Wednesday 11. December 2019
#144 - December 2011

 

The G20 seeks to address the financial crisis

 

The French city of Cannes, better known for its opulence than for its geo-political significance, was perhaps a symbolically odd choice to host one of the most important recent meetings of the G20.

 

The G20 was founded in 1999, as an informal expansion of the G7, whose membership was overwhelmingly Western, plus only Japan (and Russia in the ‘G8’). The G20 balances continental representation, and includes major emerging economies. The Catholic development consortium CIDSE, has pointed out that the nine ‘middle-income’ member states countries account for 58% of the world’s poorest people, so we should expect from the G20 a decent sensitivity to urgent issues of global poverty. Still, 19 members are among the 28 largest economies of the world: the twentieth being the EU - a pragmatic step which enhances the G20’s power of coordination while conceding to several countries a double representation.

 

Criticisms of the G20 are of two main kinds, concerning its legitimacy and its policy priorities. A self-selecting body will always invite discussions of legitimacy. Before a summit of 2009, Pope Benedict wrote to the host, the then UK Prime Minster Gordon Brown, that even though the G20 members ‘represent 90% of the world’s gross production and 80% of world trade’, sub-Saharan Africa is represented by just one State and some regional organisations. ‘Those whose voice has least force in the political scene are precisely the ones who suffer most from the harmful effects of a crisis for which they do not bear responsibility.’ The Pope recommended that the G20 feed into the UN system, ‘in order to hear the voice of all countries and to ensure that measures and steps taken at G20 meetings are supported by all’.

 

A body that considers itself an animator, a catalyst for action (§.93), and which entitles its recent final declaration, ‘Building our common future: renewed collective action for the benefit of all’, is also a caucus, representing - whether it likes it or not - primarily its own members. President Obama commented,‘Everyone wants the smallest possible group that includes them’. There is no Charter for the G20, the meetings are virtually closed.

 

As to policy, many issues which critics urged the G20 to address are reflected in the final declaration. Employment and social protection, the defence of the environment and the response to climate change, are all prominent; the problem of the volatility of food prices, so threatening to the world’s poor, is emphasised, recognising the need to defend the livelihoods of smallholders through supportive investment; credit ratings agencies and other instruments increasingly seen as predatory are targeted for better regulation.

 

There remain clear grounds for unease: to take just two examples, the declaration against business corruption unusually admits that the offering of bribes by business executive is no less corrupt than their acceptance by foreign public officials. Yet this challenge is undermined (§.86) by the continued reliance on voluntary, not binding, norms for prevention. The firm commitment to control tax havens is welcome: yet, as CIDSE reports, a recent study by CCFD-Terre Solidaire revealed that 21 per cent of the subsidiaries of the fifty biggest European companies are located in tax havens.

 

Nevertheless the G20 Declaration is a clear step forward in proposing coherent instruments to meet both the crisis itself and the needs of the poor: it is far better than many critics feared. As always the task of implementing the recommendations is far more formidable.

 

Frank Turner SJ

Jesuit European Office

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