Political experts and economists discuss to what extent the G20 Summit in St. Petersburg can be effective in tackling global economic challenges.
The G20 summit in St. Peterburg is in full swing. Photo: Reuters
With the G20 Summit starting in St. Petersburg, Russian and foreign experts interviewed by Russia Direct speak about the potential implications of the summit for the world, Russia’s image abroad and the ongoing dialogue between Moscow and Washington.
James R. Barth, the Lowder Eminent Scholar in Finance at Auburn University and a senior fellow at the Milken Institute. His research focuses on financial institutions and capital markets, both domestic and global, with special emphasis on regulatory issues
The G20 refers to the finance ministers and central bank governors of 19 member countries and an equivalent-level representative from the European Union. The member countries account for 86 percent of world GDP, 80 percent of global stock market capitalization and 94 percent of global bond markets as of year-end 2012.
This means that economic and financial decisions made by the G20 will have major implications for the global economy and financial markets. It is therefore crucial that the member countries, to the extent possible, coordinate their policies to achieve greater economic and financial stability as well as sustainable growth worldwide. The failure to do so can adversely affect not only individual countries but all the roughly 220 countries in the world.
Unfortunately, recent developments in Syria will have a tendency to divert attention away from important economic and financial matters at the G20 meeting. Tension already existed between Russia and the U.S. due to the Snowden Affair, but it has heightened considerably given the current lack of agreement as to whether any military action should be taken against the Syrian government by the U.S.
To the extent that the focus is on economic and financial issues, Russia’s image certainly benefits because its share of global GDP ranks it among the top ten countries. It is expected to move even higher within this group in the coming years. This makes Russia a key player in any attempts to coordinate economic and financial policies across countries.
The emerging markets have grown vastly more important in recent years and will continue to do so over time, which makes their role in the G20 ever more essential. This fact made it clear that the G7, which consisted of the rich industrial countries, should no longer hold center stage after the global financial crisis in 1997-1998. To promote global growth and stability, it is now widely recognized that emerging markets must be intimately involved in global governance.
Ivan Timofeev, program director at Russian International Affairs Council (RIAC) and associate professor at Moscow State Institute of International Relations (MGIMO)
Do we need the G20? Yes, of course, because in this case we have many new players that are not represented in the G8. Their role in the world economy is growing every day. Without their participation, it will be impossible to resolve the problem of imbalances that exist in the current economic system. The G20 emphasis on economic problems is also fairly important. This is what makes it different from the G8, which focuses more on political issues.
The G20 Summit is hardly likely to improve U.S.-Russia relations. Their dynamic has its own logic that is almost not related with the activity of both countries in G20. The Syrian problem, ABMs, security questions determine bilateral relations. And the summit will not influence on the discussion of these issues on a bilateral level.
This refers to the image of Russia as well. A lot will depend on the media coverage of Russia’s Chairmanship [of the G20]. This topic is likely to be on the periphery [for journalists]. This means that the summit is hardly likely to have a serious impact on Russia’s image abroad.
For big developing countries, the G20 is a good opportunity to show their growing role in global affairs. However, it is only the beginning of the path to truly effective governance. The G20 is just one of the mechanisms which can help to fulfill these functions, even if it’s not to a full-fledged extent. This is a milestone of the long path from sovereign governments to global governance. In the near future, the sovereign state remains a key actor in world politics.
Chris Weafer, senior partner with Macro Advisory, a Moscow-based consultancy providing research services to macro hedge funds, venture capital investors and foreign companies looking at investment opportunities in Russia and Central Asia
The G20 is much less relevant today than was the case at the first meeting in April 2009. At that time, the world was facing into a financial abyss and needed coordination amongst the major economies to avoid a deep and prolonged crisis. At that meeting, all of the G20 countries were in agreement as to what needed to be done and the level of cooperation was 100 percent.
Today the world is much more divided as to what measures should be taken to sustain the global recovery and to prevent a future crisis. There is a clear split between the countries of the developed world, principally the U.S. and Europe, and those in the developing economies.
These two groups now have different agendas and this will likely be evident at the G20.
Specifically, the emerging country leaders will be very critical of the actions of the U.S. Fed and of the Japanese government, who, they argue, have been pursuing purely self-interested policies without regard to the damage inflicted in the emerging economies. I think we are now at, or very close to, the end of the useful life of the G20 as an effective policy group. I expect it will survive as an annual meeting but become more like a photo-op for leaders, much as the G8 has become.
Nevertheless, the G20 is an opportunity for President Putin and President Obama to meet, even if no formal summit has been agreed. So that is a positive opportunity and I expect to hear a more reasonable dialogue from both leaders in St. Petersburg. Both countries have a lot more at stake than simply self-interested geopolitics. I expect to see a much more pragmatic approach from both and a generally more positive outcome than heard in recent weeks.
Can this summit improve the image of Russia abroad and in the U.S., particularly? No, I think one meeting, even a G20 summit, cannot achieve that. There are far too many issues that combine to create a negative perception of Russia, in the U.S. in particular. The recent anti-gay legislation and the Magnitsky case have, in particular, caused a lot of damage to how the U.S. views Russia. I think that only a series of more positive steps, e.g. dealing with the major investment and business issues such as corruption and the rule of law, can start to change the current poor perception.
Pavel Vasiliadi, UFS Investment Company, an international group of companies providing a full range of financial solutions
The G20 is always criticized because of the declarative character of its communiqué. In addition, the decisions of the G20 summit are usually very slow to get off the ground. The G20 summit has been initially created as a forum for dialog between developed countries and their counterparts in emerging economies to step up the discussion on global finance.
As practice shows, although the G20 summit has played a certain role in coping with the 2008 global financial crisis, the commitments adopted at that time (I mean those that regulate state budgets and toughen the standards of the banking system) have been fulfilled with setbacks at every step. Potentially, the G20 might become a kind of supranational body that could contribute to bringing more stability to the global financial system and world economy in general. So far, this organization is currently fulfilling cosmetic functions and tinkering around the edges.
Regarding U.S.-Russia relations, the G20 summit can be a platform for decreasing tensions in the U.S.-Russia dialogue. Yet, there are hardly likely to be any breakthroughs in their bilateral relations [that result only because of the summit]. Although there are no plans for a meeting between Russian and American presidents, it is possible that they might discuss the thorniest problems in a behind-the-scenes format, as Russian Presidential Aide Yuri Ushakov said.
As for the image of Russia, the summit is hardly likely to change dramatically the perception of Russia abroad. It’s a well-known fact that Russia’s position is taken into account [globally]. And another summit between BRICS countries that will take place in the framework of the G20 proves this.