Lagarde to raise approximately a $430 billion fund  to strengthen – the firewall – against Eurozone default – currently Spain as the key target of market concern.  A declared victory for the G20 Leaders?

Well, not so obviously.  Indeed my colleague Dan Drezner at his blog at foreignpolicy.com has suggested – quite rightly – that there appear to be two camps of thoughtful expert types – hey, I have to say this since Dan included me in the “success” camp of global governance decision-making – along with colleagues John Ikenberry from Princeton, Brooking’s Senior Fellow, Robert Kagan and finally my good colleague from NYU Bruce Jones – certainly not bad company.

So where are we in achieving progress in the main tasks for the G20 – IMF reform, or economic rebalancing or achieving Strong Sustainable and Balanced Growth (SSBG)?  I understand from his blog that Dan himself will – something like Houdini – reveal himself , or at least his position as he says, “in the coming months” on the functioning of global governance.

Well, while I along with you wait with anticipation for Dan’s announcement – I can’t wait totally.  Now in arriving at a judgement on progress, there are two elements that many commentators are quick to ignore when trying to assess success for the G20 Leaders Summit, or any other global summitry aspect of global governance.  First, global summitry is not just about Summit leaders gathering together – the so-called photo-op appearance.  As I have argued frequently in the past (“The Iceberg Theory” of Global Governance – Seeing it Work“) global summitry sweeps in the tasking  by leaders of  ministers and ministries, transgovernmental regulatory networks (TRNs) and even private bodies – what I’ve referred to as the “Iceberg Theory” of global governance architecture.

Second, most collective decision-making reached at a global summit such as the G20 seldom gets implemented there. Many, if not most, of the agreements are only implemented at the national level.  Without national implementation – executive or legislative – or both – there cannot be successful decision-making.  The global summitry world has not been capable of – what international law colleagues like to call “delocalization” – global governance generally still requires national action.

So to progress.  First let’s look at the Communique issued by Foreign Ministers and Central Bankers on April 20th.  Even a cursory glance will reveal a series of critical reports being prepared and/or being being forwarded to the Leaders:

  • work by the Financial Stability Board (FSB)  and the The Basel Committee on Banking and Supervision (BCBS) on modalities for extending the SIFI Framework to domestic systemically important banks (D-SIBs) and the completion of their work by November 2012;
  • a progress report from the FSB on strengthening the oversight and regulation of the shadow banking system with final recommendations in June 2012;
  • work coordinated by the FSB to provide safeguards supportive of a global framework for central counterparties (CCPs)  – on the road to an agreed over the counter (OTC)  derivatives reforms – looking to standards and requirements of CCPs by the end of 2012;
  • work by the International Accounting Standards Board (IASB) and the Financial Accounting Standards BOard (FASB) to achieve convergence – a single set of high quality international standards –  and to complete their study by mid-2013;
  • work by the FSB to establish a global legal entity identifier (LEI) with a report by June 2012;
  • work to be completed by June 2012 on an agreed internationally consistent standard on margining for non-centrally cleared OTC derivates;
  • an Interim Report for the Los Cabos G20 Summit from the OECD on a new set of reviews and on necessary steps to improve comprehensive information exchange in the Mutual Assessment Process (MAP);
  • the Ministers taking forward the financial inclusion agenda to present to Leaders in Los Cabos the G20 Set of Financial Inclusion Indicators thus assisting countries on measuring and tracking progress on access to financial services globally;
  • on financial education an OECD/International Network on Financial Education (INFE ) and the World Bank presentation of a Report on the High Level Principles on National Strategies for Financial Education;
  • on inefficient fossil fuel subsidies, a report of progress on the phasing out in the medium term of these subsidies;
  • a progress report for the Finance Ministers and Central Bankers in November 2012 from the International  Organization of Securities Commissions (IOSCO) on the implementation of  the Principles for the Regulation and Supervision of Commodities and Derivatives Markets;
  • a report by the World Bank and the OECD with support from the UN to be provided to G20 Leaders at Los Cabos compiling country experiences with Disaster Risk Management (DRM); and
  • a report to Finance Ministers in November to facilitate the assessment of risk and financial strategies towards implementing DRM.

While some initiatives are more meaningful as opposed to others, it is evident that much is being tasked and reported on at the global summitry level.  Be sure that little if any of this will ever be reported by the global financial media – far too complicated and messy.

