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.