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If the G20 didn’t exist, we would have to invent it. Some would counter that the world is so divided that such groupings won’t work. Yet this fact only makes the G20 or similar events all the more important: people don’t have to talk to people they already agree with. An even stronger reason for its existence is that we can no longer live in isolation: the health of our planet and economy depends on our cooperation. As global challenges are more urgent than ever, there is a need to work together in such a team.
The question then is not whether we need the G20, but how best to use it. How is the leadership of the Indian government? What lessons should we draw from this experience for the future?
Understandably, the Indian government used the G20 to celebrate India and its rising status in the world. It also succeeded in gaining full membership of the African Union. The latter is indeed a step towards greater legitimacy for the G20.
A more important question, however, is whether the world is any closer to solving some of its biggest challenges. There are three obvious concerns here.
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The first is division. The absence of Vladimir Putin and Xi Jinping from the recent summit in New Delhi underscores that we live in a period of conflict. The existence of a rogue nuclear superpower poses a huge threat to our future. Equally concerning is the apparent decision by Chinese leaders not to engage directly with their global counterparts except in Chinese-led institutions such as BRICS. His absence also bodes ill for the stewardship of our collective future.
The second is overloading. As I pointed out in May, the communique from the highly successful G20 meeting in London in April 2009 was just over 3,000 words. It also focuses on stabilizing the financial system and saving the world economy. Crisis focuses the mind. The current approach of world leaders is inevitably more fragmented.But the word count of about 13,000 Delhi Summit Declaration do you need? It covers almost everything one might include. How is progress on such a massive agenda monitored and evaluated? As we know from previous G20 efforts, the answer is impossible: most of them will die.
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The third is hypocrisy. We all know that leaders’ actions don’t always match their words. For example, the declaration states, “We reaffirm our commitment to zero tolerance of corruption.” Yet the reality is that the G20 includes some of the most corrupt countries in the world. The declaration also states that “we . . . remain committed to promoting the full, equal, effective and meaningful participation of women as decision-makers in addressing global challenges”. But remember, Saudi Arabia is a member.
One might respond that hypocrisy is the tribute of vice to virtue. But that’s little comfort when it comes to the most important global issues of our time: rising temperatures, rising poverty and unmanageable debt in many developing countries. For example, the communiqué states, “We recognize the need to increase global investment to achieve the climate goals of the Paris Agreement and to rapidly and significantly increase global investment and climate finance from all sources, from billions of dollars to trillions of dollars. “But does that mean they will take any relevant action? After all, the next sentence promises to expand “financing, capacity building and technology transfer” on voluntary and mutually agreed terms” (my emphasis). “Voluntary and mutually consensual” already indicates that nothing big will happen.
By far the most important contribution of the Indian presidency remains the commissioned report on strengthening financing for development and the environment, prepared by a team of experts led by Lawrence Summers of Harvard University and NK Singh, India’s eminent civil servant. The first report was released at the end of June. The second is expected to expire later.
The reality behind these reports is that a massive increase in investment is needed if the world is to achieve its development and environmental goals. This is necessary. A large share of all new investment must go to developing countries. But most of them lack the domestic resources and/or expertise to achieve the desired goals. In addition, they are unable to obtain foreign capital on the scale and conditions required. On the contrary, as global capital market interest rates have risen, capital market access conditions have greatly deteriorated, and many capital markets have fallen into serious debt distress.
We know the solution. More official financing in various forms is needed. Much of this must stimulate larger private capital flows through risk sharing. This in turn requires significant debt relief orchestrated by the International Monetary Fund, more concessional financing to the poorest countries, significant increases in equity capital by the multilateral development banks (particularly the World Bank), and increased leverage in these banks. Excellent. This in turn requires governance reforms, including in terms of voting shares.
This agenda is radical, important and urgent. If this goal is to be achieved in the near future, it must become a major focus of global economic policymaking. The good news is that decisions by the West and major emerging countries can achieve this goal. But they need to focus on urgent matters. They must focus on changing the scale and nature of development and environmental finance. Beautiful words mean nothing without firm actions.
martin.wolf@ft.com
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