G20 Rome summit

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from Policy Magazine  

The Rome G20: Multilateral Stress Test or Last Call at the Star Wars Cantina?

Colin Robertson

October 26, 2021

This weekend’s G20 summit in Rome is important on a number of counts: as part of the international community’s ongoing pandemic and economic recovery response; in setting the tone for the COP26 Glasgow climate summit that immediately follows it; as well as for the World Trade Organization (WTO) ministerial in Geneva at the end of November. More important, Rome is a stress test of multilateralism. Amid levels of geopolitical tension not seen in half a century, can diverse nations act on behalf of the common good?

It does not help that key players including China’s Xi Jinping, Russia’s Vladimir Putin, Japan’s Fumio Kishida and Mexico’s Andres Manuel Lopez Obrador will not be there.

Nor that the extraordinary G20 summit on Afghanistan earlier this month failed to meet expectations. It could not even come up with a communiqué. Instead, thechair’s summary said safe passage should be given to those Afghans who wished to leave the country, that future humanitarian programs should focus on women and girls and the Taliban should contain militant groups operating out of the country. Neither Xi nor Putin dialed into the call.

Rome is about getting straight answers to two key questions.

On COVID, how soon will the world be sufficiently vaccinated? Vaccine production has increased but distribution remains a problem, especially in Africa. Will we learn the lessons from COVID to be prepared for the next pandemic?

In terms of economic recovery, can the G20 nations nurture and support economic growth while avoiding inflationary pressures? Can the developing nations cope with debt and the social pressures created by COVID? Importantly, will the rich help the poor?

With the Glasgow climate summit just days away, Rome will also give a sense of the answer to a third question. Will leaders make the required national commitments and will developed nations come up with the funding to mitigate climate change for developing nations?

As to climate, Queen Elizabeth put it best when she was picked up by a hot mic saying of COP and political rhetoric that it is “irritating” when “they talk, but they don’t do.” Bookend the 95 year-old monarch’s icy assessment with that of 18-year-old Greta Thunberg’s excoriating world leaders for their “blah, blah, blah” and you get a sense of intergenerational frustration over the existential threat of climate change. G20 nations account for almost three-quarters of global greenhouse gas emissions.

In his remarks at the UN General Assembly in September, UN Secretary General Antonio Guterres warned that the world is “on the edge of an abyss and moving in the wrong direction.” Can the leading nations come together to deal with the pressing issues of our time: the pandemic and getting the world vaccinated; setting a course for sustainable economic recovery that also addresses inequality at home and internationally.

For Guterres, Rome will be the latest in a continuing series of tests of the current multilateral system: “On the one hand, we see the vaccines developed in record time — a victory of science and human ingenuity. On the other hand, we see that triumph undone by the tragedy of a lack of political will, selfishness and mistrust… This is a moral indictment of the state of our world. It is an obscenity. We passed the science test. But we are getting an F in ethics.” Guterres concluded, “The problems we have created are problems we can solve.”

To meet the World Health Organization (WHO) goal of fully vaccinating at least 40 per cent of the population in every country by year’s end and 70 per cent by mid-2022, high-income countries need to fulfill existing vaccine dose donation pledges, coordinate with manufacturers to prioritize deliveries to COVAX in the near-term and remove trade restrictions on the flow of vaccines and their inputs.

For Prime Minister Justin Trudeau it will be his first chance for face-to-face meetings with his fellow leaders since the September 20 election. He has now won three elections and with the impending retirement of German Chancellor Angela Merkel, he becomes the senior member of the G7. This gives him place and standing. His father, Pierre Trudeau, put a lot of effort into bridge-building between North and South and then into the East-West divide, culminating in his farewell peace initiative. What will Justin Trudeau leave as his global legacy?

In Rome, we can expect Trudeau to support the global tax reform package generated by Finance Minister Chrystia Freeland and her counterparts. The Organisation for Economic Cooperation and Development (OECD) estimates that when implemented, the reforms have the potential to yield around $150 billion in additional global tax revenues annually. But national governments must now pass implementing legislation and, given the polarized US Congress, passage is no sure thing.

Trudeau will also press his fellow leaders to contribute to the annual $100 billion finance mitigation fund for developing nations, a process led by Environment Minister Jonathan Wilkinson and his German counterpart, State Secretary Jochen Flasbarth, in advance of COP.

