29 Feb *UPDATED* Reflection on David Cameron’s report “Governance for growth”

Reflection on David Cameron’s report “Governance for growth”
Written upon request of G20 French Presidency. Prepared for G20 Cannes Summit

Quick Facts

• The G20 emerged in 1999 when the finance ministers and central bank governors of advanced and emerging countries met in Berlin, Germany, for an informal dialogue on key issues for global economic stability. The meeting was in response to the financial crises of the 1990s with growing recognition that some key countries were not adequately represented in global economic discussion and governance.
  • From 1999 to 2008, they maintained annual meetings.
  • With the 2008 crisis, U.S. President George W. Bush convened a meeting of G20 Leaders in Washington, D.C. where it was agreed that the G20 was the most suitable forum for coordinating responses. Here, the Leaders agreed to implement an Action Plan with three main objective: restoring global growth; strengthening the international financial system; and, reforming international financial institutions.
  • Thus, the G20 Leaders’ Summits were launched in 2008 with agreement that the G20 should be the premier forum for their international economic cooperation
    • Taking over from G8
    • Informal and Leader-driven group focused on building political consensus for 19 country leaders + EU
    • Represents 85% of the world’s economy
    • Three main points of report:
    1.  Power of informality
    2. Focus on areas where improvements to governance will matter most, including strengthening of the Financial Stability Board and reinforcing the role of the WTO
    3. Develop common principles to guide development of standards that govern the global economy, from tax transparency to anti-corruption.

• Report claims to be a “pragmatic way forward for improving governance.”
• Includes reference to food security (section 4) but no definition of governance.

* G8 countries
+ also represented at the G8 by the Council and Commission President

• These forums and institutions participate in meetings of the G-20:
  • IMF
  • WB
  • International Monetary and Financial Committee
  • Development Committee
  • G20 membership is not determined by the world’s largest economies on an annual basis and therefore does not necessarily reflect the largest national economies of the world in any given year. The organization states:
    • There are no formal criteria for G-20 membership and the composition of the group has remained unchanged since it was established. In view of the objectives of the G-20, it was considered important that countries and regions of systemic significance for the international financial system be included. Aspects such as geographical balance and population representation also played a major part (G20. FAQ #5: What are the criteria for G-20 membership?)

Part 1: The G20’s future role and direction
1.5 UN and Bretton Woods are outdated
This section makes reference to treaty-based institutions, such as the UN that have “long existed to underpin and coordinate the actions of nation-states.” The report argues that these institutions reflect a “specific time and circumstances of the world in which they were founded.” The report hints to their inefficiencies or redundancies in so far as in a changing world contemporary challenges require “new ways of generating and refreshing the political consensus for addressing these challenges.”
1.6 No need for new institutions (in direct contrast to what is suggested above)
The report states that “improving governance should not necessarily require the creation of new global institutions.” Instead, what is required in the “development of political consensus.” At this point, the logic of the report is somewhat challenged. After declaring a new informal, leader-led organization in the form of the G20, the report claims current institutions, that have formal structures are not adequate for achieving political consensus. Yet, the UN General Assembly and other UN agencies (excluding the UN Security Council) are fora for consensus-decision making where in every country has one vote. What can be concluded from this is that political consensus building in the contemporary context need only include the world’s biggest economies and should not be limited by institutional processes and bureaucracy (arguably put in place to support due process and accountability).
1.7 Keeping things informal
The report argues that the informal and leader-driven character of the G20 has helped to advance political agreement in “key areas of national economic policies, and to deliver outcomes through formal international institutions.”  Few other intenational fora have such high-level political (i.e., leader) engagement and it is thus logical that the decisions taken at this level have greater political power.
When compared to the Committee on World Food Security, it is obvious which decisions will be implemented first.

