Before we go more deeply into the Syrian swamp, a few comments on the recent G-20 summit. Over the past few years, the G-20 Summits have increasingly seemed detached from reality, as the 20-odd member institution (there are now lots of hangers on) either produced communiques that had no appreciable effect (Conclude the Global Trade Talks!) or dealt with exceedingly peripheral or intractable issues (Corruption: in Africa). But this year’s gathering passed from the unreal to the surreal.
In past commentary, I have noted these multilateral summit processes—whether the East Asian Summit, the G-8 or the G-20—are best defended by pointing to the (modest) public good that can emerge from heads of state meeting annually to discuss and share viewpoints on global, and even parochial, issues. Schmoozing with other major (and some minor) international actors has its place in the hierarchy of diplomacy.
For the G-20, unfortunately, the problem from the outset was that the commentariat posited much greater responsibilities and importance to the institution. Thus, back in 2008-2009, able scholars from the Brookings institution, and other think tanks, posited the advent of a new form of global governance. “A new global economic order” was in the offing, they sated. The “Old Order” was characterized by the principles of national sovereignty, national interest, unilateralism, competing blocs, and hard power. In contrast, the “New Order,” as embodied in the G-20 is based upon acknowledgement of interdependency, common interest, reciprocity, global networks, compromise and soft power. Unstated but clearly in mind, President Barack Obama’s election portended the arrival of the New Order.
Unfortunately for the Brookings idealists—and others who cheered them on—the G-20 era didn’t quite turn out that way. With regard to the G-20’s top economic missions, the high point came early —when in 2008 in Washington the 20-odd nations agreed to and (mostly) carried out measures to pull the world back from the abyss of a panic-induced depression—flooding the markets with mountains of liquid cash and tossing appropriations at multiple projects in attempts to stem steeply rising unemployment. This led to effusive claims of a “revived Bretton Woods system.” But gaining consensus on easy money and public largesse proved a lot easier than bending other national interests to yoke of “interdependence.” Indeed, since 2009 there is no evidence that any G-20 nation agreed to any policy prescription on the basis of “common interest” rather than “national interest.”
Just to take a couple of examples. Currency policy occupied a top place in G-20 meetings from 2009 through 2012, with the brunt of pressure aimed at China (though US and Japanese anti-recession policies also came in for criticism). China did gradually allow the Yuan to “float” upward: but this was always in a carefully controlled environment and—as China’s leaders repeatedly stated—based upon their reading of domestic necessities. Though many, including some US economists who should have known better, had even called for trade retaliation against unfair currency policies, this year’s summit gave only lip service to the need for “market based” currency values.
Also at St. Petersburg, the tables were turn on the US Taking the role of protector of developing economies, Beijing led efforts to warn the US that Federal Reserve’s “taper” and potential exit from the QE stimulus should take into account the impact on other nations: read Brazil, Indonesia and India in particular. The communique bowed in this direction, but there is no sign that the Fed will factor in such impacts when it decides one way or the other that the time has come for the “taper.” The strength—or weakness—of the US economy will determine the outcome of the Fed’s decision when it meets this week.
Similarly, on climate change, in Pittsburgh in 2009 G-20 nations vowed to “rationalize” fossil fuel subsidies and support updating of the Tokyo Protocol on carbon emissions. While pronouncements were dutifully included in the subsequent communiques, action has been sporadic on fuel subsidies and open warfare among G-20 nations characterized the UN Copenhagen climate change conference that took place a few months after the 2009 summit.
This year’s summit also attempted to tackle the supposed grave issue of tax avoidance by multinational corporations. The communique decried the loss of revenue by such tactics and vowed to deal with the issue. But, as with most other questions on the G-20 agenda, the matter can only be taken up by individual nations and, crucially, their legislatures. So it will be years before current rules are changed or existing bilateral tax treaties are amended to rein in alleged multinational foul play.
The more general point is that on substantive international economic issues, the G-20 represents a motley crew of nations, at odds on more traditional North/South issues but also divisions within the North (viz., US and European nations on climate change) and South (viz. China and Brazil/India/Argentina on currency issues).
Beyond the questionable substantive results, at first glance the meeting in St. Petersburg blew away my own defense of the Schmooze factor. Famously, in the run-up to the summit President Obama had likened his host Mr. Putin to a sulky teenager “slouched” in the back of a classroom. And Mr. Putin had labeled US Secretary of State Kerry a “liar.” In addition, President Obama was faced with the embarrassing disclosure just before the meeting that the NSA had spied on both President Nieto of Mexico and President Rousseff of Brazil. But, though we still don’t know all the background details, maybe even with this surreal personal climate, something positive did result from the Schmooze factor.
Though President Obama had conspicuously canceled a duo-summit with President Putin weeks before, the two men did meet, spontaneously or otherwise, near the end of the summit. And according to Obama aides, it was from this 20-minute exchange that emerged the lead up to the Russian plan to defuse the Syrian crisis with the UN-led destruction of Assad’s chemical weapons cache. So who knows, maybe an annual person interaction of the world’s leaders still has some merit?
In any case, the Washington think tank commentariat may be showing signs of a more measured appraisal of the G-20. A policy brief penned by two CSIS scholars is simply titled: “On Balance the G-20 Still has a Vital Role.” Still a little optimistic but a climb down from a “new economic order” governed by a “revived Bretton Woods system.”
