memoria towards the g20 leaders summit...1 towards the gtowards the g- ---20 leaders’ summit20...

1

TOWARDS THE GTOWARDS THE GTOWARDS THE GTOWARDS THE G----20 LEADERS’ SUMMIT20 LEADERS’ SUMMIT20 LEADERS’ SUMMIT20 LEADERS’ SUMMIT

Online discussion forumOnline discussion forumOnline discussion forumOnline discussion forum

Instituto Matías Romero, SREInstituto Matías Romero, SREInstituto Matías Romero, SREInstituto Matías Romero, SRE

April 23April 23April 23April 23----May 2, 2012May 2, 2012May 2, 2012May 2, 2012

With the participation of:With the participation of:With the participation of:With the participation of:

Deanne Leifso, Paola Subacchi, Thomas Fues, Barry Carin, Deanne Leifso, Paola Subacchi, Thomas Fues, Barry Carin, Deanne Leifso, Paola Subacchi, Thomas Fues, Barry Carin, Deanne Leifso, Paola Subacchi, Thomas Fues, Barry Carin,

and Monica Wihardjaand Monica Wihardjaand Monica Wihardjaand Monica Wihardja

2

ContentsContentsContentsContents

PagePagePagePage

Day 1. TheDay 1. TheDay 1. TheDay 1. The GGGG----20’s Relationship with International Financial Institutions20’s Relationship with International Financial Institutions20’s Relationship with International Financial Institutions20’s Relationship with International Financial Institutions 3333

Moderator: Deanne LeifsoModerator: Deanne LeifsoModerator: Deanne LeifsoModerator: Deanne Leifso

Day 2. Day 2. Day 2. Day 2. Economic stabilization and structural reforms as foundations for growth Economic stabilization and structural reforms as foundations for growth Economic stabilization and structural reforms as foundations for growth Economic stabilization and structural reforms as foundations for growth 11117777

and employmentand employmentand employmentand employment

Moderator: Paola SubacchiModerator: Paola SubacchiModerator: Paola SubacchiModerator: Paola Subacchi

Day 3. Day 3. Day 3. Day 3. The development agendThe development agendThe development agendThe development agenda of the Ga of the Ga of the Ga of the G----20202020 22229999

Moderator: Thomas FuesModerator: Thomas FuesModerator: Thomas FuesModerator: Thomas Fues

Day 4. Day 4. Day 4. Day 4. How can the "informal" GHow can the "informal" GHow can the "informal" GHow can the "informal" G----20 process be made more effective?20 process be made more effective?20 process be made more effective?20 process be made more effective? 44449999

Moderator: Barry CarinModerator: Barry CarinModerator: Barry CarinModerator: Barry Carin

Day 5. Day 5. Day 5. Day 5. Security and commodity price volatilitySecurity and commodity price volatilitySecurity and commodity price volatilitySecurity and commodity price volatility 77772222

Moderator: Monica WihardjaModerator: Monica WihardjaModerator: Monica WihardjaModerator: Monica Wihardja

Day 6. ConclusionsDay 6. ConclusionsDay 6. ConclusionsDay 6. Conclusions 99999999

3

Day 1. Day 1. Day 1. Day 1. TheTheTheThe GGGG----20 and the IF20 and the IF20 and the IF20 and the IFIsIsIsIs. Moderator:. Moderator:. Moderator:. Moderator: Deanne LeifsoDeanne LeifsoDeanne LeifsoDeanne Leifso, Project Officer at the , Project Officer at the , Project Officer at the , Project Officer at the Centre for International Governance Centre for International Governance Centre for International Governance Centre for International Governance

InnovationInnovationInnovationInnovation

Deanne Leifso:Deanne Leifso:Deanne Leifso:Deanne Leifso:

Good morning and welcome to the first day of online discussions on major issues related to the G-20. Before we begin I’d

like to thank the Instituto Matías Romero for inviting me to be a guest moderator for today’s discussion on the G20’s

relationships with international financial institutions (IFIs). If you’d like to learn more about CIGI, where I am the

coordinator of our G20 research program, and our work on these issues please visit: http://www.cigionline.org/.

Following up on the Spring Meetings of the IMF and World Bank and the meeting of G20 Finance Ministers, hopefully we

can focus particularly on the roles, responsibilities and relationships of the IMF, World Bank and the Financial Stability

Board.The communiqué is here.

Related articles:

• http://www.theglobeandmail.com/report-on-business/international-news/latest-g20-meeting-introduces-new-

way-of-doing-business/article2409248/

• http://www.nytimes.com/2012/04/23/business/global/agreement-on-a-global-firewall-but-little-beyond-

that.html?_r=2&ref=business

• http://www.telegraph.co.uk/finance/financialcrisis/9219919/Interactive-graphic-breakdown-of-the-IMFs-new-

430bn-firepower.html

To start the discussions today, I’d be interested in learning more about your initial reactions to last week’s developments.

In your opinion, were the meetings successful; how much progress was made? The Managing Director of the IMF,

Christine Lagarde, had hoped to achieve another “London moment”. Did we see that in Washington last week? What does

last week’s debate over IMF resources mean for the G20?

4

Deanne

(Please note that all opinions expressed today are mine alone and do not necessarily reflect the views of CIGI.)

Miriam Gabriela Medel GarcíaMiriam Gabriela Medel GarcíaMiriam Gabriela Medel GarcíaMiriam Gabriela Medel García,,,, from the Embassy of Mexico in Germanyfrom the Embassy of Mexico in Germanyfrom the Embassy of Mexico in Germanyfrom the Embassy of Mexico in Germany: : : :

It was a success in the sense that at the end, Ministers were able to agree and actually deliver the much needed additional

funding for the IMF to effectively counter negative effects of the European crisis.

An interesting development, which will undoubtedly start showing more and more often before Los Cabos, is the

increasingly important role of the emerging economies, not only BRICS but Mexico and South Korea for instance as well,

in the decision-making process within the financial institutions.


The point of the additional funding was to strengthen the global firewall, which is supposed to instill confidence in markets

but already this morning stocks fell sharply over new worries about Europe. What if $430bn worth of firepower isn’t

enough? It’s interesting to note as well that the US and Canada withheld funding for political and ideological reasons

(interpreted as cracks in G20 unity?).

If we look at the confirmed contributors and expected contributors diagram via that Telegraph link, emerging economies

are stepping up to the plate. I agree with your point, beyond funding commitments, the emerging economies are playing an

increasingly important role in the decision-making process.

5

In media coverage during the meetings, the Indian Finance Minister commented that they didn’t see financial contributions

being linked in any way with future voice or governance reform. Whereas the Brazilian Finance Minister was widely

quoted on the need to tie cash with fresh pledges of more IMF voting power for emerging nations to recognize their

growing clout on the international financial stage. What, if anything, can emerging powers within the G20 do to speed up

these voting reforms? What/who are the main stumbling blocks? The issue of IMF voting reform has been discussed at

every G20 Leaders’ Summit and yet little progress has been made. There are some important deadlines this year and

next.

Julio César Escobedo FloreJulio César Escobedo FloreJulio César Escobedo FloreJulio César Escobedo Flores, from the Embassy of Mexico in Greecs, from the Embassy of Mexico in Greecs, from the Embassy of Mexico in Greecs, from the Embassy of Mexico in Greece:e:e:e:

According to the Telegraph's diagram, more than half of the resources pledged to the IMF come from EU members

(Eurozone and others).

Apparently, the developed G-20 economies are waiting for a deeper commitment from the emerging ones (particularly

BRICS) to advance in the Governance reform.

Mexico's last year strong effort to change the IMF leadership selection or current confirmed pledges of resources

from non-BRICS emerging economies (e.g. South Korea, Singapore, Saudi Arabia) are some examples of what has been

doing to speed up the governance of IFIs.

BRICS economies need to work unity and coherence. Not only have they shown differences in the negotiations of gaining

voice at IFIs, but also in other G-20 core issues, such as trade liberalization (Doha Round).

Julio César Escobedo Flores, from the Embassy of Mexico in GreecJulio César Escobedo Flores, from the Embassy of Mexico in GreecJulio César Escobedo Flores, from the Embassy of Mexico in GreecJulio César Escobedo Flores, from the Embassy of Mexico in Greece:e:e:e:

I agree on the idea that the IMF meetings were successful. At the end, Finance Ministers and Central Bank Governors

reached the goal of building a $430 billion or plus firewall to expand the role of the IMF as an international lender.

However, given the lack of additional American (and, for instance, Canadian) contributions, it's not accurate to talk about

another "London moment". Those Governments keep insisting on the responsibility of Europe to solve its own debt crisis.

6

I consider that G-20 members, under the IMF umbrella, should promote a common approach to the Eurozone crisis. If the

G-20 is to prevent the rest of the world from spillovers from the Eurozone indebtedness, it has to deploy inclusive

reactions. A wide participation in the pledges of resources to the IMF -including BRICS, as Miriam suggests- would better

reminded another "London moment".

In general, the IMF communiqué text reflects the process of strengthening the IMF in which the G-20 engaged since

London. It's interesting to see how the IMF has enrolled itself in transversal issues such as Food Security, Climate Change

(through the Green Climate Fund), Disaster Risk Management, and so forth.


But do G20 members have a common approach on how to respond to the Eurozone crisis? If last week’s debate at the IMF

tells us anything, it’s that there is no common stance. There remained differing opinions on what the new pledges meant

and how they should be used, and many countries remained on the sideline. If they can’t agree in the IMF on how to

proceed, will they be able to reach a common consensus in Los Cabos?

I agree that the communiqués are positive, Julio, but I find the difference between G20 statements and actions quite

interesting, particularly in the area of IMF reform. The G20 members commit themselves to reform but not all of the

members have “done their homework”. See here and the attached pdf (if it works). Ted Truman had a piece last week that

also looked at the failure of the G20 to implement agreed IMF reforms (found here). I’d like to return to my previous

questions: What, if anything, can emerging powers within the G20 do to speed up these voting reforms (particularly

Mexico as the host)? What/who are the main stumbling blocks?

Later in the day I’ll turn the discussion towards the work of the IFIs and how they relate to the G20 agenda (good points

worth of discussion, Julio).

7

Rodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the Direction----General for North AmericaGeneral for North AmericaGeneral for North AmericaGeneral for North America: : : :

Hello,

It is interesting to see that, even though, Mexico was chairing the meeting, and will be the host of the G20 Summit, the

Telegraph chart does not includes Mexico in the chart. I looked online and see how much our country will contribute and

there are some reports that the figure will be around 10 billion dollars.

In multilateral affairs, and I believe particularly in groups as new as the G20, everybody will always mention that they

support the general agenda of the group, but, as Mrs. Leifso mentioned, not everybody is doing their homework back

home.

I believe the announcement of new contributions is a good sign and will lead to a more focused discussion regarding the

increase responsibility (and votes) inside the IMF.

Regarding the US, 2012 is an election year, and I have following the process and there is, particularly among Republicans,

the idea that US should reduce their foreign assistance, including contributions to IFI, to reduce the deficit. any pledges to

increase the contributions would definitely be a campaign topic, something that the Democrats and Barack Obama would

not want at this time. The interesting question is whether their reluctance is because of this year´s politics or there are

deeper questions. One thing that is clear how the G20 is changing the dynamics of international affairs, particularly in the

financial arena.

Rodrigo

8


My take was that, on the surface, the US wasn’t contributing funds due to the challenges of a difficult Congress in an

election year. The G20 gave the IMF a deadline of the 2012 IMF and World Bank Annual Meetings to implement the first

step of IMF reform. These meetings are held before the US election making it unlikely that President Obama will accept

the amendments on reform of the Executive Board.

Rodrigo made a good point that politics may only be part of the reason for their reluctance. As was mentioned earlier,

Canada didn’t contribute funds either to make a statement about how the IMF decision-making structure

disproportionately favours European countries. Most of the BRICS are sending the same signal that they want change and

are flexing their muscles by tying strings to their cash contributions. I think we can all agree that the dynamics within the

G20 are also changing, which in turn is effecting the dynamics of the relationships between the G20 and the IFIs.

During last year’s IMF leadership selection process, it was encouraging to see some G20 countries, Mexico and Canada

included, back the non-European candidate. Do you think this momentum was diminished when many G20 countries-

Japan, Canada, Russian, Mexico and South Korea included- backed the US World Bank nominee?

Deanne

Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru: Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru: Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru: Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:

Taking politics into consideration, I find it particularly revealing that three countries members of the G20 will have

elections this year, including the host. By June, only France's election will be decided, so it will be interesting to see if

agreements made by then are in any way reconsidered by France's government.

Regarding the momentum for leadership at the IFI's, I do think it was diminished when many G20 countries-particularly

9

Russia, Mexico and South Korea- backed the US World Bank nominee. It again turned into a political process and the

status quo continued because the qualifications fo the candidates became a second consideration instead of the priority.

Deanne LeifsoDeanne LeifsoDeanne LeifsoDeanne Leifso: : : :

It often seems that politics trumps economics. This will continue to be a challenge for the G20 members and IFIs. Exciting

headlines often over-shadow a lot of the good work that these organizations do too. Speaking of which, I had hoped to get

more into a discussion on the work of the IMF, World Bank and especially the Financial Stability Board (a product of the

G20 process) on economic policy coordination and other items related to Mexico's agenda but I have to sign off for the

day. Hopefully we can tackle some of these issues next week on the wrap-up day. If you have an opportunity, I encourage

you to peruse my lengthy suggested bibliography. Thank you again to the organizers and to today's participants.

Deanne

Beatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCO::::

Actually, as Deanne points out, one of the major issues (not yet accomplished), since the Washington summit was the

reform on the governance of IMF and World Bank. Little progress has been achieved so far, including in the selection of

the heads of these institutions.

Although the commitments reached in Seoul concerning changing the votes and seats at IMF, there is no much hope that

the timeline will be respected.

This is the reason why BRICs are holding the announcement of their contribution of this new firewall for the IMF. From

my point of view, this will be the only way to force the implementation of the so pledged reforms.

10

Although there is an increasing recognition of the importance of emerging economies in the international economic

system, there is still a lot of reluctance from US, Europeans and Canada to give up the decision power they have in the

international financial institutions.

And indeed, even if there is political commitment from the part of some countries, let's bear in mind that this is an

electoral year in many places.


Shifting gears beyond the Spring Meetings and amped up firewall, how do the IMF and the World Bank work to support the

G20 agenda? What are some of the actions/work that has been commissioned in the past? How are they supporting the

work of the Mexican presidency in the run up to the June summit? In your opinion, what more could be done?

Deanne LeifsoDeanne LeifsoDeanne LeifsoDeanne Leifso::::

The IFIs appear to contribute (or get called to contribute) in the areas where they have established expertise. What areas

could benefit from more joint analysis? Eg. the World Bank is doing a lot of work on financial inclusion. Does working

together benefit all parties?

11

Deanne LeifsoDeanne LeifsoDeanne LeifsoDeanne Leifso::::

Two further issues to consider before the end of the day:

1/ The IMF and World Bank have 'ex officio' status at the summits to give the G20 a degree of independence. The G20 has

no legal standing and has no formal link with the multilaterals. The reform of global financial institutions has been a major

theme at every G20 Leaders’ Summit (with some success). I think it’s important to discuss whether or not it’s legitimate

for the G20 members to call the shots on IMF and World Bank reform, taking into account the fact that the G20 was

created at a time when the existing organizations failed. Many low-income countries are discouraged by their lack of

voice in the G20 and are concerned with the “G20-ization” of these traditional multilaterals.

2/ I think the emerging players are smart to tie strings to their much-needed contributions. It’s about shifting the balance

of responsibility and votes within the IMF while arming it with the resources to tackle the challenges of the global

financial crisis. If the G20 is going to give tasks to the IMF, World Bank and Financial Stability Board, these institutions

need resources to complete the job. The BRICS especially might have to pay to play if they see the role of the IMF, World

Bank and FSB as valuable. Will EU and American heavy-weights allow for voting to be strictly proportionate to countries’

economic output? Could we see a divide in the G20 between BRICS and G7 on this in the coming months in Mexico and in

Tokyo?

Julio César Escobedo Flores, from the Embassy of Mexico in Greece:Julio César Escobedo Flores, from the Embassy of Mexico in Greece:Julio César Escobedo Flores, from the Embassy of Mexico in Greece:Julio César Escobedo Flores, from the Embassy of Mexico in Greece:

I find the issue of the G-20 legitimacy as the adequate body to address the governance reforms of IFIs quite interesting.

When I was posted in Nicaragua, I remember there were many governmental officials who criticized the Group for being

an exclusive forum. They believed the global economic governance should be discussed in the United Nations instead.

12

However, the Mexican presidency has reiterated that the G-20 does not pretend to supplant other multilateral

organizations, but to enrich and facilitate their work.

In his article, Edward Truman remembers us that G-20 members hold a great majority of the votes needed at the IMF to

meet the Seoul commitments. Therefore, I think the Group has enough legitimacy to make the reforms a reality.

On the other hand, if the decision-making process of the G-20 leaders is highly string attached to electoral conjunctures

and Legislative approval, would not be better to avoid deadlines and privilege confidence measures. At least, it would

forestall a future G-20 fragmentation.


I'd just like to jump in one last time to stir up the discussion and add that there's a difference between legitimacy and

power. The G20 has the economic power, but that doesn't necessarily mean that it has the legitimacy to dispense

economic reforms for global institutions. And who holds the power at the UN? It is the same cast of characters.

Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:Sylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:

On the issue of legitimacy and representation as well as the Mexican government as host, I'd like to also point out that

there are representative countries that have been invited to attend this year's event. Two Latin American countries

(Colombia and Chile) are on that list and at the recent meeting of Ministers of Economics and Commerce, Peru was also

there. This could in a way represent the importance that the region is taking and it could also increase the legitimacy of

the forum.

Judith Marcia Arrieta Munguia, from the Mexican Mission for International OrganismsJudith Marcia Arrieta Munguia, from the Mexican Mission for International OrganismsJudith Marcia Arrieta Munguia, from the Mexican Mission for International OrganismsJudith Marcia Arrieta Munguia, from the Mexican Mission for International Organisms: : : :

13

hello Deanne, a few comments:

I think Mexico has put new ways of negotiating in the G20: 1) the finance ministers communiqué shows some deliverables

that are "kept" until Los Cabos from G20 countries that can change the actual balance; 2) at the same time the G20 trade

ministerial put in some fresh air and commitments vs. the blockage of Doha; 3) G20 foreign affairs ministerial meeting

focused on global governance. This holistic approach may be useful to tackle the political factor, always present: gains in

one arena, could help as trade off in the other. Holding money for the IMF may ease Europeans to give more than 2

positions and focusing on financing for LDC, as Mexico has proposed, may diminish excuses of Canada from increasing the

IMF funds, an eventually the US.

Mexico has the cop16 diplomatic bonus, as well as strong beliefs in multilateralism, though with pragmatic small

approaches, and is now playing against time to reach agreements in June, but knowing it can still tie commitments in the

following months: just before the next IMF's meeting in October, as it did last week.

Beatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCOBeatriz Hernández Narváez, from the Mexican Mission for UNESCO: : : :

On the first issue. I think that actually because on the way the G20 was created, it is completely normal that it makes a

call for reform on IMF and WB. Let's remember that G20 was established in 1999 with the main aim of fostering global

financial stability through cooperation among major economies but also through the reform of the global financial

governance. And that included, of course, the IMF and the WB.

The communiqué of 1999 (para 2) states "The G20 was established to provide a new mechanism for informal dialogue in

the framework of the Bretton Woods institutional system, to broaden the discussions on key economic and financial policy

issues among systemically significant economies and promote co-operation to achieve stable and sustainable world

economic growth that benefits all".

On the other hand, it is true that there is malaise from what some called "limited or unrepresentative membership" of the

G20. Nevertheless, as some of my colleagues already mentioned, the G20 is doing outreach. Not only invites other

countries to its meetings (like it is now the case of Los Cabos Summit), but it is also establishing relationships with other

regional bodies (both formal or informal) and working closely with global institutions (like OECD) and the UN system.

14


Hello. My initial reaction is that the meetings were successful for two reasons. First, on an initial impression international

financial governance is shifting. Emerging economies are willing to contribute to solving the crisis in Europe, which in a

sense illustrates this “Washington moment”; they see the crisis looming ahead in full force, thus completely different

actions have to be taken (i.e. emerging economies contributing to bailing out developed ones). Second, the $430 billion

was raised without the help of the largest economy on earth. This clearly portrays emerging economies struggle to get

more of a say in international financial institutions. Now that they have said they will contribute, albeit Russia, China and

Brazil did not mention a figure, besides their macroeconomic stability and figures, now they also have a contribution to the

institutions that will back their claim for more of a say.

What this means for the G20 is especially interesting. First, it means that the G20 is becoming the multilateral forum

where financial decisions on the IFI’s will be taken having the legitimacy that it represents over 80% of the global

economy. Second, and as one of the articles mentions, this meeting showed that even if the White House is not on board,

substance is agreed upon. These two aspects illustrate the unpredictability and difficulty around which decisions on IFI's

will be surrounded by. They will no longer be guided by one country’s internal and external interests but by the many

interests of large emerging economies.


Very insightful response. Thank you for sharing, Sylvia. I wonder what your thoughts are on the recent leadership race for

the World Bank. Clearly the US still holds some sway and will until/if it decides to relinquish some power. See point #2 in

my previous comment.

Here’s the breakdown on IMF quota and board reform:

“For the proposed quota increases under the 14th General Review of Quotas to become effective, members having not

less than 70 percent of the total of quotas on November 5, 2010 must consent to the increases in their quotas and the

15

proposed Board Reform Amendment must have entered into force. The proposed Board Reform Amendment enters into

force once the Fund certifies that three-fifths of the members (i.e., currently 113 members) representing 85 percent of

the total voting power have accepted the proposed amendment.”

Here are the quota and voting shares for IMF members: http://www.imf.org/external/np/sec/memdir/members.aspx. I

shared a link and pdf earlier that show who has voted for what. The wallets of emerging economies may have some

influence (especially with Europe) but do they have enough leverage with the US in an election year?


Definitely the US still holds some, if not a lot, of sway. The election of the leadership at the World Bank is clearly an

example. But it seems to me that the sway is shifting towards the emerging economies, however slow this shift may be,

signals are appearing.

Rodrigo Alberto Azaola Illoldi, from the Embassy of Mexico in New ZealandRodrigo Alberto Azaola Illoldi, from the Embassy of Mexico in New ZealandRodrigo Alberto Azaola Illoldi, from the Embassy of Mexico in New ZealandRodrigo Alberto Azaola Illoldi, from the Embassy of Mexico in New Zealand: : : :

Sorry for this late response but time difference is not really helpful.