This section of the report also argues that the G20 provides the “space for the key global economies – advancing and emerging alike- to come together on an equal basis to discuss and resolve economic issues openly and in the spirit of enlightened self-interest [whatever that means], without the historical legacy of North-South divisions that may still affect institutions which were developed in a different economic and political context.
First, we can again note a direct jab targeted towards the UN, where G8-G77 tensions have long existed. Second, the logic is rather sordid: the North-South divide is eliminated and a new, more overt Rich-Poor divide has replaced it. And unlike the UN where there are procedures, mechanisms and processes in place to ensure dialogue amongst all nations, the G20 has restricted dialogue to only the richest 20 economies (even fewer if you consider the EU as a single economic zone).
1.8 Influencing Global Governance
The report argues that the G20’s ability to play an “influential and constructive role in global governance rests on it providing decisive leadership on the challenges of economic integration.” Moreover, “to enhance the legitimacy of the G20’s consensus-building role, Leaders should commit the G20 to becoming much more structured and transparent in its engagement with other actors in the global system”. Thus while informality and lack of structure is the best way to coordinate its internal operations, it appears that the G20 is willing to sacrifice informality in its interactions with other organizing, effectively creating the legitimacy through mechanisms and processes to ensure their integration. It’s a bit like having your cake and eating it too.
1.9/10 Other participants
There is reference to working with other actors in the global system, especially to facilitate subject-specific involvement in G20 work.  Here, the report calls for more consistent and effecting engagement with non-members, relevant international institutions and other actors (1.9) and that the output of the G20 on specific topics could be improved by “welcoming the effective participation of non-members, international institutions and other actors”(1.10). Nowhere in the document is there specific reference to civil society or NGOs.
Here there is mention of the variable geometry approach being pioneered by the G20 on the issue of development. I have no idea what this is and will follow up on it over the next few days.
1.11 Participation to a point: the focus remains efficiency
The report calls on the G20 to find balance between “open to wider but targeted participation in its work, and maintaining its efficiency through time.” In line with the recommendations of the Global Governance Group (3G Group) [which incidentally should be 2G group, or 3G…not to be picky or anything], the report calls on the G20 to commission work from international institutions in a transparent manner, “allowing these requests to be considered within their governance structures, respecting these bodies own decision-making processes”. I am unclear on what this actually means. I mean, I understand the words, but practically, what are the implications? Does the G20 assume it can force or mandate international organizations to undertake work for them? Is this paragraph supposed to remind them that other organizations are indeed autonomous with their own decision making processes?
At least there is recognition of the need to include the views of others: “As much as the G20’s ability to build political consensus matters, the willingness of others to contribute to this consensus is also important for strengthening global governance.”
BOX 1: Strengthening engagement with the United Nations
After undercutting the UN several times in the first section of the report, they present a box about how to strengthen relations between the UN and the G20. The report recognizes that “the G20’s growing role has caused some in the UN system to raise questions about the G20’s legitimacy, ability to deliver on its commitments and potential overlap with the work of existing formal institutions.”
The report suggests that the two organizations play complementary roles in the global system and that while engagement has been less than systematic, there is a need to find ways to enhance communication and support each other’s objectives.  In a rather blind-sighted statement, the report claims that “the G20 can help the UN to increase its understanding of the G20’s agenda”, suggesting that concerns about the G20 are not linked to the fact that it is an organization that declares informality a strength and includes only the world’s richest nations may not have the greatest degree of legitimacy or the capacity to follow through on commitments (since there is no formal way of monitoring this) but rather in a failure of UN staff to comprehend the G20 agenda.  In the next sentence, the report then suggests that there may be ways to utilize the UN’s technical expertise in the work of the G20!
To improve relations with the UN, the report calls on the G20 to:
1-      Regularize the practice of briefings and consultations with UN membership;
2-      Ensure that each G20 Presidency appoints a seniors official within the Troika[1] to oversee this engagement
3-       Coordinate with the UN to make use of existing processes for feeing in and highlighting issues
Finally, after suggesting the UN is antiquated and unable to support effective consensus building, the report calls for enhanced engagement between the two organizations to maximize cooperation.
Is it just me or does this not further point to potential concerns about the legitimacy of the G20. An informal network of leaders –which I don’t agree them to be, but that is the discourse and how they are framed in this report so let’s go with it – suggesting that the UN needs to find more ways to engage with them. The thing I don´t understand here is that each of them are already involved in the UN, in major ways, especially as donors. So why would the UN double-engage? It seems like a direct contradiction to the calls for streamlining and efficiency made in the report. All of these countries are represented at the UN and can (and do) advance the agenda of the G20 as individual nations and more formally as G20 nations. This was particularly obvious last October at the 37th Session of the Committee on World Food Security’s policy roundtable on Food Price Volatility. The G20 agenda clearly dominated and effectively adapted the Committee’s decision on food price volatility to suit the G20’s report on the subject that was due out the following month.
The G20’s own governance: The power of informality and Strengthened capacity and internal processes
1.12 discusses the issue of formality including the point that some argue that the G20 can only be credible by becoming a formal institution and others stating that the global system lacks a legitimate and overarching level of formal economic governance, proposing the G20 Leaders should become a formal level of governance sitting above the IMF and WB, in a perfect representation of acting as “judge and jury” and suggesting a failure to take anything away from the financial crisis.
1.13 The report rejects these approaches are argues that the G20 has opted for an informal approach because it enables them to “reach consensus quickly, flexible, and effectively, working with the international governance system rather than having to rebuild it.” This approach, the report states, “has enabled them to explore the scope for political agreement outside the constraints of more formal, binding institutions and structures.”
Effectively, what this means is that they don´t like the rules they agreed to in other fora so they are going to gather informally outside and influence decision-making from there. It’s effectively an informal formalizing of geopolitics since the end of the cold war and the rise of the BRICS. The major concern of course, remains the lack of procedural accountability and the exclusive nature of the Group.
1.14 The report differentiates between informal and unstructured, arguing it should seek out the former while following through on its political commitments.
1.18 This section recommends that the G20 develop agreed working practices to maintain its operational effectiveness and the report then provides a “non-exclusive list of possible working practices, drawing on previous G20 discussions”.
1.19 with reference to increasing the G20’s capacity,  a permanent Secretariat with a policy function is recommended. It is argued that “to avoid jeopardizing its Leader-led and informal character, the G20 needs to avoid transferring its steering and policy development out of the hands of its members”. Thus while the G20 can call on experts to enhance the debate through knowledge production and debates, decision making is to remain in the hands of members.
1.20 The report recommends that the G2 expand its capacity by formalizing the Troika and underpin it with a small secretariat.
1.21 The function of the secretariat would be to maintain continuity in the G20’s engagement efforts and could rotate with the presidency.
BOX 2: List of possible G20 Working Practices

