G-20 leaders in Pittsburgh. Photo: Argentine Government

A surprising amount happened last week on the diplomatic scene, from the Iran confrontation to President Hu’s historic first speech ever by a Chinese president to the U.N. General Assembly where he announced some pretty dramatic steps on climate to President Obama using his leadership at the U.N. to pass the non-proliferation resolution to the G-20 meeting in Pittsburgh.

Policies within the established architectures were changing, but finally the architectures were changing too. First, the G-20 resolved to replace the G-8 as the go-to group for global economic leadership. As I’ve written frequently, this is the right move. But a lot of questions remain including — who are the 20? Are they going to be the current 29 or so leaders, or will they find a way to shrink the group to a more manageable size? More importantly, will they find a mechanism to “refresh” the membership every so often? The top economies won’t always be comprised of this group. It would ensure the group’s future relevance if they brought in new blood and excused old blood every now and again, as I’ve suggested in the past.

The IMF is also — finally — going to better reflect the economic realities of today, because the G-20 agreed to shift 5 percent of voting shares from the developed to the developing countries. This might not sound like a lot, but in the world of IMF governance, it’s major. It shows Europe’s willingness to give up some of its over-representation.

Finally, the G-20 undertook two interesting experiments in accountability. First, it reviewed its progress to date. The result sounded like a puff piece, but the exercise, if taken seriously and done regularly, is one method to hold this group to account for its performance. Finally, it asked member countries to submit their macroeconomic policies to a “peer review” process. This is an interesting way to try to put teeth in a system with no built in enforcement mechanism. Peer pressure can be a powerful force, even among major powers.

- Nina Hachigian

They discuss the debate over next steps in the war in Afghanistan, as top U.S. military commanders call for yet more American troops. They also examine the global economic summit in Pittsburgh — what the leaders accomplished as their ranks increased from a group of eight to a group of 20.

Nina Hachigian is joined by Bruce Jones, the director of the Center on International Cooperation at New York University and senior fellow and director of the Managing Global Insecurity Initiative at the Brookings Institution.

The agenda for this week’s meeting of the Group of 20 developed and developing nations is full, but when the leaders of all these countries sit down in Pittsburgh to discuss banking regulation, energy and poverty alleviation, one question will not be on the table — the question of who should be at the table in the first place.

Deciding which nations will sit at the global decision-making table is more politically charged than whether to tie bankers’ bonuses to the risks they take or whether countries can and should stop subsidizing fossil fuel consumption. Resolving which nations will try to forge consensus on these and other critical questions, however, is key to determining whether any resolving actually gets done.

The current G-20 — which in fact consists of roughly 27 countries — came to life when the Bush administration was in a big hurry to address the global financial crisis back in 2008. The previous global leadership forum, the Group of 8 — the United States, Japan, Germany, Great Britain, France, Italy, Canada and Russia — lacked the participation of newly emerging economic powers such as China and Brazil as well as several other major economies such as Saudi Arabia and South Korea. A global crisis requires global participation, and the G-8 was clearly the wrong tool for the job.

Since the G-20 already existed at the ministers’ level, President George W. Bush moved it up a notch to create a new forum. Pittsburgh marks the fourth time this group of leaders has met, but it still operates on an ad hoc basis and the confusion of who attends is undermining confidence in its ability to deliver. The challenge now is to forge a G- grouping that actually works.

The first problem with the current G-20 is that its membership is somewhat arbitrary. It is loosely based on economic weight, but Argentina, whose economy is not in the top 20, attends meetings and Poland, which is in the top 20, does not. If the G-20 were comprised of the actual top economies, then at least extremely time-consuming and distracting squabbles over who is in or out would be minimized. Using objective criteria for membership also has the aura of fairness in determining eligibility.

To increase legitimacy by increasing representation, the Center for American Progress proposed a variation of this idea earlier this year. The plan would take the top two economies from each of five regions of the world and then fill in with the next 10 largest economies. The group could also evolve over time, with membership recalculated every five years to reflect the actual economic and power realities of the moment. That “refresh” makeover would ensure that the group doesn’t quickly become a relic.

Another approach would be to base membership not just on economic weight but also population. One version proposed by the Brookings Institution’s Managing Global Insecurity project, would be to combine economic weight and population in determining the rankings of the top 16 countries.

Both the CAP and Brookings’ approaches allow for the inclusion of important populous countries such as Indonesia, Saudi Arabia, Turkey and Nigeria in addition to the big emerging economic powers that are now in the G-20. This has the potential to make the group’s decisions resonate with a far wider set of countries. That would help ensure greater global compliance with any decisions the leaders of these countries agreed to take.

