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September 27, 2009 7:17 pm
“Today, we designated the G20 as the premier forum for our international economic co-operation.” This statement is among the most important made in this pivotal year of 2009. The “Great Recession” has transformed the governance of the world economy: emerging economies are now equal partners. The question is whether the members of the G20 will deliver on their promises now that the worst of the crisis has passed.
The G20 is justified in claiming, in their communiqué, that at the London summit in April “our countries agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital. It worked.” Leaders have lived up to promises to increase resources for the International Monetary Fund. This has, in all, been an era of desperate co-operation. Now leaders must build on the success.
They know very well why: “The process of recovery and repair remains incomplete. In many countries, unemployment remains unacceptably high. The conditions for a recovery of private demand are not yet fully in place.” More-over, beyond the immediate need to restore economies to health lies a host of longer-term challenges.
So what have the G20 leaders promised? They agreed to: avoid premature withdrawal of stimulus; plan their exit strategies; launch a “framework for strong, sustainable and balanced growth”; strengthen financial regulation, via reformed rules on capital adequacy and remuneration of bank employees; reform the global institutional architecture, including reallocation of quotas in the IMF; phase out fossil fuel subsidies; “bring the Doha round to a successful conclusion in 2010”; reach agreement in Copenhagen on climate change; and meet twice in 2010, first in Canada and then in South Korea.
Some of this looks quite unlikely, particularly the hoary promise to complete the trade round and the new one to reach a climate agreement. Some of it looks ambitious, not least the aim to implement and monitor plans for global rebalancing.
Yet it would be a mistake to indulge in cynicism. The G20 has shown a real will to act. Its leaders know that we cannot tolerate another crisis. They have accepted a broad reform agenda. They understand that a global economy requires global governance. They are aware, above all, that only through global co-operation would such governance be possible. They must cling to that awareness in years ahead, for what they have done is only a start.
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