Global system problems concern the current human population in its entirety. However, as the global population is politically organized around sovereign states, understanding of global system problems and design for solutions need to be constructed by aligning the interests and priorities of the fragmented subsystems. Forcing structures or policies against national governments’ tendencies or mis-timing of otherwise politically agreeable initiatives will most probably be frustrated.
As the global governance structures evolve, nation states may be persuaded or may at times be embarrassed into action but may rarely be obliged against their will on a sustained basis. Sporadic crises in the short run and shifts in the underlying preferences of populations in the long run can align the interests of political leaders and hence expedite the deepening of global governance.
G-20 is an important undertaking as a relatively recent global governance initiative but the underlying dynamics of member state politics should be kept in mind in calibrating expectations and in pacing its progress.
SHAPING G-20’S AGENDA, CREDIBILITY AND EFFECTIVENESS
Three broad guidelines may be useful in shaping G-20’s agenda to ensure credibility and effectiveness:
i) Post-Crisis Consensus and Policy Action:
The natural alignment of national interests during global systems crises can be channeled into durable concrete policy action and lasting institutional competence. However, even after crises, tenuously supported common action should not be forced. Reluctant national enforcement would lead to ex-post frustration of common purpose and to the eventual erosion of G-20 credibility.
ii) Managing an Expanding Agenda:
It is important to anchor and structure the expanding agenda around modest but relevant objectives that do not necessarily require immediate joint action. The anticipation of well-defined crises may prove useful in anchoring the rapidly expanding G-20 agenda. Although nations may not be ready to take pre-emptive action on adverse global trends, they may be willing to invest in common contingency planning in key global systems that can be readily deployed in case of a crisis.
iii) Building Public Consciousness of Global Interdependence:
G-20’s visibility and profile can be leveraged to build public consciousness of the global system problems and choices. In the long run, public consciousness of the problems is likely to be the most effective force for mobilizing and legitimizing national policy action on global issues.
In brief, leveraging the natural alignment of political interests around “crises” in the near-medium term and focusing popular consciousness on global challenges in the longer term are both necessary elements of deepening G-20’s enduring authority and effectiveness.
These broad themes can be put into action in the coming year under the Russian Presidency of G-20:
I- POST-CRISIS POLICY ACTIONS: FINANCIAL CRISIS AND RECOGNIZING DIVERGENT INTERESTS
The need for G-20 crystallized in the aftermath of the global financial crisis and the G-20 successfully mobilized the aligned interests for joint global action
Significant progress was made in a range of areas, including the establishment of FSB, the rapid advance in Basel II.5 and III regimes, and national resolution regimes of global systemically important banks (G-SIB).
However, progress has been gradual and uneven in a range of critical issues including shadow banking, issues in cross-border G-SIB resolution regimes, consensus on reforms in OTC derivatives reforms.
It is important to identify and address the reasons for delays in these areas. The delays may be due to the usual difficulties in coordinating national bureaucracies or may stem from more fundamental divergences in national priorities. The former would justify a more active G-20 Presidency in pushing for these reforms whereas the latter would require a guarded activism that would be ready to retreat if the divergences are unbridgeable.
There may indeed be fundamental divergences. In the aftermath of the crisis, most western authorities understandably have a regulatory bias due to the previous excesses. In a potential trade-off between financial stability and growth, they are likely to favor the former until a new balance is struck. However, nations that avoided excesses in their financial sectors prior to the crisis are unlikely to have such a clear preference. This is especially true if financial regulation is perceived to be the main culprit in compromising high economic growth that some of these nations are accustomed to.
It is critical for the Russian Presidency to identify and address such conflicting priorities across G-20 members. Otherwise, prolonged and inconclusive G-20 negotiations on certain financial regulatory measures will erode the credibility of future policy initiatives. Alternatively, forcing a reluctant consensus among G-20 members and then facing selective enforcement of agreed norms would be even more detrimental to G-20’s long-tem standing.
Therefore, the Russian Presidency should aim to conclude the remaining financial regulatory discussions that started after the global financial crisis. Areas of jointly committed action should be rapidly implemented. Any policy area of fundamental disagreement should be recognized and possible retreat from previously agreed ambitious policy action should be addressed with candor.