In regard to the point raised about legitimacy and power it is my opinion that one of the breakthroughs that IFI´s should

accomplish is precisely how to accommodate the interests and goals of emerging economies, for example in terms of a

bigger vote share, with its overall legitimacy.

The IMF success of raising 430 b. USD (or 360 b. USD) seems to be small to contain the already spilling Spanish crisis.

And the challenge is how to give legitimacy to a set of institutions that are already behind the shift of power from

developed to emergent economies in the context of the bail out of Europe. Beyond that, is understandable why countries

are having second thoughts on giving away resources towards an institution which first short term task will be an

economical zone bonded by strong austerity and structural problems linked to domestic politics.

How then to stabilize and reform the power sharing structure of IFI´s in the context of its diminished legitimacy? Here is

where the G20 could play a key role in revamping, as someone mentioned with a holistic approach, the need for more

16

inclusiveness, in countries, topics and power sharing, into the IFI's to-do list. Easier to do than say or course if only the

gap between the BRICS and the G7 wouldn’t appear to grow with each summit and the European fiscal pact would be

seriously considered regardless domestic politics as for to be implemented on schedule.

17

Day 2. Day 2. Day 2. Day 2. Economic stabilization and structural reformsEconomic stabilization and structural reformsEconomic stabilization and structural reformsEconomic stabilization and structural reforms. . . . Moderator: Paola Subacchi, Research Director of the Moderator: Paola Subacchi, Research Director of the Moderator: Paola Subacchi, Research Director of the Moderator: Paola Subacchi, Research Director of the

International Economics Research at International Economics Research at International Economics Research at International Economics Research at Chatham HouseChatham HouseChatham HouseChatham House

Paola Subacchi: Paola Subacchi: Paola Subacchi: Paola Subacchi:

Hello and welcome to the online forum 'Towards the G20 Leaders Summit'.

Today's topic is Economic stabilisation and structural reforms as foundations for growth and employment.

I would like to start our discussion by asking to highlight the main risks to the outlook for the world economy this year.

Last week Christine Lagarde spoke of fragilities even in economies that seem to grow robustly. Do you see risks that

could derail the world economy and could require the G20 to act, once again, as the 'crisis committee' ( or the

international 'firefighter')?


According to the World Economic Outlook of the IMF (January 2012), global recovery is threatened both by strains in the

zone euro (mainly by the situation in Spain) and because of a slower growth in emerging and developing countries.

On the other hand, OECD Interim Economic Assessment says the G7 economies are projected to grow by 1.9 percent in

both the first and second quarters of 2012, although a strong variance in outcomes is expected. While the US and Canada

will have a more robust growth, situation in Europe remains fragile (weak consumer confidence, high unemployment and

tight credit), even in the three most important economies.

Other factors are also threaten the recovery such as rising of oil prices, weakening activity in emerging market

economies, notably China, and a slowdown in world trade growth.

18

So far, and in order to cope with this situation, the increased resources pledged for the IMF gives some confidence both

for crisis prevention and/or resolution. The real question is how much countries will put in place the fiscal and structural

reforms that address the real causes of such crisis, as is the case of Europe. In that sense, I see G20 role mainly focused

on monitoring its own commitments regarding fiscal, financial, structural, monetary, trade and development policies.


This year's world economic outlook seems to be threatened again by the highly indebtedness European countries. Those

economies lack either banking liquidity or state solvency, which have proven to be positively related to economic growth.

Despite the firewalls built by the Eurozone and IMF, there is no guarantee Spain, Italy or Greece will adequately

implement their fiscal adjustments to reduce debt and public deficit. For instance, It's hard to build a long-term growth

while cutting spending.

That uncertainty tends to spread across stock markets, generating a global economic risk. Therefore, it's imperative to

the G-20 to act in order to diminish it, even though the risk has a regional origin.

But, there are other risks threatening today's global economy: exchange rate corrections and increasing protectionism.

These policies are more common in the emerging world (e.g. China, Brazil). Both have a negative impact in

competitiveness, job creation, and financial stability.

Miriam Gabriela Medel García, from the Embassy of Mexico in GermanyMiriam Gabriela Medel García, from the Embassy of Mexico in GermanyMiriam Gabriela Medel García, from the Embassy of Mexico in GermanyMiriam Gabriela Medel García, from the Embassy of Mexico in Germany: : : :

As indicated by both Bety and Julio, market volatility, increase in the prices of oil, protectionism and a profound monetary

crisis in Europe are, among others, factors that do put international stability at stake.

It is also very clear that the G20 has the responsibility and the power (and increasingly the legitimacy) to act towards

economic stabilization. The issue is, as Bety pointed out, how are the G20 economies comply with and account for their

own commitments, especially with reference to fiscal regulations.

19

On the other hand, it is important for the G20 to look beyond the "crisis agenda" of the current times and give steps

towards medium and long term solutions to the very problems that have led us to live such a crisis. In that sense, one of

the priorities of the Mexican Presidency - the promotion of green growth - seems to aim at that goal. Hopefully concrete

results will come out if its discussion, at least in the form of a platform for action with measurable variables and goals.

It will be interesting to see how the group balances its call to attend to acute crises and a more structured, long-term

oriented type of role in the international economy.

Paola SubacchiPaola SubacchiPaola SubacchiPaola Subacchi: : : :

In 2009 the G20 launched the framework for 'strong, sustainable and balanced growth and became the key forum for

economic and financial affairs. This means that the G20 should evolve into a permanent committee from a crisis

committee, focusing more on long-term structural issue. Lot has been done in this sense in the last couple of years, and

the work that the G20 is doing with the support of the IMF for rebalancing the world economy is evidence of this.

However, the yet unresolved crisis continues to put the G20 on the spot as the firefighter. However, unlike in 2008-2009,

the crisis is now European, as opposed as to global. No matter the spillovers from the Eurozone to other countries in the

case of a recrudescence of the crisis. Countries no longer 'dive together', and this considerably reduces the scope for

maneuvering and the policy impact of the G20.


I believe the major risks to the outlook of the world economy this year are definitely related to the cuts in spending of the

European governments and its debt crisis. For example, and in a very illustrative event regarding the risks for the global

economy, newspapers today talk about the recession that Spain now finds itself in: Spain has now announced officially that

its economy is in recession. Another illustrative event found in the news today is the demission of the government in the

Netherlands because of lack of support for cuts in spending. Europe, to me, is clearly the biggest risk and repeat of what

happened in Greece in Spain is something that could require the G20 to act once again as the “crisis committee”.

Emerging economies, on the other hand, do seem to show fragilities, but I do not believe them to have the biggest risks.

20

Despite the fact that China’s growth is not as significant as it used to be and protectionism in Brazil and Argentina is

evident, in my view the G20 should prioritize the events in Europe more than the fragility some emerging economies seem

to be exhibiting.

Amado Trejo Romero, from the Consulate General of Mexico in ShanghaiAmado Trejo Romero, from the Consulate General of Mexico in ShanghaiAmado Trejo Romero, from the Consulate General of Mexico in ShanghaiAmado Trejo Romero, from the Consulate General of Mexico in Shanghai: : : :

My colleagues have already mentioned some of the main risk in the world economy. In Europe and the US there are high

unemployment rates, fiscal deficits, growing public deficits, lack of confidence in their currencies (mainly in the euro and

the dollar), restricted credits and consumption, discrete economic growth predictions, rising protectionism in trade.

Growth in China and other emerging economies oriented to exports is slowing mainly because of the lack of demand from

their main imported markets, the US and Europe, despite some increase in the so-called south-south trade and

investment. These countries need to change their economic model to balance their dependency on the external markets by

increasing their internal demand. We might also consider the fact that some countries have not only national public deficits

but also massive state or provincial deficits (Eg, China, Mexico and the US) that could affect the macroeconomic stability

of some countries in case of an abrupt economic crisis.

However, there is another risk that could affect the world economy in the coming months that will cause uncertainty in

both the international and the national levels: political change in countries like the US, México, France and China. Will new

governments have the political and economic leverage as well as the support from their main national players to back up a

G20 crisis committee model which will reach to focus their efforts on solving international problems rather than their own

national problems first?

It seems that the current main risks at the world economy come from the G20 countries. Therefore, it should be on the

best interest of the the G20 countries to act as a crisis committee to avoid bigger economic and social issues in the

coming months.

21


Because the G20 represent around 80% of the global GDP they include most problematic countries/regions. Therefore

they should act together in their own interest. The G20 can certainly act as crisis committee as they have the capacity to

bring key economies around the table and so discuss problems and solutions. This is what happened in 2009 with the

London Summit. The G20 should also take a broad look at the global economy to identify areas where policies need to be

coordinated. One example of this is exchange rate policies and trade balances. The global financial crisis has shown how

interconnected the national economies are and how quick shocks are transmitted throughout the system. The recent

spillover report published by the IMF shows how much more attention is now paid to interlinkages and their impact. This

work has been promoted by the G20 as well as the mutual assessment process (MAP) where countries should assess their

economic outlooks against some guidelines set by the G20 last year. This is a good step towards the direction of

becoming a 'permanent' committee


It is true that there is more and more exchange of information and cooperation among the G20 countries to implement

some guidelines as the MAP and it is a good sign to develop a permanent structure. However, there are still guidelines.

The real challenge is to reinforce those guidelines among the G20 countries. How will countries reinforce them? Who will

have the authority to reinforce them? Will G20 countries propose to create another multilateral organization or will they

recommend to act as a special committee inside the IMF?


I don't think there is any wish to turn the G20 into a special committee within the IMF. I think that the current format with

the IMF providing research and technical advice to the IMF works well. How to implement the guidelines? MAP, that is a

22

peer review process and has been designed to replace the classic IMF surveillance, should help countries to assess the

compliance with their designated goals and so help them to stick to committed objectives.


Indeed, I think that "peer review" is a good tool for G20 to ensure compliance on commitments. This works very well in

some international organizations, like OECD, where this "soft power" is of paramount importance for countries.

Rodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the Direction----General for NoGeneral for NoGeneral for NoGeneral for North Americarth Americarth Americarth America: : : :

It is interesting to notice that unlike the economic crises of developing countries in the 1990s (Mexico, Southeast Asia,

Argentina, Brazil, Russia), the 2008-2009 recession and the current Eurozone troubles have not had a big effect on

currency values, with a few exceptions.

I would think this could be in part of the more flexible exchange rates of most countries now (as compare to the past), that

offers less opportunities to make a profit by currency speculators (a la Soros with the British pound). Another reason

could be a the closer economic policy coordination of the G20 countries that reduces, to a certain point, economic

uncertainty,

As mentioned, today Spain is back in recession, China's growth is slowing down (with its repercussions), the US is in the

middle of an election year that is focused on spending cuts and rising energy costs. This economic outlook, before the

G20 collaboration, could bring down not just financial markets but whole currencies and economies. Today, in part as a

result of the cooperation between the 20 largest countries, the situation raises concerns but still manageable levels.

One key point is that as long as countries are talking and taking some action, like the increase in the IMF Funds, in

the context of the G20, calms market down.

But as mentioned in the previous postings, there is a need to start looking at medium and long term agreements to help

maintain economic growth for all countries, which is harder to do to that solve emergency situations.

Rodrigo

23

Alejandro Ramos Cardoso, from the Embassy of Mexico in ChileAlejandro Ramos Cardoso, from the Embassy of Mexico in ChileAlejandro Ramos Cardoso, from the Embassy of Mexico in ChileAlejandro Ramos Cardoso, from the Embassy of Mexico in Chile: : : :

The world economy has come a long way in the recovery path from the colossal crisis scenario it faced by September

2008.

Still, dire concerns remain, as the Eurozone is cooped up in one of the greatest depressions it has yet faced, growth has

stalled in some of the largest economies, namely the United States and Japan, and developing countries are striving to

maintain relatively high rates of growth while containing inflation (Eswar S. Prasad, 2011: 5).

As already pointed out by some of my colleagues in this forum, the following might be some of the most salient risks, just

to name a few, that overshadow prospects for a full growth recovery of the world economy to pre-crisis rates:

• Huge debt deficits, mainly in the Eurozone, that have led to a confidence crisis, which according to some authors

may even pose an “existential threat” to the euro currency (Ignacio Angeloni et al, 2011: 1);

• High and sustained unemployment rates, most notably in the largest economies;

• Currency wars fueled by fiscal domestic pressures and current account concerns (uncertainty leads to fear which,

in turn, produces protectionist measures); and

• The mandatory need to attain structural reforms that address not only short term aspects of the economic crisis,

e.g., distribution of income, and the “quality” of government revenues and expenditures (Izak Atlyas et al, 2011:

3); which call for great domestic political partisan compromises.


Thanks again for the very interesting topics by all. I have here two main points:1) Mexico's participation in G20 finance

ministers and high level meetings has been quite franc, even bold, aiming to clarify G20 members responsibilities in the

crisis. For instance, the speculative motor of the rising prices of commodities; the need to accord important cuts to

Greece's debt and even consider its retreat from the Eurozone. The different European countries crisis, from liquidity to

trust. The need to change the actual consumption paradigm for a greener one. And even the need to deepen structural

reforms and to empower the FSB to avoid gambling and bring financing to the real economy. While trying to tackle trade

protectionism through mechanisms not polluted by the Doha agenda.

24

2) Nevertheless, other realpolitik facts have not been mentioned: the struggle of the US to maintain the previous unipolar

world, with its traditional focus on internal issues and own interests over multilateral institutions. Including the underneath

battle of currencies where the dollar is striving to keep its leading place since it replace the gold pattern. And the risk that

the political support to the euro by its major economies/economy, without changing the welfare state model that Europe

has supported since WWII, plus austerity measures imposed to the "PIGS", may bring more social turmoil and put at risk

not only the common coin, but the whole European integration process.

Therefore, the permanence of the G20 "crisis committee" is very much needed, while the existing international financial

and economic mechanisms are revamped.

25

2.1 2.1 2.1 2.1 What to do with thWhat to do with thWhat to do with thWhat to do with the Euro crisis? e Euro crisis? e Euro crisis? e Euro crisis? –––– Paola SubacchiPaola SubacchiPaola SubacchiPaola Subacchi

Paola Subacchi:Paola Subacchi:Paola Subacchi:Paola Subacchi:

Beatriz and Julio have picked the eurozone as the region mostly at risk and the one that can threaten the stability of the

world economy. This is very true, and the size of the eurozone economy is such that instability there spills over to other

regions. The key question is indeed liquidity and austerity. There is no enough liquidity in the real economy and some

countries in the euro periphery are affected by a credit crunch. On the other hand, improving fiscal positions is a condition

necessary to restore market confidence.

My next question is: provided that growth and reducing public deficit/debt are necessary conditions to restore market

confidence is there a right mixture where fiscal austerity does not suffocate growth?

Julio César Escobedo Flores, from the Embassy of Mexico in GreeceJulio César Escobedo Flores, from the Embassy of Mexico in GreeceJulio César Escobedo Flores, from the Embassy of Mexico in GreeceJulio César Escobedo Flores, from the Embassy of Mexico in Greece::::

That's the big question!

The other day, I was reading an article (don't remember the reference though), in which the author criticized the

traditional IMF (& now German) formula to restore economies based on a list of standard conditionalities. The

author argued that for an economy to grow there must be specific state interventions to remove specific constraints.

Therefore, I think the right mixture depends on the country.

Take the example of the debt crisis in Mexico in the early 80s, when the country cut public spending, but improved

competitiveness by reducing its exchange rate. Now, Greece is suffering a similar problem, but attached to a common

currency and to a small industrial base.

26


Fiscal austerity does not mean necessary to suffocate growth when governments try to increase efficiency in public

spending and public investments, having a strict auditing and control over the use of the country’s financial resources; to

improve competitiveness in key industries and also in labor markets; and to attract FDI in key economic sectors to create

new employments.

The welfare state model in Europe is not adapting to the current economic situation in the region due to the fact that there

is not universal employment anymore. The state continues spending in social benefits for their citizens when they are not

productive because of the lack of employment. It is imperative to reform the labor market in countries like Portugal, Spain,

Italy, Greece or France to create jobs for the younger generations that are struggling to find economic stability


The problem in Europe is that structural reforms, that are necessary but not sufficient, will have effect in the long-term.

What we need is economic growth now, but the conditions for growth, as the previous two commentators said, are not

ideal.


What has been the contribution of the G-20 to balance the need of growth and austerity in the European crisis?

In the framework of the G-20, the leaders have often stressed the importance of trade and investments attraction to boost

economic growth in a context of fiscal discipline.

However, not always an increasing trade is positively related to growth. Let me refer again to the case of Mexico,

who after NAFTA experienced unprecedented levels of trade combined with low growth rates (even contractions).

27

The problem is that trade and investment are not the only preconditions to growth, but also local demand, access to credit,

efficient public spending, and so on, depending on the economy's traits.

I remember that Governor of Bank of Mexico, Agustin Carstens, said in the beginning of the Eurozone crisis that highly

indebted countries should restructure their debts, by renegotiating longer payment terms. In so doing, they would gain

time to work on growth.

Sylvia Paola Mendoza Elguea, from the EmbSylvia Paola Mendoza Elguea, from the EmbSylvia Paola Mendoza Elguea, from the EmbSylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:assy of Mexico in Peru:assy of Mexico in Peru:assy of Mexico in Peru:

Like Julio César says, that's the big question!

From reading an article on the Asian Financial Crisis in the late 1990's that affirms that it is proof that austerity does

work, I will agree with Julio that the right mixture depends on the country. This article says that austerity measures,

besides being extremely painful, they allowed Asian countries to implement much needed structural reforms thanks to

which they were able to grow as much as they have this past decade. Nevertheless, since as the article states “currencies

played an important role as an escape valve in the early days of Asia’s post-crisis adjustment” (Read more:

http://articles.businessinsider.com/2012-02-28/markets/31106849_1_crisis-austerity-adjustment-

programs#ixzz1t0cpPPcu) we cannot be sure that that austerity measures will bring the European countries’ economies

out of the current crisis. Furthermore, Guillermo Ortiz argues in the article “Austerity measures without growth? Greece,

Ireland and Latin America”, not only that currency depreciation played a role in resolving financial crises in those

countries and region, but also that trade and investment were involved in solving the issues. Concluding that either the

European countries will have to forgo the euro or encourage trade and investment accompanied with the implementation of

structural reforms and austerity measures to be able to get out of the crisis. Perhaps the G20 could suggest all of those

measures.


Indeed, the balance between fiscal austerity and growth is rather difficult to attain. What we are seeing in Europe (and

notably Greece) is a very destructive dynamic of austerity, collapsing growth and rising public indebtedness. At the same

time, we are witnessing an increased violence, high levels of unemployment and unfortunately, extreme forms of populism

(and radicalism) on the rise.

28

While the G20 role is mainly of a crisis-responder, the Action Plan for growth and jobs adopted in Cannes goes beyond a

simple economic perspective.

In the same line of thought, just yesterday, President Calderon met with Robert Zoellick, in preparation for the Summit in

Los Cabos. What interested me of the news is that both agreed on the need to work together for the promotion of social

development.

This aspect is what I think we are leaving behind. Growth as such does not necessarily means development in the broader

sense of the concept. While many structural reforms in Europe are necessary, many of them are having a direct impact on

people and their living conditions.


According to Kemal Dervis and Homi Kharas (2011), by 2011, in what they call the fourth phase of the current world

economy crisis that started back in 2008, the most usual recommendation regarding fiscal policy was that of loosening

said policy in the short run while announcing future tightenings. Furthermore, as the authors assert, the former can be

seen, on the one hand, as a coherent policy in the sense that today's tax cuts could very well mean that there will be tax

increases somewhere in the future. However, on the other hand, from a practical perspective, there is a concern in

the financial market regarding the political ability of governments to raise taxes and reduce deficits in the future.

If I understand correctly, the main problem of the eurozone nowadays is that it has very little fiscal room - if any, in some

cases- to recover growth and stimulate market confidence at the same time, since countries are cooped up in a vicious

circle, with growth stagnation, and very unfavorable debt dynamics. Hence, I believe that the question still remains on how

to reduce public deficits while fostering economic growth.

29

Day 3. Day 3. Day 3. Day 3. The development The development The development The development agenda of the G20agenda of the G20agenda of the G20agenda of the G20. Moderator: Thomas Fues, Senior Researcher at the . Moderator: Thomas Fues, Senior Researcher at the . Moderator: Thomas Fues, Senior Researcher at the . Moderator: Thomas Fues, Senior Researcher at the German Development German Development German Development German Development InstituteInstituteInstituteInstitute

Thomas FuesThomas FuesThomas FuesThomas Fues: : : :

Dear participants of the G20 online forum,

this is Thomas Fues, writing to you from the German Development Institute in Bonn, the former capital of Germany. I am

delighted and honoured to have been invited by Instituto Matías Romero of the Mexican Foreign Ministry (SRE) to this

timely dialogue. As you know from the program, the topic of today's session is the development agenda of the G20. I have

earlier provided a text of mine on this topic, actually it is more of a draft - work in progress.

The G20 (at the level of heads of state and government) is a pretty new fixture of global governance. And the focused

attention of the G20 on development issues is of even more recent origin (2010 Seoul summit). It is yet too early to

present conclusive evidence about the G20's impact on non-member developing countries. Still, considering the economic

and political weight of the G20 and the high expectations from the outside, it is urgent that we start to reflect on the G20's

accomplishments for global development.

To start our conversation, my first, very basic, question is as follows:

In your view, what have been the most important actions of the G20 in support of low-income countries so far?


Dear Professor Fues and fellow colleagues,

30

first of all, let me start by thanking the IMR for this excellent opportunity to learn from so distinguished scholars and

experts on world economy and G20 related issues. I also want to thank you for sharing your insightful thoughts and your

interesting paper on the development agenda of the G20.

In addressing the topic you raise, in my opinion the need to incorporate development issues in the G20 agenda should be

out of question. As you clearly put it, "the G20 should contribute to the provision of global public goods and act as a

guardian of global-wellbeing" (Fues, 2012: 3). And, in that sense, I believe there is a wide consensus on the importance of

attaining a more balanced, inclusive, environmentally-friendly and equitable economic growth. Thus, the G20 must draw

on its momentum and its legitimacy (which are a product of its own effectiveness and leadership) by actively seeking to

expand its mandate, in accordance with the Seoul Development Consensus, to address development issues and devoting

special interest to Low Income Countries (LIC) concerns in this matter.

So far, and especially after the November 2010 summit, there have been some steps taken towards the creation of a

development agenda within the G20. The aforementioned Seoul Development Consensus and the Multi-Year Action Plan

have set "the programmatic basis for the G20's commitment to overcome poverty and global inequities" (Fues, 2012: 1).

