G20 FINAL REPORT EXTRACTOS

G20 FINAL REPORT ACCORDING TO CLUB OF MADRID.

[[HAZ:Disregard the previous sending. This seems to be a more reliable source]]

The G20’s Role in the Post-Crisis World. Seoul, Republic of Korea
http://www.clubmadrid.org/img/secciones/G20_FINAL_REPORT.pdf


Executive Summary

The November G20 Summit, chaired by the Republic of Korea, will be the fi rst
one overseen by a non-G8 country. This represents a unique opportunity to
enhance this leadership forum’s effectiveness and credibility and to broaden
the confi dence and momentum that the Korean Presidency has already
generated and that needs to be maintained.

The Korean Presidency should be ambitious but also pragmatic. The G20 must fi rst
show it can deliver on existing commitments. It is in delivering that the G20 will
ensure its legitimacy. The Korean Presidency needs to strike a delicate balance: it
must encourage the G20 to begin thinking and acting long-term, beyond the
exigencies of crisis management; but also make sure that such strategic foresight
does not divert efforts from short-term imperatives. The Toronto summit was billed
as a ‘post-crisis’ meeting but was forced to narrow its focus to questions of fiscal
retrenchment. Barring further instability and crisis, Seoul will provide an opportunity for the G20 finally to deliberate on its role beyond reactive crisis fire-fi ghter.

We welcome the Korean Presidency’s initiative to include development in the
agenda. There is a case for adding some new items to the agenda; but this
should be done in a way that facilitates progress on economic cooperation and
governance issues and not distract from them.

Even an eventual slowdown in global economic recovery should not shake the
political resolve of G20 leaders in the compliance of commitments and the
pursuit of their agenda.

Against this background the following recommendations were put forward for
the Seoul Summit and the G20 in the years to come:

Legitimacy and Efficiency:

Recommendation 1:
Reinforce the G20’s role in global economic governance
in the post-crisis world.

Recommendation 2:
Frame the agenda and institutionalize the relationship with
relevant multilateral organizations and actors in order to avoid duplication of
mandates and foster complementarities.

Recommendation 3:
Focus on its current agenda and deliver on its commitments
in order to ensure legitimacy.

Recommendation 4:
Ensure the G20s effi ciency by maintaining a manageable
size, a valuable process, a workable agenda, and adequate cost management.

Reform of Quotas at International Financial Institutions:

Recommendation 5:
Grant greater voting power to emerging economies and
developing countries in the IFIs by ending the US veto right and Europe’s
over-representation.

THE G20’S ROLE IN THE POST-CRISIS WORLD

Recommendation 6:
Consider the reform the IMF quota formula by including
other relevant indicators. To date, around 80% of this formula is based on GDP.
Other elements such as population and reserves could also be considered.

Recommendation 7:
Implement the decision to select the President of the
World Bank and the Managing Director of the IMF on the basis of merit and
regional representation.

Recommendation 8:
Address future international financial challenges, such as,
international monetary reform and the need for a global financial safety net.

Accountability Mechanisms:

Recommendation 9:
Define the role of the G20 as the premier leadership forum
that can provide political guidance on issues of concern for economic
cooperation and governance.

Recommendation 10:
Strengthen the accountability of the G20 through the
application of results measurement, commitment monitoring and mutual
assessments.
Recommendation 11: Foster transparency to enhance people’s ability to trust the quality of its decision-making.

Recommendation 12: Define and establish an outreach strategy that allows for two-way accountability with relevant institutions and non G20 countries.

Development priorities for a G-20 Agenda:

Recommendation 13:
Enhance national capacities and create an enabling
international environment for the development of sustainable global growth and
well-being. The experience of the Republic of Korea can serve as an inspiring
reference for developing countries.

Recommendation 14: Promote green and inclusive economic growth,
employment creation and investment in human capital, all principles that apply
to global efforts for development, including within G20 Members.
Recommendation 15: Take a more determined and creative stance on global
free trade. This is an opportunity for the G20 to take concrete steps to conclude
the Doha Round and fulfill the commitments of the Doha Development
Agenda.

Recommendation 16:
Address the existing contradiction between freedom in
capital movements and the still significant barriers in the movement of labor in
order to avoid asymmetric globalization

Final Report: Extracts

II. Reform of quotas at international financial institutions

Recommendation 5:

Grant greater voting power to emerging economies and
developing countries in the IFIs by ending the US veto right and Europe’s
overrepresentation.