The difficulty with all of these proposals, as President Barack Obama points out, is how do you explain to the 17th or 21st country that it is not welcome? That’s tough politics.

Hence a third answer is popular these days, which is to have a core of powerful countries act as the new G-grouping and then vary the membership depending on the issue. But if the politics of who’s at the G-20 table are thorny, why repeat them every single time a new meeting is convened? Surely better to take a tough decision once, rather than endlessly renegotiate it.

The choice of a global leaders-level summit grouping involves tradeoffs of important attributes. The new grouping should be broadly representative to maximize its legitimacy, but small enough to be effective. It should tie membership to responsibility, but also serve to shape the choices of less responsible, yet powerful, actors. Ideally it would be inclusive but small, representative but value-based, and legitimate, but effective.

That may simply be an unattainable goal in today’s world. Thus the Obama administration and other governments at the G-20 summit next week need to decide what attributes are most important and then brave the consequences. We believe that the most important balance to strike is between efficiency and buy-in — largely confining the club to those with actual power in the world economy and global security but bringing in a few countries that represent broader regions or groupings of states.

Right now, with the G-8 still active and the G-20 also meeting, the window is open for the Obama administration to develop a consensus around a new grouping of global leaders, or perhaps more than one, that could play a key role in global cooperation for decades to come. If they don’t seize this moment, however, important issues could drift, setting back progress.

If this issue isn’t tackled head on and some degree of stability brought into global decision making, both resentment and uncertainty will rise. That puts at risk the broader strategy that President Obama has outlined of forging broad cooperation on critical issues, such as non-proliferation or the upcoming talks in Copenhagen to forge a global carbon-emissions accord. These are problems that can’t wait for solutions.

- Nina Hachigian and Bruce Jones

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Photo courtesy of Flickr user iwasaround under a Creative Commons license.

In Pittsburgh, the Europeans will be pushing for more regulation of the capital markets and groups like hedge funds and rating agencies.

For more, read Worldfocus blogger Nina Hachigian’s thoughts: Deciding who decides at the G-20 summit

John Authers, the investment editor for the Financial Times, joins Daljit Dhaliwal to discuss what’s likely to happen at the G-20 summit.

Press coverage of the G-20 Summit in London.

Worldfocus editorial consultant Peter Eisner, the former deputy foreign editor of the Washington Post, discusses what really came out of the G-20 meeting (besides the $1.1 trillion pledged), including Fidel Castro’s positive outlook on U.S.-China relations.

You’d be hard-pressed to figure out — in terms of old-fashioned greenbacks — what exactly came out of the G-20 meeting in London this week. But perhaps warm, fuzzy feelings are all we need.

The stock markets were sharply up at the end of the week, so maybe appearances — and promises — are reality.

Does anybody really know how much money is needed to attack the world recession, and how much of the money pledged by G-20 nations was already en route?

The consensus is that the G-20 leaders pledged $1.1 trillion in total funds. But President Obama said, “Nearly all G-20 nations have acted to stimulate demand, which will total well over $2 trillion in global fiscal expansion.”

And meanwhile, British Prime Minister Gordon Brown has also indicated that there’s an escalation clause somewhere, and that the stimulus based on the G-20 agreement will add up to $5 trillion by the end of next year.

No matter the fine print, it sounded good to many.

Jeremy Warner, writing Friday in The Independent, said that “it’s easy to be cynical, but the summit has also achieved something genuinely impressive…For the first time in a long time, there’s reason for optimism.”

Nobel Prize winning economist and columnist Paul Krugman, who has criticized the Obama administration for not pumping enough into the stimulus, is still pessimistic, but wrote that he saw “glimmers of good news — the G-20 summit accomplished more than I thought it would.”

He was writing about that in the context of concern about the Chinese government, which he says “hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis.”

And speaking about China, that late entry in the news analysis game, Fidel Castro, also had an optimistic take on the G-20 Summit.

“The experts on economic issues have made a tremendous effort,” Castro wrote on Friday in his occasional column, “Reflections of Fidel,” in Granma, the official Cuban government newspaper.

Castro singled out special praise for Obama and for Chinese President Hu Jintao, who plan to meet soon to discuss a broad range of issues. That he said, may be “one of the most important news items in relation to the G-20 Summit.”

- Peter Eisner

Photo courtesy of Flickr user Soitu.es under a Creative Commons license.

G-20 members agreed to several elements of regulatory reform, including limiting hedge funds, bankers’ pay and credit agencies, as well as monitoring tax havens.

The markets have reacted positively to the results of the G-20 meeting.

Martin Wolf, the associate editor and chief economics commentator for the Financial Times of London, joins Martin Savidge to discuss how the results of the meeting will impact the global economic crisis, whether the G-20 nations will be able to turn their words into action and how other nations have responded to Obama’s leadership.

