Conference on the Russian G20 Presidency, Moscow, December 2012
Finance ministers and central bankers from the world’s 20 leading economies will gather at the old Kremlin cavalry stables in Moscow at the end of this week for their first meeting under Russia’s chairmanship. Collectively their nations account for two-thirds of the world’s population, four-fifths of its trade and six-sevenths of its GDP. But this gathering, to be held under the rubric of the International Financial Architecture Working Group, will see horses for courses: deficit nations that want to grow out of debt and surplus countries that are keener on a dose of austerity to cure what ails the other group.
Credit: Blouin News Statistics
What will be noticeable by its absence is the common will that was seen in the immediate aftermath of the 2008 global financial crisis to bring about the coordinated economic and financial reforms needed to make global economic governance sound and growth sustainable. Moscow has said it wants its chairmanship to focus on the need to start a new cycle of growth. Instead there are likely to be divisions over currency wars (competitive devaluations) and whether — and with what — to replace the expiring target set by the G20 in Toronto in 2010 to halve national budget deficits.
Both risk further diminishing the organization’s reputation and raising further questions about its relevance as the global economy’s steering committee. The 2009 Pittsburgh summit, at which the G20 declared its ambition to be the ‘premier forum’ for international cooperation among its members, now seems a distant memory. The finance ministers and central bankers meeting later this week may offer the last chance the G20 has to get back in the harness if its leaders, when they meet in St. Petersburg for their summit in September, are to resolve even some of the the problems that have hampered global economic cooperation in recent years. We wouldn’t bet on it.