The IMF and the World Bank must be made more legitimate, effective, and
accountable, and this must be done by granting a greater voice to the developing
world. This lack of representation is at the root of their lack of responsiveness.
Accordingly, the existing economic governance structure limits the effectiveness
of the IFIs, as they do not adequately respond to the needs of developing
countries. Priorities in the IFIs are set by boards in which developed countries
are overrepresented, causing a serious problem of accountability.

In order to properly address this issue and give more power to developing countries,
the US veto and Europe’s overrepresentation at the IMF must be unequivocally
addressed. Currently the US has the 15% of voting power and the majority rule was
established at 85%. Reducing this majority rule to 70% or 75% could resolve this
problem facilitating a more responsive decision-making process. Europe is
overrepresented within the Bretton Woods institutions and with the current crisis
some EU countries have actually become IMF borrowers, as is the case of Greece.
This might be seen as illegitimate and may lead to problems in the future.

“The balance of economic powers has changed; the distribution of fi nancial
capacities, savings and reserves is no longer what it used to be”
Lionel Jospin, Former Prime Minister of France. Member of the Club of Madrid

Recommendation 6:

Consider the reform of the IMF quota formula by including
other relevant indicators.

The current formula privileges Gross Domestic Product, which accounts for
approximately 80% of the total formula. In this sense, some of the participants
suggested the introduction of new elements in the determination of these
quotas, elements such as population, reserves and money. These proposals
whilst helping address the under-representation of Asia do not really deal with
the underrepresentation for Africa. Therefore more creative formulas are still
encouraged.

Recommendation 7:

Implement the decision to select the President of the
World Bank and the Managing Director of the IMF on the basis of merit and
regional representation.

Although this issue has already been raised in previous G20 Summits, it is an
important one to emphasize in order to ensure efforts in this direction continue.
There is criticism around the current system in which the IMF Managing Director is
European and the World Bank President is American.
In this sense, and aiming for a better global representation, it is necessary to
choose both the Heads, and all staff, on the basis of merit and contemplate
regional criteria.

Recommendation 8:

Address future international fi nancial challenges, such as
international monetary reform and the need of a global safety net.
Once the crisis has been overcome, the G20 should tackle critical matters
which some participants defi ned as the “black holes” of the system, such as
the excessive volatility of energy and commodity prices, the control of hedge
funds, fi scal paradises and speculation due to the instability of exchange rates.
The French G20 presidency will take up some of these issue in its agenda,
although proposals regarding the stability and equity of the global monetary
system have already been presented by the Chinese government and the UN
“Stiglitz Commission”.

Regarding the reform of the IFIs some scholars believe that a significant reform
of the existing IMF Council would be enough. Others think that it is necessary
to transform the IMF Council into a new International Monetary and Financial
Board, with broader decision-making powers, for instance, in the selection of
the Managing Director and strategic aspects of global surveillance. In any case,
the idea of a broader council covering all international fi nancial institutions
remains on the table. The G20 should indicate which kind of global economic
coordination council it prefers, taking into account the stability and equity of the
system that is sought.

As a result of the experience of the 2007 crisis, a number of Asian economies
have to date accumulated vast amounts of trade surpluses, which means
foreign reserves but also global imbalances that have helped them to overcome
the crisis. Based on this experience and the sovereign debts accumulated by
many to rescue banks in diffi culties, some participants suggested the
convenience of developing mechanisms to reduce vulnerabilities during future
systemic crises. In past summits, such as Toronto, the G20 recognized the
need of increasing regional and international efforts in this sense and asked
fi nance ministers and central bank governors to consider this issue in greater
depth. In Seoul a more defi ned stance on this matter is expected through the
proposal on ‘global safety nets’ which will simultaneously require the still lagging
reform of IMF’s. The G20 should seriously consider this issue, as the creation of
a ‘global safety net’ mechanism would increase protection against future
fi nancial crises and help reduce global imbalances as developing countries
would no longer be tempted to accumulate foreign reserves.

Likewise, the matter of emergency fi nancing and the recapitalization of regional
development banks came late to the agenda, so most of them were neither
ready nor useful during the crisis. The G20 should seriously rethink about new
mechanisms that could result in almost automatic recapitalization of the regional
development banks in order to increase their response capacity.


===================

Policy Briefs


The G20: Panacea or window-dressing?

By Giovanni Grevi
Senior Researcher at FRIDE.

The short answer to this question is: neither. Much ink has been spilled over the
last two years on the role and potential of the Group of 20 leading economies
meeting at leaders’ level. Since its launch, the relative success of the G20 in
fi ghting the global fi nancial crisis and averting a long economic recession has
grabbed the headlines. Unregulated markets and reckless national policies had
created unsustainable imbalances that sparked the crisis, but a new summit
prototype had been designed; able to trigger collective action, coordinate
stimulus packages and regulate fi nance. The G20 has indeed proven to be an
effective crisis-management mechanism.

