- Current political and economic issues succinctly explained.
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The Group of 20 (G-20) brings together the European Union and nineteen countries that represent the world’s major and top emerging economies. The group was established in September 1999 by the Group of Seven (G-7) industrialized nations, which convenes several times a year to discuss economic issues. It was formed in response to the financial crises of the mid- and late 1990s, with the aim of better integrating emerging economies into international dialogue on financial issues. It initially served as a forum for representatives from national finance ministries and central banks.
The meetings of November 2008, however, attracted G-20 heads of state to confront the economic crisis, producing a communiqué that sought to calm fears and prepare the way for possible collective action. The G-20 includes all the G-7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), Russia (which also meets annually with the G-7 countries in a format for broader political discussions dubbed the G-8), as well as: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, and Turkey. The European Union is also represented, both by its president and the chair of the Eurozone’s central bank.
The G-20 meeting also brings together representatives of large international institutions. They include the president of the World Bank, the managing director of the International Monetary Fund (IMF), and the chairs of the International Monetary and Financial Committee, and Development Committee of the IMF and World Bank.
There are no formal criteria for G-20 membership. Regarding the current composition of the group, the organization says "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 part in determining the group’s membership." The size of a country’s economy was not grounds enough to gain membership. For example, Spain is among the world’s top ten economies, yet is not a G-20 member (Spain did, however, gain an invitation to the April 2 summit in London along with non-member the Netherlands).
Unlike many other international institutions, the G-20 does not have a permanent staff. There is no permanent secretariat. Instead, the group selects a chair that rotates among its twenty members annually. The G-20’s chair is managed as a troika that consists of the current chair, the previous year’s chair and the following year’s chair. The troika members propose agenda issues, suggest speakers, and advise on logistics as needed. In addition, the present chair acts as the temporary secretariat and is responsible for coordinating the group’s work and organizing its meetings. The 2009 G-20 chair is the United Kingdom.
The G-20 has traditionally worked closely with outside organizations such as the Financial Stability Forum, a group that seeks to coordinate financial regulation internationally. The group also seeks ad-hoc advice from both the private sector and non-government organizations.
While the underlying principle of G-20 activity is to achieve consensus, according to the group’s website, there are "no formal votes or resolutions on the basis of fixed voting shares or economic criteria. Every G-20 member has one ’voice’ with which it can take an active part in G-20 activity." This structure, in which each of the twenty member states is equally weighted in its power, has also emerged as a point of contention.
Some experts say the G-20 should weigh its members’ power, much as the IMF does. Among other benefits, this would mitigate discontent among countries excluded from the group of twenty because their counterparts who "just made it in," despite having relatively small economies compared to other G-20 members, would have limited podium power within the group.
Objectives and Meetings
The Group of 20’s stated objective is to serve as "an informal forum that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability."
According to Paul Martin, former prime minister of Canada, who served as G-20 chair from 1999-2001, the group’s meetings "focus on translating the benefits of globalization into higher incomes and better opportunities everywhere." The group plans to accomplish this by agreeing to higher standards of transparency and exchange of information on tax matters, combating abuses of the financial system and illicit activities, including tax evasion, and contributing to the reform of the international financial architecture.
In addition, the Group of 20 has been taking on an informal role in reforming the Bretton Woods system in response to the financial crisis. The April 2, 2009 summit was dubbed "Bretton Woods II" by British Prime Minister Gordon Brown. A draft communiqué obtained by the Financial Times says the meeting has among its aims the reform of international institutions such as the IMF and World Bank; strengthening coordination of financial regulations across borders; taking steps to ensure that capital continues to flow to emerging and developing countries; and reaffirming a commitment not to raise new barriers to trade in goods and services, despite some clear signals of protectionism among group members.
Meetings of the G-20 were traditionally held once yearly. Meeting agendas included discussion on policies for growth, reducing abuse of the financial system, dealing with financial crises, and combating terrorist financing.
The G-20 also includes a deputies’ process which lays the agenda ahead of meetings of finance ministers and central bank governors. The deputies meet at least twice a year before the annual meetings of finance ministers.
Since the G-20’s founding in 1999, the group’s yearly meetings have shifted focus. In 2005, under China’s chairmanship, the group opened discussion of reforms to the international institutions developed at the 1944 Bretton Woods conference-the IMF and the World Bank. In response to the financial and economic crises of 2008 and 2009, the group broadened its agenda and held more frequent meetings. In late 2008, Former President George W. Bush and French President Nicolas Sarkozy initiated a summit in Washington, D.C., bringing together heads of state-not finance ministers-for the first time in the group’s history to address the global financial crisis. In addition to the agenda-heavy April 2009 summit, the group is expected to hold more such meetings during the course of 2009.