The G20

A New Geopolitical Order

K. Postel-Vinay

• Publisher: Palgrave Pivot
• Year: 2016
• ISBN:
  9781137367754
• Topic: Politics & International Relations
• Subtopic: International Relations
• Index: Politics & International Relations

This book argues that the G20 is neither a global executive board for a new world order, nor is it just a crisis unit for failing economies. It is a laboratory for the observation, experimentation and invention of new forms of international cooperation that are redefining global politics.

1

The G20 in the Constellation of Gs

Establishment of the G20: 1997–2008

How did the G20 come about? It is impossible to comprehend the diplomatic status of this group without understanding its origin. But it is also extremely difficult to trace the history of an entity whose culture is predominantly oral. Legally established organizations such as the United Nations (UN) and the European Union (EU) produce large volumes of documents—deliberations, communiqués, declarations and so on—which are all archived. The abundance of documentation makes it possible to reconstruct the history of these institutions, within the limits of the transparency of their proceedings and their main actors. An informal institution such as the G20, not having any legal structure, logically produces far fewer written or publicly accessible documents. Peter Hajnal has pointed out that when the G20 met at the ministerial level, the documentation produced essentially consisted in the final communiqués of its meetings.¹ That remains true for the G20 summit meetings of heads of state and government. Writing the history of the Group of Twenty thus entails observing what is apparent but that has not necessarily been expressed—for instance, the evolution in meeting formats and agenda—, or else retracing the trajectory of its components—the G7 countries, the emerging nations or even its individual members.

Politically driven institutionalization

As a sign of its gradual institutionalization, in 2007, the Group of Twenty decided to record its own history. The initiative was undertaken by deputies from G20 member countries. Chaired by a former director of Canada’s central bank, the team preparing the report featured a strong Canadian presence, while other G20 members, South Korea and Saudi Arabia, were not represented. The report was submitted at the 2007 G20 meeting in November and published by the University of Toronto.² The document contains a wealth of factual information on the early days of the G20. It also expresses a consensual, “politically correct” vision. To some extent, this is what makes it interesting, as it is the self-portrait of an institution and sheds light on its ambition. At the very least, the institution aimed to become a fixture of international politics and would preferably gain influence. On receiving the report, South African President Thabo Mbeki declared, “The study of the G-20’s History is revealing—a new institution established less than ten years ago—has emerged as a central player in the global financial architecture and an effective contributor to global economic and financial stability.”³ The intention of certain actors, particularly Canada and South Africa, to carve out a new space for dialogue and a springboard for new ideas in the international sphere appeared fairly early in the G20’s trajectory.

This political resolve, later bolstered by players with more weight, starting with the United States, was vital not only to bring such an entity into being but also to make its voice heard on the international stage. Two other facts help to understand why the G20 emerged, and more precisely why it came together in the late 1990s. It has often been claimed that the G20 was an extension of the G7 and G8, and even that the G20 had already replaced the G8. This analysis merely confuses the matter all the more since the G8, as will be seen, obeys a fundamentally different logic than the rationale behind the G20. What is true is that the G7’s legitimacy came increasingly under fire around the early 1990s and that demands for its enlargement grew more vocal.

One of the best-known proposals in this regard came from Zbigniew Brzezinski, former advisor to US Presidents Jimmy Carter and George H. W. Bush, in an article for The New York Times in the summer of 1996. He suggested opening up the G7 to four countries that had come to be qualified as “emerging”: Brazil, China, India and Russia.⁴ Russia joined the group the following year, with staunch backing from the United States. The G7 thus turned into the G8 in 1997, but it continued to meet at the level of finance ministers and central bank governors of the seven “old” capitalist economies.

The G8 first opened up to countries of the South in 2000 when Japan took the initiative to invite the presidents of three African powers—South Africa, Algeria and Nigeria—as well as the prime minister of Thailand to the Okinawa summit. When France presided the G8 in 2003 at Evian, it repeated the initiative, inviting a considerably larger number of countries: the five members of the New Partnership for Africa’s Development (NEPAD), South Africa, Algeria, Egypt, Nigeria and Senegal, as well as Malaysia and Morocco, representing the Non-Aligned Movement and the G77 respectively, and four “emerging” countries: Brazil, China, India and Mexico. The following year, in 2004, the G8 met as a restricted circle, presided by the United States, in a strained context due to the war in Iraq. The United Kingdom renewed the dialogue with emerging powers one year later, however, inviting Brazil, China, India, Mexico and South Africa to the summit at Gleneagles. Germany suggested associating these five countries systematically in the preparation and organization of G8 summits. Thus was instituted the “Heiligendamm Process” or the “Outreach 5.” The five states, representative by their economic weight, such as China and Brazil, or their regional position, such as South Africa, became permanent guests of the G8.

But it is important to note that this still did not turn the G8 into a G13. The question of whether or not to alter the composition of the G8 members was not on the agenda. It was and remains diplomatically too complex—somewhat akin to the thorny problem of the representativeness of the UN Security Council permanent members. In addition, the coexistence of a more influential G20 alongside the G8 makes the issue less crucial.

