November 19, 2008
The much heralded G20 Washington meeting of 15 November has come and gone. Did it live up to its hype? Was it just a talk shop? Will it be remembered next year? Some dust has settled and it is possible to draw preliminary conclusions.The successful holding of a meeting bringing together such an unwieldy group of developed and developing countries and the agreement to a declaration was no mean feat. Anyone who thought that major decisions could be made were dreaming, but there was agreement on several important issues and an agreed timetable for action.
Remarkable too was the fact that the meeting was effectively convened and led by the Europeans, with George W Bush no more than a figurative chair – evidence of the measure in which the financial and economic rescue operations are no longer US-driven. This is an exceptional opportunity for Europe, which reached a common position ahead of the Washington meeting, and spoke broadly with a single voice. The constructive atmosphere is unlikely to be disrupted when Barack Obama participates, but his own substantive views are as yet unknown.
Key results from the meeting were:
Agreement that a broader policy response is needed against the deteriorating economic conditions.
- A commitment to reform the Bretton Woods institutions to reflect changing economic weights.
- An agreement to prepare for a possible Doha round ministerial meeting.
- Fiscal stimulus packages to be announced by more countries.
- Working groups to address international financial regulations, including the Financial Stability Forum.
- Underscoring the critical importance of rejecting protectionism and not turning inward in times of financial uncertainty.
An initial list of specific measures, contained in an action plan, will be the subject of extensive ministerial and expert negotiations. High priority actions are to be completed prior to 31 March, 2009 although the Obama administration does not take office until 20 January.
A G20 summit is expected to be held in London next April.
Recognition of the need for a global response from all the leading economic powers and the change in world economic weightings are the two most likely, lasting outcomes. There will be many disagreements in the light of the ambitious agenda, but this is to be expected.
There also a number of personal puzzles to be resolved. The drive has so far come from Sarkozy with much of the ideas from Brown. What happens after 31 December? The Czech Republic is not part of the Euro area and not, qualified to lead. Sarkozy’s idea of presiding over the Eurogroup has met with strong resistance, not least from the current chairman Juncker, whose relations with Sarkozy are poor.
The G20 must now deliver. But no-one should question the value of the Washington meeting.Author : Stanley Crossick