G20 Epilogue: Buying time or buying a recovery?

Thursday, 2 April 2009 | posted by SimonM
G-20 London Summit 2009

Last week I put forward three big principles for a good outcome from the G20 Summit in London:

1. All people are valuable: make the international system more equitable through trade reform, debt relief, improved governance and better aid flows.

2. Low Carbon: deal with climate change and the economic crisis at the same time.

3. Effective not just efficient: improve regulation and information flows to reduce the likelihood of price shocks and market volatility.

I predicted that "we'll see a good deal of talk about addressing climate change and extreme poverty without much action, and a lot of promises around regulatory reform, with a commitment of follow up and continued dialogue by world leaders."

Well, we did better than I thought - but I wonder, is the $5 trillion stimulus and $1 trillion in new measures announced today merely going to buy us time, or will it buy our way to a recovery?

On valuing all people, leaders made an unprecedented commitment to increase funds available to both rich and poor countries through the IMF to reduce the impact and likelihood of countries going bankrupt. The move to ‘name and shame' countries resorting to protectionist measures is welcome, as is the $50b to poor countries to ensure the impacts of the crisis are lessened.

Trade reform runs much as predicted - we agreed to try harder in the future, and re-committed - for what must the be 5th or 6th time to the Doha round of WTO negotiations. This is a welcome sign, but prospects for the elimination of subsidies that hurt the poor the most are weak - the EU and US won't go near the political suicide involved in giving up the protections that they currently offer their farmers.

The call for a low carbon recovery had some pretty words assembled around them, but no concrete measures. Prefacing ‘jobs' with the word ‘green' is not a policy measure, and the weak statements around commitment to Copenhagen at the very end of the communiqué offer little hope that the world leaders understand the fundamental connection between the planet and the economy.

And finally, the move towards more effective markets made huge strides. The Germans and especially the French spent much of the weak grandstanding about how they might walk out if they didn't get better regulations, and it seems to have paid off. A last minute deal was done to smash our long-standing acquiescence to bank secrecy - a move that must be sending ripples around circles of crime bosses, corrupt leaders and tax dodgers around the world. Much work remains to be done on the details of the regulatory reforms, but the signs are promising.

So, the question remains - what does all this mean?

At first glance, stock markets like it. The response in the press has been measured but positive, and the leaders are looking pretty pleased with themselves. I'm cautiously optimistic - this is an unprecedented agreement, and the words are heading in the right direction. But, much work remains to be done, and the past performance of leaders at these sorts of summits would indicate that they'll drop the ball on a number of these initiatives.

And that means that the ball is back in our court as campaigners and activists. Our leaders have made promises in our names - it's our job to hold them to account for this, push them to do more where they've fallen short, and provide the human stimulus that will see our recovery work for people as well as profits.