G20 Faces Present Challenges, Questions About Its Relevancy
An overabundance of capital in the economy might have stemmed the bleeding by banks and corporations, but as financial leaders gather for the G20 meeting in Russia, it has become clear that the strategy did little to revive the staggering global economy.
In fact, as the Financial Times notes, the G20 leaders see “bad news whichever way they look.” This was reflected in recent reports that the European recession worsened at the end of 2012 with many nations experiencing a further contraction of their economies.
Concerns About Potential Currency Wars Top Agenda
If recessionary fears were not enough, there is growing unease about Japan’s actions to rely more on its central bank to ease monetary policy while also spending public money more freely. Talk of “currency wars” echoed throughout the hallways as financial leaders flocked to Russia.
German Financial Minister Wolfgang Schaeuble told German radio, “We do not want state intervention in exchange rates. We want exchange rates that are determined by the markets.”
Questions Remain About Whether The G20 Is Still Relevant
In a paper for the Congressional Research Service, analyst Rebecca Nelson writes of the diverse views about how effective the G20 as an international organization intended to inspire cooperation toward achieving solutions to global economic concerns.
Some analysts, she writes, contend “the G-20 has failed to provide adequate international leadership in key policy areas” because it might be “too heterogeneous to achieve real coordination and its agenda is too ambitious.”
On the other side are those who maintain the G-20 retains an important role as “a critical forum for discussing major policy initiatives across major countries and encouraging greater cooperation, even if agreement on policies is not always reached.”
Looking back on a recent panel discussion on the challenges facing the G20, Stewart Patrick of the Council on Foreign Relations says many acknowledge the initial gains made by the G20, but diverge on the path ahead.
He noted Ian Bremmer of the Eurasia Group was most pessimistic, while Nicolas Berggruen, president of the Berlin-based Berggruen Institute on Governance, expressed uncertainty about how relevant it would be.
Speaking for himself, Patrick believes that despite the challenges ahead the G20 remains “indispensable” as a resource for discussions between high-level officials of large and small economies and that “it should remain the apex framework for breaking global deadlocks.”