Furthermore, the institutional framework, has been provided by the Development Working Group, established in the

Toronto summit of June 2010.

Regarding specific development policies, there is a wide range of target areas in which the G20 is acting, all of which are

summarized in your working paper, i.e., infrastructure (e.g., the establishment of a High-Level Panel for Infrastructure

Investment); Private investment, labor and human resources (e.g., promoting social and environmental standards); Food

security and agriculture (e.g., investment in research and development of agricultural productivity); social protection

(there seems to be an emphasis on national conditions for social protection nets, per request of developing countries),

among others.

Nonetheless, there is still a need for the G20 to reach out to nonmembers, particularly LICs, and consolidate its image as a

trustworthy and legitimate actor in addressing development issues.

31

Thomas FuesThomas FuesThomas FuesThomas Fues::::

Dear Alejandro Ramos,

thank you so much for your comprehensive thoughts on the G20's efforts towards low-income countries. As you point out,

the G20 has built up a wide range of work streams which are of immediate relevance to developing countries. My concern

is: This is more than the G20 can effectively handle. It seems to me that the Mexican presidency is determined to narrow

down the development work within the G20 in order to become more relevant and produce tangible outcomes.

I wonder, Alejandro, if you could point out specific policy areas or development issues where the G20 has, already at this

early stage, produced genuine value-added for low-income countries. And where do you see significant potential for

future G20 efforts on development?


Dear Professor Fues,

Thank you very much for such a prompt response.

In fact, it is my understanding as well that the Mexican presidency of the G20 has made attempts to narrow down the

development agenda to more tangible objectives, and bearing in mind at the same time the accomplishments of the G20

under the French presidency. In particular, two of the five priorities set by Mexico have to do with development issues,

namely "Enhancing food security and addressing commodity price volatility"; and "promoting sustainable development,

green growth and the fight against climate change".

On the other hand, notwithstanding the fact that it may still be too early for us to be able to measure the G20's efficiency

in development tasks, regarding specific policies and issues where the G20 has moved forward, the most recent Report of

32

the DWG (2011), summarized the actions taken in the development agenda, in accordance with the Multi-Year Action Plan

adopted in Seoul, aimed at both setting the foundations for a strong and balanced economy and building resilience.

Some of the tasks in said areas include the development of an Action Plan by the Multilateral Development Banks to

facilitate infrastructure investment in LICs; the creation of a High Level Panel on Infrastructure; the creation of a report

on responsible investment standards provided by the Interagency Working Group; the development by IOs of a set of

indicators to measure economic value-added and job creation of private investment; the development of a G20 Agriculture

Ministers Action Plan on food price volatility and agriculture; the creation of an Agricultural Market Information System;

the promotion of the adoption of a quantified reduction of migrants' remittances costs; among others.


Thanks so much, Alejandro (please call me Thomas). Your very concrete points on the development work of the G20 are

very helpful. I share your view that the G20 is generating significant value-added for low-income countries in these

areas. At some later point, it would be good to have rigorous impact assessments by independent scholars on these

issues. This would also help to increase the G20's reputation and legitimacy.

This brings me to a further question which you might consider:

What mechanisms can the G20 develop to interact with low-income countries on a more systematic basis? Their needs

and views need to be heard and responded to by G20 leaders. My institute, the German Development Institute, is

participating in a major outreach and dialogue effort headed by the South African Institute of International Affairs (SAIIA).

The program aims at assessing the impact of G20 policies on African countries. On that basis it will formulate

recommendations on how the continent can interact better with the G20 in the future. Possibly, the Mexican presidency

could link up with the program and use it as an opportunity of mutual learning which might be replicated in other

developing regions.

33


Thank you so much, Thomas, for your keen remarks. Please excuse me for not having replied before but I had a hectic

afternoon yesterday and could not get back to you earlier as I would have wished.

The question you pose is a tremendously relevant one and, from what I have read, there lies one of the biggest challenges

for the G20 in terms of the development agenda, i.e., how to better approach and reach out to LICs on a more systematic

base. The recommendations the G20 and IOs can make in this regard are a great starting point but I definitely share your

concern about developing indicators and mechanisms to be able to assess what impact do policies and recommendations

have on the everyday life of the people living in said countries.

Finally, I find very interesting the work that you are carrying out with the South African Institute of International Affairs. It

is my wish too that hopefully we could replicate that same model in other parts of the world and definitely it is a

recommendation that the Mexican presidency could pick up and bring to the attention of the leaders.

Thank you again, Thomas, for your interest and insights on such an interesting topic. I hope we get to interact once again

in the near future.


One of the great achievements of G20 in terms of development is the endorsement of the so called Seoul Consensus which

defines a new economic relation between developed and developing nations. Compared with the "Washington Consensus",

this new paradigm on development recognizes that global growth is very much dependent on LDC's progress in the MDGs

and does not try to impose a uniform "top down" solution. In other words, it is acknowledged that "One size does not fit

all".

The Seoul Consensus and its Action Plan recognizes that solutions should be tailored to each situation and that countries

should have ownership over their development strategy.

By far, this is a good accomplishment, especially in the way development is understood and practiced.

34

One particular element in support of LCDs is that related on the pillar of “Financial inclusion”, meaning that small

industries from LDCs can have access to financing.


Thank you, Beatriz, for making the important point on how the Seoul Consensus defines a new paradigm different from the

Washington Consensus of former times. I share your view that the new emphasis on "policy space" for developing

countries as opposed to uniform policy proposals from the Bretton Woods Institutions (World Bank and International

Monetary Fund) is highly relevant for developing countries as they strive for economic and social advancement.

One point where I am critical of the Seoul Consensus refers to the environmental dimension. To my reading, the document

does not adequately take into consideration the planetary boundaries for growth which cannot be ignored for the sake of

human survival. I wonder if you would like to share your view on this with us. This brings in the point on how the Los

Cabos summit can provide a helpful input for the Rio+20 world conference immediately following the G20 meeting. Can

you share with us what possibilities you see in productively linking the two events?


Hello, Thomas

One of the Mexican priorities during its Presidency refers to Promoting Sustainable Development, green growth and the

fight against climate change. This emphasis, from my point of view, is intended to fill the gap of the Seoul Consensus, as

you rightly point out. Actually, it is my understanding that the theme is being addressed as a cross-cutting priority,

affecting all the 9 pillars defined in the Seoul Plan of Action, notably Infrastructure.

35

In fact, at the beginning of its Presidency, Mexico pointed out its intention to promote specific issues of interest for

developing countries, including inclusive green growth. Furthermore, Mexico committed to organize a process of

consultations and a expanded and transparent dialogue with non-member countries, the UN, regional organizations and

other relevant partners that are essential to find solutions to global concerns. In that sense, Los Cabos Summit can be of

support for the efforts being carried out in the way to Rio +20, if there is the political will of the leaders and if this work

(on inclusive green growth) is seen as a complement of global efforts to sustainable development.

The outreach carried out by the Mexican Presidency has been innovative in many ways. For instance, the first Think+20

meeting (which gathered important think tanks, including you Thomas) proposed to "green" G20 and made a number of

recommendations to Sherpas to mainstream green growth and produce a Los Cabos legacy of green growth. For instance,

if the recommendations of Think+20 are taken on board by leaders at Los Cabos, I guess that negotiations in Rio will be

promising.

One of G20 advantages is its ability to promote a coordinate action/work by different international organisations which in

the past pursued overlapping and divergent agendas. The greater the possibility of having a consensus and collective

action in G20, the more likely to have a better outcome in Rio.


Thank you so much for your excellent points, Beatriz. Sorry that I did not answer immediately. I went to bed at 11:30 pm

last night. Now I am back at my office, looking out to a rainy and cold Bonn where everybody is longing for spring to come

at last.

I congratulate the Mexican presidency for bringing green growth and sustainability onto the G20's agenda. When we had

the very productive Think 20 meeting two months ago in your capital, your impressive Sherpa pointed out how difficult it

is to mobilize support for this approach among G20 members.

36

And from a German perspective, I can add how ambivalent and contradictory our national policies are in this regard. For

example, our government has decided to phase out nuclear power by 2022, giving in to strong popular opinion on this

issue. However, subsequent steps to implement the transformation of energy systems toward renewable sources and to

move, in general, towards a low-carbon economy are lagging behind.

I share your view that political will of governments is key to any progress on global sustainability. At the same time, let's

not underestimate the relevance of societal preferences and grassroots political action. Estimates show that we can

expect a significant increase of the middle class in developing countries by the billions, especially in Asia but also in Latin

America. Will these newly prosperous segments of population follow principles of sustainable consumption and articulate

themselves politically in support of such concerns?

I wish the Mexican presidency full success in linking the Los Cabos summit to the Rio+20 world conference. I really hope

that the G20 can muster the political will to make a substantial contribution to the success of Rio thus gaining in legitimacy

and effectiveness.


As you already mentioned, the most important action of the G-20 on development has been the narrowing of its agenda.

The Mexican presidency has proposed three pillars: infrastructure, food security, and green growth.

It's in the first one, however, where I find the most promising steps for the LICs so far. Not only does the DWG, but also

some G-20 Ministerial meetings have agreed to promote urban planning, investments in infrastructure, and even a specific

project on sustainable urban mass transportation in the developing world. The Group is working closely with the World

Bank, whose expertise in this matter is well-known.

In your article, you indicate that the G-20 should withdraw from operational efforts and focus on shaping development-

friendly framework conditions of the world economy. If so, the pillars proposed by the Mexican presidency make a lot of

sense.

37

Actually, Mexico possesses experience providing regional public goods in Central America through the Mesoamerican

Project (former Plan Puebla Panama), which have had a positive impact on the development of the region. It's worth to

mention, though, that the provision of global public goods will require operational efforts at some level or stage.


Thank you, Julio César, for joining the debate. It's good that you point out the priorities of the Mexican presidency on

development issues. We definitely need more strategic focus of the G20 in this regard. The G20 should, first of all,

complement, not duplicate, efforts of other bodies and organizations in international development cooperation. And it

should concentrate on bringing actors together, bridging gaps and creating synergies. Therefore, it should not be so much

interested in initiating new operational work but rather identify ongoing efforts and be supportive in making these

successful. Creating platforms and policy frameworks is an important task in this regard.

Let me now address the point to which extent members of the G20 could deepen their dialogue on frameworks for

international development cooperation which are accepted by traditional donors and rising powers (so called emerging

"donors") alike. The Busan Partnership for Effective Development Cooperation, agreed on by universal consensus a few

months ago, has entered a crucial stage. Through the Post Busan Interim Group, governments are struggling to define a

new institutional home which suits all sides (and in which the OECD-DAC and the United Nations would cooperate). From

what I hear, Mexico is playing a very constructive role in this process. Major rising powers, however, are keeping at a

distance. Will it be possible to bring everybody under the tent by the end of June, as envisaged by the Busan Outcome

Document.

Do you have any ideas on how the Development Working Group of the G20 could foster the convergence of "traditional"

and "new" "donors"?

38

Julio Julio Julio Julio César Escobedo Flores, from the Embassy of Mexico in Greece:César Escobedo Flores, from the Embassy of Mexico in Greece:César Escobedo Flores, from the Embassy of Mexico in Greece:César Escobedo Flores, from the Embassy of Mexico in Greece:

The DWG could foster those convergences between traditional and new donors by developing a net of triangular

cooperation, under the G-20 umbrella.

G-20 membership includes traditional and emerging donors, who have successfully worked together before.

Let me mention again the Mesoamerican Project. After several changes in its architecture, it has deployed specific

initiatives to produce regional public goods (in fields such as infrastructure, telecommunications, environment, health) with

national and international funds.

Mexico, accompanied by the Central American and Colombian Governments, has attracted the interest of traditional (USA,

Spain) and private donors (Gates Foundation, Carso Foundation) to build those goods.

Triangular cooperation has proven to improve transparency, accountability, and knowledge.


Thanks again, Julio César. Your reference to trilateral or triangular cooperation in projects and programs is highly

relevant. The German government is very interested in this approach and is exploring how to expand its activities here. I

understand that several projects have already been implemented with Mexico in the Central American region in a

triangular fashion (thanks for underlining the relevance of the Mesoamerican Project). This can generate superior results

in partner countries (recipients) and provide valuable space for dialogue and learning at the providing side.

Let me, however, point out that some developing countries (as recipients) are not really interested in triangular

cooperation since they prefer to deal with "donors" individually. They cherish the choice among different providers and,

sometimes, feel that they can gain from playing one provider off against another.

39

Just last week we had a big conference in Bonn for our program "Managing Global Governance" which is designed as a

capacity building and dialogue platform for eight rising powers (we have a five months' course for junior professionals in

Germany, look at: https://gc21.giz.de/ibt/en/opt/site/ilt/ibt/programme/mgg/xhtml/index.sxhtml, in case you are

interested). Mexico is part of the network. SRE was excellently represented at the conference by Carlos Tena. At that

event, an important representative from the Chinese government told me that they are very open to triangular cooperation

with Germany (or other Western donors for that matter) in Africa. But their African partners do not want to hear anything

of this. They prefer to cooperate with China independent of any Western country.

What are your experiences in Central America in this regard?


Guess that one of the reasons why recipient countries don't always find triangular projects attractive might be the political

agenda behind the traditional donors.

Traditional donors use to set up a list of "political" conditionalities in their recipients in order to cooperate for

development (e.g. democracy, freedom of speech, etc.). On the other hand, and beyond those conditionalities, new donors

most of the time have historical links with their recipients (that is the case of Mexico with its Central American peers).

While traditional donors' cooperation may be perceived as a tradeoff for recipient countries, emerging donors' cooperation

represents a win/win situation for them.

At the end, both traditional and new donors share a common goal: translate their cooperation into development.

40


Thanks again, Julio César. You make a strong point in referring to the political conditionalities often attached to

projects/programs of traditional donors. Personally, I have my reservations about the effectiveness of external pressure of

this kind. From the academic literature that I am aware of, it emerges that external conditionality has only worked in one

case. That is the accession process of the European Union (along the so called Copenhagen criteria which define

standards of democracy, rule of law, protection of minority rights etc. as preconditions for membership). The reason for

success lies in the substantial benefits that interested candidate countries want to realize by joining the EU.

With regard to development cooperation, incentives are much lower and domestic elites are often opposed to social

transformation which threatens their economic and political privileges. What to do?? Just support governments of low-

income countries without any regard to the political order and the situation of human rights? Maybe neutral multilateral

bodies like the United Nations human rights committees can play a productive role here.

A final point on South-South cooperation: It is often claimed that SSC (automatically?) generates benefits for both sides

(win-win). However, empirical evidence is still very scant. We need more transparency and rigorous impact assessments.

This is where the UN Development Cooperation Forum could make an important contribution. It will meet again at the

beginning of July in New York as part of the ECOSOC thigh-level segment. I wonder if Mexico will take an active interest

in the event.

Everardo Corona Aguilar, from the Embassy of Mexico in IndonesiaEverardo Corona Aguilar, from the Embassy of Mexico in IndonesiaEverardo Corona Aguilar, from the Embassy of Mexico in IndonesiaEverardo Corona Aguilar, from the Embassy of Mexico in Indonesia: : : :

I think that one of the most important actions of the G20 in support of low-income countries so far has been precisely its

structural transformation – although it was unexpected-. By this transformation G20 developed policies focused on global

economic imbalances and incorporated emergent economies, as well as demonstrated concern for the poorest countries.

All of these issues look as noble and moral objectives worthy of being admired.

41

Nevertheless the G20 is indeed interested in legitimizing its existence, because the adopted policies taken by 20 countries

in the world have effects – negative or positive – on close to 200 countries. So we can note that the forum –G20 - is

acting as super power, and to justify its existence as “permanent global governance” is looking support from the countries

less developed.

The question here is that there is not a global resolution from all countries in the world giving this super power to the G20

to act as world government. Read carefully and we can see that its capacities come from the selfthe selfthe selfthe self----defined mandate.defined mandate.defined mandate.defined mandate. This This This This

mandate has been amplified, mandate has been amplified, mandate has been amplified, mandate has been amplified, first to the emerged economies and through them (Korea and Mexico, later surely Indonesia)

try to convince to the rest of countries in the world that G20 is the best option to face the global problems of our time.

This lack of consensus is a deep gap in the international relations that is creating a new paradigm in the global

governance. We can see the agenda and every time is getting more and more power. The G20 is also transforming the

international institutions as FAO, IMF, ILO, etc in its consultant branches.

International relations should be more democratic and transparent. It is not democratic that 20 countries decide the fate of

200. Isn’t it?

Although in the Mexico’s agenda and its way to the Summit in June have participated more stakeholders (B20, Y20, T20,)

and many other from the academy, it’s important to incorporate those countries who are not part of the G20, in order to

create broad consensus about the G20 policies.


Thank you, Everardo, for coming into the debate. As I understand your statement, you are addressing the legitimacy gap

of the G20. Clearly, the G20 is a form of self-appointed club governance at the apex of the global system. For me, this is

a crucial aspect as we consider the future of this body. But first we need to recognize that the 19 nation-states which are

members of the G20 (plus the European Union) represent almost two thirds of world population. Looking at exclusion this

42

way, the proportions come out differently: It's not 19 countries against the rest of 174 countries (there are 193 member

countries of the United Nations altogether), but two thirds of the world population against one third excluded (which is bad

enough).

Now, when we look into the future, there are several things to consider. In the short run, the G20 could decide to interact

with the United Nations in a more formalized way (already now, the UN Secretary-General takes part in G20 meetings).

For example, the G20 could go the UN General Assembly, regularly report on its actions and invite all member states to

comment and recommend further steps. In the long run, I could see the integration of the G20 into the United Nations.

There are a number of proposals on the table to this regard. The UN could establish a Leaders' Council (similar to the

Security Council) including major world powers plus additional members based on regional representation.

I definitely believe that the G20 is not the end of the story in innovative global governance. When we look at the

magnitude of global systemic risks, which will make life very uncomfortable for all of us on this fragile planet, we should

become more creative in designing new forms of inclusive international cooperation than we can see today. Do you have

any suggestions in this direction?

Judith Marcia Arrieta Munguia, from the Mexican Mission for InternatiJudith Marcia Arrieta Munguia, from the Mexican Mission for InternatiJudith Marcia Arrieta Munguia, from the Mexican Mission for InternatiJudith Marcia Arrieta Munguia, from the Mexican Mission for International Organismsonal Organismsonal Organismsonal Organisms: : : :

Dear all, some comments to the very interesting contributions regarding the development agenda of the Mexican

presidency of the G20 and its outreach to international organizations and other main actors: 1) the G20 is an informal

mechanism of voluntary commitments, thus, more flexible and efficient than some multilateral institutions. Therefore, it is

difficult to envisage it reporting to the UN GA, but easier to see its members acting in the different fora, with the aim to

reinforce and reform multilateralism, as proposed by Mexico at the very innovative G20 ministerial meeting last February.

G20 should not be another group as G77 or juscanz, etc...but act within them for better understandings and consensus

building.

2) In a creative fashion, Mexico is also convening new and traditional donors, bringing the private sector to compromises

in B20 taskforces that include food security, infrastructure, telecommunications, etc..a.i. in concrete commitments. But

also creating working groups with the civil society on its priorities, aiming in particular vulnerable sectors, SME's creation

and low income countries. Finally Y20 is engaging youngsters into initiatives that may foster quality jobs. All of which

should be benefited by the improved macroeconomic environment that the G20 governments are aiming to.

43

3) Therefore these stakeholders, together with international and regional organizations, are the operational platforms on

which the G20 presidency is supporting its approaches to the poorest.

4) The fifth priority on green growth acts as a cross cutting issue regarding the other four, and is the linkage of the G20

with Rio plus 20. Also, thanks to the date of the G20 summit, Rio will assure the presence of its leaders with a better

focus on sustainable development, having advanced in other crucial economic issues.

5) Finally, the focus on risk reduction of the Mexican presidency is aiming as well to foster FDI in LDC's through different

means; while financial inclusion is also promoting social programmes as "Progresa" for poverty reduction.


Great points, Judith Marcia. Thank you for outlining the full range of outreach activities which the Mexican presidency has

undertaken and is still planning. These are important steps in listening to relevant stakeholders and in promoting global

conversations on effective multilateral cooperation. The structures and processes of global governance and international

development cooperation have become highly complex and diffuse. More and more actors are entering the stage and they

often bring significant resources to the table in global problem-solving. Scholars have begun to talk of a "non-polar"

global system where power and authority are decentralized and widely spread out. At the same time, global risks are

becoming more threatening by the day. We see an alarming global governance deficit. The G20 can make important

contributions in this regard but, in my regard, it must create reliable mechanisms of transparency, accountability and

inclusion and follow the principles of trust, reciprocity and reputation. As we learned from the recent Nobel laureate,

Elinor Ostrom, these principles are the preconditions of effective human collaboration within and across societies.


Going back to the first question regarding G20 actions towards low-income countries, I think that the food security issue

has been a very positive discussion, especially in countries where agriculture is one of the main economic income sources

and/or subsistence for the population. In this regard, the flexibility of the G20 allows a very high degree of brainstorming

and experimentation for different formulas and strategies, with the participation of several actors from NGO’s to think

44

tanks et al. This is of high interest for several countries, taking into account for example that at least of world rice or

wheat production is made by G20 members. The results of this discussions have enough legitimacy to be heard since they

are not linked to any government, and a solid proof is the persistent critique against government subsidies of bio fuels vs.

volatility of food prices (haven’t heard though much discussion on GM foods). Also, given the importance and leverage of

the G20 countries in the financial system, there is room for the mechanism to impact policies that could ameliorate, or at

least better manage, the commodities exchange. Other important topic related to food security is of course climate

change, and here the G20 has been very active.

Other very interesting subject mentioned before and that might deserve additional comments is nontraditional donors. Not

so long ago I read that the budget for example of the Gates foundation for addressing malaria is certainly bigger than

national budgets for the same purpose, and it seems the results are better delivered. What is the G20 relationship with non

state donors and how are they included in the agenda, say for example in climate change, food security or other topics?


Thanks, Rodrigo Alberto, for joining the discussion. I enjoyed your detailed information on G20 activities in the area of

food security. As time goes on and the development work of the G20 matures, it will become ever more relevant to

provide transparency and let the world know what is going on and what outcomes are generated. Of course, there are

significant benefits of informality, of staying away from well-established structures with charters, budgets and clear-cut

responsibilities internally and to the outside world. At the same time, global cooperation can only be effective, in my view,

if it operates in transparent, accountable frameworks in order to create trust, reciprocity and reputation (as the recent

Nobel laureate Elinor Ostrom tells us). Otherwise, those not immediately involved with the respective activities will remain

suspicious.

