It’s now official. The G20 group of countries has replaced the G8 as “the premier forum for international economic cooperation”. In other words, the countries in the G20 will now make the rules for managing the global economy instead of the G8 – what used to be the world’s richest nations.
So said the Leaders Statement of the G20 countries (plus others) after a meeting in Pittsburgh on September 24 and 25 chaired by US President Barack Obama.
Among the other things the Leaders said is that when they met in April this year in London they “agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital”. And, they declared: “It worked”. The response to which must be: “Really?”
If it worked, it’s not very obvious in Caribbean economies many of which are in severe recession with little prospect of recovery before the end of 2011.
Little surprise, therefore, that the Assistant Secretary-General of the Caribbean Community and Common Market (CARICOM) Secretariat, Colin Granderson, is reported to have said that CARICOM countries are concerned about not having a presence in the G20. As he emphasised, “It is believed that the views of vulnerable states with peculiarities such as ours need to be heard”.
The Caribbean and the Pacific are the only areas of the world that are left out of the G20. In fact, Europe is over represented as is obvious from the membership and special guests of the G20.
Out in the cold: Caribbean Heads of Government
So, who are the members of the G20? They comprise the G8 – the United States, the United Kingdom, Canada, France, Germany, Italy, Japan and Russia – and the ten large developing countries they could no longer ignore. These are: Argentina, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey. And, for some curious reason Australia is a member as is the European Union (represented by its rotating President and the European Central Bank), making for 21 members. Then, there are special guests as well – the leaders of Spain and the Netherlands. Altogether, six European Union countries plus the EU Presidency.
Voiceless in all this are the small regions of the Caribbean, Central America and the Pacific, though the argument could be made that Mexico is a Central American country and Australia represents the Pacific. Even if the latter shaky argument is made, and accepted by the Central American and Pacific countries, no such argument can be made for the Caribbean.
Of course, representation in the G20 is a consequence of the deficit of democracy in the international system. The G8 would have remained long in control of the world’s economy if the expanded economies of Brazil, India, China and South Africa had not forced the G8 to recognize them.
Membership of the G20 has little to do with fair representation and much to do with self interest. Together, the G20 countries cover more than eighty-five percent of world economic activity. They can afford to ignore, or at least pay lip service to, the other nations who account for the remaining fifteen percent of global economic activity, even as Ban-ki-Moon, the UN secretary-General, reminds that eighty-five percent of the world’s countries are not represented at the G20. In the end it is power that matters, and power in this instance is purchasing capacity and market size.
How exactly the G20 will conduct its work is not yet clear. The Leaders at the Pittsburgh meeting instructed their officials “to report back at the next meeting with recommendations on how to maximize the effectiveness of our cooperation”. But, if the ‘green room’ process at the World Trade Organization is anything to go by, decisions will be agreed by a handful of the more powerful countries with others being co-opted into the deals either by coercion or trade-offs. Thereafter, the thinking of “eighty-five percent of the world’s countries not represented at the G20” will be of little consequence.
In reality, what the G20 may have done is provide a blind behind which a new power-group may emerge: the US and China for sure, maybe a combined EU (but certainly not the full gamut of European countries that now hold on to a place because of past dispensations), Russia, India and Brazil. Undoubtedly, deals made between the US and China will hold sway, and it is their interest to work out mutually beneficial arrangements.
China and the US: Certain G20 deal makers
It is significant that in the Pittsburgh Leaders’ statement, the developing countries in the G20 appear to have adopted the agenda of the G7 countries (the G8 minus Russia) some of which is inimical to the interests of small economies.
Of course, the IMF and World Bank remain important instruments. In these institutions, the US and Europe continue to call the shots. But, China, India, Brazil and even Saudi Arabia (despite its close US links) are unlikely to engage with the US and the EU in the effective cooperation that the G20 leaders called for in Pittsburgh in the absence of greater influence in the IMF and World Bank.
In this connection, a process for reallocating voting power in both organizations has to be settled by the G20. It will mean easing out some European countries that now sit on the Executive Boards to make room for countries such as China and Saudi Arabia. It will definitely mean an end to the practice of the US and Europe holding on to the headship of the two organizations.
The new boys in the ClubBut, even those changes should not be enough. What is required is a new vision of the role of the organizations in financing development needs.
The vision should include a policy that “no nation shall be left behind” and it should be backed by pledged and callable resources that depart from the unrealistic norms that have become part of the IMF and World Bank ideology.
Whether the developing countries in the G20 will prove to be more sympathetic to the “peculiarities” of small “vulnerable” states is left to be seen. But, one thing is for sure the Caribbean is right to ask for a seat at the G20 table.