The Asian financial crisis: from the G22 to the G33

The emergence of the G20 was thus fostered by the growing perception that the G7 was losing legitimacy, as it was less and less representative of global balances after the end of the Cold War. The conditions that actually launched the G20 were related to the Asian financial crisis of 1997–1998. This crisis, which affected all of East Asia with a few notable exceptions such as China—at the time much less engaged than today in the dynamics of globalization—, prompted an emergency meeting of representatives from the IMF, the World Bank and 14 Asia-Pacific countries in the fall of 1997 in the Philippines. It set up a framework for dialogue known as the Manila Framework Group.⁵ At the request of Singapore’s prime minister, backed by other Asian leaders, the United States expanded this initiative by constituting the Group of Twenty-Two or G22, sometimes called the “Willard Group,” after the name of the hotel in the US capital where meetings took place. The G22 was the precursor to the G20.⁶ It brought together central bank governors and finance ministers representing the G7 powers—who had majority voting power at the IMF, a central player in managing the 1997–1998 crisis—and Asian countries as well as others that were also affected by the financial turmoil of the 1990s, such as Mexico, Argentina and Russia.⁷ The composition of the G22 thus reflected two factors: the effort to limit the ripple effects of an economic upheaval in East Asia, the most dynamic region in the world, and the perception that this turmoil was in fact a manifestation of growing interdependence at the global level.

In the fall of 1998, APEC, the Asia-Pacific Economic Cooperation Forum, held its annual meeting.⁸ The delegates declared on this occasion that they welcomed the work undertaken “to improve co-ordination and involvement of the private sector in the prevention and orderly resolution of international financial crises.” And regional leaders added,

We believe that there would be considerable value in continuing this work in a process involving both industrialised and emerging markets economies. We agree that a forum such as an expanded G22 would be appropriate for this purpose.⁹

Discussions were held among the most influential IMF member countries to examine if the work of an expanded G22 could be tied in with that of the Interim Finance Committee—an advisory board that has since been renamed the International Monetary and Financial Committee (IMFC). But the issue touched on the question of the global representativeness of IMF governing bodies: the institution was not ready to tackle the matter head on and so did not risk opening the door to negotiating the place of emerging countries down the road by engaging in formal dialogue with them. It was finally with the G8’s endorsement that an expanded G22 with eleven new members,¹⁰ making it the G33, came about in March 1999. However, from its very first meeting, the G33 members experienced the limits of a dialogue including such a large number of participants. At about the same time, “G7 Finance”—the G8 finance ministers minus Russia—was examining how to put together a more effective and hence more manageable tool for dialogue. Following its recommendations, the G8 announced in June 1999 that it would work together to “establish an informal mechanism for dialogue among systemically important countries, within the framework of the Bretton Woods institutional system.”¹¹ A few months later, the G7 finance ministers confirmed the formation of the new group to replace the G33:

In December in Berlin, we will invite our counterparts from a number of systemically important countries from regions around the world to launch this new group. The EU Presidency and European Central Bank will be invited. In addition, to ensure effective liaison with the IMF and World Bank, we will invite the World Bank President, IMF Managing Director and Interim and Development Committee chairmen to serve as ex officio members of the group. We are grateful to Paul Martin of Canada for agreeing to lead this group as Chairman for its first two years.¹²

A G20 of “systemically important countries”

The G20 thus got off the ground in Germany in winter 1999. Several countries involved in the history of its formation were absent from the G20, in particular Singapore, which had encouraged the United States to set up the former G22. The fact that, at the time, the G20 brought together ministers instead of heads of state and government, thereby drawing less media attention, probably facilitated the delicate operation of paring down the G33, therefore excluding 14 members (13+1 so that the EU would have a seat). Some of these, mainly Asian countries once again, had taken part in bringing this cooperation project to fruition.¹³ Even if this evolution was facilitated, it was not for all that unanimously accepted. The composition of the G20 was inevitably to some extent arbitrary. The selection criterion—“systemically important countries”—could be interpreted in different ways, and still can be. The disappearance of Sweden and the Netherlands when the G33 was converted into the G20 was criticized because it deprived the new group the long experience of these countries in loans and development aid. Keeping Argentina in the group was debated because, like South Africa, it did not rank among the world’s twenty largest economies. Debates about the relevance of the G20’s composition remained discreet in the early years, however. They came back into the spotlight when the G20 went from the level of ministerial meeting to a summit of heads of state. It will be shown further on to what extent this issue goes largely beyond the G20, or rather, how the G20 raises very fundamental questions about the representativeness of international institutions handed down from 1945.

The G20 became a high-level forum in 2008. The initiative was announced by the United States, but it actually came from France, endorsed by the United Kingdom. Paris and London, which had strengthened their ties, shared the same analysis of the shortcomings of existing international organizations. In an interview granted to the French daily Le Monde, British Prime Minister Gordon Brown declared in March 2008,

France and the United Kingdom can work together hand in hand with common interests and shared values. This is the case, as you will see in the coming weeks, of the reforms of international institutions created in 1945: UN, World Bank, International Monetary Fund. These organizati...

Table of contents

• Cover
• Title
• 1  The G20 in the Constellation of Gs
• 2  Does the G20 Lack Legitimacy?
• 3  The End of The West and the Rest
• Conclusion: The G20, A New Grand Geopolitical Narrative?
• Appendices
• Bibliography
• Index