I guess the best way for the G20 to deal with these tensions and contradictions is to channel its activities towards

formalized multilateral organizations and mainly support ongoing processes there. And, to make the point again, the G20 is

well advised to sharpen its strategic focus. Instead of getting involved in one hundred and one dispersed actions it should

45

concentrate its efforts and resources on select issues of key relevance to low-income countries.

Your final point on large private foundations addresses an important concern of the new architecture for international

development cooperation. Notwithstanding the often helpful and innovative contributions of philanthropic actors, they must

also accept and internalize the principles of transparency and accountability according to the Busan Partnership for

Effective Development Cooperation.


I apologize for joining this debate so late. This has caused the debate to have advanced from the initial question regarding

the major accomplishments of the G20 on development, so I would first like to address one of the questions mentioned in

the paper by Dr. Fues: Should development be included in the G20 agenda? I believe it is important that development is

part of the agenda because global economic imbalances are intrinsically related to development. It is interesting that the

issue of development was introduced by the first emerging economy to host the G20 meetings and even more noteworthy

that the second emerging economy to host the G20 is, like Beatriz pointed out, attempting to “fill the gap of the Seoul

Consensus”. The specific gap that I believe the Mexican presidency to be attempting to fill is that mentioned by Dr. Fues:

“the environmental dimension”. Now the major challenge will be seeing if the agreements reached regarding this issue

within the G20 transcend to actions around the world including those countries not represented in the group.

This brings me to my next point and another question pointed out in the debate on legitimacy and top-down decision

making. The accomplishments already reached within the G20 to link with agendas of international multilateral

organizations and the current approach of the Mexican presidency to involve civil society through the B20, Think20 and

Y20 will give this forum more legitimacy and allow it to take in all views so that it does not seem like the decisions are

being taken by the powerful few.

46


thank you, Sylvia Paola, for picking up some of the strands of our conversation so far. Let's hope that the Mexican

presidency will be successful in achieving meaningful decisions at Los Cabos on green growth and global sustainability,

which, in turn, would help a lot to generate much needed momentum for the Rio+20 conference.

With regard to institutional innovations which are on the agenda at Rio, I would like the G20 to take a positive stand on the

so called "double upgrade". The first step would mean lifting the status of UNEP to a full-fledged UN Environmental

Organization with more resources and enhanced authority (the location should remain in Nairobi, however). The second

step would be the creation of a new Sustainable Development Council as subsidiary organ of the UN General Assembly.

This body could become the main intergovernmental platform for building a global consensus on the urgent transformation

towards a low-carbon global economy.

I wonder what the position of the Mexican presidency is on this issue. Certainly, the world public will follow the Los

Cabos summit intensely and with high expectations, particularly in regard to the decisions on green growth and global

sustainability.

RRRRodrigo Márquez Lartigue, from the Directionodrigo Márquez Lartigue, from the Directionodrigo Márquez Lartigue, from the Directionodrigo Márquez Lartigue, from the Direction----General for North AmericaGeneral for North AmericaGeneral for North AmericaGeneral for North America: : : :

Sorry for the late intervention, but I had a crazy day. However, through the day I was able to read the very interesting

comments you all made.

Regarding the issue of development as a part of the G20 framework, I would like to point out that the improving economic

conditions of the poorest countries on earth not only helps the citizens of those nations, but also brings financial gains to

developed and emerging markets. Back in the day when countries like Korea, Brazil and Mexico had limited ability to

compete in the global market, they saw development as way to improve their own condition. Today, multinational

corporations from these countries see the financial rewards of better incomes in the developing world, thus they want to

47

improve their standards of living, so they can consume products made in Korea, Brazil, India and China. In summary,

development fuels economic growth, key goal of the G20 summit. (It is interesting to see that this idea is very important

for the new President of the World Bank).

The development agenda at the G20 has the risk of competing with more traditional frameworks as the UN of

Development Banks, but including the topic in the G20 discussions has, I believe, two benefits: a) as a new ad-hoc

grouping, the G20 does not have the baggage and obstacles that other organizations have, and it has a strong motivation to

show deliverables, not just for the group itself, but for the international community in general, so it remains relevant; b) as

the G20 grew from financial ministers to head of states, it carries the benefit of having the attention of two very important

actors, the executive branch (most of the Sherpas had direct access to the Heads of State/Government, which is not the

case for the representatives to other international organizations), and the financial ministers themselves, which at the end

of the day, are the ones who provide/administer the funds for almost all the development programs. All these can

help focus the attention of key decision makers in specific development topics, which can create consensus and move

toward real actions.

Rodrigo


Thanks for your late-night contribution, Rodrigo. You bring in the important point that the G20 commitment towards low-

income countries is not really about charity. Of course, effective global governance needs universal solidarity. But the G20

countries themselves have a lot to gain from promoting pro-poor growth in the developing world. These are the markets

of the future that need to be developed and nurtured. At the same time, poverty and human deprivation are the ideal

breeding grounds for state failure, extremism, anti-democratic forces, cross-border violence and instability. In a

globalized world such risks cannot be contained to a specific country or region. We all suffer from social exclusion in any

place, no matter how distant. Scholars and politicians are becoming aware that social disparities are serious threats to

growth and sustained prosperity. Let's hope that the G20 can make a difference here.

48

At the end of our fascinating conversation, I wish to thank Instituto Matías Romero for providing us the space to interact.

And I wish to thank you, the participants, for all the valuable ideas which have focused our minds on crucial issues for the

G20, in general, and the Mexican presidency, in particular, as they are getting ready for the Los Cabos summit. Good luck

to all of you, Thomas.

49

Day 4. Day 4. Day 4. Day 4. How can the "informal" GHow can the "informal" GHow can the "informal" GHow can the "informal" G----20 process be made more effective? 20 process be made more effective? 20 process be made more effective? 20 process be made more effective? Moderator: Barry Carin, Senior Fellow at the Moderator: Barry Carin, Senior Fellow at the Moderator: Barry Carin, Senior Fellow at the Moderator: Barry Carin, Senior Fellow at the

Centre for International Governance InnovationCentre for International Governance InnovationCentre for International Governance InnovationCentre for International Governance Innovation

Barry CarinBarry CarinBarry CarinBarry Carin: : : :

Today's topic is very difficult- because while "process is substance" no one is too shy to have an opinion.

It is very important for the G20 to succeed; if it fails Mexico and other middle powers may not be at the table in the

regime that replaces it.

So how can we make it work?

What can Mexico do to ensure the process is as efficient and effective as possible?

I propose we discuss the issue in four parts - preparation, participation, transparency and accountability.

Are these the correct questions?

Given that the G20 is an informal arrangement that is not treaty based, how can we strengthen the credibility of this self-

designated “premier forum for international economic cooperation”?

• What can be done in terms of perfecting preparation?

• Are there ways to improve participation?

• Can we enhance transparency?

• Can we increase accountability?

Sherpa Preparation Process:

Is it possible to have a Sherpa executive committee including China and the US?

Can the role of the “Troika” be upgraded?

What is the best way to enhance the ability of the G20 Presidency to provide “secretariat” services?

Participation:

50

It has been argued that there are too many people at the G20 table to have a real discussion among Leaders.

What can be done to provide more time for Leaders-only discussion?

The G8 invited the G5 for just part of the meeting – which G5 leaders found insulting. Can more extensive outreach

compensate for not “being at the table”?

Transparency:

What techniques can be used to promote openness?

Can working group and international organization reports be publically available?

Can parts of the meeting be televised and webcast?

Accountability:

Can the informal G20 have some sort of independent “Inspector General” or auditor to review compliance with past G20

commitments?

How can accountability be increased?


Dear Professor Carin and colleagues,

given the informal, non-treaty nature of the G20, in my opinion the following could be some of the elements that seem

essential for it to transit successfully from a "crisis buster" to a "steering committee":

Regarding preparation, it is important to have a smooth transition between presidencies, which is facilitated to some

extent, if I understand correctly, by the troika and seconded staff mechanisms. Also, notwithstanding the fact that each

presidency seeks to stamp its own agenda and priorities, coherence in this regard is highly desirable, as was the case, for

instance, with the transition from the French and the Mexican presidencies, and the priorities set in the development

agenda. Moreover, as Steward Patrick asserts, “[s]ummits, of course, tend to garner the most attention but the work that

occurs between these events is arguably more important.” (Patrick, 2010: 7). In that sense, the transnational networks

51

that are built and set to work prior to the summits are of an extraordinary relevance, since all of the technical and

specialized expertise is needed in order to have a successful summit.

Regarding participation, I believe that the question you pose is indeed very relevant, i.e., how can Mexico (or any other

emerging economy of the G20) contribute to achieving an efficient and effective performance of the G20? In general

terms I think that we can all agree on the fact that the G20 stands on the premise that both established and emerging

economies within the G20 benefit from being at the same table addressing issues of global concern. Thus, emerging

powers “have an incentive to adapt more nuanced policies than bloc politics might otherwise encourage” (Patrick: 15).

Furthermore, the development of bloc politics and dynamics within the G20 is something that both parties, i.e., developed

and developing economies, should try to avoid for the sake of the G20. Emerging powers have to exert leadership and

collaboration if they are to continue bargaining with the large, established economies. That goes without saying that the

latter must also be willing to yield positions in favor of a common goal; which reminds me of a traditional collective action

dilemma.

If I may, in a second participation, I would like to address the topics of transparency and accountability.


Alejandro

Re preparation, you mention the importance of the troika and seconded staff mechanisms. The general sense is that

neither mechanism is being fully exploited. Is there anything Mexico can do to stregthen them? Can Mexico call a follow

up Sherpa meeting in July and cement and enhance these two mechanisms?

Re dealing with the collective action problem- perhaps the best approach is carefully do our homework and identify win-

win-win outcomes in every member’s interest - concentrating on what is feasible.

52

Barry Carin

AlejandroAlejandroAlejandroAlejandro Ramos Cardoso, from the Embassy of Mexico in ChileRamos Cardoso, from the Embassy of Mexico in ChileRamos Cardoso, from the Embassy of Mexico in ChileRamos Cardoso, from the Embassy of Mexico in Chile: : : :

Professor Carin,

Before considering ways of providing the G20 with a formal straitjacket structure, I think it needs to show that the

agreements reached at the summit are fully enforced, and that it can render value-added results. In that sense, in answer

to your question, I do not see why Mexico could not call for a Sherpa meeting post-summit to follow up and better

enhance the results attained at the leaders reunion. Because, although the summit is arguably the climax in the plot, there

needs to be a continuity in the whole process.

Likewise, the G20 needs to focus as well in the priorities that the presidency in turn establishes and not divert into

other areas that may seem overwhelming. In that way, I believe Mexico could contribute to the strengthening of the

sherpa and seconded staff mechanism.


Alejandro

Are we confronted with a "chicken and egg" dilemma? Will the G20 be able to "show that the agreements reached at the

summit are fully enforced, and that it can render value-added results" without first having an effective structure?

By the way - I am the first to insist on informality - but it must be systematic informality as outlined in the non secretariat

idea in the article in the bibliography for this forum. The question is what concrete ideas can Mexico champion?

Barry Carin

53


Some thoughts:

I think that the level of commitment of a presidency decays once its period is finished, which is respectably

understandable. But if the same level of commitment, expressed with high level participation and involvement, could be

continued almost as a rule even though the presidency is in the other troika member, this would enhance both the figure of

the troika as a steering figure and would assure the permanence of the topics raised with each presidency.

How could be possible to interest the Russians. Maybe if offering the same of interest that was put in the Mexican agenda

but to their own agenda as a commitment to forward it among the other members and the multiple actors of the reach-out.

Could Mexico commit resources to the Russian agenda as its own? Would Russians accept this?

In regards of transparency, the scope of the G20 is already wide as to obscure the different efforts and outcomes. Could it

be possible to think within that non-secretariat staff a “division” for communication affairs? To convey the message of the

G20 in a truly global multilayered manner surely isn’t through government spokespersons.

I like the idea of the itinerant cloud-based non-secretariat. Sending to the host capital staff from the troika in a semi

permanent basis would have a positive outcome in terms of streamlining the agenda and keeping an eye on its logistical

aspects. Legitimacy and commitment comes to mind as well.


Rodrigo

Thanks for these comments and ideas. One possibility on communications is to set up a sort of working group for

communications affairs, with the Troika as members. I am sure the Koreans, Australians and Turks would join. What do

you think?

54

With respect to the Russians- is there a potential agenda topic in the energy field that is of equivalent interest to both

Mexicans and Russians?

Barry Carin


In my view, it's imperative to strengthen the role of the Troika along the whole process (pre and post Summit).

Within many regional forums (e.g. Europe, Latina America), the Troika performs an essential role by assessing the

agendas and directing the debate.

Why do regional Troikas succeed? Probably, it's a matter of common interests. Therefore, G-20's preparation process

should focus on that.

In regard of participation, I would like to stress the need of re-defining the main G-20's objectives. Its membership

stemmed from a financial conjuncture. If the forum is to become a global steering group, it would be necessary to re-think

its composition.


Julio

Presume you are the Sherpa for Mexico and the President trusts you and accepts all your recommendations. What

specifically would you do to strengthen the G20 Troika? How can you motivate the Russians to take it seriously?

Barry Carin

55

Julio César Escobedo Flores, from the Julio César Escobedo Flores, from the Julio César Escobedo Flores, from the Julio César Escobedo Flores, from the Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:

Let me refer to something Miriam mentions below: the G-20 Troika must ensure continuity without compromising

informality.

That's true. The better the Troika develops agendas and follows them up, the more derivable the G-20 will find their

commitments.

It's important for the Troika to be convinced that all the work it's doing now may materialize something designed in the

past or may build the foundations for a global public good in the future.

So, if I were the Sherpa for Mexico, I would strengthen the G-20 Troika by ensuring its presence in all dialogue channels

(Ministerial and Sherpa). While the ministerial channel (not only Finance & CBG, but also Economy, Agriculture, Foreign

Affairs, etc.) would formulate decisions and promote commitments, the Sherpa channel would facilitate and monitoring the

ministerial job.

It'd be necessary for the Troika to conduct both channels with a close and permanent accompaniment of a technical

institutional group (i.e. IMF, World Bank, OECD, UNDP, UNCTAD).

For instance, seconded staff would likewise be necessary to provide coherence to the whole process.


We all seem to agree - an effective Troika will increase the chance of an effective G20 - it may even be a necessary

condition. The question then- "Is an effective troika a sufficient condition for G20 success?" Or should we aspire to a type

of bureau or executive committee - no more formal than the Troika - but which has China and the US as permanent

56

members (as recommended by Tom Bernes in his THINK20 submission)?

Barry Carin

Julio César Escobedo Flores, from theJulio César Escobedo Flores, from theJulio César Escobedo Flores, from theJulio César Escobedo Flores, from the Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:

If we look at regional forums with executive committees, it's easy to find cases (such as in Latin America) where those

bodies lack Troika's political leverage, reducing their managerial capabilities.

Therefore, I don't support the idea of a bureau. Instead, G-20 should strengthen the communication channels between the

Troika and the international institutions (IMF).

In regard of the proposed permanent US & China participation in the Troika and/or the executive committee, it seems to

be a risky move. It may send a wrong message concerning the G-20 membership and legitimacy.


Julio, I agree that the US and China should never be members of the Troika- the chair of the G20 is best left to others.

But we have to recognize that - like in Animal Farm - all countries are equal- but some are more equal than others. So

too all G20 countries are equal- but some are more equal than others. Tom Bernes proposed a "Bureau" in his Think20

paper for Lourdes Aranda:

"There are very few examples of the actualization of the Troika. There are some instances of a successful Troika. For

example, the structure of the G20 Financial Inclusion Experts Group (2009-2010) and the resulting Global Partnership on

Financial Inclusion maintain the G20 troika countries as the overall Co-Chairs. But the French and Russians are

conspicuous by their absence in leading the preparations for Los Cabos.... In any case, it may be unrealistic to expect

progress on preparing for decisions on complex, contentious issues without the full engagement of both China and the

United States. Perhaps it is time to stop beating a dead horse and instead look for an alternative to the G20 Troika.... the

57

most promising construct to substitute is an “Executive Committee”. The idea is most highly developed among the inter-

governmental groups of officials who meet at the OECD. The leadership group, in essence an Executive Committee, is

called the “Bureau”. A number of delegates are designated annually to serve as officers (for two or three years) for a

Committee of all the members. The Bureau provides more detailed direction to the OECD Secretariat on issues of

management and the planning of the Programme of Work. Bureau members participate in a planning meeting prior to each

Committee meeting and provide ongoing consultation by telephone and through email and written exchanges. The Bureau

meetings are open to all committee members who may attend and participate if they wish

At Cannes, the G20 asked their Sherpas “to develop working practices for the G20 under the Mexican presidency”.

Imagine if the Sherpas recommended to President Calderon that future G20 agendas should be prepared by an Executive

Committee of Leaders’ representatives. The presidency of this “G20 Bureau” would be the Sherpa of the host country –

Mexico until November 2012, followed by Russia in 2013, Australia in 2014 and Turkey in 2015. Presidencies in

subsequent years would follow the G20 “bucket system”. The other members of the G20 Bureau would be designated by

the Leaders, with realpolitik resulting in China and the US always being members. To avoid being sidelined by the “Not

Invented Here” syndrome, the future success of any significant proposal will require the support of the US and China. (Of

course, Mexico would have to arrange for Chinese and American support for the Bureau idea.) The logic is clear- a

“Bureau” is the only effective way to share the heavy burden of seeking substantive input fromG20 non-members and

civil society who insist on real consultation and apportion the onerous travel requirements of communicating the outcomes

from the G20 proceedings."

What do you think of Tom Bernes' suggestion?

Barry Carin

Rodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the Direction----General for North AmericaGeneral for North AmericaGeneral for North AmericaGeneral for North America: : : :

Hello,

I believe that the credibility of most of international fora, including informal groupings such as the G20, is based

on expectations of its results. If the international community and participating countries expect to have important results

58

and the organization/summit fails, its credibility is damaged. On the contrary, if they expect to have little results or no

results, and somehow they manage to come up with a big idea, the credibility of the organization/grouping is enhanced.

In this regard, I think this is one of the reasons that the G20 gained credibility and recognition in the firsts meetings. To

sustain both, the group would have to continue to deliver results (real actions) besides important declarations.

For diplomats, let alone common citizens, is hard to keep up with the commitments/actions/results of bilateral meetings

and international conferences, so I believe a way to gain credibility, while increase accountability could be a webpage that

clearly shows what were the commitments, what actions had being taken and what are the results. This could help also

to focus the negotiation on specific deliverables rather than lofty declarations. Of course, we have to recognize that this

is a difficult task, but Mexico and the future presidents of the G20 need to take into account if they want that the G20

credibility remains.

It would be sad to see the G20 become the next APEC, which is a great forum for leaders across the Pacific to meet,

exchange views and experiences, commit to some voluntary goals, but lacks clear results.

Regarding the proposal of having more Leaders-only discussions, we have to take into account that in the era of Summit-

diplomacy, some of the leaders will meet in a continuing basis throughout the year, from UN Conferences, to Regional

gatherings, and specific groupings, so the countries and the leaders themselves would have to have a specific

motivation or reason to extend their meetings. One idea that might be a bit crazy, but could work, is to have a real

Leaders retreat (such as most Fortune 500 companies executive staff have). The specific motivation (as I mentioned) for

them to accept would be that, unlike most of Leaders-only meetings, this one would not have an agenda (so there are no

expectations of any results). Free thinking and some camaraderie could motivate them to come up with some solutions

that nobody is expecting (thus enhance their credibility). I know this is a little bit naive, but sometimes we have to think

outside the box.

Rodrigo

59


Rodrigo

The University of Toronto does a report each year on G20 compliance with commitments-

http://www.g20.utoronto.ca/compliance/2010seoul-final/index.html. Your idea of a web page is a good one- you could

build on the U of T approach. Such a compliance report would be taken much more seriously if was produced by a

government. Perhaps Mexico could make a start by asking each working group to fill out the same template of questions.

Re Leaders-only discussion, one way is to extend a leaders-only meal by an hour and a half or so. In 1994 at the Naples

G8 Summit, the Leaders were scheduled to have a plenary session with the G8 foreign ministers, who had prepared for it

by meeting in the same venue for a day. The leaders simply cancelled it at the last minute- saying they did not want to

meet the foreign ministers to receive the report and just used the time to talk among themselves. Mexico, as president,

could simply change the schedule ( it would be prudent to get Troika , US and Chinese agreement beforehand, to allow

more Leaders-only discussions.

Barry Carin

Rodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the DirectionRodrigo Márquez Lartigue, from the Direction----General for North General for North General for North General for North AmericaAmericaAmericaAmerica: : : :

Thank you for the information about the compliance commitment evaluation. It is a great tool, and I am happy to report

that Mexico is doing fine, but could do better.

It is interesting to note that, some of the emerging nations that are looking for a greater role in the international area,

such as BRICS ranked on the bottom half of the compliance report. I believe that you have to lead by example, and so far

they are not doing great.

60

Table 5: 2010 G20 Seoul Summit Final Compliance by Member RaTable 5: 2010 G20 Seoul Summit Final Compliance by Member RaTable 5: 2010 G20 Seoul Summit Final Compliance by Member RaTable 5: 2010 G20 Seoul Summit Final Compliance by Member Rankingnkingnkingnking

Rank Member Average Compliance Score

1 Australia +0.85 93%

2 European Union +0.83 92%

3 France

+0.77 89% 4 Italy

5 United Kingdom

6 Canada +0.69 85%

7 Japan +0.62 81%

8 Mexico +0.58 79 %

9 Russia

10 Germany +0.54 77%

11 Korea +0.46 73%

12 Brazil

+0.42 71% 13 China

14 India

15 United States +0.38 69%

16 Indonesia +0.36 68%

17 South Africa +0.33 67%

18 Turkey +0.17 59%

19 Saudi Arabia +0.08 54%

20 Argentina -0.08 46%

Source: http://www.g20.utoronto.ca/compliance/2010seoul-final/index.html

61

The Compliance report is great, but in regards to the webpage, I was thinking in a more user-friendly easy to understand

presentation. One example that I just recently saw is the "results" section at the World Bank webpage. On additional idea

is that to present it in a form that people can relate to or that have a direct impact on their daily lives.

Rodrigo.