So while there is progress, let’s look at the other side of the ledger.  One of the major reforms proposed and accepted at the 2010 G20 Seoul Leaders Summit was IMF reform that would enhance the role of the large emerging market powers such as India, Brazil and especially China (see Edwin Truman at the Peterson Institute for International Economics for a detailed review of the progress of the reforms “The G-20 is Failing” posted originally at at Foreign Policy )in the IMF .  Several steps were agreed to by G20 Leaders in Seoul including:

  • doubling of the IMF quota subscriptions – the resources the IMF uses to lend to other IMF members;
  • amendment to the IMF Charter that would redistribute seats on the IMF’s Executive Board away from the overrepresented Europeans; and
  • a revision by January 2013 of the formula used to adjust the IMF quota shares.  The formula revision would be followed  by a substantial increase in the IMF quota subscriptions and resources by January 2014.

The problem: it ain’t happening!  With respect to item one countries are required in many instances to obtain legislative change to gain approval.  Though the IMF requires that 60 percent of IMF member countries – holding 85 percent of the of total IMF votes approve the change, key members have failed to enact legislation.  And who are these key members.  The key holdout is the United States and given congressional deadlock it is unlikely the United States will be in any position to achieve legislative approval – especially with an election looming in November 2012.  In addition other significant countries including traditional economic powers Canada and Germany and emerging market powers  – Argentina – the badboy of the G20 – Indonesia, Mexico – the host for the G20, Russia, Saudi Arabia, South Africa and Turkey – have all failed to pass the necessary legislation.

And with respect to item two – the amendment of the IMF Charter – and the anticipated power sharing agreement –  the action is “Europe’s Court”.  It is expected that Europe will reduce its representation by two seats – it has 8 seats currently, three possibly  if you include the Swiss seat.  These seats will then be farmed out to the large emerging market powers.  Well so far there is no agreement with respect to the two seats – which of Belgium, the Netherlands, Spain, Italy and Denmark will give up their seat on the Executive Board – and it would appear that Switzerland is prepared only to rotate its seat with Poland.  So there we have it.  Promises to reform the IMF to enable a transfer of power to the new large emerging market states – and no forward action to date.

So it is hardly surprising that so many commentators and folks from media argue that the G20 is failing.

Strange Members

 

 

This narrative is not about odd appendages – although possibly metaphorically – it is.  It is about who is – and who is not – strange members in some of the ‘Informals’ – in this case the BRICS and the G20 Leaders Summit.

Now I am not one to spend my days worrying about representation and membership in global summitry.  Membership in most of these Informals is self identified.  Nobody is running  for ‘Class President’.  Having said that frequently debates have broken out among the experts and the critics over the failure to include one country or another.

There was for years a drumbeat of criticism over the membership of the G7/8 – the so-called ‘Club of the Rich’. There were frequent charges advanced over the lack of legitimacy of these original 7 and demands that the Club expand to include the newly emerging large market counties – and others as well.

When the G20 Leaders Summit was born out of the global financial crisis and brought together for the first time the traditional economic powers with the newly rising economic powers including China, Brazil and India, the legitimacy debate quieted briefly but reemerged over the lack of representation for one region or another. The representation and legitimacy debates really are a discussion without resolution. But experts and commentators can’t leave it alone.

Earlier in the week I was fortunate enough to join friends and colleagues in New York City at the Asia Society for a conference on the “Rising Powers and a New Emerging Order” .  This Conference had been called together by the Chicago Council on Global Affairs and the principal interlocutor on this Project – Richard “Rich” Williamson. Williamson is the senior fellow at the Chicago Council for multilateral institutions.  Rich has had a varied career serving various Republican Presidents in various foreign policy posts and has served also as the Chair of the Illinois Republican Party.    Today he is a senior advisor to the presumptive Republican presidential candidate – Mitt Romney. Rich is deeply interested and involved in evaluating the adequacy of global governance institutions.  This current project is designed to understand the new power dynamics of the international system and to evaluate the adequacy of the current international institutions in the face of major transition and evolution.  Besides assessing the adequacy of the current leadership of the United States, Rich is keen to understand the impact of the rise of the large emerging market countries on international institutions.  To do so Rich and his colleagues from the Chicago Council have brought together some of the “talking heads” in global governance to look closely at the operation of these international institutions.  In the context of the rising powers – of course – the group was soon into examining the BRICS – though there was frequent reference to the potentially unique role of China.  It is not unreasonable in the context of  current global summitry to examine the BRICS – but any close inspection immediately raises questions over whether there is any there – there.  And for the moment I don’t think there is.  I mean the group couldn’t even agree to support a single candidate for the position of president of the World Bank.  While this may represent for some politicians and commentators – the revenge and return of the Group of 77 – it is not.  And as the group was able to tease out, China has a laser-like policy that focuses on its own national interest  – and avoids distractions unrelated to these interests.  The BRICS remain the invention of Jim O’Neill at Goldman Sachs – and not a terribly vital instrument of these key powers.  I hope to comment more on the impact of the rising powers – as seen from this workshop – but let me turn to yet another strange member.