Below, see a slideshow of G-20 protests in London. More than 4,000 people attended the “Financial Fools Day” protest on Wednesday and protests continued into Thursday.

Photos courtesy of Flickr users under a Creative Commons license.

Protesters in London erected a banner in advance of the G-20 meeting in the city.

President Barack Obama arrived in London on Tuesday in advance of Thursday’s G-20 gathering. There, the leaders of the world’s most powerful countries hope to devise a plan to end the most serious global economic downturn since the Great Depression.

On Wednesday, the president met with the British prime minister and offered assurances that the differences among world leaders attending the summit meeting have been exaggerated.

“I am absolutely confident that this meeting will reflect enormous consensus about the need to work in concert to deal with these problems,” he said. “I think that the separation between the various parties involved has been vastly overstated.”

Daniele Archibugi is director of the Italian National Research Council and professor of innovation, governance and public policy at Birkbeck College, University of London. He writes at OpenDemocracy to argue that members states’ interests are too divergent, and that the G-20 is not a representative international body.

The G20 ought to be increased to 6 Billion

The G20 is important in the eyes of the world. Its pronouncements could decide whether you can get a job, refinance a mortgage, get a loan if you are a small company and, in the poorer parts of the world, even put your kids to bed with a full stomach.

Is the G20 really the right institution to address so many hopes and fears? From the standpoint of legitimacy, not at all. It has no employees, no headquarters and not even a statute. Indeed the international relations handbooks cannot tell us how to handle it, as it is situated half way between an international organization and the more formalized practices of traditional diplomatic channels.

In spite of the name, it does not even have 20 member states: it has only 19, boosted by the addition of a European Union representative. The member governments are by no means featherweights; as they themselves often remind us, they represent 85 per cent of world production, 80 per cent of world trade and two thirds of the world population.

However, these are merely quantitative values and have little to do with legitimacy. For Bangladesh it is not enough to have a population six times greater than that of Saudi Arabia to become part of the group. The only representative from the continent of Africa is South Africa. The G20 is lacking in logic also as far as income is concerned: Spain, Iran, Taiwan, the Netherlands and Poland have a gross domestic product exceeding that of Saudi Arabia, Argentina and South Africa but have not been invited. Also other countries of crucial importance for world financial architecture, such as Switzerland with its banking system and the Arab Emirates with its Sovereign Wealth Fund assets, are absent.

How does that one third of the world population whose state representatives have not even been invited to the Summit feel about it? A good 173 countries in the world have been left out and can only wait and see what is decided in London. We are talking about one third of the world population which has all the problems of the other two thirds and often many more, but in this case have no voice.

However, it is still better than the G8, it might be objected, which groups the governments of only 14 per cent of the world population, all of which located in the North of the world. It might be argued that to enlarge the meeting and turn it into a G192, a kind of UN General Assembly on a school outing, would make it more representative but also inconclusive as there would be no possibility of taking effective decisions. The crisis that has hit the financial markets calls for strong messages to be transmitted, which can only come from those governments that have enough resources to guarantee them. But the countries that have fat wallets do not seem to be interested in sending these messages, perhaps because they have not been given a mandate to act on behalf of all countries.

Initially dreamed up to act as a clearing house to the G8 by providing a platform also for the countries of the South, it has become entangled in inter-governmental logic and represents interests that are too divergent to allow a consensus to be reached.

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The views expressed by contributing bloggers do not reflect the views of Worldfocus or its partners.

Photo courtesy of Flickr user thehutch under a Creative Commons license.

Reginald Dale, a senior fellow in the Europe program at the Center for Strategic and International Studies, joins Martin Savidge to discuss this divide, the popularity of President Obama verus Candidate Obama in Western Europe and whether Russia will respond to President Obama’s pledge to ”reset” its relationship with  Russia.

The U.S. has witnessed frustration over the government’s huge bailout of American International Group (AIG) — whereas France saw a wave of protests and strikes aimed at getting the government to do more to ease the deepening crisis.

John Authers, the investment editor of the Financial Times, joins Martin Savidge to discuss growing anger, next month’s G-20 talks and if the European Union will be able to come up with a unified position.

Marcus Mabry, the international business editor for The New York Times, joins Martin Savidge to discuss the market gyrations and the G-20 meeting.

Jagdish Bhagwati, senior fellow for international economics at the Council on Foreign Relations, speaks with Martin Savidge about the meeting’s accomplishments. They discuss the possibilities of a forthcoming G-20 meeting with Barack Obama in office and The Wall Street Journal’s assertion that the economic plan could prove problematic.