It is easy to brand the G20 a failure. The Group of 20 leading economies is doing little to assuage fears of impending conflict over currencies and trade. Its vague communiqués do little to disguise bitter divisions over how to address ballooning current account imbalances.
But Rhee Chang-yong, South Korea’s sherpa to the G20, bristles at this damning appraisal, which he says obscures the group’s ability to foster co-ordination on vital issues that would otherwise have vanished from the global agenda during the economic crisis.
“In the long-run, people should look at what we have done in development, trade, IMF reform and financial regulation,” he said.
As a country that has made an astronomic rise from the ashes of the 1950-1953 Korean War, South Korea was keen to use its G20 presidency to style itself as a leader in the field of development. The so-called Seoul consensus, mapped out on Friday, is supposed to steer the focus of international development away from financial handouts to broader factors that encourage economic growth, such as infrastructure.
Mr Rhee says the plan will prove a key part of the South Korean legacy this year but the final wording of the Seoul consensus – intended to replace the much-maligned Washington consensus – has won a lukewarm reception from aid agencies and development economists. As with the rules for current account imbalances, they accuse the G20 of avoiding numerical targets that can be used to hold advanced countries to account in areas such as opening up markets to exports from the developing world.
Cafod, a British charity, describes parts of the Seoul consensus as being “eerily familiar” from the Washington model, for trying to involve the private sector in infrastructure.
“The G20 does not reassess the poor performance of private sector involvement in energy, transport and communication infrastructure investment and their mixed track record on social and environmental impacts experienced since the heyday of the Washington consensus,” said Christina Weller, Cafod’s economics analyst.
Chang Ha-joon, a development economist at Cambridge university, agreed Seoul had shied from promoting some roots of its own success that did not chime with the Washington consensus: protecting infant industries through tariffs and a loose policies on intellectual property.
The G20 made a historic breakthrough last month to grant a greater voice to developing nations in the International Monetary Fund, reflecting a shift of global power to emerging heavyweights such as India and China.
European countries will give up two of their eight seats on the 24-member board. More than 6 per cent of IMF voting power will also be transferred to under-represented countries at the fund. China will become the third-biggest member of the 187-strong institution.
Although the principles have been agreed, IMF nations have yet to complete the horse-trading over who the winners and losers will be in a recomposition of the board.
The G20 has proved the key forum for world leaders to forge a more robust regulatory financial framework to restore confidence in a global banking system whose failures triggered the economic crisis of 2008. The G20 meetings have helped establish tougher regulations on the amount of core capital banks should hold under the so-called Basel III accord.
Regulators have now turned their attention to banks and insurance companies deemed “too big to fail”. Seeking to allay public anger about the use of taxpayers’ money to bail out institutions whose failure would undermine the economy, officials are set to finalise a package of capital surcharges and other safety measures by the middle of next year.
The G20 has sought to revive the moribund Doha trade talks, which collapsed in disarray in 2008 with India resisting Washington’s attempts to open its economy to US exports. The G20 has backed its calls for the restoration of the tariff-slicing Doha round with sweeping injunctions against protectionism.
However, the G20 has offered no sense of how to resolve tensions between rich and poor nations that sank the Doha talks.
The rhetoric of promoting commerce has also been undermined by the failure of the US and South Korea to finalise a landmark trade at the G20 summit in Seoul, as both nations had promised. Still, Barack Obama, US president, remained optimistic, arguing the accord could be still be completed in coming weeks.
Get alerts on Global Economy when a new story is published