Rodrigo

I agree that we need a more user friendly presentation than U of T, but also that this kind of report would be more

influential if it was the report of the G20 troika or at least a government. Perhaps you can promote the idea further,

Barry Carin

Sylvia Paola Mendoza Elguea, from the EmbassySylvia Paola Mendoza Elguea, from the EmbassySylvia Paola Mendoza Elguea, from the EmbassySylvia Paola Mendoza Elguea, from the Embassy of Mexico in Peru:of Mexico in Peru:of Mexico in Peru:of Mexico in Peru:

I would like to join this debate by first addressing the issue of success and what can happen to make Mexico and other

emerging countries to not be at the table in a regime that replaces it. I'd like to address these questions because I do not

see the possibility of having a regime that does not include emerging economies. This is because, as the article “The G20

and the United States: Opportunities for More Effective Multilateralism” mentioned, the creation of the G20 happens in

part because of the recognition that in order for the forum to be effective and legitimate, the contributions of emerging

economies are needed. That being said, to have all players at the table come up with recommendations that can be

implemented, a flexible and effective mechanism has to be part of the G20 to be successful and the creation of the troika

is a step towards this goal. But to me, as Dr. Carin states it does seem to be a case of the “chicken and egg” because in

order for the group to consider further institutionalization it must show that its agreements and recommendations are

accomplished.

To possibly solve this “chicken and egg” ordeal, Mexico could use the example of the Rio Group (where the country has

had significant contributions) regarding the roles of Troikas and “Non-Secretariats” to enhance the G20’s effectiveness.

62

The Rio Group first started as The Contadora Group, whose initial purpose was to promote peace in Central American

countries in the 1980’s, now it has turned into something even larger with 33 member countries with divergent interests,

possibly more difficult to work out than the G20’s, because now the CELAC (the organization that replaced the Rio Group)

has no clear consensus on how to achieve the ultimate goal of promoting integration in the Americas. Nonetheless, I

believe the troika and flexibility intended in the organizational scheme outlined in the constitutive documents of the

CELAC are innovative mechanisms that Mexico could use as examples for the G20.


Sylvia

We all agree the G20 must succeed. The issue for middle powers is that the number 20 seems too high for a group to have

an effective discussion. If the G20 fails, the successor regime will include emerging countries like China, India and Brazil,

but may not include countries like Australia, Korea and Turkey, nor Canada and Mexico. So we must make it work- we all

want to be at the table with the rule makers rather than outside with the rule takers.

The question then is how to use the remaining months of the Mexican presidency to emulate the CELAC troika? What

specific initiatives should Mexico promote? How can Mexico convince the Russians (remember "troika" is a Russian word)

to take the Troika seriously? Will Mexico offer several highly regarded officers to be seconded next year to Moscow?

What else can be done?

Remember, Sylvia, to assume you are in charge.

Barry Carin


63

I would like to join the debate by addressing two recurrent issues in the discussion, if I may:

a)Sherpa preparation process.- Strengthening of the Troika is a political decision to be made not only by the current

presidency buy by the other two and the rest of the members of the group. To me, the opportunity resides in the fact that

most members seem to be aware that strengthening of the Troika is the most accessible way to ensure continuity without

compromising precious informality. While the Presidency has the responsibility to engage and obtain commitment from the

future presidency, the whole group must act as well to back up that request. Peer pressure, assignment of specific tasks

to the past and future presidencies are some methods to achieve so.

I have seen some initial - if cautious - encouraging signs from Russia. Their participation at the highest level in the

recently held meeting of Ministers of Economy and their open commitment to follow up on the results of that meeting is an

example of this. The issue of how, if at all, are we going to incorporate all this "Mexican" parallel initiatives (ministerial

involvement other than finance and not as a part of the sherpa process) is another question ...

a) transparency.- I believe the outreach process started by Mexico through its special representative and through the

various activities with constituencies (youth, academics, unions, the business sector, organized civil society, among

others) is a step in the right way.

The challenge is not only to incorporate the thoughts and ideas gathered through those processes but to be inclusive

without compromising action capacity and to create a way to be accountable to these constituencies as well.

On the issue of accountability, I have more questions than answers. How would that figure of "inspector general" work?

Are peer reviews viable? Desirable? How are we going to measure "progress"?

Thank you professor Carin for your thoughts and your time.

Regards.

64


Dear Miriam

Thank you for your thoughtful response. I agree that "Peer pressure, assignment of specific tasks to the past and future

presidencies are some methods" to strengthen the preparatory process. I am pleased at your report of encouraging

Russian signs. One question is whether Mexico can devise some special task to assign to Russia - an ingenious terms of

reference that is clearly in Russia's national interest but that will bring credit to the G20.

On transparency - the outreach efforts so far have all been before the Summit. Would it help if more working or options

papers were posted publicly at an early stage?

On accountability- why are you teasing me? You (with the skill set of both Machiavelli and Gandhi) have answers you

should share. Please presume you are tasked to suggest initiatives- what would you advise?

Barry Carin


Re participation- What is the assessment of the first ever G20 Foreign ministers meeting?

What were the positive lessons?

What would you change if you were to do it over again? Would you invite as many as 10 guests again?

65

If Vladimir Putin asked your advice, what would you suggest to him?

Miriam Gabriela Medel García, from the EMiriam Gabriela Medel García, from the EMiriam Gabriela Medel García, from the EMiriam Gabriela Medel García, from the Embassy of Mexico in Germanymbassy of Mexico in Germanymbassy of Mexico in Germanymbassy of Mexico in Germany: : : :

I find the first G20 ministers to have been a success - my bias is of course that I am a Foreign Service officer... However,

from what I have read and heard from colleagues, it was a very successful meeting in the sense that it allowed foreign

ministers a say in the more long-term questions associated to the effectiveness of the group and the discussion of the

broader global problems that we all need to tackle together.

Indeed, if the G20 is going to be a useful instrument of foreign policy for its members and an effective mechanism in the

promotion of global change, it needs to start working on broader issues that are of common concern (future of

multilateralism, green growth or green economy, for instance) - with the necessary intervention of diplomacy and the

political approach from foreign ministries. Again, the question remains as of how, if at all, these parallel processes will be

incorporated in the traditional, formal, channels (finance ministers and Sherpas).

On the number of invitees I actually would keep it the same: invite a limited numbers but allow participation of anyone who

shows interests. That is a good formula to ensure transparency and inclusion, especially at this stage in the development

of the Group, when informality is so valued yet seen with suspicion by some.

Getting back to accountability, in the short term I would probably propose a system of voluntary submissions by member

countries for public scrutiny. That way we could probably avoid having to build an institutional framework for a peer

review, which is something that at this stage member States do not seem to desire.

For the moment, I chose not to advise Vladimir Putin...

66


Miriam

I must admit skepticism re numbers of invitees.

How many people can be around the table and still have an energetic discussion?

I was disappointed when I read that there were so many guests for the first organizational meeting - but perhaps you can

convince me that with skilled chairing that it can work.

I hope that you are just pausing for a moment in choosing not to advise Putin? What if you are seconded to Moscow next

year to make the troika work? Or to put it in a more indirect way - what if Russian colleagues request your advice?

Barry Carin


Dr. Carin, thank you for your provocative questions and sorry to join in late. Probably I should start by inviting all who

have not taken a look at the official site of the Mexican Presidency to do so at g20mexico.org: you will find there an

historical memory of main commitments, thus, continuity; the road map concept paper with the Mexican goals and even

better, outcome documents from the on-going process, some already with deliverables.

This carefully chosen set of public documents is not only a main commitment of Mexico on transparency, but a pragmatic

tool where the engagement of the participating stakeholders already mentioned -Y20, L20, B20, NGO- is being posted,

even critics, so as to serve for the accountability of the engagements of governments.

Mexico believes that effective actions are the best way to diminish the legitimacy issue, while it has committed to

strengthen the linkages between the G20 countries and the multilateral organizations and open the dialogue to special

guests -Chile and Colombia, besides Cambodia and Benin, and just recently, Ethiopia- besides Spain as permanent

observer. The foreign affairs ministerial meeting even had other special ad hoc gests: Singapore, Norway, Algeria, among

others.

Furthermore, Mexico has added 2 figures for the continuity of this open dialogue: 1) Think20, where think tanks and

academy -not only from the 20 members- explore longer term solutions, structural transformations, cross cutting impacts,

67

etc; and 2) added a task force to the B20, committed to advocacy and continuity of the private sector work, following

gender/regional equilibrium principles, mutual presence of one government observer in each task force and one task force

observer at ministerial meetings, increased participation of businessmen -including SME- and less of chamber officials,

and particular development targets for less developed and low income countries.

Regarding the institutional matter, besides the troika mechanism that obliges the acting presidency to keep in mind the

recent engagements and involves the next one, so as to be preparing accordingly its future agenda, the established G20

working groups play as "soft institutions" having each a co-presidency of 2 countries that do not end with the change of

the chair of the G20. Engagement of other members besides the troika and the working groups has been rightly addressed

by designation of future presidencies, after Russia in 2013, Australia in 2014 and Turkey in 2015, through the rotation of

regions, starting with Asia.

Therefore I wouldn't worry so much for Russia. Our accomplishments will wage on it, and having us in the troika, we will

not let our achievements fade. Besides the fact that the BRICS can always introduce issues that Russia -willingly or not-

might probably support.

Mexico is also promoting other ways to increase the sense of global responsibility in the group instead of self-benefit,

through the engagement of foreign affairs ministers in global governance and other issues related with the impact of the

financial crisis on development and the real economy; and has engaged the trade ministers in a fruitful dialogue that

creatively introduced issues related to trade facilitation and financing without polluting the discussions with the Doha

blockage.

In fact, Mexico is not only taking advantage of its diplomatic bonus of COP16, and trying to promote a new paradigm for

growth in a more sustainable way, but introducing informal and only leaders mechanisms -of course no press until the

end-, in relaxing settings -Puerto Vallarta in B20, Los Cabos in June's summit- sort of Davos style, that do not end here.

Both, the sherpas calendar and the financial track preview meetings in the rest of the year, after the summit,

acknowledging that the G20 is mainly a process.

Having said this, how can you not envisage the participation of Mexico in future decision making tables? when it is actually

participating in all main discussions, as a "G1": in the OECD discussions, but as well in GRULAC and other developing

nations fora, with the group of main contributors to the UN, and as important donor through south-south cooperation to

Central America and the Caribbean; in Busan regarding aid effectiveness; and in the preparatory team of the 2015

sustainable development goals, after being awarded for its achievements in the MDGs.

Hopefully, The Los Cabos summit will have concrete deliverables form the 5 Mexican priorities that accurately

streamlined previous engagements and focused both, on financial urgent issues and structural reforms with a human face.

68

The recent contributions to the IMF were definitely promoted by the G20 Presidency; and the surprising results of the

trade and financial ministerial meetings are already paving the way. Why lose hope?


Judith

Thank you for reminding us of all the positive dimensions and accomplishments of the Mexican presidency. It is always

easier to find fault and criticize than to praise. But is there not room for improvement despite the substantive

accomplishments? I would ask you to use that "not yet satisfied" prism and insist on moving closer to the most perfect

practicable.

Let us take Think20 for an example. With Andres Rozental, I was an organizer and drafted the final report of the Think20

meeting in February with Lourdes Aranda. So I am a supporter. I am told that Sr. Rozental had less than 15 minutes to

present and discuss the report at the March Sherpa meeting (do not misunderstand- I am very grateful for the time with

Lourdes Aranda and team and the 15 minutes- a great accomplishment), but that there were 100 people in the room for

his presentation. How can one arrange a substantive Q & A session in those circumstances? In any case, one option if

Think20 continues is to present the Think20 report in advance, so everyone assumes it has been read, and task the Troika

members to cross examine the Think20 representative at the Sherpa meeting.

It never hurts to take the position of the worry wart- anticipating problems and ensuring that we have a "Plan B" for

unfortunate contingencies. Keep up the good work.

Barry Carin

Judith Marcia Arrieta Munguia, from the Mexican MissionJudith Marcia Arrieta Munguia, from the Mexican MissionJudith Marcia Arrieta Munguia, from the Mexican MissionJudith Marcia Arrieta Munguia, from the Mexican Mission for International Organismsfor International Organismsfor International Organismsfor International Organisms: : : :

Thank you, Dr. Carin, for your views. We also have a high value of Andrés Rozental and luckily he was a very good

multilateralist. a.i. I agree 5 minutes may sound awfully short for a debate but being used to the 3 minute red light in most

multilateral fora trains you with the challenge of developing marketing and publicity abilities to send short impacting even

subliminal messages that of course, should be recorded and be backed with a document posted in a public space, being

69

able to receive feedback and further debate, probably not from the sherpa, but from the working group and so on. My

ambassador says that being a diplomat means being optimist, but you are right, you cannot arrive to a synthesis without a

critic...


Dear Professor Carin: Due to workload I unfortunately missed the interaction with you on Thursday. Nevertheless, I didn't

want to miss the opportunity to post some comments, based on the inputs and reflections from you and my colleagues:

Governance and preparatory work

Governance of G20 is key if it will transform from a crisis response to a Steering Committee. If we all understand Steering

Committee as an advisory body made up of high level stakeholders, who provide guidance on key issues, then there is the

case for having a Secretariat in theG20 that can prepare the agenda, collect information, do outreach and follow-upon

commitments. To overcome the burden of “bureaucratizing” the G20 and losing its informal character, I do agree with the

non-formal character of this Secretariat, integrated by seconded staff from the countries of the Troika.

This non-Secretariat does not exclude the idea of working hand in hand with International Organizations, especially for

the preparation of purely technical work, as has been the case so far with OECD, for instance. As Steering Group, G20 can

be a sort of “coordinator” of organizations, in a way that they complement each other. G20 cannot be an implementing

agency neither another international organization, but it can be the forum for discussing (and hopefully agreeing) on global

issues.

Participation

G20 upgrade was a result of the 2008-2009 crisis. New dynamics of the world economy required more inclusive dialogue,

and thus, the need to bring in new emerging countries. At the time, new members were chosen because of their

membership to the group of 20 finance ministers and central bank governors, and not because they necessarily complied

with objective, well defined and transparent criteria. It was, so to say, an urgent solution to cope with the crisis at the

time.

70

As the agenda of the G20 is broadening, the question of legitimacy is of course in the air. As global concerns are included

in G20 discussions, developing countries feel excluded and unless their concerns and interests are reflected, they will

have no incentive to comply with the outcomes of G20 deliberations. It is true that outreach can only partially compensate

for “not being in the table”. However, there is the risk, as pointed out by Subacchi & Pickford, that “allowing more

countries around the table could hamper the G20’s effectiveness as a key multilateral economic forum”. As this could

become a never ending debate, from my point of view we should look for innovative (and productive)ways to outreach.

My colleagues have already mentioned the great effort of Mexican Presidency to enhance dialogue with non-members, as

well as regional and multilateral organizations. But outreach is not an end in itself. As pointed out by Paul Heinckeber

(2011), consultation should have as ultimate objective “seeking substantive, rather than pro forma input”. Furthermore, it

is important to keep in mind a limitation of this dialogue: guests of a Presidency may engage in G20 working groups but

they have no agenda setting power neither can they participate in the adoption of the communiqué.

To overcome to some extent these limitations, Heinckeber proposes interesting ways of involvement of non-members

such as adopting an informal constituency approach or including the UN Secretary General in G20 Summits as a matter of

right.

Another alternative that could be foreseen to promote consultations and coordination is through the G5. Although the

Group of Five is a “child and product of G8, it has already proved useful as a platform of dialogue between developed and

developing countries. This could also be a way to engage China, India and Brazil which so far, have been rather reluctant

to assume more responsibility, as they still plead themselves as developing countries.

In any case, G20 requires an “External Relations Strategy” in order to clarify the role of guests (as Spain for instance),

broaden outreach and give clarity and direction of its relation with non-members, as well as providing defined frameworks

for them to participate in G20 work.

On leader’s discussion .- I agree that G20 summits should be organized to develop empathy among leaders. Developing

close relations and trust among them is a good way to solve global deadlocks. Leaders need time to engage informally, so

other mechanisms of interaction without the restrictions of pre-established agendas could be envisage. Meals only for

leaders, or retreats, as proposed by Julio are possible options.

71

Transparency and Accountability

For keeping its legitimacy and its relevance,G20 definitely needs to have effective mechanisms of disclosure and

openness.

It is imperative to strengthen the Mutual Assessstrengthen the Mutual Assessstrengthen the Mutual Assessstrengthen the Mutual Assessment Process (MAP)ment Process (MAP)ment Process (MAP)ment Process (MAP), the backbone of the Framework for Strong,

Sustainable, and Balanced Growth, adopted in Pittsburg summit of 2009. Under the Mexican Presidency, members have

agreed to enhance monitoring and accountability of past commitments. The challenge will be on 1) how much of this

commitment will be reflected in Los Cabos Action Plan to be adopted in the Summit of June and 2) how much the MAP

could also match with the discussion and commitments of the Development WG, so that concerns of developing and

emerging economies are included in the top agenda of G20.

The idea of an auditor is rather tempting. As much as G20 moves towards becoming a “Steering Committee”, this proposal

could take shape.

I agree with the need to make WG reports publically available. In fact, I tried to find the Index of MAP without success.

72

Day 5. Day 5. Day 5. Day 5. Food Security and Food Commodity Price VolatilityFood Security and Food Commodity Price VolatilityFood Security and Food Commodity Price VolatilityFood Security and Food Commodity Price Volatility. Moderator: Maria Monica Wihardja, . Moderator: Maria Monica Wihardja, . Moderator: Maria Monica Wihardja, . Moderator: Maria Monica Wihardja, researcher at the researcher at the researcher at the researcher at the

Centre for Strategic and International StudiesCentre for Strategic and International StudiesCentre for Strategic and International StudiesCentre for Strategic and International Studies

Maria Monica WihardjaMaria Monica WihardjaMaria Monica WihardjaMaria Monica Wihardja: : : :

Dear all participants,

I am Monica, who will be moderating the forum today on the topic of food security and commodity price volatility. There

are a few goals that I hope to achieve from this discussion today:

1. How can the G20 succeed in making a progress to tackle food security issues? (How to keep the ball rolling when

different countries have different national interests, etc.). But, first, we have to answer questions like, whether the G20 is

the most effective forum to discuss food security issues and what its limitations are, etc.

2. From the literature, it seems that there are divergent views about issues such as biofuels and financialization of food

commodities. This is not surprising since such issues are tied to national interests, for example, countries that have

comparative advantage on producing biofuel would like to continue on producing biofuel, and countries that depend on

financialization of food commodity would not like it to be regulated, etc.. How can the G20 help to bring together such

inconclusive results into one single proposal in order to move forward into the policy issues?

3. Maybe, the last but not least, is how we can include the poor and increase people's awareness about food security. Note

that poor households have a higher share of food expenditure. Moreover, Food price inflation also has an impact on equity

since the expenditure of poorer households is more heavily weighted towards consumption of food items.

There are many other questions should we have more time.

Let me first start with a first set of questions:

73

1. Since the 2009 G20 Summit in L'Aquila, global food security has had a place on the G20 agenda. Last year, the French

Presidency put together an impressive array of technical meetings, with the goal of mobilizing international organization

and G20 Member States, to strengthen food security.

Stephen John Stedman from Stanford University wrote: "By the time of Cannes, however, and its final declaration, G20

action had largely underachieved."

How successful has the G20 been in mitigating food insecurity issues? Has it gone anywhere? What are the limitations of

G20 to achieve its goal on these issues? Are G20 countries ready to: end agricultural subsidies, phase out export ban, stop

land conversions that threaten food security, etc.? Is G20 the best forum to discuss about food security? If not, then which

forum/fora?

2. During the Think 20 Meeting in Mexico City, Paul Marten (former PM of Canada) said that food security (such as in

Africa) is a regional issue.

But, Stephen John Stedman wrote: "in an interdependent world, the national pursuit of food security can have negative

externalities that exacerbate food insecurity elsewhere, which is then treated as an issue of charity for those less

fortunate."

Should food insecurity issues be solved within domestic, regional, or international domains? If it is a global issue, is there

an effective international governance architecture for addressing global food security?

3. In your opinion, what poses the greatest threat to food security? (Note: it can be country-specific, region-specific, or

global issues.) Among the most-cited factors include:

· Lower support for the agricultural research work;

· Financialization of commodities;

· Climatic shocks;

74

· Rising demand due to rising populations;

· Higher incomes from emerging economies;

· Changing diets;

· Competing use of food grains for biofuel production;

· Falling supply due to stagnant or declining crop yields;

· Diversion of agricultural land;

· Rising water scarcity;

· Increasing input costs;

· Lack of agricultural investment;

· Trade restrictions in many food exporting countries led to further increase in prices;

· Import restrictions to protect domestic market;

· Panicked hoarding;

· Market concentration;

· Dilapidating infrastructures: poor access to market, poor distribution system, poor storage system, poor data, etc

· Cyclical factors include strong recovery in emerging economies, US dollar weakness, speculative activities, and rising oil

prices;

75

· More recently, the Eurozone debt crisis may have short and medium term repercussions as well.

Look forward to your opinions.

Monica


Since one of the aims of the G20 is to coordinate public policies of its members to achieve economic stability and

sustainable development, I’d say food security should definitely be on the agenda, because with food prices soaring high,

economic stability around the world is unattainable. Also as the note to the Mexican presidency, “Consolidating and

Deepening the G20 Commitment to Global Food Security” says, despite it being an imperfect forum, without the agreement

of the G20 is not possible to have a food-secure world. Nevertheless if countries cannot agree on ending agricultural food

subsidies and phasing out the export bans in other fora such as the WTO, how will they do it at the G20? Especially if

generally those that push for continuing those policies are members of the group. A change of strategy is definitely

needed and that outlined by the aforementioned note is one of the ways to get to that strategy as bargaining is what will

get agreements.

A group of countries have to start that bargaining and tie commitments on food security to trade as the note says.

However, there has to be a leader of a group of countries within the G20 to gather up those most interested in achieving

an agreement on food security to create those bargains. Perhaps Indonesia, Mexico, India and Japan could be part of this

leadership group?


Dear Sylvia,

Thank you for your valuable input.

76

Here are my comments to yours:

1. You were right to say that we need a change of strategy. Note that in trade sector itself: "despite the fact that G20

member countries have been reiterating to avoid protectionism, the G20 member countries are responsible for 80% of a

substantial increase of trade-restrictive measures during the second part of2011. Protectionist actions in the third quarter

of 2011 alone are as high as in the worst period of 2009. Protectionism is gaining ground as apolitical reaction to current

local economic difficulties." As we know, agricultural food subsidies are huge in European countries, and they are one of

the main factors for the deadlock at the Doha Round. So, the old strategies will not work.

2. I do agree that global management on food security is needed, although implementation may be local and differentiated.

3. You seem to suggest that G20 countries have to bargain and tie commitment, or a unilateral action is needed. On the

trade sector, I am rather pessimistic, unfortunately (see point 1 above). There is an increasing tendency in Indonesia, at

least, of trade protectionists. (You may see my discussion topic on Indonesia). Beside, G20 is not a legally binding

institution, so you cannot make a country tie their hands in an agreement. I am just being realistic, I guess.

