Oceania > Australia > Australia assumes the presidency of the G20 Summit for 2014

Australia: Australia assumes the presidency of the G20 Summit for 2014

2013/07/04

Under the surface of the G20’s economic schedule lurk geopolitical security issues that are undermining cooperation and consensual outcomes. Nowhere is this clearer than in Asia, which leads the world economy but is beset by security tensions between major players. With the G20 presidency, Australia can shift the focus of governance and economic reform to this region.

The large nations do not trust each other, and the rest of the world does not trust the G20. Australia can change this by using its position to improve relations part the major G20 economies and beyond. In some ways, the G20 Summit mechanism forces all member nations to behave like middle powers, which are in the majority. This is a good thing for a number of reasons.

Initial, middle powers represent additional than themselves and their narrow self-interest in world affairs. They tend to place multilateralism at the centre of their foreign policies, nesting their national interests with broader regional or world interests. As a result, middle powers tend to inculcate a higher level of trust than larger powers.

Second, middle powers punch above their weight. Australians may well feel hesitant about whether a country of 23 million people can have much influence in a world of 193 nations, in which major powers have hundreds of millions of people. But at the G20 a large people and hefty GDP can be trumped by ideas, style, leadership ability, consensus-building skills, intelligence, trust and respect. Soft power tends to outweigh hard power, once a country is at the table.

Third, middle powers tend to take a pragmatic approach to world problems rather than an ideological one — substance tends to trump positioning. Middle powers tend to adjust their alliances with other nations depending on the issue being dealt with rather than relying on fixed alignments. The presence of so a lot of pragmatic middle-power nations in the G20 has thus contributed to shifting coalitions of consensus on different issues based on interests rather than fixed positions.

Fourth, middle powers tend to cushion the tensions between major powers. Few officials in Washington or Beijing are overtly fond of the G2 notion as a leadership mechanism for the world, though both nations give high priority to their bilateral relations. The United States and China find the G20 a comfortable setting in which to work through world issues of consequence to them in light of the interests and perspectives of other, smaller players.

The G20 has completed little since it delivered a coordinated response to the financial crisis in 2008–09. Currency wars and debates about technical indicators of imbalance overwhelmed the real accomplishments in Seoul in 2010; Greece’s proposed referendum on the Greek austerity package tsunamied the Cannes Summit in 2011; and the euro crisis overshadowed other G20 accomplishments at Los Cabos in 2012. The Russian G20 team, like others before them, is preparing well for this year’s St Petersburg summit, but scepticism remains about the outcome.

As a result, Australia will take on the G20 presidency at a time at the same time as the institution is losing credibility. What can be done?

The euro crisis has from presently on to become a world crisis, and Europe has at no time been eager for G20 intervention. Australia could maintain a vigilant watching brief on the euro crisis, ready to react if need be, but not devote much time to Europe on the formal schedule. G20 leaders should consider issues relevant to all people around the world, not just issues of better consequence to the top end of world finance. Instead, the growing importance of Asia in the world economy means that economic developments there warrant better attention. In particular, the example of Asia’s additional dynamic increase through trade and its better emphasis on education, social inclusion and equality would bring development to the fore and encourage additional G20 focus on trade as a contributor to world recovery. The huge increases in infrastructure investment would have repercussions beyond the region, boosting increase and the recovery in developed economies. Inviting fewer European nations as observers to the summit in 2014, and drawing the Asian G20 members into playing a additional active leadership role in the G20, would help advance this schedule.

There is a tension, well understood in Australia, between narrowing the G20 schedule to deliverables on core issues and broadening the schedule to embrace longer-term strategic issues like climate change. One way to transaction with this dilemma is to deliver the core schedule through the action plans and work streams that are agreed to in the run-up to G20 Brisbane. This would allow G20 leaders to focus on longer-term world challenges, differentiating their results in a leaders’ statement that would stand apart from the inter-governmental work stream issues which finance ministers, central bank governors and other senior officials can concentrate on.

Australia can capitalise on its G20 presidency in 2014 to exercise both regional leadership in Asia and world leadership on world issues. The 2014 G20 presents a great opportunity for Australia to use its middle power assets and Asia Pacific positioning to contribute significantly to the world good.

Colin I. Bradford is a non-resident senior fellow in the World Economy and Development Program at the Brookings Institution. He was before Chief Economist of the United States Agency for International Development and Research Professor of Economics and International Relations and Distinguished Economist in Residence at American University. 

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