And to do that I am led back to the G20.  I was met yesterday morning with a smiling picture – and a lead story in one of the global financial papers on the seizure by Argentina of Spain’s Repsol’s majority stake in Argentina’s largest oil company – YPF. Argentina has also announced that it will not pay fair market value for the seizure of Repsol’s majority stake.  The quote accompanying a smiling President – you can find it in the “pink paper” is: “I am a head of state and not a hoodlum” evokes for most of us aging North Americans the words of a US President. “I am not a crook.”  But I think the President Christina Fernandez de Kirchner reveals exactly what she is and and what kind of government she leads – a “hoodlum gang”.

Argentina’s bad economic behavior has over the last few years become all too apparent. In the near past the Argentinian government has seized private pension funds. It has been ordered to pay many millions of dollars in damages by international arbitration tribunals and insistently refused to do so – even abandoning the World Bank facility on international investment.

And yes Argentina is a member of the G20.  How can this be?  By now we are all familiar with the story that led to Argentina’s inclusion.  While details differ the fact is that those putting together the membership of the G20 in 1998 – then finance ministers – were partial to the then Argentinian finance minister – and so magically Argentina became a member of the G20.

But seriously folks – how can Argentina continue to be included in the High Table of Global Summitry?  This apex of global leadership is dedicated to maintaining the vitality of the global economy including no trade protectionism, open borders and the global health of the international economy.  It has to be embarrassing to G20 Leaders to be faced with a member country so destructive of the rule of law in the global economy.  It really is time to do something.  But don’t worry – they won’t.

Image Credit:  Wikipedia – Barack Obama and Cristina Fernandez de Kirchner in 2009

“After You Alphonse” – The G20 and Building a “Firewall” Against Eurozone Contagion

 

 

 

G20 Finance Ministers and Central Bankers have wrapped up their meeting in Mexico.

So what’s the result?

Well the battle has not yet been won to create a significant enough “firewall” to calm the markets and assure them that contagion will not spread beyond Europe.

But it appears to be coming.

The heart of the issue is Germany’s reluctance to add to the bailout fund that had been created – Europe had first built a temporary fund – the European Financial Stability Fund (EFSF) and then subsequently created a permanent European Stability Mechanism (ESM).  That combination would total about 750 billion euros.  But Germany is not yet ready to do that.  And the G20 – or at least many of the G20 countries – are not prepared to augment the IMF support standing around $358 billion by some $500 to $600 billion – until Europe makes a greater contribution.

The G20 countries have pressed Europe (see the G20 Finance Ministers and Central Bankers Communique) – that means principally Germany in this case –  to increase the European contribution.  It is still unclear whether Germany is prepared to commit – it would appear not to be by next week at the European Summit set for March 1 – 2nd.

Where do the G20 countries stand – and why?  Most critical in this discussion is Germany.  And Germany has resisted – and continues to resist though apparently less vociferously the enlargement of the Eurozone’s bailout fund.

Germany appears, in part, to be playing for time.  The German Government faces a crucial vote in its legislature on Monday – a vote to accept a second rescue package. – As a bit of an aside  the Netherlands and Finland also face legislative approval in the coming week.  It also seems that the German government is playing for time to see if the Greek government will be successful in swapping Greek debt held by banks and other investors that propose a significant reduction in the face value of the debt, or drawn out maturity and/or rate reductions – or all three.  And the Merkel government is all too aware that German public opinion is strongly opposed to to further bailout actions for Greece.  In fact in a poll released today,  Sunday, by Bild am Sonntag (quoted in Reuters) showed that 62 percent of Germans oppose further aid for Greece.  Thus, the German government for the moment continues to insist that an enlarged firewall may cause governments to ease up on their fiscal austerity measures and additional economic reform. The strongest views from the German government continues to argue that the ESM is sufficient as it is.  In the meantime, however, Greece, Ireland and Portugal are locked out of debt markets.

Most of the G20 countries – developed and large emerging markets alike – have urged Europe to take further steps to reduce the risk of contagion.  A number of developed countries such as the UK and Japan are prepared to raise further IMF support along with a number of developing and large emerging market countries, most insist that will not act without further actions by Europe.  And the United States has both urged greater European actions but has also made clear that it will not contribute in any instance to the enlargement of the IMF package.