4. Stephan Stedman from Stanford University suggested that "the G20 should pursue a bargain among the G20 and G-173

that explicitly states what is expected of food insecure nations in terms of agricultural, food and rural development policy,

and ties that to explicit G20 commitment on trade, aid, and food governance." So, I guess, to preserve relevance and

legitimacy, it should also work with the G-173?

Monica


Dear Monica:

I am sad to say that I am also pessimistic on the trade sector and on protectionism. As President Calderon said in one of

his interventions during the World Economic Forum in Puerto Vallarta, countries all come out and comment on the need to

avoid protectionism and the day after the Summit concludes, most countries implement protectionist measures to protect

77

their industries. We find plenty of examples of protectionism in the Latin American region as well.

Regarding the reference to bargaining among G20 and G173, it is indeed a must that the G20 works with the G173. The

main question is how? Perhaps one of the ways to do it would be to have a rotary representative of G173 countries

elected at the UN or WTO that would be in charge of presenting a non-paper to the G20 with contributions for the final

agreement that would attempt to include many of the interests of those countries. Perhaps this idea is also unrealistic, but

we could try it out.


Dear Sylvia,

Thank you for your valuable comments. I apologize for the late response due to time difference between Mexico and

Jakarta.

1. I also do not understand why leaders continue to acclaim non-protectionist measures but become the main culprits of

their own standards. I think, the G20 Mexican Presidency has to be realistic. The global trade environment has not been

friendly with tendencies of a trade war more than a trade cooperation. At least, at the multilateral level. It is a prisoners'

dilemma situation - if you do the correct way, you lose. The Doha Round has been stalled. I think, a leader at the G20

must be honest enough to say "the Doha Round is dead. What is our alternative to restore global trade order?" The critical

window to conclude the Doha Round is 2011 because there will be presidential election/ accession in the U.S. and China,

so we cannot expect any progress in 2012. And maybe, not even a few years later.

2. A rotary representative at the UN or WTO with a responsibility to produce a non-paper to the G20 is a nice initiative.

Maybe, the Mexican G20 Presidency could consider that. It can be discussed at the Foreign Affairs Ministerial Summit or

included in the agenda on global governance.

78

3. I forgot to mention earlier, that, as Paul Marten said, Africa seems to be underrepresented at the G20, while the African

region is the most vulnerable to food security and famine. Many have said that South Africa cannot represent Africa as a

whole. The African Union has been invited to the G20, but of course, its role is limited to being an observer. So, fair fair fair fair

representation of the African region needs to be reviewed since Africa can be the key to food securityrepresentation of the African region needs to be reviewed since Africa can be the key to food securityrepresentation of the African region needs to be reviewed since Africa can be the key to food securityrepresentation of the African region needs to be reviewed since Africa can be the key to food security.

Monica

Julio César Escobedo Flores, from theJulio César Escobedo Flores, from theJulio César Escobedo Flores, from theJulio César Escobedo Flores, from the Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:Embassy of Mexico in Greece:

Despite food security cannot be met by a single body such as the G-20, it definitely has a starring role in shaping food

friendly framework conditions for the world.

G-20's shortages to address food insecurity by itself are well known: policy-bias, lack of legitimacy, economic interests,

and so on.

However, as Sylvia just pointed out, there is a clear need of multilateral action in this issue.

So far, food security has been treated at regional levels (not only in Africa, but also in Asia and Latin America), but no

major advances have been recorded yet.

Therefore, G-20 should enhance multilateralism, by fostering coordination between domestic, regional and global food

governance.

When we were discussing the G-20 development agenda with Mr. Fues, he suggested that the Group should conceive

itself as an advisor to multilateral authorities and implementing agent for global agreements, based on the principle of

"common but differentiated responsibilities".

That is, G-20 could step up deliverance by promoting investments in domestic and regional projects, mainly in the most

vulnerable and poorest countries, or by designing global codes of conduct for agricultural policies to prevent negative

externalities.

79


Dear Julio,

Thank you for your valuable comments.

1. I agree with the idea of Tom about G20 being an advisor to multilateral authorities and implementing agent for global

agreements, although ironically, they become the main culprits for violating many of global agreements such as trade.

However, let me add that the G20 has the potential to be a forum that can create a "political environment" to implement

many global agenda, such as the climate change.

For example, according to the Mexican G20 Sherpa: "The G20 does not intend to become the main platform for climate

change cooperation, but rather simply support and promote the process as it evolves within the UN Framework."

Moreover, she said: "although the forum to address climate change is the UNFCCC and therefore the issue is not part of

the G20 agenda, one of Mexico's most important goals at the G20 summit in Seoul was contribute to creating a political

environment that led to success at theCOP16 in November 2010."

And certainly, once you have the highest-level political commitment, it will easier to implement it domestically and

regionally.

2. I do not quite agree that no major regional initiative advances have been recorded (but maybe, I am wrong). In fact, I

feel ASEAN-led initiatives on food security have more potential than global initiatives.

Currently, we have:

1.ASEAN Integrated Food Security (AIFS) Framework for 2009-2013 and the Strategic Plan of Action for Food Security

(SPA-FS)

80

This includes: ASEAN Food Security and Information System (AFSIS) also plans to link with the ensuing Agricultural

Market Information System (AMIS) that will be initiated by the ongoing G20 process. At least two countries are being

planned for link upon a pilot scale with the AMIS.

2. The ASEAN Plus Three Emergency Rice Reserve

Emergency food reserves differ fundamentally from buffer stocks in that the latter attempt to offset price movements

which benefit consumers at large, while emergency food reserves can make food available to vulnerable groups in times

of crisis.

Tentatively, extended to other food commodities.

3. The ASEAN Fund for Food Security - Financing

The proposed fund may have been patterned after the Global Agricultural Food Security Program (GAFSP). The feasibility

study on the ASEAN Fund for Food Security has yet to be done.

4. The ASEAN Multi-Sectoral Framework on Climate Change

Agriculture and Forestry towards Food Security is an initiative to mitigate the impact of climate change on the agricultural

and forestry industries. Among the challenges of this pillar are improving quality education for farmers, adoption of

suitable technology, setting communication and marketing arrangements to enable the access by farmers to information,

capital, and inputs. [ASEAN Economic Community Factbook].

Plus, in terms of trade, "the market for rice is well established. The intensity of rice trade among countries was relatively

high during the years 2007 to 2010. Indonesia along with the Philippines, Malaysia and Singapore are ASEAN countries

that have a high dependency on rice imports from other ASEAN countries. This kind of regional trade is essential in

enabling ASEAN countries’ to fulfill their rice needs and is a key to enhancing intra-ASEAN trade, thus promoting not food

security within ASEAN but broader trade cooperation within ASEAN." (Hirawan and Simojoki, 2012)

81

So regional initiatives are still crucial.

Monica

JuJuJuJulio César Escobedo Flores, from the Embassy of Mexico in Greece:lio César Escobedo Flores, from the Embassy of Mexico in Greece:lio César Escobedo Flores, from the Embassy of Mexico in Greece:lio César Escobedo Flores, from the Embassy of Mexico in Greece:

Thank you very much for referring to those Asian initiatives, which have had a great impact on food security.

The other day, I was taking a look at one document of the Inter-American Institute for Cooperation on Agriculture (IICA),

which has done a lot for a long time to promote food security in Latin America. The document concluded, as you argue,

that regional actions have succeeded more than global ones, particularly in Africa and Asia.

In fact, most of the time regional initiatives are implemented to reduce vulnerabilities before major global challenges such

as price volatility, protectionism, etc.

But, my point was that the outreach of those regional actions is still limited. Vulnerabilities remain high in Africa, Asia, and

Latin America.

Therefore, G-20 has the opportunity to highlight a system of systems approach in order to maximize the results of

programs designed at regional and domestic levels.


Dear Julio,

Thank you for your reference to the IICA study.

82

I agree with the ideology - that there has to be a global governance/ system to coordinate food security initiatives.

But, as what we have been witnessing, managing price volatility and trade protectionism have not made any significant

progress - if not, they are getting worse, despite the fact that G20 leaders have been exclaiming that they are committed

to avoid trade protectionism and that they recognize the need to control food price volatility.

So, maybe regional initiatives are still the best among the worse options.

Having said this, I do not mean to suggest that we should stop trying to create this global "system of systems". G20 has

the advantage to create political climate for this effort.

Monica


While not seen as an urgent matter at the moment, the issue of food security and food commodity price volatility might

become some of the most important ones in the agenda of the group - and the global agenda for that matter, in the short

term. Together with climate change, the faulty access to food and speculation around its commodity price, along with

problems associated to access to raw materials, are the most pressing issues humanity faces as a whole.

In is therefore encouraging to see the commitment of the group to discuss it. The challenge is to translate it into

commitment for action and into actual initiatives that have to be carried out necessarily by other, formal, international

institutions and that involve more than the 25something members of the Group.

In that sense, the G20 - UNFCCC experience is an example worth emulating in the field of food security, even though it

might be double challenging as it does not exist a single formal global negotiation platform for food security. On the other

hand, it might not be necessary or even desirable, as progress might be easier to achieve through regional initiatives as

you have suggested.

Thank you Dr. Wihardja for all the information you provided on the Indonesian experience, as well as on the regional

83

initiatives at the Asian level. Mexico can definitely learn from them. And this thought takes me to the fact that the G20 has

a huge potential for a peer-teaching and learning process. Hopefully we will all make profit of it.

Best regards.


Dear Miriam,

Thank you for your valuable comments.

I apologize for the late response because of the time difference with Jakarta.

Certainly, every country and region has a different food security issues, hence, solution must be differentiated, although

there are also global issues that can be tackled globally. As a first step, I think the G20 must at least be the theatre to

provide a political climate with the highest political commitments by leaders to re-affirm the on-going food security

issues, to recognize issues at the most food insecure nations and not to put a blind eye on the contribution of the G20

countries on food security issues in the world, such as agricultural food subsidies, export ban, financialization of food

commodities, waste of food, etc..

I also see the need to have a division of labour on top of a differentiate approach by each country and region. A division of

labour between global issues, regional and domestic. In Indonesia, for example, logistic issues - including, connectivity -

is as important as demand-supply issues. But, this is certainly not the case of Singapore. I also think that, within a region,

focus must be on the most insecure nation. It is interest to note that the most insecure nation may not be the most import-

dependent country.

84

Hence, multilateral/ horizontal coordination (coordination among different organizations) and vertical coordination

(coordination among global, regional, and national initiatives) is crucial. Coordination may be the key issue here.Coordination may be the key issue here.Coordination may be the key issue here.Coordination may be the key issue here.


On the first point: whether the G20is the most effective forum to discuss food security issues and what its limitations are, etc.

First consideration. Food Security is a complex global challenge that requires collective action and a comprehensive

approach to address in a coherent manner its multiple dimensions, such as availability, access, utilization,

stability(according to FAO´s definition).

The convening power of the G20 for mobilizing key actors and institutions is crucial. G20members are key global actors

involved in the production, distribution and consumption of food, agricultural goods and commodities world-wide. A

number of international institutions have been mobilized to develop policy solutions. FAO,OECD, the World Bank Group,

IFAD, UNCTAD, WFP, WTO, IMF IFPRI, and the UN HLTF joined forces for the first time to produce a policy report on

“Price Volatility In Food And Agricultural Markets: Policy Responses”. This is a first step to develop a coordinated and

coherent action.

G20 as an informal mechanism for global governance and policy coordination can contribute to build common ground,

break the big deadlocks in formal mechanisms, and develop coherent responses that are translated into concrete actions.

This will not happen overnight, though. Food security and what it embraces is so complex that problems won’t be solved

in the short term. Furthermore, there is a need to work on better data collection and more robust indicators on food

security. For instance, FAO undernourishment index is published with considerable delay. Besides, it does not provide

information at the sub-national level or intra-household level.

85


Dear Beatriz,

Thank you for bringing in the issue on data collection and data availabilitydata collection and data availabilitydata collection and data availabilitydata collection and data availability. Even at the national level, we (Indonesia) have

that deep problem. Every interest group, institutions, etc. come up with their own data on, for example, on food production

and food consumption. Every year, we have the same issue of rice imports - the Indonesian government pledges for rice

self-sufficiency, but the fact is it still needs to import. The government often says that there are enough rice in the

storage system/ buffer stock, yet, the storage system/ buffer stock is scattered everywhere around Indonesia, and no one

could confirm the figure. At the end of the day, different interest groups express their distress of having to import rice.

The bottom line is there is not centralized and transparent data and hence, rice import issue simply becomes political

commodity for different interest group and the government to take advantage of. I do not understand why there is no

automaticity system, for example, where if certain rice deficit is found, then the government will import rice, but

otherwise no. Hence, there is a need to increase the transparency of national datathe transparency of national datathe transparency of national datathe transparency of national data.

What is interesting to have is data on the flow of food commodity across local regions within a nation, and not only

export-import data. At least, in Indonesia, we have a huge disparity so it will be interesting to see how food commodity

flows within a nation.

Monica

Rodrigo Alberto Azaola Illoldi, from the Embassy ofRodrigo Alberto Azaola Illoldi, from the Embassy ofRodrigo Alberto Azaola Illoldi, from the Embassy ofRodrigo Alberto Azaola Illoldi, from the Embassy of Mexico in New ZealandMexico in New ZealandMexico in New ZealandMexico in New Zealand: : : :

Dear Monica, before in this course I mentioned the food security issue as one of the most important in the G20 agenda,

and one that could, if effective, shield the G20 legitimacy deficit. It is true that food security became a pressing matter

after 2007/08, and the G20 has been very keen to tackle this problem besides the usual organizations. Among the G20

86

members you have indeed the biggest exporters, importers and subsidizers so yes, it it’s a good place to start a

discussion, although at the bottom line always attached to very particular national interests.

The meetings of the G20 agriculture ministers, and the recommendations issued or the research commissioned by, has

produced a good amount of data and strategies to implement. It is clear that the G20 cannot solve all this matters in a

global scale by itself, but for sure it can give enough political clout to some of the proposals to be considered at a

governmental, regional or financial level. For instance, the volatility of food prices is linked to the management of

available information for commodity traders, mainly located in developed countries, so it makes sense, for example, the

proposal of the agricultural market information system.

I think that for the G20 to forward any real and tangible advance related to food security, it should work in a two track

approach, at a financial level for example setting the mechanisms for a more rational, predictable and less speculative

trade of commodities (which of course includes the always polemic topic of subsidies, for bio fuel or agriculture) and at a

regional level, with the implementation of emergency grain programs, reserves that if multiplied could ameliorate or even

prevent another global crisis. Of course the long term objective would be to integrate regional and international food

security mechanisms under a sound financial framework.


Dear Rodrigo,

Thank you for your valuable input.

I apologize that due to the time difference with Jakarta - it was already almost 4am, Jakarta time, when this post was put

up, I could not reply on time.

I agree with the political environment the G20 could create because of the leaders' level nature of the G20.

87

In regards to the agriculture market information system, you are right that transparency is important.transparency is important.transparency is important.transparency is important. (My next question

would be transparency to whom. Do farmers get to access the AMIS?)

The double-track approach is good. We need to balance the long-term and short-term issues of food security, or financial

and non-financial issues.

The long-term issues would be:

1. To increase rice production and productivity so that respective countries will be able to feed their growing and more

urbanized population.

2. Energy and food link: biofuel.

The short-term issues would be:

1. Financialization of commodities, although the literature is still divided whether speculation causes commodity prices

volatility of not.

2. Panicked hoarding.

3. Trade restrictions.

From the multilateral organization report to the G20 (by Bioversity , CGIAR Consortium, FAO, High Level Task Force on

Food Security, IFAD, IFPRI, IICA, OECD, UNCTAD, WFP, World Bank, WTO. Dated March 18, 2012), these are the main

policies, mechanisms, and actions to be the focus of the G20:

1. Create the enabling policy environment.

2. Improve agricultural innovation system and more specifically strengthen R&D

88

3. Promote specific policies to close the gap for the small horder farmer by increasing market access.

I think, if implemented effectively, could be very nice, and combine a nice mixture between long- and short-term policy

focus.

Monica

BeatBeatBeatBeatriz Hernández Narváez, from the Mexican Mission for UNESCOriz Hernández Narváez, from the Mexican Mission for UNESCOriz Hernández Narváez, from the Mexican Mission for UNESCOriz Hernández Narváez, from the Mexican Mission for UNESCO: : : :

On what poses the greatest threat to food security? On what poses the greatest threat to food security? On what poses the greatest threat to food security? On what poses the greatest threat to food security?

From my point of view the greatest threat to food security is poverty. It is about treating the disease (poverty) and not

only the symptom (hunger).

Poverty is a critical challenge that hampers the achievement of the four dimensions of food security, as defined by FAO.

So, the issue needs to be seen as a development issue:

AVAILABILITY.-how to ensure that food is available for the poor? Here, some related constraints/challenges should be

addressed such as climate change, water resources and bio-energy production and soil management.

ACCESS.- Lack of purchasing power deprives a person from access to food. Enhancing access to food is a precondition

for poverty reduction. How governments will ensure access to food?

UTILISATION.- Some of the consequences of poverty: lack of access to clean water or poor health conditions lead to a

deficient utilization of food. What systems of social protection have to be put in place in order to ensure that households

“utilize” sufficient nutrition food?

STABILITY.- or in other words, how to ensure availability of, and access to food at all times?

89

What may be more challenging, though, is that these four aspects are interdependent and mutual reinforcing.Improvement

in food security requires progress in all these dimensions.


Dear Beatriz,

Thank you for another valuable comment.

I totally agree that food insecurity is largely a "poor people phenomenon". What I am saying is being easily well-

nourished; it is not an issue for rich people, although ironically the rich people (whether through waste of food or

something else) are the culprit to it. They are the most vulnerable in regards to the four dimensions you mention above.

I think short-term issues on food security must be focus on these most vulnerable people.

Monica


Hello Monica, sorry to join late and thank you for your very interesting inputs. Food security has been put forward by

Mexico for several reasons and through important mechanisms aiming to more concrete achievements.

1) reasons: it is a moral value to be able to feed the poorest, but also low income countries that only graduated from the

LDC category, but as well, a political need to avoid social uprisings like the Arab spring.

Having food security in the G20 agenda as a main issue inherited from the French presidency, aiming particularly the

African continent where it has important responsibilities, has also meant to Mexico a way to put development in the front

page. Without leaving the financial focus on rising food and commodities prices that Mexico has clearly point out as the

result of speculation at moments when interest rates are low, and commercialization corporations have lost the ground

90

gained by financial ones in charge of the price of "futures" of main commodities without any prejudice if the poorest

families allocate more than the 50% of their income for food, or if the 2000 MDGs targeted hunger and poverty reduction

for 2015, only 3 years from now.

Resolving food security is also a way to increase legitimacy of the G20, being responsible as you rightly say of the main

blockage at the WTO, agricultural subsidies -not only the usual suspects as the EU with its CAP or the US, but now mainly

Brazil and others like South Africa, besides Indonesia as you point out.

Finally, food security is definitely more than a global issue a systemic issue: linked to energy, climate change, financial

speculation, health, so any solution being it regional, national or global needs coordination since the growth of the world

population as FAO has clearly alerted, and the actual level of production will not be enough to feed next generations.

2) Thus mechanisms should be with different stakeholders and Mexico has gone on this direction: putting think tanks

together for medium term analysis on trends and impact; governments for better policies including the generation of an

environment that stimulates investments -both private and public- in the agricultural, fisheries and rural sectors in a

holistic manner that integrates sustainable development, better food and nutrition, but as well, risk reduction through

better information and a fire wall of insurances against climate and sanitary risks, but also vs. shooting prices; while

increasing public investments in rural infrastructure, water sanitation and irrigation, R&D, capacity building of small

farmers -firstly for auto consumption but also to perform as growing SME's, recognizing that rural development needs

green jobs, and human capital enhancement.

Finally supporting PPP, private responsibility through the food security task force of the B20 that involves the main global

corporations, but as well through the civil society working group on food security, and the whole network of related

international organizations: starting from the partners in the UN as FAO, plus WTO, OECD, and WB, and through them with

others like the WFP, the IFRC, OCHA, WHO, WIPO, UPOV, to attend humanitarian needs, nutrition, improvement of seeds,

information and stocks, among other related issues. While keeping the tropical products French initiative, wheat initiative,

and price volatility analysis with UNCTAD so as to avoid duplication of tasks, encourage advances in the Seoul multi-year

action plan, but mainly, advancing in what the Mexican presidency has defined as its 4th main priority, also linked to the

5th one on green growth.

Finally, scaling down this very much needed global enabling environment to the national and local level, needs more than

regional approaches on the road in between, integrated ones, being Asean, instead of Asia, or even among smaller group

of countries, due the stagnating negotiations in multilateral fora like the WTO.

For this reason Mexico also convened a trade ministers meeting to try to work on "other issues" such as trade facilitation

and financing, value chains at regional and global levels, plus other legal issues within the WTO rules to enhance trade and

91

growth, being Mexico a true supporter of multilateral institutions.

Such an important issue as food security could not be treated in only one front. Mexico could not risk either to get

polluted by the Doha agenda so even recently changed a ministerial agricultural meeting for 2 vice-ministers level

meeting hoping to have a more technical approach.

The small steps of the Mexican COP16 diplomacy throughout the year, more than photo opportunities, may be able to build

slowly consensus before the summit, so that the informal, "decontracté" environment that we want to build in Los Cabos,

as the one for B20 recently set in Puerto Vallarta, may ease agreements that Mexico will definitely pursue after June

throughout 2012, and later as a troika member and development group co-chair.


Dear Judith,

Thank you for the very rich input. I apologize for the late response due to the time difference.

I think it is commendable that the Mexican Government has decided to continue the Cannes agenda on food security since

many feel that it was largely underachieved at Cannes due to the Cannes Summit being hijacked by the European crisis

agenda. Besides the fact that the G20 needs a continuity of its agenda, Mexico is also the first developing country to host

the G20 so it is appropriate to pick up this agenda. As Amb. Lourdes Aranda said during the Think 20 Meeting, Mexico still

has a lot of poor people who are vulnerable to food security issues including volatility of food prices.

First, I would like to re-iterate what I said earlier. The Mexican G20 Presidency needs to ensure coordination, both among

regional and domestic initiatives and among multilateral organizations. That is the key.