Maintaining clarity of shared purpose and establishing credibility to deliver on shared purpose are important assets for G-20’s long-term relevance and should not be eroded.
II- EXPANDED AGENDA AND EXPANDED OUTPUTS: “CONTINGENCY PLANS” AS INTELLECTUAL ANCHOR
Although the world faces many challenges beyond the financial crisis, ranging from the climate change to food security, none of them seem to have matured to the stage of aligning and focusing national interests for joint action. Actual crises bring interdependence into focus and propel action whereas simmering global problems unfortunately play second fiddle to the competitive landscape of national priorities.
G-20’s agenda has nevertheless expanded into domains beyond financial regulation in the past few years. Bringing globally critical issues like food security, the green economy, development and poverty to the attention of G-20’s leadership is clearly a useful exercise in raising the profile of these global concerns but deriving concrete action has proved to be difficult.
It is critical to have a shared understanding on what is to be achieved by expanding the G-20 agenda to globally important challenges that do not have the focusing power of crises. If the purpose is to achieve concerted policy action as in the finance domain, the aspiration is likely to remain unfulfilled. It may be well-advised to calibrate expectations by grouping these agenda items explicitly under a G-20 output other than “joint policy action”.
For example, agreeing on the need to have global blueprints for action in the face of potential crises in global systems is a practically relevant and necessary intellectual exercise. Reaching a binding agreement on well-defined thresholds for joint action in key global systems would be a useful first step in this exercise. Agreeing on blueprints of action when these crises thresholds are reached in energy, food security or environment would politically facilitate and expedite G-20 action when the actual adverse developments occur.
“Contingency planning” in key global systems is a legitimate output that could engage the G-20 and enhance its credibility and effectiveness in the long-run. It would engender a much-needed sense of global preparedness which would reinforce G-20’s global standing.
Russian Presidency should anchor the expanding agenda of G-20 around an agreed output other than “joint policy action” that could streamline the agenda, encourage the member countries’ enthusiasm, curb unrealistic expectations and advance G-20’s global standing in the long-run.
Limiting G-20 output exclusively to “joint policy action” constrains the potential benefits of the G-20 forum. “Contingency planning” in global systems could be a possible route to expanding G-20’s scope without eroding its credibility.
III- LONG-TERM DEMAND FOR G-20 LEADERSHIP: BUILDING PUBLIC CONSCIOUSNESS OF GLOBAL INTERDEPENDENCE
Trying to manage and resolve complex global systems problems by building consensus among national actors is a difficult process with limited success. As politics is likely to be nationally organized in the foreseeable future, the ambitious but arguably the most promising way forward is to shape a common understanding of global concerns across populations. To the extent that global concerns achieve popular traction, national policies on global issues will be more readily aligned.
G-20 can take an active role in building that public consciousness. Already, the high profile of the meetings with the broad global agenda serves that purpose.
However, a closer analysis of the disconnect between the national citizen and the global agenda as well as the disconnect between national politics and the global agenda could lead to new ideas. Simple initiatives may have unexpected favorable impact on public perception of global issues and hence demand for G-20’leadership.
Creative use of media, shaping and motivating networks and creating new metrics are possible routes to cultivating a growing public consciousness of global interdependence.
For example, how we measure the world is an important determinant of the ensuing political choices. People’s ideas are shaped and guided by metrics used around them. Most current metrics of social well-being are national in nature. National GDP growth, employment, poverty, health and education levels shape national political discourse.
Devising and introducing simple metrics of global well-being into the global popular discourse could have a profound impact. Simply promoting the global counterparts of national measures may not necessarily lead to a deeper consciousness of global dynamics. Intellectual effort would be needed to devise new metrics to capture and advance narratives of global interdependence. New metrics could, over time, reshape public’s awareness, global choices and national politics.
How we measure and numerically express the world may appear to be a detail for G-20. However, initiatives that bridge the gap between individuals and global challenges are likely to have a more lasting effect on G-20’s popular standing than the “grand politics” of global crises.
The mere articulation of G-20’s intent to bridge the gap between citizen’s concerns and global challenges would in itself provide a necessary layer of legitimacy to the G-20 in the global public consciousness.
Crisis-driven legitimacy is likely to provide sporadic surges in G-20’s standing, but a secular trend of increasing legitimacy will demand popular global recognition of the need for its services.