• Integrations among Leaders should be informal and there should be a focus in the agenda on maximizing informal discussions.
• G20 summits should take place at a regular point each year but the Leaders should have the flexibility to convene as necessary.
• Leaders must be able to convene during times of crisis and should be ready to convene conference calls and meetings at short notice.
• The Troika should meet regularly
• The G20 should make effective use of its Sherpa network. Sherpa is the President or Prime Minister’s personal representative responsible for negotiating outcome documents. The Sherpa is usually a senior diplomat, civil servant or in politician.
• The G20 should be cautious about launching new and additional processes that last beyond individual Presidencies. This is concerning as many of the problems addressed by the G20 require long-term solutions and policies and this suggests that the G20 will focus on “quick fixes” which tend to get us into more trouble as they fail to address the structural and root causes of the problems.
• The G20 should facilitate more consistent and effective engagement between G20, non-members, international organizations and others.
• Representatives from International Financial Intuitions and International Organizations should be encouraged to continue to make contributions in specific areas.
• The main products of the Summits should be regularized to maximize consistence and comparability and should include short summaries of decisions taken.  So as to improve public awareness, the G20 Presidency should produce short and accessible fact sheets setting out key achievements and process. What is obviously lacking here is any discussion of analysis of their work, including monitoring and assessment.