Second, since food security is a "poor people phenomenon" - they are the most vulnerable to the availability, access,

utilization and sustainability issues of food - the poor people should become the main stakeholders in solving food security

issues. Those who are not so vulnerable to food insecurity, at least not in the short term, should be given moral

92

awareness as to what food security means and ways they could contribute in alleviating it. I guess even simple daily-life

instructions like "not to waste food" or where to donate access food would be a start. The poor people are about the most

skillful people in securing food - how could those living below 99 cents a day (there are about 865 million of them in the

world as of 2005, or about 13% of the world's population) secure their food every day? The bottom line is the poor people The bottom line is the poor people The bottom line is the poor people The bottom line is the poor people

have to be included in the discussion as they are the main stakeholders in food security and maybe they are the key to food have to be included in the discussion as they are the main stakeholders in food security and maybe they are the key to food have to be included in the discussion as they are the main stakeholders in food security and maybe they are the key to food have to be included in the discussion as they are the main stakeholders in food security and maybe they are the key to food

security issues since they do not take food security for gsecurity issues since they do not take food security for gsecurity issues since they do not take food security for gsecurity issues since they do not take food security for granted while we, the not so vulnerable people, hardly have to think ranted while we, the not so vulnerable people, hardly have to think ranted while we, the not so vulnerable people, hardly have to think ranted while we, the not so vulnerable people, hardly have to think

about it.about it.about it.about it.

Monica


Dear Monica and colleagues,

First of all, I would like to thank you Monica for sharing your thoughts on such an interesting ongoing debate, and please

excuse me for joining so late to the conversation. All of the participations by my colleagues are very helpful and insightful

and, that being said, I will do my best in trying to make a humble contribution.

In addressing the questions you pose, I think Mexico went in the right direction when it put food security and commodity

price volatility once again atop of the development agenda, as it selected said topics to be one of the five priorities of its

presidency of the G20.

That price volatility, triggered mainly by economic and population growth in the last decades and climate change,

threatens the well-being of a large share of the population living in poor countries, is nothing new. Nonetheless, the

situation has become ever more worrisome as a result of recent economic crises and due to the fact of the increasing

interconnection of the prices of crops and commodities, which make global shocks more rapidly transmitted (Asian

Development Bank, 2012: 4).

As was already clear in the ambitious Seoul Multi Year Action Plan on Development, when the G20 enlarged its original

scope and addressed development issues, special attention was devoted to food security and price volatility by stressing

93

the need of increasing both investment and financial support for agricultural development to mitigate shocks in the price

volatility. Furthermore, the French presidency of the G20, contributed to the advancement of said goals.

Therefore, pursuant to the most recent report of the DWG, the following activities were identified for concrete

implementation: development of a Knowledge sharing platform for tropical agriculture; pilot projects of the “Agriculture

Pull Mechanisms” initiative; development of a Public-Private Partnership Platform to maintain a high level dialogue; field

testing the principles of Responsible Agricultural Investment on a voluntary basis through pilot projects; and setting up a

risk management advisory mechanism.

One of Mexico’s proposals is to increase agricultural productivity in developing and low income countries (LICs) as a

means of improving food security while generating economic opportunities to producers. In the medium to long run, this

may be a way of overcoming protectionism, maybe?

The Mexican presidency asked IOs to produce a report entitled “Improving Global Sustainable Agricultural Productivity

and Bridging the Gap for Small Family Farms”. Besides, it is actively working within the DWG and most importantly in the

Agricultural Minister’s Group to achieving concrete policy proposals and recommendations that will be included in the

Ministerial Declaration.


Dear Alejandro,

Thank you for your valuable inputs. I apologize for the late response due to the time difference.

On top of what you said above, I wonder, if increasing within-country inequality throughout the world (partly because of

the decoupling of the financial sector from the real sector) has contributed to the food security issue. It has not been

mentioned but there are at least two reasons why it is so: first, financialization of commodities and decoupling of the

94

financial market; second, as one becomes richer, one takes food for granted and hardly think about it, while as one

becomes poorer, food security issues become worse. This is just a thought.

The abovementioned initiatives are commendable. Maybe, there needs to be a double-track approach. One at the Finance

ministerial level on financialization of food commodities and how to better regulate food commodity prices, especially from

speculators. Indonesia has been the main proponent to regulating food commodity future/derivative market as it sees it as

the main culprit for food commodity prices volatility. However, it seems that progress has been slow. Part of the reason is

that literature has been inconclusive in regards to the effect of finanliterature has been inconclusive in regards to the effect of finanliterature has been inconclusive in regards to the effect of finanliterature has been inconclusive in regards to the effect of financialization of commodities on food price volatility. Some cialization of commodities on food price volatility. Some cialization of commodities on food price volatility. Some cialization of commodities on food price volatility. Some

countries that countries that countries that countries that benefit from financialization benefit from financialization benefit from financialization benefit from financialization ooooffff food commodities would not be in favor in regulating the market. Hence, the food commodities would not be in favor in regulating the market. Hence, the food commodities would not be in favor in regulating the market. Hence, the food commodities would not be in favor in regulating the market. Hence, the

Mexican G20 President should make progress on this front, and move forwardMexican G20 President should make progress on this front, and move forwardMexican G20 President should make progress on this front, and move forwardMexican G20 President should make progress on this front, and move forward into concinto concinto concinto concrete policy formulation/ rete policy formulation/ rete policy formulation/ rete policy formulation/

recommendation.recommendation.recommendation.recommendation. If studies show financialization is detrimental is contributing to price volatility, then it should be

regulated. If not, then it should not be.

The Mexican Presidency's proposal to increase agricultural productivity is commendable. Unfortunately, there is a 10-15

year lag between agricultural research spending and its impact on productivity. Even if reinvestment were to start

immediately, the effects are likely to be evident somewhere around 2025. It is crucial that it starts now, but there have to

be some short-term measures as well - what we do in the meantime.

Yes, I have read the IO's report. I think, it is a good report. The challenge now is how to make the Leaders adopt such

recommendation and internalize it at home in such a way that it is relevant to national-specific issues while safeguarding

it against domestic institutional constraints.

Monica

95

5555.1. .1. .1. .1. Case Study on Indonesia: Food Security vs. Food SelfCase Study on Indonesia: Food Security vs. Food SelfCase Study on Indonesia: Food Security vs. Food SelfCase Study on Indonesia: Food Security vs. Food Self----Sufficiency Sufficiency Sufficiency Sufficiency –––– Monica Wihardja. Monica Wihardja. Monica Wihardja. Monica Wihardja.


Dear participants,

On top of the "big issues" discussion I posted earlier, I would like to also stimulate debate on Indonesia's unique example

on food security. This is a concrete example of food security that may help us think about how to solve bigger issues. So,

please feel free to put comments. Hopefully, this discussion could also help Indonesian policy makers to solve Indonesia's

food security issues.

Monica

-----

Few facts:

• Food constitutes more than 50% of the expenditure for half of the population.

• Poor households spend almost a quarter (23 percent) of their income on rice compared with 9 percent by upper

income households.

• Around 70 percent of poor households in rural areas (a significant proportion of which are farmers) are net

consumers of rice (i.e. they consume more rice than they produce).

• Indonesia's rice consumption is one of the highest in the region/world: about 130 kg per capita per year.

• Because of its archipelagic islands, food inflation is often a supply-side phenomenon: climatic shocks (including

high sea waves) and dilapidating infrastructures and poor logistics.

• Indonesia used to be net exporters of many food commodities: fresh beet, live cattle, rice, sugar, shallots, etc. But,

now it imported most of these food commodities.

96

Issues:

One of the key challenges for Indonesia is its increased protectionist measures in trade industry and its impact on food

security. Food security is often misunderstood as food self-sufficiency. Although Indonesia has pledged to become self-

sufficient in rice, the fact is Indonesia still depends on rice imports in order to ensure it has sufficient rice reserve every

year. Indonesia remains a net deficit country on rice with an increasing deficit in 2010: 169.68 million USD (2007),

97.34million USD (2008), 95.41 million USD (2009), and 180.11 million USD (2010)(Hirawan and Simojoki, 2012). One the

one hand, by increasing rice imports, Indonesia is losing its comparative advantages in food crops. Warr (2012) suggests

that there is a significant underinvestment in agricultural research within Indonesia. Moreover, dilapidating infrastructure,

such as poor access to market, poor distribution system, poor storage system, poor irrigation system, etc. have worsened

Indonesia's domestic competitiveness on food crops. On the other hand, there are proliferating horticultural and other

trade barriers. Quarantine system is introduced on all horticulture goods. Ports that could accept horticultural goods are

reduced from 8 to 4 ports starting in March this year. Quota on beef imports has been reduced. The import of salt is now

prohibited on a seasonal basis, and is only allowed subject to ministerial approval. Imports of some quality seeds, such as

high-quality potatoes seeds, are not allowed and foreign ownership on seeds investment is restricted.

Current national strategy on food security:

1. Increasing domestic supply through long-term measures aimed at enhancing Indonesia’s agricultural productivity and

production.

2. Managing food price volatility through short-term proactive measures, such as streamlining import procedures of key

staples from international markets, with a possible contingent purchase agreement.

3. Protecting the purchasing power of poor and low-income households through short-term extraordinary social

measures.


Hello Monica,

97

This is a fascinating topic, but very challenging as well. Trying to respond to your stimulating questions, I will first try to

go into the example of Indonesia.

As you rightly point out, one of the key challenges for Indonesia are its increased protectionist measures, especially for

rice imports, which have led to an enormous increase of rice price, with terrible consequences for poor households.

The problem, I guess, is that food security in the country is understood mainly as self sufficiency production issue. This,

bearing in mind the importance given to rice by population, not only as the most important commodity in the country but

also as an integral element of Indonesian gastronomic culture. In a working paper prepared by the Center for Global

Development (2004) (http://www.cgdev.org/files/2740_file_WP_48_Food_security_in_Indonesia.pdf), it is even mentioned

that there is the perception that a "time bomb" is ticking for Indonesia’s food security as a result of its deficit on national

production of rice.

Being perceived the threat so narrowly (need to reduce imports), Indonesia forgets other aspects required to face with its

food security challenge in an integral manner, such as:

• Investments on new technologies and irrigation systems

• Development of logistical facilities (for rice stocks)

• Investment in rural infrastructure

• Development of rural capital markets

• Subsidies to poor consumers when prices go up

• Technical assistance to farmers (capacity building)


Dear Beatriz,

98

This is certainly a wonderful input from you. I will pass this on to the Indonesian representative for the G20 at the

Ministry of Agriculture.

Some of my comments to your inputs:

1. It is ironic that the response of our government in regards to the fact that Indonesian high consumption of rice per

capita per year is "Eat less rice". So, now, there was "Rice-free day" being conducted in some regions in Indonesia.

Moreover, this assertion was accompanied by the assertion that rice causes diabetes! This broke my heart, to be honest,

because there are still many Indonesians that are struck by famine (like in NTT, in the East region of Indonesia).

2. You may read in today's article: Indonesia is seeing a decline in competitiveness.

http://www.thejakartapost.com/news/2012/04/27/ri-s-competitiveness-decline-govt.html

"In late 1990s, Indonesia’s infrastructure competitiveness was rated above China and Thailand. Now, Indonesia’s

infrastructure competitiveness level is only above the Philippines and Vietnam. From 2009 to 2011, we have seen some

improvements in road, railroad, flight, telephone and cellular communication infrastructure, but overall, they still have low

competitiveness scores. Indonesia’s logistics capability was also threatened, due to the fact that more than 50 percent of

the national irrigation system was in a state of disrepair. According to Bappenas data, 37 percent of the irrigation systems

in rural areas are non-functional with similar situations facing more developed areas, in which 15 percent of the irrigation

systems are broken."

A testimony that food security in Indonesia may become a time-bomb.

Monica

99

ConclusionsConclusionsConclusionsConclusions


colleagues

Our Mexican colleagues seem to have a blind spot re the future of the G20 – which will be tenuous if it appears impotent

re the fallout from the financial crisis. The colleagues point to the exemplary performance of their presidency and the

impossibility of a G8-type group that excludes the emerging economies. But they are perhaps naively optimistic.

If the G20 is displaced by another group to manage global crises and set the parameters for global deals, its successor is

likely to consist of a smaller number of countries and exclude middle powers like Canada, Mexico, Australia, South Korea

and Turkey. Our planning should focus on ensuring the G20’s success. There is a relevant cautionary example. In the

early 1990s the steering group for international trade policy was the Quadrilateral Trade Ministers (Canada, EU, Japan and

the US), who met together twice a year at Ministerial level and often at official level.. The “Quad” set the agenda for the

GATT in Geneva. No Canadian could imagine that after 1999, the Quad would be no more and that Canada would be

displaced from the inner group setting the global trade policy agenda.

Forbes Magazine some years ago suggested a new G8 – take the existing G8 - and replace Italy and Canada with China

and India. If you add South Africa and Brazil – the ten would form a credible “steering committee”. So Viva Mexico! and

let’s make sure the G20 succeeds.

Deanne

There seems to be a lot of concern about legitimacy – despite the observation that G20 members collectively hold veto

power in all the major global organizations. I think our colleagues are fooling themselves when they assume that inviting a

100

few countries to attend satisfies legitimacy. Anyone who is not invited will be unhappy. Further, the invited guests do not

participate in the preparation. Consider the Danish view:

“…legitimacy in representational terms ultimately is a matter of ensuring that minorities have voice and influence on equal

terms with the rest of the constituency. Any talk of legitimacy in the case of the G20 is non-sense. It is a self-selected

and illegitimate group of countries which – by permanently excluding 172 countries from key deliberations on global

economic governance – is undermining a system of multilateral cooperation that it has taken more than sixty years to

build.” www.diis.dk/graphics/.../rp2011-04-g20g20g20g20-and-beyond_web.pdf

Given that the G20 will not evolve into a constituency system – what more can Mexico do? Perhaps Mexico can involve

the guests, the Y20, B20, civil society and Think 20 substantive follow up after Los Cabos.

Barry Carin


Greetings All,

Thank you for the question, Barry. I would argue that veto power does not necessarily equal legitimacy. I think the

perception is that an elite group of 19 countries and the EU are dictating terms to multilaterals with broader memberships.

But for those who think the UN, IMF or World Bank hold more legitimacy than the G20 because they are legally binding,

treaty-based institutions – who has the veto and voting power there? It’s the same countries that also carry G20

membership cards.

Membership matters. It’s about appearances. Anyone not invited to the party is going to cry foul over legitimacy. Adding

to this, there are no provisions for suspension or mechanisms built in to accommodate changes in systemic importance

(our colleague Dr. Andrew Cooper recently wrote on this here).

101

I think it’s important to consider that there are different kinds of legitimacy as well. The Mexican government is right to

focus on tying legitimacy to performance and not necessarily to those countries and organizations represented around the

table. If a football team is winning games, there are fewer calls for changes in the roster.

I agree with the participants of your forum that follow-up is important. Due to the scheduling of the summit, the Mexican

presidency has the opportunity to continue consultations with the B20, Think Tank 20, Y20, civil society and regional

groups. I think this is a must. Through enhanced accountability and a better global relations strategy, the perceived

legitimacy of the G20 could be improved.

Deanne


In response to your initial question to the whole group, while I agree that there was an apparent blind spot last week re:

the future of the G20, what would have to happen (or not happen) to displace the G20 as “the premier forum for (their)

international economic cooperation”? What would prompt the big players like China and US to create a new group that

does not include traditional and new middle power countries? Would having a smaller group without Canada, Mexico,

Australia, South Korea and Turkey be more productive? In your list, Barry, I think it’s interesting to note that all of those

countries were or will be hosts. Their value-add in the G20 is the technical leadership they provide (or at least that’s

Canada’s line). It’s often the Europeans, Chinese and Americans that (excuse the saying) “bring the drama”. The G20’s

success is important and should be the ultimate goal, but if the G20 can’t succeed who or what group can?

Does anyone know of a study or paper that has looked at how each of the G20 countries aligns on each of the major

issues since the first Washington summit? The US might be tempted to keep around like-minded countries. Isn't that how

Canada was brought into the G7?

102


Deanne

Your question 'what would have to happen (or not happen) to displace the G20 as “the premier forum for (their)

international economic cooperation?"

Some possible answers- although I hope they do not happen. We have to make sure that the G20 succeeds so that there is

no displacement.

- A slow descent into irrelevance because the US President or Chinese Leader decide not to attend. Remember what

happened to APEC, despite early promise.

- BRICS countries decide to become a real caucus- with regular well prepared meetings because of paralysis in IFI

reform and G8 insistence on continuing. BRICS set up their own "monetary funds" via sophisticated swap arrangements.

- Greece defaults and there is a banking crisis in Europe that shows "the Emperor has no clothes".

Let's not be complacent.

Barry


Good points. I guess I was only thinking about what would cause a G10 to displace the G20, but you're right in that there

are a number of damaging scenarios that could potentially happen. The BRICS are already causing waves by officially

announcing that they are launching a development bank next year that some commentators see as a potential rival to the

IMF and World Bank. Talk about messy multilateralism!

103


Thomas

1. Should the G20 get involved in the discussion of post 2015 MDGs, which after all will set the paradigm for development

thinking? Should it assist the UN process which will produce the successor goals?

2. In one your replies last week you wrote:

“The first step would mean lifting the status of UNEP to a full-fledged UN Environmental Organization with more

resources and enhanced authority (the location should remain in Nairobi, however). The second step would be the creation

of a new Sustainable Development Council as subsidiary organ of the UN General Assembly. This body could become the

main intergovernmental platform for building a global consensus on the urgent transformation towards a low-carbon global

economy.”

Are you serious? UNEP with enhanced authority? Over whom? The multilateral environmental convention secretariats,

including the three in Bonn? Are they going to move to Nairobi? What part of the authority of UNESCO, IWC, IMO,

OSPARCOM, UNPF, World Water Council, Global Water Partnership, Fisheries organizations (LOSC, UNFSA, Regional

Fisheries Organizations, FAO), Forestry organizations(FAO, ITTO, IUFRO) would be surrendered to UNEP. Will it be

responsible for energy (which is largely responsible for environmental problems and climate change); if so what powers

and mandates would be transferred from the many international organizations dealing with energy?

Recall John Ruggie’s comment: “… as much as I appreciate the desirability of locating a UN agency in a developing

country, I thought UNEP was the one agency that should not have been…You couldn’t then and cannot now coordinate

fast-moving networks from places that lack the communication and infrastructure, and that are so far removed from the

thing they are supposed to be coordinating”.

104

I am in favour of ambitious goals- but this is not in the feasible set.

Barry


thanks for these specific and controversial points, Barry. The first one is easy for me. I think that the G20 should not get

involved in the ongoing discussions about post-2015 MDGs. There are already many political and expert processes

moving forward nicely which do not need support by the G20. For example, Rio+20 will look at sustainable development

goals which would apply to all countries, not just to developing countries as is the case with MDGs. I would rather see the

G20 contributing to the Rio agenda on more strategic issues.

This brings me to your second point. Yes, of course, we are all aware of the limitations of placing a UN agency in Nairobi.

I would hope that with dynamic advances in information technologies the drawbacks could be minimized in the future.

When I speak of enhanced authority I do not mean that all environmental treaty bodies and organizations should be moved

to Nairobi. My argument rather goes into the direction of strengthening UNEP so that it can provide a more effective

leadership role in guiding and directing the global network(s).

Enhanced authority could come about by universal membership of a specialized agency. As a programme, UNEP has a

limited membership on a regional, rotational basis. A specialized agency would be funded by obligatory (not voluntary)

contributions of members. The Sustainable Development Council would function as intergovernmental body in New York.


105

Thomas

The question re post 2015 goals - I question the contention that all is moving along "nicely". The prospect is for a

contentious meeting in Rio re "sustainability goals. The leaders - Columbia and Guatemala - have not done their

homework. Poverty advocates see the exercise as weakening the emphasis on poverty.

If the G20 is not an implementing body- but a `steering` committee, why would it not umpire processes that will hopefully

lead to the next development paradigm. Otherwise we could have dissonance with different processes recommending

different sets of goals.

Barry


SUMMARY: How can the "inSUMMARY: How can the "inSUMMARY: How can the "inSUMMARY: How can the "informal" G20 process be made more effective?formal" G20 process be made more effective?formal" G20 process be made more effective?formal" G20 process be made more effective?

Sherpa Preparation Process:

Q.Is it possible to have a Sherpa executive committee including China and the US?

Can the role of the “Troika” be upgraded? What is the best way to enhance the ability of the G20 Presidency to provide “secretariat” services?

· It appears there is a consensus for an informal “non-Secretariat”, “cloud-based”, staffed by seconded staff from the

countries of the Troika, to work hand in hand with International Organizations, given that the G20 is not an implementing

agency.

· There was support for a follow up sherpa meeting in July to cement and enhance the Troika and the idea of a “non

secretariat”.

106

· On the one hand, “the development of bloc politics and dynamics within the G20 is something that both parties, i.e.,

developed and developing economies, should try to avoid for the sake of the G20”, but coalescing of the G5 might reduce

the reluctance of BRICS to lead and assume responsibility.

Participation:

It has been argued that there are too many people at the G20 table to have a real discussion among Leaders. What can be done to provide more time for Leaders-only discussion? The G8 invited the G5 for just part of the meeting – which G5 leaders found insulting. Can more extensive outreach compensate for not “being at the table”?

· There was in my view too much comfort with the large number of people around the table. Having too many guests risks

an APEC type deterioration.

Transparency:

What techniques can be used to promote openness? Can working group and international organization reports be publically available? Can parts of the meeting be televised and webcast?

· There was agreement to consider making the WG reports publically available.

· There was support for a “division” for communication affairs, to convey the message of the G20 in a truly global

multilayered manner, rather than through government spokespersons.

Accountability:

Can the informal G20 have some sort of independent “Inspector General” or auditor to review compliance with past G20 commitments?

How can accountability be increased?

107

· There was some support for further development of the idea of an auditor.

· We need a reader friendly web page that presents the type of information in the U of T Compliance Report

As thanks to Judith, for her contribution on the need to be able to communicate in very limited time (“the challenge of

developing marketing and publicity abilities to send short impacting even subliminal message”), here is my favourite

cartoon about the danger of ratios:


On accountability, a website hosted by governments tracking commitments would also go a long way to tackling the so-

called legitimacy problems too. I think there are a lot of (comparably) “easy” fixes that the G20 can do. A comprehensive

and consistent website hosted by governments is one such fix (see recommendation #8 in the report released by Paola

Subacchi and Paul Jenkins last year – the link is in the bibliography Dr. Subacchi provided). The quality and quantity of

information available varies. As someone who regularly follows the G20, Mexico has done a great job harnessing social

media to make the process more transparent. I only hope Russia continues the trend. Even more can be done in terms of

online outreach, webcasting, forums like this, etc.


