IMD International

The G20 needs restructuring says Jean-Pierre Lehmann

November 14, 2014

Australia is hosting the G20 summit in Brisbane this weekend and as Australia's prime minister Tony Abbott says, it needs to be ensured that "it's more than just a high-level talkfest". I am not convinced that it will be with acuter geopolitical tensions, more significant domestic economic issues and with the normally prima donna US having become a lame duck.

The G20 summit should concern every single one of us. After all, it is the annual summit of the world's most powerful leaders, but can anyone remember anything of significance being decided at a G20 summit that actually had an impact? Made a change? Was there ever anything that one might even remotely qualify as "memorable" and that will linger in history books?

The Australian prime minister said that this time it will be different because when the finance ministers met earlier in the year, they announced an increase of the G20 GDP of 2% in the coming 5 years, numerous infrastructure measures, the reduction of trade barriers and more. I am still not convinced it will be more than a talk shop again: On infrastructure there is a lot happening, but this is China, re-engineering the globe, nothing to do with G20.

Overall there is a crisis, or perhaps more accurately a gaping deficit in global governance. There is no global community, a lack of leadership and certainly no global consensus or conciliation. G20 member states are primarily driven by nationalist and mercantilist short-term goals without much concern for global public goods, let alone the future of the planet and prospects for the next generations.

On this year's agenda the G20 will address is the tax evasion of big corporations like Google, Apple, Amazon and Starbucks. One person who will be very uncomfortable if the subject is raised is Jean-Claude Juncker, the current President of the European Commission, who was prime minister of Luxembourg when much of the tax shenanigans of these firms were taking place.

The fact that Australia deliberately left climate change out of the agenda proves my point about the global governance deficit, the absence of not only global vision, but also a common wavelength, between the key actors. Climate change talks like many other talks on the global agenda are moribund.

That said, I do not believe that the G20 should be dissolved. As the famous Churchillian quip goes, "jaw-jaw is better than war-war". But the G20 should be restructured. The EU is wildly over-represented with Germany, France, the UK and Italy, plus the presidency of the EU). One is enough. Conversely, Nigeria should be invited to join.

Jean-Pierre Lehmann is Emeritus Professor of International Political Economy at IMD, Founder of the Evian Group and Visiting Professor at the University of Hong Kong and NIIT University in India.

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