So it is unclear today whether Europe will enlarge the bailout at the March EU Summit or that a complete package – somewhere near $2 trillion including European and IMF funds –  will be ready or concluded by the G20 Finance Ministers and Central Bankers when they meet again toward the end of April.  But we can see that the G20 Ministers and Central Bankers meeting has been important in trying to construct a bailout package.  Furthermore in looking at the comments of the ministers and central bankers there is not a simple divide between developed and large emerging market states and developing countries.

Speculation over the legitimacy of the G20 continues apace.  But the legitimacy focus is ill placed (see the Reuters blog – “The Great Debate” and the article by Terra Lawson-Remer, february 24, 2012) .  The current troubles in constructing a bailout package reflect  popular and legislative opposition in a number of countries – Germany most notably – but in other European countries as well and in the United States.  This is not a G20 legitimacy debate at all; it is a political battle in the domestic and international contexts.  That fact that executives and their officials cannot act without calculating legislative dis/approval is not new – remember the “failure” of the Kennedy Round  in the US Congress.  But this says next to nothing about G20 legitimacy.  What it reflects is that global economic negotiating, indeed almost any international negotiating – as we were told long ago by Harvard’s Robert Putnam – requires officials to negotiate in two ways – across the table with other leaders and officials, and backwards and over their shoulders with the legislators and broader publics of the country.  The “high table” of international economic negotiations has never been leaders and officials divorced from domestic politics.  And it isn’t now.

Image Credit:  Chris Skinner – Financial Services Club Blog

 

 

Tackling ‘Peace and Security’ at the G20 – Sort of

 

 

 

 

 

 

 

This weekend a number of these foreign ministers – most notably United States Secretary of State Hillary Clinton and Germany’s Guido Westerwelle  – will convene at the invitation of Foreign Minister Patricia Espinosa in Los Cabos Mexico (in June the G20 Leaders Summit will meet at Los Cabos). – For the first time these ministers gather under the G20 umbrella to discuss – at least in principal – “foreign and security” policy.

Is this then the final grand leap of the G20? Will the Leaders Summit now include a full global summitry agenda economic, financial, peace and security?  Will G20 Leaders gather to tackle economic and financial regulatory reform and securities crises as well?

Well – not exactly.

Among the G20 there has always been tension, if not outright contention, over the scope of the Leaders Summit agenda.  While some G8 countries have urged tackling at least questions on nuclear non-proliferation, or crisis management and resolution, others, notably non G8 countries such as China and Brazil have resisted any extension which would bring peace and security issues to the G20 agenda and remove it from the UN Security Council.  As Bruce Jones Director of “Managing Global Order Project”   at the Brookings Institution declared

What is left behind is foreign and security policy … In this regard, the G-20 foreign ministers meeting in Los Cabos represents the first real opportunity we’ve had to begin that work.

Bruce has gathered a number of experts and former ministers from around the G20 to reflect on this upcoming meeting at the Brookings Institution website. In general Bruce and his colleagues support the calling of this meeting.  Among those is Celso Amorim, former Foreign Minister of Brazil, who writes:

Without exaggerating the scope of the changes that may begin with the February meeting of Foreign Ministers in Mexico, one is allowed to hope that it can at least initiate a process which someday will impact on the formal institutions that deal with political and security matters.  In order that such a process may take place, it is essential that the FM meeting focuses on concrete questions – such as the ones mentioned here [Arab Spring, the Iranian nuclear program, a broader-based approach to Africa] – and does not lose much time and energy on more abstract issues of institutional nature Nor should it bother too much with other subjects – important as they may be – which have already found an appropriate locus for debate, such as climate change.

So support for sure, but also demands for greater precision as well on the agenda.  And the reality matches the commentary.  Clearly there was no unanimity on the need – desire for – this meeting.  The Mexican foreign minister, the host, has made clear this meeting is “informal” and not a Summit – meaning no summit declaration.  In addition 8 countries have not sent foreign ministers but rather lower ranking officials including France, China, Brazil and India.

So it appears that there are a number of questions that ‘dog’ the question of G20 foreign ministers meetings.  Key among those is the agenda.  The Mexican foreign minister has suggested that the meeting will tackle “pressing issues” including food safety, strengthening the rule of law and providing efficient and coherent leadership to tackle global challenges.  He also made clear that the the group would discuss but rule out statements on critical crisis issues such as Syria.  So less on crisis management – at least formally – and more on issues that Lee Dong-hwi of IFANS in Korea, another of the Brookings invited experts,  calls “hybrid issues” – issues where economic and security issues are inextricably linked.  This indeed may be the incremental way to extend the agenda to more “peace and security-like” issues.  But food security and climate change might best be discussed by others – rather than the foreign ministers.  The foreign ministers after all represent a more traditional conception of diplomacy.  Once foreign ministers were the only officials that  dealt with international matters in global settings.  But that is long gone.