It’s hard to imagine a more disparate set of leaders — with the authoritarians now outnumbering the liberal internationalists around the table. It includes flakes and gangsters reminiscent of the original Star Wars scene when Han Solo is confronted by the bounty hunter Greedo in the Mos Eisley cantina.

It was financial crises – the Asian and dot.com crashes at the turn of the millennium – that gave the G20 its birth. Its architects, Canadian Paul Martin and American Larry Sommers, designed it to be the financial fire brigade: bringing together the leading economies’ finance ministers and central bankers and, since the 2008 crisis, heads of government. Through 2008-09, the empowered G20 acted as the global economic management board to address what we now call the Great Recession. The G20 was to be the catalyst to better incorporating China and the big developing economies into the IMF and WTO and while also driving the IMF and OECD agendas to revive trade negotiations and stimulate global tax reform. The G20 of 2008-09 got things done and coordinated global economic recovery.

Since then, China’s “peaceful rise” has given way to a more aggressive push for superpower status. But with power comes responsibility. As then-US deputy secretary of state, later World Bank President Robert Zoellick warned in his 2005 speech to the National Committee on US-China Relations, China needs to assume “a responsibility to strengthen the international system that has enabled its success.” This includes working constructively on non-proliferation, pandemics, trade and technology, as well as climate.

Today, the G20 is more a caucus than a cabinet. There is always a tendency for communiqués to resort to bromides and weasel words to camouflage their inability to agree. It’s hard to imagine a more disparate set of leaders — with the authoritarians now outnumbering the liberal internationalists around the table. It includes flakes and gangsters reminiscent of the original Star Wars scene when Han Solo is confronted by the bounty hunter Greedo in the Mos Eisley cantina. In that sense the G20 reflects the realities of contemporary world geo-economic politics. It’s a meaner and messier world made more complicated by existential challenges like pandemics and climate change.

The world is beset by labour and supply chain problems, and there are already fears that there will be fewer presents under the tree this Christmas because the goods are still sitting in a ship somewhere. With the US looking to ‘decouple’ from China and China pursuing ‘dual circulation’, globalization as we knew it is entering a new phase where the emphasis will be on secure and resilient supply chains that protect production and transportation with ‘trusted’ partners.

Then there are worries about rising inflation. The assumption that we could all borrow trillions of dollars in newly printed cash was premised on a quick bounce-back and only a short burst of inflation. Now bankers and finance ministers are trying to figure out if we all borrowed too much and if so what to do about it.

Debt relief for emerging economies is essential. Many of their citizens remain unvaccinated and the IMF estimates 65–75 million more people will fall into poverty. Borrowing costs are increasing, and their central banks are raising interest rates to stave off inflation. The United Nations Conference on Trade and Development (UNCTAD) assesses that the damage from the pandemic has exceeded that of the Great Recession in most parts of the global economy, but has been particularly draining on the developing world.

The G20 should lead. The recent issue of US$456 billion of Special Drawing Rights (SDRs) to IMF member countries, creating additional international reserve assets, is a first step that should be followed by the developed economies and China passing their new SDRs to the world’s poorest countries.

While protectionism prevailed across the board with the onset of the pandemic, the WTO’s June Trade Monitoring Report says trade policy restraint by G20 economies prevented a destructive acceleration of protectionist trade measures that would have further hurt the world economy.

It’s a start but much more needs to be done.

It’s been 20 years since the current round of global trade negotiations began at Doha in November, 2001. The United States continues to block the appointment of new judges on WTO panels despite efforts by Canada and like-minded nations. The WTO’s dispute-settlement process is now stalled.

US Trade Representative Katherine Tai spoke recently in Geneva, reaffirming US support for the WTO without identifying what changes Washington wants. In a recent Foreign Affairs piece, Peterson Institute CEO Adam Posen says the inward trade policy practiced by recent administrations is doing immense harm to American workers and the American economy.  But the world does not stop and wait for the US to get its house in order.

For Canada and its kindred democracies, multilateralism is an article of faith and a cornerstone of our respective foreign policies that has helped preserve peace and create a prosperity our ancestors could only dream about. Failure to act multilaterally will make for a meaner, poorer and more dangerous world. Our children and grandchildren will wonder how we could so blow it.

For more on G20 see  this G20 PRIMER


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