The G20 on Friday inverted an apparently iron law of multilateral summitry --- that the significance of a final statement is inversely related to its length --- by turning in a bulky communiqué whose genuine heft is likely to be felt in the global economy for years to come.
Speaking to reporters here at the end of the summit of the world’s leading economies, Prime Minister Manmohan Singh chose to highlight seven important issues on which he said genuine forward movement had taken place despite differences between the developed and developing countries represented in the group.
The most important decision that had been taken, he said, was the designation of the G20 as the “premier forum” for discussion of international economic issues. “This is an important development broadening the international governance structure”, he said
The Prime Minister also expressed satisfaction at the fact that the G20 had agreed there would be no premature withdrawal of the “trillion dollar” stimulus flowing from its last two summits. Since the global economy had clearly not bottomed out, it was too early to talk of an “exit” from this approach.
Third, a decision had been taken in principle that the governance structure of the International Monetary Fund would be changed by early 2011. Specifically, he said, the G20 had agreed to a 5 per cent shift in the IMF quota share --- used to allocate representation on the board --- from over-represented countries to dynamic emerging markets and developing countries which are currently underrepresented. Prime Minister Singh said the BRIC countries had demanded a 7 per cent shift but this was resisted by the developed countries.
The battle to recapitalize the World Bank and other regional development banks --- a key priority for India --- was only partially won with the G20 agreeing to find the necessary resources based on a review of the capital needs of these banks to be completed in the first half of 2010, Dr. Singh said.
The fifth achievement he chose to highlight was the agreement on a new ‘Framework for Strong, Sustainable and Balanced Growth’, a compact that commits the G20 to work together to assess how their macroeconomic policies fit together and work to promote a more balanced global demand. The job of monitoring the implementation of this framework has been handed over to the IMF, which will the G20 develop a new “peer review” process. The Prime Minister said such a process would not constrain the autonomy of India to pursue its own macroeconomic policies --- which are the subject of IMF scrutiny away --- but would allow a closer look at the problems with economic management in the developed economies.
The G20 discussed the important issue of climate change, said Dr. Singh and called for a successful outcome in the forthcoming UN Framework Convention on Climate Change negotiations in Copenhagen. But he added that this call was more in the way of a pious wish since it was not at all clear that the developed countries were willing to implement the emission cuts earlier UN conventions had said they must do. Though the Prime Minister did not draw attention to it, the final communiqué also includes a commitment by the G20 for the phasing out of “inefficient fossil fuel subsidies” over the medium term, with the interests of poor consumers in the developing world addressed by targeted cash subsidies (as Indonesia has been attempting to implement) rather than price distortions that may lead to excess consumption. That India had a problem with the approach was made clear by the Prime Minister’s Special Envoy on Climate Change, Shyam Saran, who told reporters on September 24 that he was not convinced about the utility of introducing a phase-out at the G20. Though India subsidized fossil fuel consumption, post-subsidy prices in relation to the purchasing power of the average citizen were among the highest in the world, he had said.
The seventh issue Prime Minister Singh chose to highlight was the renewed commitment of the G20 to fight protectionism. The group agreed that this could be realized by working for an early resolution of the Doha round of trade talks.