In the “Iceberg Theory” of global summitry (see my June  2011 blog post “The Iceberg Theory of Global Governance – Seeing it Work”), of which I am a strong advocate, obviously,  significant ministerial, working party and transgovernmental regulatory networks (TRNs) including a wide variety of intergovernmental, ministerial, regulatory and administrative institutions, are tasked  – by Leaders and Ministers – with developing standards and policy reforms that then need to be implemented by national authorities. Leaders Summits are but the “tip of the iceberg” of global summitry.

So, it is not at all clear that foreign ministers are the best at dealing with many of these not really policy subjects for foreign ministers. But if it is “crisis management” that will occupy the agenda, then the China’s, Brazil’s and others will insist that the discussions need to be at the UNSC.

Nevertheless it may be that the foreign ministers may best tackle crisis prevention matters and at least publicly limit, at least for the moment, the immediate crisis situations – though it is a setting where at least countries avoid the distorting impact of the “all mighty Security Council veto”.  And I think Bruce Jones has picked up on this crisis prevention agenda and the “speak softly approach”  for crisis management:

Far more important is relationship building, building shared perspectives on key security issues, nd an informal space for back room negotiations.  I suspect that Secretary Clinton will use quite a lot of her time in Los Cabos cornering her Chinese and Russian colleagues on the Syria question – and that’s very much to the good.

So let’s urge a crisis prevention  approach and a discussion of current security crises – even if those aspects of the discussion are left to the back room for now.

Photo Credit: Wikimedia Commons

 

A Certain Uncertainty – From Seoul

 

 

 

It was a slight distraction – around noon.  My panel on G20 global governance survivability had just ended.  The next panel on international monetary policy had begun, chaired by the President of KDI, Oh-Seok Hyun.

Here we are in downtown Seoul at a conference organized jointly by the Korean Ministry of Finance and Strategy and the Korean Development Institute.  The Conference “World Economy in 2012 & Global Economic Cooperation: Issues for the Mexican G20 Ahead” had opened with ministerial comment and weight and was proceeding in a fairly calm and deliberate way.

Anyway back to President Hyun.  A note was carried to the dais by one of KDI’s many assistants and passed to the President.  President Hyun showed  momentary surprise and then it passed and he seemed to go back to chairing the panel.  I didn’t think much of it.

Then I felt the buzz of my iPhone.  Distracted, I pulled the phone from pouch and gazed at a rather startlingly news message – Kim Jong-il was dead.   Yikes.  Now that was surprising as here I was sitting in a plush conference room in downtown – Seoul – yep Seoul!  I passed on the news message to a Korean colleague who quickly scrambled out of the room to contact colleagues back at KDI. To learn more – maybe.  As it turned out they had not been alerted to the great leader’s death.  But the news was spreading fast.

So within hours the news was all over the conference and beyond.  It was passingly odd.  To be so close to North Korea (DPRK) – at this critical juncture.  So what was the reaction in Seoul.  Well, I suppose uncertainty was the most palpable sense felt.  The South – Korea – with its almost 50 million people – had for many years longed for reunification.  But that was no longer the case.  Korea had grown wary of the aggressiveness, the nuclear weaponry – of living next to ‘the crazy’ cousin – 22 million people – largely starving – but for the military and the elites – isolated from the world – and super-nationalist about the Kim ruling dynasty.

So the transition was underway – presumably – with the ‘great successor’ Kim Jong-eun – the youngest son of Kim Jong-il – moving the pieces in an elaborate dance to solidify his shaky control of the government, party and military.

Uncertainty was the watchword all around.  While Kim Jong-il had died Saturday, the announcement was held back till – as I said – around noon on Monday.  Immediately meetings around the region began.  The Korean President Lee Myung-bak reassured his people to go about their business calmly.  While the Korean military heightened vigilance, unlike 1994 (when Kim Jong-il’s father died),  the government did not place the Korean military on high alert.

So here we were in Seoul in a country that had achieved remarkable success – great economic growth and prosperity, heightened international status and a member of the G20 – waiting for events from the ‘hermit state’ – it was weird.

And I was on my way back to North America.

Image credit:  Alan Alexandroff looking toward the DPRK

 

 

 

 

G20 Global Governance is Hard Work, World – Get Used to It!

[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.