Will the G20 be a success?

April 2, 2009

While we sit and wait to see whether world leaders can come to some sort of agreement about coordinated fiscal stimulus, enhanced financial regulation, IMF reform and trade protectionism, I thought that I would do a bit of speculating about whether what’s going on inside London’s ExCel Centre today is likely to lead to a break through.   Of course, having never had the pleasure of being involved in such a high level meeting, I’ve had to rely on some other experts to give a sense of what’s going on and whether the summit will be a success.   Here, rather than focusing on the things that are in the news about spats between the French / Germans and the British / Americans / Chinese, I’m looking at some larger aspects of the summit to predict whether it will be successful.

The G20, and it’s predecessor the G7 /8, are unique because they are informal gatherings of finance ministers, foreign ministers and heads of state which allow leaders to seek agreement on major international issues.   But it is not always organised the same way, and the way that it is organised helps to determine it’s likely outcome.  This has been one of the key themes in a class I taught this year at LSE, Economic Diplomacy.

One of the things that Sir Nicholas Bayne (former British diplomat, LSE academic and one of the foremost experts on the G8) has stressed is that successful summits come about when finance and foreign ministries are extensively involved in the preparation of the negotiations prior to the leaders meeting.  He describes this as the ministers making the policy, with the leader giving authority to approve it / improve on it.  When this happens, the more technical aspects of the communique are likely to be agreed on in advance, leaving only the most sensitive political decisions for last minute negotiation amongst leaders.  That is when the informality of the G20 / G8 grouping is most effective: when sitting President Sarkozy next to President Hu Jintao at dinner (which Gordon Brown did last night) is actually likely to lead to some breakthrough.

However, as Sir Nicholas has noted in lectures at the LSE, there was only weak coordination between finance ministers and leaders in the case of both of the G20 summits (in November and at present).  The meeting of finance ministers held on 13-14 March appears to be lightly tied in to today’s summit.  This is perhaps understandable given how new the G20 is as a format for leaders: while it’s been around since 1999 for finance ministers, it’s ability to coordinate at leaders level is actually much less established and they are still ironing kinks out of the process.  But that might mean that the gaps left are too large to bridge by the end of the day, and no amount of face to face contact between Obama and Sarkozy will be able to help facilitate cooperation.

Additionally, by being so inclusive (the UK has invited leaders of NEPAD, the African Union, ASEAN, the World Bank, IMF and other regional development banks to the talks in addition to the 20+ heads of state), the British will have lost the sort of “clubby” atmosphere of the summit which is supposed to facilitate agreement.  The expansion to the G20 already compromises the extent to which the leaders feel some sort of connection and common understanding of global problems, and the inclusiveness of the invitations, while laudable from a global governance and equity standpoint, may actually compromise the effectiveness of the summit.  In fact, social theorists of economic diplomacy argue that such small groupings are effective because they allow actors to be persuaded, rather than forced to go along through more coercive socialisation methods.

But even when things go well at the summits themselves, the G8 and G20 are not super-effective at getting heads of government to change domestic policy.   This has been noted recently regarding the surge of protectionism after the November summit: while leaders pledged to not increase trade protectionism, 17 out of 20 G20 members implemented some sort of protectionist measures between November and April.    Research actually indicates that less than 50% of what is promised at summits is actually carried through on.  That seems to imply that the longer the list of to-do’s the communique presents, the less the chance that it will be implemented in full.   The November communique contained more than 40 items on the to-do list, which were not fully prioritised.

So what do all of these insights mean?  That the summit is doomed to failure?  I don’t think so.  As I said several times over the past couple of days in the news, I think that in the end, a spirit of cooperation will prevail given that the stakes for showing international unity on the financial crisis are so high.   But that doesn’t mean that the summit will produce stunning outcomes – the very fact that there is likely to be agreement means that there will be a sort of least common denominator feeling to the eventual communique.    A disappointment, perhaps, but not a complete failure.

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