One year after its launch, as danger of a global fi nancial meltdown receded and
economic recovery picked up notably in emerging markets, the G20 boldly
established itself at the 2009 Pittsburgh summit as the ‘premier forum for our
international economic cooperation’. This self-appointment simultaneously raised
expectations and scepticism regarding the ability of the new format to achieve
the tall order it had set for itself. After the Toronto summit of June 2010, the
expectations-reservations gap has narrowed: the former have fallen and the latter
have risen. The modest Summit Declaration has been treated as evidence that it
is not the G20, but its main stakeholders, that make the difference. In other
words, a crisis response committee is not necessarily fi t to steer the course of
global economic governance.

In fact, it would be inaccurate to portray the G20 as the panacea of deep-rooted
structural problems; just as it would be ill-advised to dismiss it as a window-dressing
exercise. A balanced assessment of the role of the G20 requires a distancing from
summit meetings and setting the new format in the broader, evolving framework of
global governance – the collective management of common problems.
Conclusion

Global governance is approaching a critical juncture. As the international agenda
is growing more complex and demanding; the resources of multilateral bodies
are dwindling and the redistribution of power engenders competing narratives
on respective priorities and responsibilities. And yet, the launch of the G20 and
the proliferation of other informal groupings and coalitions prove that all key
stakeholders accept the imperative of cooperation to mana ge risks and
anticipate crises. Power shifts and interdependence are arguably shaping an
interpolar system.

In this new context, there is no quick fi x for global governance. Cooperation is
– and will remain for the foreseeable future – a question of ‘learning by doing’.
The overarching purpose, however, should be to build mutual trust, bring more
coherence to what has been defi ned as ‘messy’ multilateralism and harness
the political capital and resources of major powers while doing so. The G20 has
a major role to play to this end. It is neither a panacea nor a mere windowPolicy
dressing exercise. If its members invest the necessary political will, it can
become the lynchpin of collective action on global economic issues and related
matters, in structured cooperation with multilateral bodies and networks of
non-state actors. Innovation will lie at the interface between these different
dimensions of global governance rather than in the isolated reform of any one
of them.

==============

The G20 and the global governance of development

By Nils-Sjard Schulz
Associate fellow at FRIDE

Under the Korean chairmanship, the G20 is committed to engaging in the global
development agenda, just in time for the Millennium Development Goals (MDG)
Summit in September 2010 and the High-Level Forum (HLF) on Aid Effectiveness
in 2011. But the main contents and tools still need to be designed, and strategic,
policy and practical challenges remain. This policy brief suggests ways in which
the G20 could usefully advance development debates.
[---]

What needs to be done in 2010?

The stakes for the development agenda of the G20 are high. The rather
unpredictable context for global development requires both smart and quick
decisions regarding where to engage and with which processes to connect. As
such, the G20 has at least two specifi c comparative advantages to build
upon:

It can help to bridge the gap between North and South, developed
and developing, by bringing on board the most relevant non-OECD
economies and building trust among its diverse members.

Out of necessity and conviction, the G20 should not create parallel
platforms, but rather ensure smart coordination with existing processes,
for example at the OECD, UN and the regions.

Against this background, the following steps towards building a development
agenda could be taken in 2010:

Host a forward-looking dialogue on development objectives and the
underlying rationale to achieve them, including a sound narrative on the
link between growth and MDGs based on evidence and country-level
practice. Initial ideas need to explore how to upgrade the MDGs beyond
2015, addressing critical development challenges such as climate
change, energy and food security. The perspectives of MICs need to
be integrated more consistently, hand-in-hand with the expectations
of LICs. This dialogue should be conducted in close consultation with
non-G20 developing countries. The UN conferences as well as regional
platforms can contribute essential synergies to the discussion. The G20
might need to designate its members to help mobilise the developing
countries in their corresponding regions around an open-minded
refl ection on development goals beyond 2015.

Initiate a transparent discussion on fi nancing for development, critically
reviewing the feasibility of the existing roadmaps and establishing
reasonable aims towards 2015. This debate should also explore the
role and contributions of emerging economies and MICs as partners
in the global fi ght against poverty. Probable tensions around ‘burdensharing’
should be addressed within the G20 as soon as possible.

The Monterrey spirit, with its more integrated mix of fi nancing sources,
needs to be boosted. The most obvious linkages can be found in the
area of domestic resource mobilisation and sustainable foreign debt,
in addition to ODA. While this discussion should take place in a more
protected space for negotiations, consultations and feedback should
be undertaken with the UN-ECOSOC, the G8 and donor groups such
as the EU and the Arab Coordination Group.

