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Global Issue 15

Global Insight G20 “Russia has identi ed stimulating economic growth and job creation as a primary objective of its G20 Presidency. We consider these tasks a priority for the development of a modern society.” Russian President Vladimir Putin “Tax authorities across the world should automatically share information, so those who want to evade taxes have nowhere to hide.” British Prime Minister David Cameron distract attention from its failure to stabilise the global fi nancial system by moving the goalposts to another task: the even thornier and more amorphous challenge of enabling growth and improving employment around the world. Encouraging growth and job-creation are goals which may not be mutually compatible, unless the G20 is willing to look at fundamental reforms de-prioritising technology and putting the cash, instead, to social needs. The Gates Foundation gives US$1.5 billion each year. By contrast, the 2013 fi scal year budget just for military technology research in the US alone was $69.65 billion. President Obama’s fi scal year 2014 budget request for NASA is $17.7 billion for space research. Forrester Research forecasts that US global spending on IT in 2013 will be $2.06 trillion. Further, if the G20 wishes to accomplish stability with growth, as well as with increasing employment, then reforms need to be No one wants to rock the boat too much, lest we move from currency wars to trade wars and – at worst – to actual wars introduced, not only in the fi nancial sector, as discussed so far, but also in the much more diffi cult areas of reconstituting money and of re-orienting our entire economic system. Not only are there questions about the G20’s effectiveness and good sense, there are continuing concerns about its very legitimacy. It is a self-appointed body with unclear criteria about which countries to include or exclude at what times. The G20’s membership does not refl ect the 19 largest national economies of the world in any given year. Indeed, the organisation states that there are “no formal criteria for G20 membership… In view of the objectives of the G20, it was considered important that countries and regions of systemic signifi cance for the international “We have made progress, but we are nowhere near a point where we could say that the kind of derailment that leads to market crises could not happen again, and so nancial market regulation will again play a central role at the G20 meeting.” German Chancellor Angela Merkel fi nancial system be included. Aspects such as geographical balance and population representation also played a major part”. The 19 member nations are indeed among the top 29 economies, as measured by GDP in nominal prices, and among the top 25 countries by purchasing power parity, in lists published by the IMF for 2013. However, in a club of the rich, exclusion of countries that should qualify because of being in the top 20 – such as Switzerland, Norway and Taiwan – not surprisingly, rankles them. Spain is a “special invitee”. Austria, Belgium, the Netherlands, Poland and Sweden are included only as part of the EU, and not independently, while other countries are represented twice – once as themselves, and once as part of the EU. While the G20 believes that the group’s “economic weight and broad membership gives it a high degree of legitimacy and infl uence over the management of the global economy and fi nancial system”, there have been several different proposals to put the membership on a rational, rather than political, basis. In the words of Jonas Gahr Støre, then Norway’s Foreign Minister, the G20 “may be more representative than the G7 or the G8, in which only the richest countries are represented, but it is still arbitrary”. Alternative proposals have been given short shrift. Other issues affecting the G20’s legitimacy are that it lacks a formal charter, that its meetings are held behind closed doors and that it is usurping tasks that belong to the UN and other international organisations. No wonder Støre, called the creation of the G20 “one of the greatest setbacks to rational global governance since World War II”. The fact is that the G20 will have to be reformed if it is to be genuinely useful – for example by basing its membership on some defensible principle, by taking on some task which is not the province of another international organisation, by accomplishing one task before moving on to another and by holding its meetings in the open. Prabhu Guptara advises the boards of international companies and is the William Carey University Distinguished Professor of global business, management and public policy (India) global thi rd quar ter 2013 www.global -br ief ing.org l 29 © Photos European Union


Global Issue 15
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