Dear Barry,

I recently attended a high-level roundtable and public forum on "Thinking about the Asian Century". It was organized by

the East Asia Bureau of Economic Research in collaboration with the South Asia Bureau of Economic Research at

108

Australian National University. The inputs from this roundtable and public forum would go to the Advisory Committee for

the Australian Government on the White Paper Australia in the Asian Century, which will be written in June-July this year.

Part of the public forum discussion was on G20. Since all of the panelists and moderators of the public forum were well-

respected experts on regional and global architecture, I thought I would share some of the outcomes from the discussion.

1. There is no clear way for the moment to relate the G20 to Asia’s existing regional architecture.

2. On the G20, it was argued that the G20 needs a system which involves the other non-G20 countries if its decisions are

have legitimacy in the other countries’ eyes. It was also argued that more clarity is needed on who is responsible for

implementing and enforcing the G20’s decisions. The argument was also made that the G20 is simply a transitional body in

the process of reforming the international system.

3. It was argued that a system of regional caucuses might be a good way to improve the functioning of the G20.

4. Most Asian members of the G20 do see it as the best way to relate to the rest of the world: this is true of China but

also of India which, despite its leadership in South-South initiatives, did not otherwise previously have a spot at the head

table. Japan has been more ambivalent about the continuing role of the G7.

5. It was argued that China sees the G20 as the best way to work towards a reshaping of the international order to more

closely resemble a shareholding model, away from the current model of a US-owned family business.

Monica

109


Monica

Thank you for these points.

Re "more clarity is needed on who is responsible for implementing and enforcing the G20’s decisions. The argument was

also made that the G20 is simply a transitional body in the process of reforming the international system."

The point is that the G20 does not make decisions - it agrees to work together or to invite reports.

An anecdote re the limits of command- After the Canadian hosted G8 in 2002, The Canadian sherpa wrote the Canadian

Exec Director at the IMF re the "decisions" made to work together in the IMF re Africa - the Canadian ED who thinks he

works for the Finance Minister wrote back "Thank you for your suggestions. We are always interested in hearing from the

public."

Re "It was argued that a system of regional caucuses might be a good way to improve the functioning of the G20", I

believe that both Canada and Mexico would like to have their own voices at the global table rather than being represented

by the chair of the regional caucus- which the Americans would insist on holding if the discussions involved US national

interests.


Dear Barry,

I think, it was understood that the G20 was not a decision-making body. In fact, non-G20 countries should make sure that

the G20 would not be becoming that way.

110

I guess, in regards to the first point, it is quite a legitimate statement since the G20 does not have a good collective

memory, especially in regards to non-financial issues.

There was a discussion about how the new global governance should look like. Essentially, all agree that the new global

governance should not be a family business dominated by the US but a shareholding system. What we need in the future

are new norms that are more reflective of developing countries' conditions. The new norms should not be China's alone

either.

In regards to the second point, at least from the perspective of Asia, or even only ASEAN, regional caucuses are

commendable. I believe, that big-power countries and middle-power countries are ready for these regional caucusing.

Asian regional architecture is very fluid - as you can see from the proliferation of ASEAN-led groupings especially after

the Asian financial Crisis 1997-1998. The modality of ASEAN - consensus based - allows middle- and small- power

countries to have equal voices as those of big-power countries. If the ASEAN way is acceptable to the other regional

countries, regional caucuses should work nicely.

Monica


Monica

Perhaps your view would change if the US was in your regional caucus.

Barry


111

Monica,

these are very important points to me. They underline how much non-member countries are interested in interacting with

the G20 in a more formalized way, for example through regional caucuses. And they want increased transparency and

accountability. I have the feeling, that the G20 has to come up with substantial innovations to this regard soon, otherwise

opposition from the outside will increase significantly.

I wish to let you know (already did so to participants on my online day) that my Institute, DIE, is involved in an innovative

program of the South African Institute of International Affairs. They are doing a major outreach to all of Africa during the

coming years to assess the G20's impact on Africa and to consider ways on how African voices could be integrated better

into G20 deliberations. I am happy to provide further information if desired.


Dear Tom,

There is always an opposing and critical comment from our ASEAN neighbours about G20. It is not surprising. If Indonesia

was not included, but say, Malaysia, was, Indonesia would also have the same opposing and critical view about G20. Also,

there is no "institutionalized" way of outreaching to our ASEAN neighbours, other than inserting G20 agenda in the ASEAN

ministerial-level meetings, I believe.

South Korea made a point that before the G20 Seoul Summit, in order to come up with the Seoul Development Consensus

and Multiyear Action Plan on Development, it had to go to literally all developing and emerging countries to ask questions

about development issues. I think, the Mexican G20 Presidency will have to do the same.

In regards to the African outreaching, it is a truly commendable initiative. Yes, I am interested in the information.

112

Monica


Question for Paola

What is your reaction to the Catherine Dobbs submission for the Wolfson prize?

(http://www.policyexchange.org.uk/images/WolfsonPrize/wep%20shortlist%20essay%20-%20catherine%20dobbs.pdf ).

Should the G20 promote her solution by pressing the Europeans behind the scenes? Should the G20 try to enhance

participation by offering a prize for the best policy idea?

Barry Carin


I've attached the paper (PDF) that Barry referred to in case anyone is having problems with the above link.

113


Hi Barry,

I think none of the shortlisted submissions to the Wolfson prize is interesting enough to deserve much attention. Surely

the G20 have better to do with their time. A prize for the best policy idea? Surely not. As you know, effective policies are

the result of the ongoing dialogue (as well as research and analysis) among many players, rather than the something

created 'ad hoc' (like, for example, a prize for the best logo for the next Olympic games).

Paola


Barry,

On the prize, I was not suggesting that 'government officials know better', otherwise 'think-tankers' like us will be out of

work. What I am saying is I do not see how prizes can generate best policy ideas. These normally come from the

interactions of several actors and are distilled from several discussions, dialogues, papers etc. It is an incremental process

rather the creative work of an individual (or a few)


114

Thanks for posting many interesting comments on the topic of rebalancing and stabilizing the world economy.

With the eurozone crisis continuing and the increasing likelihood of default by Spain, the G20 may end up, once again,

playing their 'most performed' role of crisis committee. This is absolutely fine, and indeed, as some of you pointed out, it

is important that the G20 members address and possibly resolve the ongoing crisis. The issue here is not only the

measures that the deficit countries need to implement in order to restore fiscal stability and market confidence. This is

necessary, but not sufficient. The G20, in both their role as crisis committee and the permanent forum for economic and

financial affairs should address: 1. growth; 2. coordination of economic policies and spillovers. Growth is essential to

restore confidence not only in the market, but with firms and households: growth will reduce unemployment and make the

fiscal burden more bearable. Policy coordination, in its turn, is essential to the framework of 'sustainable, strong and

balanced growth'. In an increasingly integrated world economy is essential to understand how the effects of policies

implemented by one country spill over to other countries. More specifically, it is essential that the G20 get involved in

discussing how the European monetary union can be made to work. This is broader than just putting together a 'fiscal

compact' and hope that it works - which I don't believe it will. It means assessing the economic convergence of the

countries locked in the monetary union and see how the gaps in competitiveness can be narrowed. Besides the structural

reforms that the deficit countries are asked to implement, there should be a G20-led plan to think how economies that are

locked together - of which EMU is the most advanced example - do not end up in a spiral of 'perverse destruction'

because of unintentional 'beg your neighbour' impact of each other's policies.


Paola

Can you be more specific re your comment that ", it is essential that the G20 get involved in discussing how the European

monetary union can be made to work."

I cannot think of any examples that do not tell the Europeans what is politically unacceptable in their various countries.

Can you give some examples?

By the way on the IMF - which is in a sense a shareholder organization- is it not accurate to say that the Europeans are

asking for the debtors to run the institution? Should not a quid pro quo for IMF backstopping be conditions that can be

115

imposed without a European veto?

I am disappointed in your reaction to the G20 prize suggestion? It makes you sound like an elitist - as arrogant as I was

when I was Canada's sous sherpa- thinking that I did not need any advice from anyone outside government circles- we

"knew it all". What is wrong with trying to mobilize and unleash creativity?

Barry


Re: IMFRe: IMFRe: IMFRe: IMF

Canadian Minister of Finance Jim Flaherty had an interesting piece in The Telegraph yesterday on how the eurozone

needs to deal with its own problems: http://www.telegraph.co.uk/finance/financialcrisis/9238854/The-eurozone-should-

sort-out-its-own-mess.html. The op-ed echoes Barry's concerns above. I think it's interesting that we did not explicitly

see other countries withholding funds for the same reasons. The discussions I had last week focused on how the emerging

economies are incentiving reforms of the IFIs through their contributions to the firewall as they look to play a more

important role.

Re: Outside the Box ThinkingRe: Outside the Box ThinkingRe: Outside the Box ThinkingRe: Outside the Box Thinking

I think that the “Think20” is one way to mobilize and unleash creativity. Per our recommendation to sherpas to:

Institutionalize the Think-20 to serve as idea “banks,” monitoring and accountability mechanisms, and help deliver feedback and buy -in from sceptical publics to accept correct, but painful, policies. The Think-20 can also be asked to craft assessments of potential agenda items.

I hope that the event earlier in the year underscored for the Mexican presidency how useful outside expertise can be.

116


Barry,

The key issue, and the most important one going forward, is how to coordinate policies. This is true for all countries in

the G20, but it is especially true for those countries that are locked in Europe's monetary union. The problem is not to tell

the Europeans what to do with their countries, or to create robust firewalls to prevent the crisis to escalate (if Spain

needs to be bailed out). Assuming that EMU survives the current crisis, then the issue is to understand how countries with

different competitive advantages, sizes of the their economies, endowments etc an live within the straight jacket of a fixed

exchange rate regime without ending up in a spiral of 'beg your neighbours' type of situation. Like with the spillover

reports initiated by the G20 and implemented by the IMF, it is crucial that the G20 will lead the discussion on how

countries can be competitive without reducing the welfare of other countries. Competitiveness in international economics

should not be a zero-sum game. At the moment the only solution for the rebalancing the deficit countries are deflationary

fiscal measures. This is a risky strategy as 1. countries cannot cope; 2. public opinion is increasingly hostile. The risk is

that the game will break before it can be fixed. Protectionism is on the rise, and people are much more recipient now to

protectionist messages (see Le Pen in France) than 4 years ago when the financial crisis broke up. This is something the

G20 should not complacent with and should watch.


Dear colleagues,

117

Here are some key take-always from the brief discussion on food security and food commodity price volatility. I said in

the beginning of my initial post that I would like some answers to the three issues below. So, here some of the answers I

got from the participants.

1. How can the G20 succeed in making a progress to tackle food security issues? (How to keep the ball rolling when

different countries have different national interests, etc.). But, first, we have to answer questions like, whether the G20 is

the most effective forum to discuss food security issues and what its limitations are, etc.

a. Most participants think that food security should be in the G20 agenda.

b. But, it needs a change in strategies. We will not see G20 countries end agricultural subsidies, phase out export ban,

stop land conversions that threaten food security, etc..

c. All participants are pessimistic on the trade sector and countries becoming protectionists. Leaders continue to acclaim

non-protectionist measures but become the main culprits of their own standards. The G20 Mexican Presidency has to be

realistic. The Doha Round has been stalled. A leader at the G20 must be honest enough to say "the Doha Round is dead.

What is our alternative to restore global trade order?" The critical window to conclude the Doha Round is 2011 because

there will be presidential election/accession in the U.S. and China, so we cannot expect any progress in 2012. And maybe,

not even a few years later.

d. A rotary representative at the UN or WTO with a responsibility to produce a non-paper tothe G20 is a nice initiative to

ensure that there is legitimacy to outcomes on food security.

e. A fair representation of the African region needs to be reviewed since Africa is the key to food security but Africa is

underrepresented at the G20.

f. Regional initiatives seem to be succeeding better than global initiatives. According to one document of the Inter-

American Institute for Cooperation on Agriculture (IICA), which has done a lot for a long time to promote food security in

Latin America regional actions have succeeded more than global ones, particularly in Africa and Asia

118

g. Multilateral/horizontal coordination (coordination among different organizations) and vertical coordination (coordination

among global, regional, and national initiatives) is crucial.... Coordination is the key.

h. There is a need to work on better data collection and more robust indicators on food security. For instance, FAO

undernourishment index is published with considerable delay. Besides, it does not provide information at the sub-national

level or intra-household level.

i. In regards to the agriculture market information system, transparency is important.

j. The double-track approach - one for financial and the other for non-financial issues - is good. We need to balance the

long-term and short-term issues of food security also, and not only financial and non-financial issues.

The long-term issues would be: 1. To increase rice production and productivity so that respective countries will be able

to feed their growing and more urbanized population. 2. Energy and food link: biofuel.

The short-term issues would be: 1. Financialization of commodities, although the literature is still divided whether

speculation causes commodity prices volatility of not. 2. Panicked hoarding. 3. Trade restrictions.

2. From the literature, it seems that there are divergent views about issues such as biofuels and financialization of food

commodities. This is not surprising since such issues are tied to national interests, for example, countries that have

comparative advantage on producing biofuel would like to continue on producing biofuel, and countries that depend on

financialization of food commodity would not like it to be regulated, etc.. How can the G20 help to bring together such

inconclusive results into one single proposal in order to move forward into the policy issues?

a. One participant asserted that increasing interconnection of the food and commodity prices is the main threat to food

security: "That price volatility, triggered mainly by economic and population growth in the last decades and climate

change, threatens the well-being of a large share of the population living in poor countries, is nothing new. Nonetheless,

the situation has become ever more worrisome as a result of recent economic crises and due to the fact of the increasing

interconnection of the prices of crops and commodities, which make global shocks more rapidly transmitted (Asian

Development Bank, 2012: 4)."

119

b. Indonesia has been the main proponent to regulating food commodity future/derivative market as it sees it as the main

culprit for food commodity prices volatility. However, it seems that progress has been slow. Part of the reason is that

literature has been inconclusive in regards to the effect of financialization of commodities on food price volatility. Some

countries that benefit from financialization of food commodities would not be in favor in regulating the market. Hence, the

Mexican G20 President should make progress on this front, and move forward into concrete policy

formulation/recommendation.... If studies show financialization is detrimental is contributing to price volatility, then it should

be regulated. If not, then it should not be.

3. Maybe, the last but not least, is how we can include the poor and increase people's awareness about food security. Note

that poor households have a higher share of food expenditure. Moreover, food price inflation also has an impact on equity

since the expenditure of poorer households is more heavily weighted towards consumption of food items.

a. One participant pointed out that the greatest threat to food security is poverty from the perspectives of availability,

access, utilization, and sustainability.

b. It is largely a "poor people phenomenon". Being easily well-nourished is not an issue for rich people, although ironically

the rich people (whether through waste of food or something else) are the culprit to it.

c. The poor people are about the most skillful people in securing food - how could those living below 99 cents a day

(there are about 865 million of them in the world as of 2005, or about 13% of the world's population) secure their food

every day? The bottom line is the poor people have to be included in the discussion as they are the main stakeholders in

food security and maybe they are also the key to providing solution to food security issues since they do not take food

security for granted while we, the not so vulnerable people, hardly have to think about it.

Monica


120

Are there risks when operating with a double-track approach? Will it lead to groups operating in silos? Food security is

part of the development working group and the issue of commodity price volatility is covered in the finance track agenda.

One of the points of discussion at the Think 20 meetings in Mexico was when to let leaders lead. The point was made that

agricultural ministers generally hold less power in governments than finance and foreign ministers. If we want to make

progress on food security, the heads of government need to take responsibility. There are long term structural issues that

need to be addressed that require top political commitment and awareness of how these issues affect economic recovery.


Dear Deanne,

Thank you for reminding me about the political commitment of leaders.

Certainly, G20 is a potential theatre to create a political climate for leaders to endorse political commitment on crucial

issues such as food security.

On the other hand, after the online discussion on Friday, I come to believe that bottom-up approach can be more effective.

As I said earlier, naturally, those who are not vulnerable to food insecurity (including national leaders), do not have to

think much about food security. Because they do not, they also are not the most skillful people to solve food security

issues. When I think about those people living below 99 cents per day (13% of the world population), and still survive, I am

thinking they must be very skillful in food management. The bottom line is whether it is a top-down or bottom-up

approach, the biggest stakeholders here are poor people and they must be included in the process and a part of the

solution.

Monica

121


Dear colleagues,

thank you so much for your thoughtful reflections on the content of our joint online forum. I wish to thank and congratulate

the Instituto Matías Romero and the Mexican Foreign Ministry (SRE) for establishing the forum and encouraging their

colleagues to get actively involved. For all I know, this is an innovative step on how a G20 presidency invests in its own

capacity building and stimulates the international discourse on critical issues. I do hope that the Instituto will evaluate the

exercise and make the results known to the public so that can be of value to other administrations and the scholarly

community.

Looking back on the discussions I had with the participants of my day, the following points stand out:

1) In regard to the development agenda of the G20, we are all still very much at the level of (good) intentions with little

empirical evidence to demonstrate genuine impact. I think it would be worthwhile for the G20 to commission rigorous

evaluation studies which would broadly include experts and scholars from the developing world. Maybe, Think20 could

play a helpful role here, especially if the group is successful in attracting seasoned analysts from non-member countries.

2) The contributions to the online forum on the development agenda sharpened my critical understanding in regard to the

lack of strategic focus of the G20. This kind of scattered, voluntaristic approach, taking in all sorts of topics and

contributing to numerous ongoing processes, probably will not work. Where does the G20 really want to make a difference

for people and economies in low-income countries? Five years from now, what will the G20 claim as its key

accomplishments in this regard?

3) From my perspective, the legitimacy gap of the G20 is often not properly understood or addressed. Of course, we can

emphasize the output dimension and hope that the G20 will score on that point. Still, the deep-seated discomfort of many

countries and segments of world society over the self-selected nature of this most powerful case of club governance will

122

not fade away, that's my guess. Outreach to all sorts of constituencies is all fine and well, but its impact is very limited

since everybody understands that it is driven by the ad-hoc intentions/preferences of each individual G20 presidency and

highly asymmetrical in nature, as no institutionalized setting or common purpose is generated. I am afraid that this will not

satisfy the broad-based demand for inclusive discourses in addressing global challenges and providing global public

goods.

4) This brings me to my final point: Which identity does the G20 want to develop as time goes by? Does it want to limit its

role to global economic governance in a narrow sense with a particular focus on crisis management? Or does it understand

itself as guardian of global well-being with a far-ranging responsibility for global prosperity and stability. It is my

understanding, that an isolated approach to global economic governance cannot work due to the interconnectedness of the

global system which tie together all economic and social phenomena of a globalized world society.

My conclusion from that is that the G20 must see itself as a team player in global problem-solving with outstanding

political and economic resources. It must be ready to develop a new culture of international cooperation in a multipolar

setting. We are talking about new spaces of globality which need to be addressed and structured by new patterns of

cross-border, multi-stakeholder interaction.

Therefore, the G20 should not imitate itself to provide a platform for negotiating the national interests of member states

only. It should rather develop a globalist perspective and develop an ambitious agenda on key global challenges. Not with

the aim of providing solutions on its own but in defining corridors of convergence which it then can propose to the

international community. For this to work, the G20 must better connect with inclusive structures and global political

agendas. To take one example which is dear to me, as you know, I refer to the back-to-back timing of Los Cabos and

Rio+20. What agenda will the G20 prepare for Rio, what political and financial capital is the group ready to invest in order

ensure that the global conference on green growth and sustainability will be successful?

Again, many thanks for this fruitful dialogue Thomas

123


Thomas

I agree with almost all these points.

But re "the legitimacy gap .... the deep-seated discomfort of many countries and segments of world society over the self-

selected nature of this most powerful case of club governance will not fade away", let me make one diagnostic observation

and a prescription:

In every multilateral organization, there is a small group that meets informally and gets things done. Nothing happens as

the result of 193 people sitting around a table to resolve an issue. There is always an inner group. In the mid 1990s at the

WTO, it was called "the invisible committee". Even the "legitimate" UN accomplishes anything when small contact groups

lead. So the issue is whether we want a leadership group with continuity and solid preparation.

The prescription is maximum feasible transparency on agendas and working papers.

Barry


You are absolutely right, Barry. Large groups will need a steering committee of sorts to prepare meetings, structure

debates, monitor implementation and provide political guidance to secretariats. By the way, there a number of proposals

on the table on how such a limited-number steering body on global economic issues could be created under the roof of the

United Nations. Kofi Annan's high-level panel on system-wide coherence suggested the L27, a body of 27 member states

under ECOSOC, which would perform such tasks. States would be elected on a geographical basis and could be re-

elected. (By the way, the UN Security Council functions in this manner, with five permanent members, of course). The so

called Stiglitz commission called for an Economic Security Council at the highest political level (heads of state and

government). To give another example, the Busan Partnership for Effective Development Cooperation will most likely

124

establish a new inclusive body at ministerial level to be complemented by a steering committee of 12-14 representatives

elected from constituent groups.


It is always helpful to distinguish between "caucusing" and forming a "caucus". The latter may endanger the legitimacy of

the group, while the prior is commendable.

Monica


Dear Tom,

I think that point 1 is one of the keys to a successful Summit. Some of the agenda does not move forward into policy

recommendation because literature is inconclusive, e.g. biofuel, the impact of financialization of commodities on price

volatility. This has to be done also at the national level. Each country must have a clear evidence and coherent

implementation plan beyond the "good will".

G20 Summit is a political theatre, for good or bad. Some countries use it to win international supports and reputation.

Some countries are more genuine. If scientific - based studies are strong enough and can be evidence to favor one policy

over another, then political bargaining can be framed within "good policies only" framework ruling out all the bad policy

choices. Without strong scientific - based studies, there are more risks of leaders bargaining over bad policies options but

populist ones.

125

In regards to point 2, I agree, G20 needs to improve its collective memory. I think, G20 countries must be overwhelmed in

keeping up with their own commitments - development, food security, green growth etc..

I think point 4 depends on point 3. Before the G20 can improve its legitimacy issue, it cannot assume its role as global

economic governance in whatever sense.

In regards to your last paragraph, I think the key is coordination, especially in agenda where there are already other

existing fora to handle these agenda.

Monica


Agnes

Thank you for the opportunity to participate in this forum.

I look forward to the timely responses of the Mexican Colleagues who have incomplete assignments`.

I appreciated our exchange.

Barry Carin


I'd like to thank Agnes and the Instituto Matías Romero for the opportunity to participate in this excellent and highly

informative forum. I enjoyed my interactions with the participants and other guest specialists. Please feel free to contact

me if you'd like to chat directly or get in contact with anyone from CIGI.

memoria towards the g20 leaders summit...1 towards the gtowards the g- ---20 leaders’ summit20...

Documents