Strengthen the fulfi lment of and education regarding standards and
practices of effective development cooperation. With a view to the
Korean HLF, additional energy could come from a better narrative
around ODA as a trigger for pro-poor growth. The involvement of
new development actors in the standard-setting process will be key
for long-term legitimacy. South-South knowledge exchange could
become another important entry point for revising the current premises
of North-South aid, especially in the area of national capacities in the
public sector. This agenda might open interesting options for non-G20
developing countries willing to engage in this dialogue; countries which
are currently preparing strategies within the platforms such as the
OECD-DAC, the UN-DCF and the existing regional processes.

====================

The G20 and global financial governance

By José Antonio Ocampo
and Stephany Griffi th-Jones
are at the Initiative for Policy Dialogue,
Columbia University

[[Haz: See this in separate doct]]

After the 1997 Asian fi nancial crisis and its contagion through the developing
world, a major discussion on reforms of the global fi nancial architecture took
place, with rather limited success. When the global fi nancial crisis hit, fi rst
through the eruption of the subprime crisis in August 2007 and, in particular,
the global fi nancial meltdown of mid-September 2008, the world had a strong
sensation of déjà vu, not only in terms of fi nancial crises and their contagion,
but also of the inadequacy of international institutions to deal with them.

================

A Southern perspective on the reform
of international fi nancial institutions

By Peter Draper
Research Fellow, Economic Diplomacy Programme
South African Institute of International Affairs
Memory Dube
Researcher, Economic Diplomacy Programme
South African Institute of International Affairs

[[Haz: see this in a separate doct]]


Since the onset of the fi nancial crisis, the G20 has moved to centre stage
concerning global economic governance in general, and reform of international
fi nance regulation in particular. This ascendance culminated in the G20 Pittsburgh
Summit declaration to the effect that the G20 is now ‘the’ forum of choice for
international economic coordination.

What further reforms are needed?

A number of proposals have been made:

1. A redistribution of quotas in the IMF to refl ect changes in the global political
economy while maintaining the quota shares of over-represented developing
country members. This is particularly important in light of the recent increase
in voting shares to developing countries in the World Bank, which resulted
in the loss of voting shares for some developing countries such as Nigeria
and South Africa: the shares of over-represented developing countries are
the ones distributed to the countries whose shares are being increased.
Consequently, the effects of the vote reshuffl e are not that signifi cant for
developed countries. The initial voting powers and quota allocations in
these institutions were based on the fi nancial contributions of the members
as well as their economic importance. This has changed signifi cantly over
the years with developing countries contributing signifi cantly more through
their loan repayments. Also, as the primary users of IFI services, developing
countries deserve an equal voice in the institutions.

2. The IMF Board decides the priorities of the institution. As a result, equitable
representation of developing countries on the Board is needed if such
priorities are to refl ect developing country needs. This could be done by
consolidating some European chairs into a single Eurozone seat, since
Europe is overrepresented. Such changes in the Board’s structure would
need to refl ect changes in voting weights.

3. A reconfi guration of the ‘heads’ and staff selection procedures. The selection
of the head of the World Bank and the Managing Director of the IMF is
based on the voting and quota structures, and is thus based upon nationality
– either US or EU. Appointment to such positions should be made through
an open, transparent and merit-based process, without regard to nationality
or gender. To its credit, the G20 has pledged to move on this issue. Staff
selection should also be diverse and refl ective of regional representation in
the institutions. This would allow for greater accountability. This is very
important given that the make-up of the senior staff creates a structure of
accountability for the whole body of staff of each organisation, which
decides the countries that hold the institutions to account. Opening up
accountability of the senior staff to the whole membership would also
enhance developing countries’ voice in these institutions and help their
effective representation.

==============

The G20 and the multilateral trade impasse
By Diana Tussie
FLACSO. Buenos Aires, Argentina

[[See this in a separate doct]]

In many countries, the surge in national industry bailouts, stimulus packages
and subsidies contains worrying aspects of foreign commercial discrimination
to protect domestic jobs. These policies represent an emerging trade agenda
that the G20 will need to tackle, regardless of the fate of the stalled Doha round.
Nonetheless, Doha retains symbolic value in terms of providing a cooperative
climate for multilateral trade talks, precisely because of this longer term agenda
looming in the background.

===============

To get the complete doct open: http://www.clubmadrid.org/img/secciones/G20_FINAL_REPORT.pdf