It's fashionable to heap great expectations on international summits like this week in Cannes. The reality is that, even as the G-20 has its benefits, no meeting is going to fix the world's problems.
Summit meetings like next week's G-20 in Cannes are something of a mixed bag for world leaders. Conventional wisdom holds that summits are politicians' cat nip--a chance to bask in their status and commiserate with peers. Of course there are also substantive policy matters on the docket, and the challenge of producing results worthy of all the fuss. As any presidential aide will attest, everyone involved in the process is thinking ahead to perceptions of the summit and asking themselves, "what do we want the headline to be?"
If the justification for these powerfests is to advertise diplomacy to ordinary people, this places an onus on President Obama and his colleagues. In a time of such widespread economic strain, we're bound to look at the summit pronouncements and wonder whether that's the best the world's most powerful men and women can do. Even so, it's important to judge this question by realistic standards for what agreements Obama and his colleagues can reach, or else it will only fuel cynicism.
The G-20 is basically a club of key economic players--collectively they account for over 80 percent of world GDP--and a channel for their combined efforts to maintain global economic growth and financial stability. The recent history and current debates within the group will sound familiar to anyone who has been following the domestic politics of America's own economic troubles.
At the height of the Great Recession, the leaders of G-20 nations not only injected government spending into their own economies and propped up troubled banks, they also set up global financial facilities with trillions of dollars to meet additional needs. After the sense of emergency faded, however, so did the sense of solidarity among the leaders. Just before the June 2010 Toronto summit, President Obama wrote to his counterparts that the recovery was too fragile for a hasty shift from stimulus spending to austerity. Despite this plea, the leaders of Germany, Britain, and Canada pushed through a highly ambitious set of deficit reduction commitments. Such deep splits over what ails the economy inevitably constrain G-20 leaders' options for further action -- just as in the US budget battle.
The signature issue: spend-and-borrow countries, like the US, need to spend less. Export-and-lend countries, like China, need to spend more.
Another complication for leaders headed to Cannes is that the most immediate economic danger -- the threat posed by Greek government debt to the Euro -- lies somewhat beyond the G-20 sphere. Protecting the Euro from potential Greek default is a matter for the Eurozone countries, as shown by the recent frenzy of negotiations. But regardless of whether the G-20 nations reinforce European measures with added steps in Cannes, the wider global group will deserve partial credit for any solution forged by Europe's leaders.
Looking beyond the short term, the G-20's signature agenda is to put the global economy into better balance. The spend-and-borrow countries, like the United States, need to spend and borrow less. The export-and-lend countries, like Germany and China, need to spend more. Given the major adjustments and political sensitivities involved, this will be achieved via steady incremental progress. Given that China had for years refused even to discuss, G-20 groundwork for economic rebalancing seems to have been on a good track. Leaders in Cannes will claim credit for setting up an analytic system for the IMF Mutual Assessment Process to pinpoint the sources of economic imbalances.
Any fair assessment of the G-20 process must factor in the differences among various policy topics and challenges. As the G-20 has branched out into new areas beyond its core portfolio of global economic growth and financial regulation--e.g. development aid, food security--critics have warned against G-20 leaders becoming distracted. In reality, though, not all issues place the same demands on leaders' time and attention; it depends on how controversial or complex they are.
A few examples bound to come up next week help show the benefits of being opportunistic instead of rigid. For instance, in 2010 the group started to focus on economic development, with a view toward developing countries as possible future sources of growth. In that vein, leaders in Cannes will discuss the value of helping extend infrastructure to connect areas not well linked to the wider regional and global economies. In another connection between the international agenda and the US domestic agenda, the leaders will be talking about the impact of commodity price spikes on food insecurity among the world's poorest--fresh on the heels of new US regulations to cut down on the speculation that leads to price hikes. And the G-20 Anti-Corruption Working Group is a prime example of a relatively uncontroversial issue on which significant progress has been achieved with just a modest push from the top.
If the G-20's defining feature is its members' combined economic heft, the group's other distinction is as the sole top-level forum where leaders from the emerging and established powers sit at the table as peer equals. This offers leaders a valuable chance to tackle shared challenges with all the key players of today's world in the room. Given the tragic and violent history of earlier shifts in global power, this comparative advantage is vital and should be leveraged for as much cooperation as possible.><
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