More broken promises

The G20 has offered no solid solutions to address vulnerable economies

By Irfan Mufti

The 3rd summit of group of 20 rich nations held from June 26-27, 2010 in Toronto Canada was attended by the head of states from member countries. The group, formed in November 2008, aimed to bringing together 20 most developed countries to deal with financial and banking crises and share responsibility for improving global financial architecture. G20 is officially not recognised as the formal decision-making platform and its mandate is still limited to few economic and financial spheres.

While the group does not have the same political and economic clout as exercised by G8, it is fast becoming a parallel platform for discussion on key subjects including framework balanced growth, financial sector reform including international financial institutions and development, fighting protectionism and promoting trade and investment among others. The platform brings together newly emerging Asian giants like China, India, Indonesia, Turkey, South Korea, Saudi Arab and other developing economies like South Africa, Brazil and Australia alongwith the G8 countries, including USA, Japan, UK, France, Germany, Italy, Russia and Canada. The recent additions in the global elites' club have changed the discourse and sense of responsibility among global leaders.

G20 leaders have, in recent years, begun a positive evolution regarding their thinking and approach to development challenges. In the wake of the global economic recession, their commitment to narrowing the development gap and reducing poverty are integral to achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy for all.

The final declaration of two-day summit fell short of the expectations people of the under-developed world had from the new world leadership. The summit however, did make some positive progress and resolved to deal with the development shortfall and financial crises. The summit expanded its role into development sector. It however disappointed many for its inaction and indifference on a major demand for Financial Transaction Tax (FTT) that could go some way to filling the gap in funding the under-developed countries.

The summit also created a Working Group on Development and left it action plans for the next Summit in Seoul in November 2010. Several civil society leaders called on the G20 to broaden their impact as a forum. They believed that global progress depends on the G20 leaders working to support the MDGs. It is hoped that emerging donors such as South Korea and Saudi Arabia as having an important role to play while India and China must do better at home and in their international commitments. Several lobby groups, regional groups (including Asians and Africans), interest groups for Child health, education, poverty reduction, climate justice, sustainable development, feminist groups showed mixed responses on the declaration of the Summit.

Some expressed their opinion that G-20 isn't moving quickly enough to offer the kind of global economic leadership that ensures balanced growth and stability by improving the resilience of the world's poor. It is also said that the G20 has drawn a blank on poverty. The 20 leaders of the world also missed a golden opportunity to tackle poverty when it could only agree to disagree over how to make the banks repay the cost of the economic crisis. According to this group, the G20 ought to have placed a tax on the financial sector to offer a significant hand up to the 64 million people forced into poverty by the economic crisis.

Another group warned that sustainable economic recovery need more than brief platitudes from the G20 on green recovery than what it delivered in Toronto. They said that the world leaders were still painting the economy in black and white but it must include green. Instead of being a summit of real action, it recycled and reused earlier commitments on fossil fuels. Some though welcomed India's announcement earlier in the week to phase out fossil fuel subsidies on petrol and review the subsidies on diesel and other fuels.

Some organizations say G20 was bankrupt as the leaders lacked ideas and any willingness to compromise. They opined that the declaration would be forgotten before the day was over. Their disappointment came as the G20 has offered no solid solutions to address still vulnerable economies. Such indecisiveness of key global matters worries several that a fading capacity among developed countries to collaborate will mean the poor suffer the most.

The decision of the summit to cancel Haiti's IFI debt and the creation of G20 Working Group on development was greatly applauded and welcomed. This agreement of Haiti's debt is indeed a 'breath of fresh air' but G20 must now write off the debts of all impoverished countries.

Many civil society leaders and NGOs said the G20 was a missed opportunity to show leadership on climate justice and to set a path to get back on track for a global deal post 2012. They demanded for at least $200 billion per year of new and additional public finance by 2020 but saw little progress on agreeing new sources such as an FTT and levies on aviation and shipping fuel emissions. They also welcomed G20's support of the United Nations Convention against Corruption but were disappointed that there was no review mechanism built in the proposal.

Greenpeace, a lobby group on climate justice, appreciated the summit's decision for ending fossil fuels. The group sees that G20 had taken uneven steps on the Pittsburgh summit's commitment to implement country specific strategies on fossil fuel phase out. They think the Toronto G20 suffered a complete lack of vision on climate financing stating that the funds saved from fuels subsidies could have been diverted to help the climate.

Group of organizations raising voice for ending poverty expressed concern that the G20 dealing with budget deficits through cutting back on government services will end up hurting the poor. These organizations felt that government's reliance on austerity measures alone to tackle deficits risked increasing unemployment and poverty in the developed world as well as the developing world.

Trade union groups including the International Trade Union Confederation-ITUC said the G20 was failing to meet to the jobs challenge and was contradicting itself by speaking of cutting deficits but welcoming recommendations from their Labour Ministers that say jobs should be a priority. It was the wrong communiqué at the wrong time according to these unions. The unions were also critical of that the G20 chose to 'rub shoulders' with the B20 business group at the Summit.

The most critical response came from Africa group that showed their dismay on the lack of commitments and actions from G20 to meet the Africa development needs and write-off its illegitimate debts. The group argued that Africa represents 900 million potential producers and consumers and so can contribute to the global economic recovery through trade and investment. However, the African group warned that the G20 must formally accommodate the voices of the countries and people it fails to represent if it is to build a new partnership with Africa. The group also said the G20 needs to include Africa as a regular member in future summits as it same status to European Union.

It is indeed ironic that the G20 summit showed an unfortunate lack of political will to fight poverty by delaying key actions such as the Robin Hood Tax and investing in clean energy and ending fossil fuel subsidies. By delaying key actions until the Seoul Summit in November 2010, the G20 has shown an unfortunate lack of political will to fight poverty and inequality. The lack of will on key issues will gradually delegitimise this platform that was otherwise expected to provide true global leadership and responsibility.

We were hoping the G20 would step in to make a difference, but it did not. Perhaps one reason by the G20 is performing so poorly is that there are not more women at the table. The G20 includes only three women, the heads of Argentina, Australia and Germany. They need to give more space to women leadership as they can truly feel the suffering of the most deprived. It is important that road to SEOUL must include concrete actions, honoring commitments and broadening the platform to include other voices and marginalized will increase legitimacy of G20 and will give it much needed boost.

Finally, the G20 has an important role to play in forging the creation of more representative and responsive international financial institutions that better meet the needs of the poorest countries. Following the Pittsburgh summit, the G20 needs to use the Seoul summit to agree to changes to the voting structure of the World Bank and IMF.