G20 faces credibility test at Brisbane meeting
The group has failed to find consensus since the global financial crisis and now needs to show it can make progress in times of calm
Cool in a crisis, good when the going gets tough, at its best when the world's economic back is against the wall.
The G20 was widely praised for stabilising the world economy during the global financial crisis of 2008, but the body has struggled for impact - critics say relevance - since then.
In less critical times, its members have struggled to find consensus, descending instead into self-interested bickering, and reforms the G20 has promised have dwarfed those it has delivered.
This week's Brisbane meeting of the Group of 20 will be a crucial test: can it be a genuine agent for change, or just another tired horse on the merry-go-round of international confabs?
The G20 is unquestionably powerful. Collectively, G20 economies account for two-thirds of the world's people, 85 per cent of its gross domestic product, and three-quarters of global trade.
Unlike the too-exclusive G7, it includes the emerging giants of China, India and Indonesia, along with broader South American, African, and Asian representation. But with only 20 members, it's nimble enough to make decisions, as it demonstrated during the global financial crisis.
"The world was in a perilous state in 2008, much more perilous than people thought," argues Ross Buckley, professor of international finance law at the University of New South Wales.
"The G20 was important in that crisis, not so much for what it did, but for the sense it provided that someone was on the job, that the crisis was being taken care of by a credible international body. 2008 could have been really bad, it could have been as bad as 1929, but the G20 was incredibly important in sending a message of calm," he says.
In the midst of the crisis, the G20 co-ordinated the massive fiscal stimuli being pumped into the world's economies to pull them back from the brink. It redesigned international regulatory rules and reformed existing international public institutions such as the International Monetary Fund.
The G20 had the heft and credibility to make the decisions it did, but was also small enough to find consensus without undue compromise or delay.
"There's a reason sports teams are almost always no more than 15 or 18 people. That's about the upper limit of people you can have working together on something," Buckley says.
But by its success, the G20 set itself up for failure.
"The G20 made a rod for its own back," Buckley says. "It established an impossible standard to maintain when the seriousness of the situation wasn't there. When there is not a state of crisis, everyone goes back to the usual politics, disagreeing with everybody else."
But the G20 must find a way to make progress in times of comparative calm, not only during periods of panic, Buckley argues.
"If the G20 limits itself to responding merely to the latest crisis, the latest major global crisis will never be the last severe one."
Australia, as president of the G20 for 2014, is anxious for a concrete outcome from Brisbane's meeting, a headline result it can point to as evidence of its capable stewardship, as much for domestic political advantage as for the cause of global economic reform.
But this year has been a difficult one for the world economy, and G20 members have not appeared much in the mood for consensus.
"If you want to be cynical about the G20, it's easy to say 'there's not much evidence of countries cooperating'," says Mike Callaghan, programme director of the Lowy Institute's G20 Studies Centre, and formerly the Australian prime minister's special envoy for the international economy. "But with a world economy struggling, rising geopolitical tensions, what the world needs is a little demonstration that leaders can cooperate."
