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