The focus on the G20 summit will be wrongly directed
   
There are serious challenges to consider instead of personalities

by: Mohamed El-Erian
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 Donald Trump announces his decision to pull out of the Paris climate accord in June © AFP
   

This week’s G20 summit in Germany is eagerly anticipated by many, but for the wrong reason.

Rather than help in “mastering and shaping the challenges of our age”, to quote the summit’s official list of priorities, the greatest interest will be in how individual political personalities interact in a world struggling to muster enough enthusiasm for the collective action needed to address shared problems.

By intensifying longstanding structural impediments to the G20, the outcome of this summit is likely to be little more than a nicely worded communique that papers over differences rather than dealing with them to advance global prosperity. The real progress, if any, will result from bilateral discussions held on the sidelines.

On July 7-8, Hamburg is hosting the 12th G20 summit, bringing together heads of state and governments from the most influential countries as well as officials from regional and international organisations. With the meeting held under the auspices of the German government (which holds the group’s 2017 presidency), trade and climate change lead an ambitious agenda that this year includes Africa, financial stability, geopolitics, infrastructure, migration, North Korea, pandemics, refugees and terrorism.

Not so long ago, a common set of principles, broadly labelled “neoliberalism”, anchored deliberations on collective action to deal with such challenges. But the traditional leaders — the US and, to a lesser extent, the UK — are now distracted and less interested or able to play a global role.

Having walked away from the Paris climate accord and withdrawn from the Trans-Pacific Partnership, the US is still in the process of reconciling its “America First” approach with existing multilateral initiatives — let alone new ones. For its part, the UK, which has often punched well above its weight on regional and global stages, is embroiled in Brexit with a weakened government that is yet to coalesce around policy proposals.

When it comes to filling the global leadership vacuum, Germany is less well suited — at least as yet — to pick up the mantle, especially with its reluctance to assert itself too visibly. Japan is also historically challenged. China, with the second-largest economy and the biggest stock of international reserves, has not fully embraced smaller global responsibilities. France has a new, young and energetic president, but a world leadership role is hampered by years of reform delays at home. Russia raises a host of objections from several other G20 members.

Some have suggested that a combination of countries may be the answer, with China and Germany being the most cited pair. But here, again, the challenges are considerable — not least because of their competing political orientations and treatment of institutions and civil freedoms.

If anything, this year’s summit illustrates the world’s slide towards what Ian Bremmer calls the “G-zero” There is now no country able and willing to replace the US and lead a global agenda in an effective and credible manner. Thus, the list of problems whose solutions need multilateral co-operation, validation and verification is growing.

The damage from this vacuum has been increased by a design decision taken at the G20’s launch: that of depriving it of a permanent secretariat.

While the founding members’ motivation for this was understandable — to avoid a costly and bureaucratic multilateral organisation and, instead, pursue “an informal co-operative forum founded on shared values” — it has brought a harmful lack of continuity as the annual presidency passes from one country to another (Argentina is next). Initiatives that are necessarily multiyear receive too little attention over time, especially as each new presidency adds its own favourite topics. This is a structural flaw that could easily be fixed if only there were sufficient commitment to a minimum degree of collective action — but there is not.

The best that can be hoped for this week is a communique that sidesteps the differences within the international community which eat away at its ability to exercise the shared responsibility demanded by the problems of our interconnected and interdependent world. The effects of the forgone opportunities will inevitably trickle down from the global level to that of individual countries. After all, it is hard to be a good house in a challenged neighbourhood.


The writer is chief economic adviser to Allianz and author of ‘The Only Game in Town’

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