After the summit: what happens now? Alex Evans

April 2, 2009 | More on Global system, London Summit | No comments

I’ve already done a post with some quick reactions to the specifics of the communique, but before I pass out with fatigue, a final reflection on the day.

As summits go, today was a big success, particularly for Gordon Brown.  If you thought Obama was warm about Brown’s leadership yesterday, that was nothing compared to some of the language he used in his press conference at the end of the summit – where, incidentally, he charmed the assembled press to the extent that they couldn’t help applauding at the end. ‘Things you seldom see’, as they say.

But at the same time, today was always – of necessity – going to be about fighting the immediate crisis, and trying to prime some kind of immediate-term economic recovery. 

What remains so far unaddressed in leaders’ in-trays is a set of longer-term crises - and the need for longer-term recovery - on at least four key underlying issues: climate change; global economic imbalances; the issue of reserve currencies; and the need to head off another oil and food price spike, which could well get underway before the economic downturn is over.

All four of these issues raise big questions about changing the way the global economy works, and the need to ‘manage globalisation’ to make it more resilient, sustainable and equitable. All also involve big questions about power relations between the developed economies, emerging economies and low income economies.  And most fundamentally of all, they’re inextricably interrelated with one another.

At the moment, as just about every commission, task-force or high level panel on international reform in recent years has noted, the international system deals with these kinds of issues in a particularly fragmented, ‘stove-piped’, silo-riven fashion. 

That’s one reason why more and more of the hardest global issues get escalated to heads’ level, in bodies like the G8 or the G20.  But as the track record of the G8 over the last decade demonstrates, heads’ level bodies don’t obviously have the capacity to cope with them.  Initiatives and carefully crafted communique language all too often trump far-reaching, genuinely comprehensive action; it’s the old problem of the urgent crowding out the essential.  That was the case before the credit crunch – and it’s doubly so now.

Moving towards this more comprehensive action requires at least four things that have so far been missing.  One is leadership and political will to tackle the toughest issues and talk seriously about the big issues of equity that are involved.  Another, closely related need is for publics to give leaders the political space to cut deals on these issues.

But two other gaps stand out as well.  The third gap is what you might term ‘content’: ideas about the kind of ‘global operating systems’ we might ultimately be trying to get towards, even if the political space for them isn’t yet open. Where are these ideas supposed to come from? Whose job is it to think them up? In recent posts I’ve criticised NGOs for falling short on this front – but the same criticism could equally be levelled at governments, the media and yes, those of us in think tanks.  We need to think bigger than we’ve been doing so far – these are big challenges, after all, and need big solutions.

Fourth, the ‘content’ gap is matched by a ‘bandwidth’ gap.  Even if we had the leadership, the political space and the ideas, do current multilateral decision-making systems support and enable negotiation processes on complex, cross-issue bargains?  Answer: no.  G8 sherpas, for instance, meet just a handful of times before the main heads’ level summit – and sherpas invariably have busy day jobs too.  Adequate to producing a communique?  Sure.  A cross-cutting grand bargain on how the global economy runs for the 21st century? Less clear.

At the summit today, I put this question to two people in a position to provide informed answers: Michael Froman, the US deputy national security adviser for international economic affairs (and its G8 and G20 sherpa); and Mark Malloch Brown, the Foreign Office minister of state for the UN and global issues, and former Deputy Secretary-General of the UN.

I expected something from both along the lines of “well, the issues you raise are pretty difficult, but today was a step in the right direction”.  Actually, though, both gave rather more upbeat – and notably similar – answers.

What they both started with was that today marks quite a significant milestone in global governance reform.  This was only the second time that G20 leaders met at heads’ level, after all - and let’s not forget that a leaders’ forum including both developed and emerging economies was a key recommendation of Kofi Annan’s 2004 high level panel on threats, challenges and change, which (despite strong advocacy from Canada and others) looked politically impossible at the UN world summit in 2005. Moving to G20 is, as Froman put it, “a big step”.

A second point is the communique’s language on reform of international financial institutions, which although vague on the issue of voice for developing countries, is according to Froman and Malloch-Brown underpinned by genuine willingness to look at bigger picture issues in IFI reform. The FT’s Alphaville blog also notes that the new SDR allocation agreed today

represents no less than 10 times the current value of SDRs in circulation and is a clear capitulation by the US on the issue of approving the Fourth Amendment.  As background – the US was one of the last major IMF members to ratify the 1997 instituted proposal to create a special one-time allocation of SDRs. Except, of course, that particular proposal was focused on doubling cumulative SDR allocations to SDR42.8bn [i.e. a small fraction of what was agreed today].

It continues,

Either way it’s an all-round G20 capitulation to the ideas of George Soros, who pitched for exactly this measure as early as October last year. It’s also very much in line with the call coming from G20 protesting group Avaaz, who earlier on Thursday petitioned the UK government as follows:

The petition calls on leaders and officials at the G20 Summit for bold  action on stimulus, regulation and reform — to invest in a sustainable green recovery, to fundamentally reform the international financial  institutions, and to  *create $250 billion of new international reserve  funds (”SPECIAL DRAWING RIGHTS”)* — a key point of contention at the summit.

They’ve dubbed a decision on SDRs as “onward to a new Bretton Woods”. As the group — which describes itself as a web-based mass movement of 3.4m citizens with a positive policy agenda for the G20 summit — very succinctly explained it in their own communique, the SDR issue was one of the most contentious issues at the summit:

They are a key point of contention around the summit, with some countries opposing this measure and others seeking to turn SDRs into a global reserve currency to replace the dollar.

That takes us into the area of currency reform that I went into in more detail in a post yesterday. Furthermore, as Michael Froman pointed out, the G20 also agreed another significant move: the membership of the Financial Stability Forum has finally been expanded to include all G20 member countries.  What the communique said was this:

to establish a new Financial Stability Board (FSB) with a strengthened mandate, as a successor to the Financial Stability Forum (FSF), including all G20 countries, FSF members, Spain, and the European Commission

That’s not a bad haul of global governance reform for one day.  And lastly, there’s this interesting little paragraph in the communique:

21. In addition to reforming our international financial institutions for the new challenges of globalisation we agreed on the desirability of a new global consensus on the key values and principles that will promote sustainable economic activity.  We support discussion on such a charter for sustainable economic activity with a view to further discussion at our next meeting.  We take note of the work started in other fora in this regard and look forward to further discussion of this charter for sustainable economic activity.

When I first saw that, I didn’t think much of it.  But if Froman and Malloch-Brown are right to be as upbeat as they were about prospects for discussion of the tough issues, then perhaps this language really does signal something new, different and long-overdue.

If so, that would leave us in much better shape on gaps number 1 and 4 in my list above: leadership / political will, and bandwidth.  But still very much on the to-do list would be 2 and 3: political space (which is all about wider public attitudes), and content (the big ideas on policy options).

That brings us back to our old friends, the need for a better theory of influence for the new diplomacy - in which publics are recognised as having become major foreign policy actors in the 21st century – and the need for shared awareness as a precursor to starting to move towards shared operating systems.  And that’s where we need to concentrate effort between now and the G8, and beyond.