Part 2: Addressing Gaps in Governance
2.2 The G20 does have political influence and in line with its Action Plan objective of reforming international institutional they agreed upon the need for quota reforms in the IMF to reflect the growing weight of dynamic emerging markets. They also agreed upon the importance of moving towards equitable voting power in the WB to reflect countries’ evolving economic weight and the WB’s development mission.
2.3 The Report highlights that the “reforms to the World Bank Group (WBG) and the Regional Development Banks (RDBs) have been critical to supporting the growth agenda set by G20 Leaders.” Here we see the G20 reforming international organizations to suit and advance their agenda.
2.5 The Report highlights how reform to the IMF which were agreed upon in 2010 will ensure that it can play a more “effective, credible and legitimate role in supporting the operations of the international monetary and financial system”. But then goes on to state that only a quarter of the G20’s membership have implemented the quota and governance reforms. This calls into question the effectiveness of the G20 to follow through on its own commitments.
Governance of Global Trade
3.32 The report notes that the G20 constitutes 80% of global trade and thus has a significant interest in ensuring the well-functioning of the global trading system. But the report then goes on to suggest that a conclusion to the WTO’s Doha Development Round would “make a significant step towards reinforcing the global trading system, hence ongoing efforts in that regard”.
3.33 The report then states that “International trade can be an engine of global growth and development”. Which is not untrue, but there is no reflection on how it can equally be an engine for environmental destruction and social injustice.
3.35 In a shocking assumption of authority, G20 leaders tasked [not requested… see 1.11] the WTO secretariat and the OECD and UNCTAD to prepare regular reports on protectionist measures undertaken by G20 countries”. On the one hand, this starts to address concerns raised above about monitoring and accountability [Box 2], on the other hand, we see an informal collective of Leaders mandating work and thereby, in part, determining the agendas of international organizations. At the same time, the WTO should be monitoring G20 financial policies.
2.47 The report calls on the G20 to “instruct its trade ministers to work with the WTO membership to explore innovative approaches to achieving further trade liberalization in a manner that is compatible with the multilateral framework.” Here we see an explicit advancement of a trade liberalization agenda, albeit in a more consultative and open way if it includes the WTO membership of 153 countries. However the rationale is to “strengthen the WTO’s role at the heart of global trade governance.”
Part 3: Towards more effective global standards
Developing genuinely global standards
3.4 The report argues that “with a growing number of global economic actors, the underlying need for soft law to coordinate and govern behaviour has, if anything, grow in a globalizing economy.” This, the report argues, supports the case for developing and extending existing rules and standards and in the “spirit of bringing together the world’s major economies, the G20 should endorse the political importance of developing existing and future standards, by involving all of the key actors to ensure that these standards are truly global.” This does seem to stand in direct contradiction to the behavior of G20 countries at the CFS’s Food Price Volatility Roundtables in October and also in the development of the Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and forests in the Context of National Food Security and the Global Strategic Framework.
Part 4: Greater coherence in future governance
4.1 This section is concerned with coherence and consistency across institutions that address global challenges.
4.2 The report mentions food security as a cross-cutting issues along with energy and sustainable development and refers to its importance insofar as it impacts on issues of global growth. With 1 billion people going hungry and another billion people obese worldwide, this type of statement fails to recognize the tragedy and seriousness of the interconnection between food security, agriculture and trade. The report warns against the inter-related problems of  “clutter” at the international level and “silo working” which fails to address policy problems in an integrated manner.
4.4. Food Security is used as an example to highlight the issue of coherence in international cooperation and coordination as “highly pertinent in a globalizing economy”. Recognizing the connections between food security to land and resource use, and potentially offering challenge to the productionist paradigm, the report states
food security is affected by competing uses for land, water and liquid fuels. Compensating for this by increasing agricultural production could lead to natural resource degradation in the absence of a strategy for good sustainable resource governance, and would run up against environmental stresses caused by climate change.
However there is no follow-up on how to avoid such policies and no reference is made to any of the international initiatives developed to address food security, not even the G20-launched GAFSP initiative.
4.5 To overcome the twin problems of silo working and clutter, the report suggests the introduction of “powerful incentives that encourage inter-institutional cooperation and coordination in order to achieve common ends.” What would these incentives look like? Who distributes them or monitors them? Is this in part what the GAFSP seeks to do: distribute funds (incentives) to countries that implement national plans that work towards a common end (improved food security to improve markets)?
Stronger cooperation and coherence
4.6 The report argues that the world’s ability to make progress on cross-cutting issues such as food security depends on the effectiveness of international institutions and calls for continued efforts to “improve the operation of these institutions by promoting greater transparency and accountability, focusing on results [hints to governmentality], and managing monetary and human resources more carefully to maximize the system’s overall impact.
4.7 In reference to food security, the report highlights the “importance of more joint analysis [potentially suggesting that the Rome-based agencies alone are not sufficient and that other actors, such as the WB should be included here] on the impact of energy and food policy on global resources. Policy responses to global challenges need to be better coordinated, and actively involved actors who are increasingly influential or have expertise to offer, such as the private sector.” No mention is made including food producers (who are private sector, I guess) or NGOs.
4.9 The report mentions the new G20 initiative AMIS (Agricultural Market Information System) launched in June 2011 to “provide better information on the stocks, supply and demand of four stable crops”. However given calls for using and improving existing systems, and not developing long-term initiatives, the launch of AMIS suggests that the motivation is strictly financial. It is hoped that AMIS can at least feed into existing monitoring systems.
Joint reporting
4.10, With the rationale of promoting greater governance coherence, the G20 has “systematically involved international institutions in summits, Ministerial meetings and working groups.” In 2011, the G20 asked “nine organizations to provide joint inter-agency products which analysed options for addressing global good price volatility.” Here again we see the G20 mandating the work plan of organizations, but more than that, the organizations that were brought in to develop the paper are not necessarily ones that have authority or expertise in the area but who are gaining this expertise as they are called upon to produce knowledge of this type.  The FAO and OECD coordinated the report and worked collaboratively with IFAD, IMF, UNCTAD, WB, WTO, IFPRI, and UN HLTF. The paper can be read here: http://www.foodsecurityportal.org/interagency-report-g20-food-price-volatility-released
The Interagency Report to the G20 on Food Price Volatility was released in June 2011 and adopted by G20 agriculture ministers that same month and by G20 leaders in November of that year.
Final thoughts:
If the G20 wants to an exclusive group meeting to discuss a global economy that it effectively controls, that is one thing. Is it likely to result in a more fair economy? NO. Will it address systems of oppression and injustice and improve democracy and living conditions for the poor. NO. Will it work to mitigate the environmental destruction and heinous consumption of natural resources upon which the current global economy thrives? NO. If they were to stick to economics and trading and the likes, that would be one thing, but increasingly, they are positioning themselves to address issues of development, including food security. But then we are left with another question: how do we address food security without addressing trade?
 UPDATE:
I was just reviewing the number of people impacted by the food price crisis in 2007 and the majority are from Latin America and Africa, continents that are under-represented in the G20.

Reference
Cameron, D. 2011. Governance for growth: Building consensus for the future. London: HM Government. Available: http://www.number10.gov.uk/wp-content/uploads/2011/11/GovernanceForGrowth_acc.pdf