Global Perspectives - Whither G8 and G5?

The July issue of Global Perspectives sums up the results of the G8 summit in L'Aquila and looks at the future of the global governance summit architecture.

According to some authors the G8 has still a potential as a political and security forum. Nonetheless it should seek to reform the international organizations to bring them in-line with the changed global power balance. According to the German Chancellor Merkel, quoted in a contribution, the G8 should be a body for discussion, consensus building and statements while the new G20 format should make decisions.

The Joint Political Declaration of the G8 stated that the Heiligendamm Process which aimed for structured dialogue between the G8 and the G5 (Brazil, South Africa, China, India, Mexico) should be re-phrased Heiligendamm-L'Aquila Process (HAP). It should continue substantive dialogue among the major economies and provide careful reflections on long-term questions regarding the G8-G20 constellation.

Possible themes for the HAP agenda could be freedom of investment to mutual benefit; the role of innovation and technology in the process of sustainable and socio-economic development; a strategic approach to development and its social dimension; assistance to vulnerable states; food security and reform of relevant organizations; and energy.

Also in this issue an opinion article by Thalif Deen who attacks the hypocrisy of the Western nations who compare their financial efforts to fight the global financial crisis with their aid commitments in order to reach the MDG targets.

Global Perspectives is a bi-lingual (English/German) joint production by IPS Inter Press Service Europe and the Global Cooperation Council, published by Globalom Media. The monthly editions on various themes of international cooperation and development are downloadable for free.

See also the Euforic newsfeeds on IPS Europe and global governance

by Martin Behrens

The Heiligendamm Process and the reform of global governance

Considering the challenges the world is facing today, including the financial, energy and climate crises, there is an urgent need for an inclusive global governance structure with a high-level body fully representing the world population.

A new discussion paper by the German Development Institute looks at the 'Heiligendamm Process' as the starting point for further discussions on global governance reform. Further it offers different models for a future global governance architecture.

The Heiligendamm Process, which emerged from Germany's G8 Presidency in 2007, was an attempt to intensify dialogue with the new emerging actors, namely Mexico, China, India, South Africa and Brazil (referred to as G5). However it was seen as open process and not as a step towards enlargement, which was rejected especially by the USA and Japan.

According to the author the global economic crisis brought the enlargement-option back on the agenda:

"While this high-level dialogue [the Heiligendamm Process] was geared to an informal exchange of views and experiences as well as to confidence-building, the global financial crisis now calls for rapid action and hard-and-fast arrangements."

The Process is seen as success in terms of trust-building. It also helped to form a confident and pro-active G5, which even came up with concrete policy proposals during the recent G20 Summit in London. After the first phase of the Heiligendamm Process participants now need to decide where this governance model should be going to.

The author proposes a new out-ward looking process which includes other global governance structures and at the same time urges the G8 to explicitly deal with the enlargement issue. This discussion should also consider the role of the G20 which proved to be effective during the recent crisis.

by Martin Behrens

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Global Perspectives on the G20: Trillions for Whom?

The cover story of the latest issue of the magazine 'Global Perspectives' looks at the commitments of the London G20 summit to overcome the economic and financial crisis.

Andrew F Cooper (Waterloo University) underlines the symbolic function of the G20 meeting sending out the message that the seriousness of the financial and economic breakdown is recognized by important leaders across the North-South divide. Nonetheless he reminds us that the group is still criticized for its imbalanced composition with too many European members and only one African participant. Furthermore the new G20 questions the leading role of the G8. The next G8 summit will take place in July hosted by Italy. During this meeting also the so called G5 (China, Brazil, India, South Africa, Mexico) will meet a whole day with G8 countries. It remains to be seen which model will be more effective to solve the global policy challenges ahead.

During the G20 meeting 1.1 trillion dollars were promised to tackle the economic and financial crisis. Sanjay Suri (IPS London) doubts that this will actually help to improve the current economic situation. According to him financial stimuli provided in the US or the UK had no effect at all on market figures or for confidence building. Sanjay Suri claims that the main problem is that governments themselves lost credibility meaning that their promises are trusted no more. The Financial Times Index showed even a slightly negative reaction after more than a trillion US dollar was promised at the summit. Keeping in mind that much lower commitments during the 2005 Geneagles summit to help developing countries where not met, there can be serious doubts about the reliability of the new promises.

Furthermore in this issue a report from the Climate negotiations which took place in Bonn to prepare for the upcoming Copenhagen summit in December 2009.

Global Perspectives is a bi-lingual (English/German) joint production by IPS Inter Press Service Europe and the Global Cooperation Council, published by Globalom Media. The monthly editions on various themes of international cooperation and development are dowloadable for free.

See also the Euforic newsfeeds on IPS Europe and on the financial crisis

by Martin Behrens

G20 outcomes: the end of the promise of a new world order?

Source: EU News, Issue 3, April 2009

The much-anticipated G20 London Summit ended in an anti-climax. The measures announced appear to be more of the same old solutions the world has relied on so far to deal with financial problems. Have we arrived at the ‘beginning of the end’ of a promise of a new world order rather than at the ‘beginning of the beginning’ of a new world order? CIDSE’s main criticisms of the outcomes:

• The IMF with a slight face-lift will continue to regulate global finance. The IMF, bastion of industrialised country influence, will be given a 500 billion USD boost to continue to be the guardian of the global financial system, a role it has failed at so far. The G20 acknowledges the need to reform the mandates, scope and governance of these institutions by increasing the voice and representation of emerging and poor economies; ‘to take steps’ to make them more accountable and credible; and to appoint the heads and senior management on merit through open and transparent process. Will this make a difference to the numerous low income countries who are recognised to be the most adversely affected by the crisis? Highly unlikely.
  
  
• Tax havens will continue to flourish so long as they sign bilateral agreements that have proven not to be effective. The black-listing measures that the G20 announced will do little to return the millions of euros that have been illegally taken out of developing countries and deposited in secret European Bank Accounts. The OECD’s new black list will be reduced to no more than a diplomatic exercise. Countries like Liechtenstein, Monaco, Switzerland, Luxemburg, Belgium and Austria have found an easy way to stay off the list through bilateral tax agreements, while hardly changing their bank secrecy rules. Such bilateral agreements have delivered meagre results until today.
  
  
• The announced 50 billion USD for low income countries is little more than a repackaging of existing resources. With many countries in the EU set to default on their aid commitments, the Summit’s reaffirmation of donors’ commitment to achieve their respective Official Development Assistance pledges can only be believed if followed by concrete allocations to development budgets.
  
  
• A balanced and development-friendly system for international monetary stability remains elusive. The current monetary system disproportionately affects the currencies of non-reserve currency countries. The preliminary recommendation of the Expert (Stiglitz) Commission of the UN General Assembly President on reforms of the international monetary and financial system to adopt a new Global Reserve System, and the call by China to review the current monetary system based on a single reserve currency, is not reflected in the communiqué.
  

In conclusion, the G20 with its limited membership and interests is not the forum that can provide the global response to the financial crisis. Instead, the G20 should feed this outcome into the broader process to prepare the June UN Conference on the financial and economic crisis and its impact on development. Through such a dialogue, the G20 can ensure that its commitments and further policy orientations are informed by the needs and interests of this larger group of states that have as much if not a greater stake in ensuring that a new global order is carved out of the present crisis.

See CIDSE’s new policy paper, "From Collapse to Opportunity: Development Perspectives on the Global Financial Crisis" (April 2009), full G20 analysis and the Christian Aid response to the G20.

See also Euforic's newsfeed on the financial crisis