Premier Forum for International Economic Cooperation
GRF Davos, 28 June 2010/ JP
GRF Davos, 28 June 2010/ JP. After the G-20 summits in Washington in 2008 and in London and Pittsburgh in 2009, the fourth G-20 summit took place from 26 to 27 June 2010 in Toronto, Canada. Prime Ministers, Finance Ministers and Central Bank Governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Republic of Korea, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union met to follow through on commitments made at previous summits and to continue the work of building a healthier, stronger and more sustainable and stable global economy.
The first world economic summit, after the G-20 took over the leadership from the exclusive circle of the G8 in September 2009, very much focused on recovery from the global economic and financial crisis and the implementation of commitments from previous G-20 summits to lay the foundation for sustainable and balanced growth.
GRF Davos followed the G-20 summit with attention, in particular the handling of risks, social and environmental impacts of the financial crisis and the concerns of developing countries. Also the progress regarding the MDG's and the building of a sustainable, more resilient financial system are of GRF Davos’ interest. >>>read more
The results of the G20 summit in Toronto have to be assessed as rather poor. Significantly, however, was the shift in power constellation. The industrial countries have lost their dominance, emerging markets have now a major say in the configuration of the global economy.
The call in of these new members to the exclusive circle of the G8 does not facilitate the decision making procedure. The emerging markets demonstrated already their power in rejecting a special levy for banks. Decisions of the major economic powers often also affect emerging and developing countries. Now for the first time, they also have a voice in these decisions.
The summit concluded with the adoption of a declaration. The declaration promises a lot, but concrete action plans are still missing. While in the budgetary consolidation concrete results have been achieved, the work in other domains of the financial market regulation and in development and environmental issues, including climate change and energy has to be continued and strengthened.
The G-20 leaders reiterated their commitment in creating a strong, sustainable and balanced global growth, to combat money laundry and corruption and expressed their strong desire in closing the “development gap”. They significantly increased the resources for international financial institutions to address the impact of the financial crisis to the world’s most vulnerable.
Responding to the crisis
The G20 countries committed themselves to a balanced cost saving course which will not restrict the global demand and the declaration states: “Advanced deficit countries should take actions to boost national savings while maintaining open markets and enhancing competitiveness. In parallel the economies should reduce their reliance on external demand and focus on domestic sources of demand. All measures we undertake to reach those goals have to be considered under the aspect of the impacts on low-income countries.”
There is much said about transparency, soundness and reducing risks from the financial sector. The action plan on implementing a system where the governments have the power and tools to resolve all types of financial crisis, without taxpayers ultimately bearing the burden, first has to be designed and implemented. So we are still far away from a transparent international financial system with a more effective oversight and supervision.
At least they agreed on to halve their household deficits by 2013 and to stabilise their debts until 2016. However the declaration is lacking of recommendations how to achieve these goals. It is obviously up to each country to find customized strategies.
Those among the G20 who agreed to the Copenhagen Accord reaffirmed their support to its implementation and will call on others to associate with it. The G-20 leaders also expressed their commitment to engage in negotiations under the UNFCCC on the basis of its objective provisions and principles, including common but differentiated responsibilities and respective capabilities, and determination to ensure a successful outcome of the through inclusive process at the COP 16 in Cancun, Mexico in December 2010.
Supporting the needs of the most vulnerable
The G-20 countries have fulfilled their commitment to ensure that the Multilateral Development Banks (MDBs) have appropriate resources to respond to crisis - as one of the most important aspects of the global crisis respond. Their capital has been increased by 85% as a response to the recent crisis. So their total lending will grow from $37 billion per year to $71 billion per year. With these commitments the G20 want to put a more strategic focus on lifting the lives of the poor, underwriting growth, promoting security and addressing the global challenges of climate change and food security. Capital of the African Development Bank will be increased up to 200%, as Africa is the region the furthest behind on the MDG’s. But considering the annual loss of 1 trillion dollar from developing countries, isn’t this just a drop in the ocean?
Haiti’s debts, one of the least developed countries in the world, have been fully cancelled in April to support their recovery from the major earthquake which happened in January 2010.
Further the declaration states, that the G20 nations are committed to meet the MDG’s by 2015 and to reinforce their efforts. So a set of principles for innovative financial inclusion has been developed and should lead to a concrete action plan, which will be published at the Seoul summit in November.
Also reiterated has been the commitment to improve long-term food security in low-income countries. So the launch of the Global Agriculture and Food Security Program (GAFSP) has been welcomed by the G-20. They agreed in exploring the potential of innovative, results based mechanisms to harness the creativity and resources of the private sector in achieving breakthrough innovations in food security and agriculture development in poor countries.
Finally the declaration mentions the recent oil spill in the Gulf of Mexico, recognizing the need to share best practices to protect the marine environment, prevent accidents related to offshore exploration and development, as well as transportation, and deal with their consequences.
The next G20 Summit will take place in Seoul, South Korea from 11 to 12 November 2010, where hopefully progress in the above addressed issues can be reported and more concrete action plans will be published.