LEADERS of the world’s largest economies, the G-20, will meet for the second time this year on September 24-25. At the Pittsburgh summit, leaders will review the progress made since the Washington and London summits and discuss further actions to assure a sound and sustainable recovery from the global financial and economic crisis. The members of the G-20 are the finance ministers and central bank governors of 19 countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States – as well as the European Union, represented by the rotating council presidency and the European Central Bank.
In the face of the global economic crisis, the first summit was held in Washington on financial markets and the global economy where the G-20 leaders committed to an action plan. It was later renewed and reviewed at the London summit in April 2009. The earlier summit at the London’s Excel Centre made six pledges – to restore confidence, growth, and jobs; to repair the financial system to restore lending; to strengthen financial regulation to rebuild trust; to fund and reform international financial institutions; to promote global trade and investment and reject protectionism, to underpin prosperity; and to build an inclusive, green, and sustainable recovery. Taking into cognisance of the recovery of the world economy, particularly of the developed countries, it seems that the London summit was a success. This was largely due to cut in interest rates, expansionary policy followed by most central banks and concessional finance for the poorest countries by the international financial institutions, particularly by the International Monetary Fund, which was pledged in London an additional resource of $750 billion.
Still, there are things that can make the developing countries cynical about such a summit. One is the establishment of the Financial Stability Board as a successor of the Financial Stability Forum. The FSB is based in Basel, Switzerland at headquarters’ of the Bank for International Settlement which has a history of playing controversial and dark roles. In addition, the FSB is chaired by Mario Draghi, governor of the Bank of Italy and a former partner at Goldman Sachs. These raise a logical question whether the FSB would be able to serve its mandate to develop and implement strong regulatory, supervisory and other policies in the interest of financial stability.
The pre-summit London meeting held earlier this September vowed to continue life support package until the world economy regains its health. The London meeting also agreed that emerging nations should have a greater say as regards the International Monetary Fund and the World Bank. As regards climate change, the meet vowed that they would work towards a successful outcome at the Copenhagen summit in coming December. This meeting did not discuss the issue of resisting protectionism in broad detail which they pledged in the April summit. The London summit was held at such a time when world trade growth was falling for the first time in 25 years. Ever since the recession started rolling down, it has been argued by experts and of course admitted by the developed countries that protectionism has been a ‘historic mistake’ of previous era. But till date the developing world is yet to witness any such action.
The Doha Development Round vowed to ‘recognise that the integration of the LDCs into the multilateral trading system requires meaningful market access.’ Little has so far been done towards the successful completion of the DDR. The G-20 leaders in London committed themselves to reach an ‘ambitious and balanced conclusion to the DDR’ that would boost the world economy by not less than $ 150 billion every year. Any such positive conclusion largely depends on duty- and quota-free access by the LDCs which has been recognised as the most powerful tool that can make the much debated market access issue meaningful. The upcoming Pittsburgh summit is an opportunity for world leaders to deliver what they had promised in the bygone days. It is time that they avoided diplomatic language and went for some real action.
The world leaders also reaffirmed their commitment to Gleneagles Commitments and the Millennium Development Goals and agreed on the issue of preferential treatment that it was an effective tool for poverty reduction and economic growth. It is worth mentioning that the United Nations through the MDGs has urged all its members, developed countries in particular to address special needs of LDCs by adopting DFQF market access for LDCs for all exportable. The Gleneagles Commitments emphasised the need for easing the Rules of Origin so that they can be followed in a more flexible way. The US has long been following an unbending policy to allow to 97 per cent of products from LDCs while the rest of the products include clothing and agricultural products which LDCs can produce competitively. Other G-20 countries namely Japan and South Korea also have product exclusion. Although the European Union offers 100 per cent duty- and quote-free access under its Everything but Arms initiative, the Rules of Origin provisions have hindered the LDCs from taking advantage of such an opportunity. So the upcoming G-20 summit has opened up an opportunity for world leaders to deliver on the promises they made.
Again, worries are there that world leaders are yet to determine a definite figure to help developing countries combat climate change. The early September meeting did not give priority to this issue. World leaders must make progress ahead of the Copenhagen summit with only 90 days in hand. Any triviality will only result in creating mistrust within the poor developing countries. Meanwhile, the European Commission has put forwarded a proposal of $ 21.8 billion in aid to poor developing countries so that they can be pursued to sign a deal at the Copenhagen summit. But money is not the only thing that will fight irreversible impact of climate change, innovative risk management tools should be offered as well.
The US president Barak Obama will chair meeting of the world leaders that represent 85 per cent of the world economy. In his first speech on the Pittsburgh G-20 summit, Obama asserted that he has chosen Pittsburgh as it stands as an example of ‘how to create new jobs and industries while transitioning to a 21st century economy.’ It has created high hopes both among the US citizens and among the people from around the globe. The US being the driver of the G-20 faces the challenge to re-energise its alliances. It has been recognised by the Obama administration that this goal can be attained by broadening engagement based on mutual interest and mutual respect. It is time to watch whether the world leaders have moved towards the right direction or have waved another possible catastrophe.
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