Growth is currently the overarching priority for the world economy. It is therefore the core interest of the world leaders, as reflected in the main statements of international economic organizations and global forums, as well as in almost all the economic agendas of developed countries.
This is particularly relevant as national leaders tend to engage on a global level only insofar as they can relate to their domestic priorities and constituencies, especially when there is no compelling crisis like that of 2007/08, when the G20 countries perceived they were 'all in this together'. The same focus on restoring global growth was expressed by IMF Managing Director Christine Lagarde during the recent Spring Meetings, as she stressed that the global economy is running at 'three speeds' – with 'those countries that are doing well, those that are on the mend, and those that still have some distance to travel' in order to recover.
The emphasis on the need to restore growth has always been a motto of the G20, with its commitment to establish a Framework for Strong Sustainable and Balanced Growth as agreed at the 2009 Pittsburgh summit. Today, restoring growth in the global economy is the common thread linking the agendas of the forthcoming G8 and G20 summit meetings. The UK’s priorities for its G8 presidency in 2013 are helping generate growth, jobs and prosperity for the long term. To achieve this the officially stated focus will be on 'open economies, open governments and open societies to support free trade, tackle tax evasion and encourage greater transparency and accountability'. Similarly, the three overarching themes of this year's Russian G20 presidency are growth through effective regulation, through job and investment creation, and through trust and transparency. Even though the G20 Sherpas who gathered on 11 May in St Petersburg still have not indicated particular measures to be discussed in this year’s Leaders' Summit, the primary focus is tackling low growth and demand support.
Is this enough to bridge the gap between the two forums?
The current convergence on priorities does not resolve the long-standing issue of whether the forums can find common ground and effectively work together, as they have fundamentally different aims. The G20 is mainly a financial forum and the G8 is driven by the aim of ensuring a more liberal and democratic order. The question is therefore whether this convergence can bridge the gap and put them on a common track, as happened in Toronto in 2010. Other signals of a possible step in this direction might be the return of the G8 to discussing the finance and economic agenda and, on the other hand, the broadening of the G20 agenda to include, among others, social, development and climate change issues. The G20 has indeed defined itself as the ‘premier forum for economic cooperation’, albeit not the only one.
A certain degree of convergence, none the least at the official level, is expected this year and has already been expressed in a meeting between UK Prime Minister David Cameron and Russian President Vladimir Putin on 10 May. The two leaders stressed their agreement to 'coordinate their approaches' not only for this year’s respective presidencies, but also, importantly, when Russia takes over the G8 presidency from the UK in 2014. The success of such coordination can be assessed after the June G8 summit in Lough Erne, Northern Ireland, and the September G20 meeting in St Petersburg.
The G7 and Russia: the ones to watch
The requiem for the G7 was sung too early. Contrary to general perceptions, the Group of Finance Ministers and Central Bank Governors of the seven most industrialized nations has been responsible for emergency liquidity injections, coordinated exchange rate intervention and quantitative easing in monetary policy, even after the G20 was elevated to the leaders' level in 2008. It is now even more firmly back in the game of global summitry. The informal G7 gathering that took place on 11 May in Buckinghamshire reinvigorated the role and prominence of these seven countries in monetary issues (and therefore in the real economy). Ministers and governors reaffirmed their commitment not to use economic policy to seek weaker currencies. All eyes were on Japan's monetary policy intervention and quantitative easing, which was accepted as 'oriented towards meeting domestic objectives using domestic instruments', and not towards targeting exchange rates, in the sense of devaluating the yen on international currency markets.
There has been wide debate on whether the failing importance of the G20 summitry has been caused by the lack of a compelling reason to act (as the crisis had clearly provided) or, possibly even more, by the failure of BRICS countries to adopt a leadership role within the group. As chairmanship is an indicator of ownership, Russia finds itself in a unique position, as it is the first BRICS country to host the G20. This follows its hosting of the APEC summit in 2012 – and it will not only hold the G8 presidency in 2014 but host the BRICS summit the following year. Russia’s crucial role in the interplay of the different forums and in setting and steering the global summitry agenda could lead to increased legitimacy and collaboration among them, and to a more effective international dialogue and cooperation between advanced and emerging economies.
Whether this window of opportunity will help non-G7 members feel more included is too early to assess, especially given the evolving structure of the global summitry system. So far we have witnessed a general trend of collaboration within the Troika system, small practical steps such as the co-chairing of working groups by an advanced and an emerging member, and a certain degree of streamlining of the main priorities (growth and jobs) for the presidencies to address. Russia may therefore embrace the responsibility to improve the sense of ownership at the G20 level.