The Toronto G-20: A Transition Summit

Few concrete improvements. This is what the world is taking away from the G-20 Summit held in Canada during the weekend of June 26 and 27.

Admittedly, the previous meetings were more productive. Born in the turmoil of the 2008 financial crisis and called upon by Nicolas Sarkozy to provide emergency solutions, the G-20 Summit distinguished itself at its London and Pittsburgh editions with globally consensual decision-making––new governance regulations of financial markets, a blacklist of tax havens, additional resources for the IMF and the World Bank, among others. Top priority was given to achieve a better oversight of the drifts caused by the financialization of markets, which partly triggered the crisis of the early 21st century. One cannot but notice that these good intentions only resulted in limited effects.

In 2010, the international environment has evolved. The brunt of the crisis has passed and other news disrupted the political agenda. Indeed, the explosion of a debt crisis and the significant reevaluation of the dollar against the euro marked February 2010. Consequently, we witnessed a dangerous destabilization of the global economic balance and a general awareness of the public debt issue. Hence, the emergency shifted from international market regulation to public deficit reduction.

The Toronto G-20 did not consider these new global factors in addressing key issues of governance and international regulation. Toronto thus seems to be a “transition G-20”, where rejuvenating national finances and returning to economic growth seem to have replaced hunting down the fraudulent behaviors of international finance. Even if it is just a façade, this consensus was stated in the Preamble of the Summit Declaration: “These countries with serious fiscal challenges need to accelerate the pace of consolidation”. So, a total of 45 hours of negotiations were required to agree on the need to consolidate economic recovery while halving public deficits by 2013. This is both a lot in principles and very little in practice.

The issue of financialized markets has been relegated to the background. Few concrete progress were thus achieved, save for some declarations of intent regarding derivatives markets: “We also committed to improve the functioning and transparency of commodities markets” indicated the participating heads of states and governments.

But beyond this second declaration of intent, what about global food security, what about financialized market regulation––especially agricultural markets that are highly volatile? For instance, all indicators tend to show that agricultural prices––especially grain prices––will experience new increases in the up-coming months. Unfortunately, the G-20 Summit, which is an international body born out of economic globalization, gives the impression to await the occurrence of a crisis to make transitional decisions, without ever going to the root of he problem. Admittedly, going from a post-war global balance to a new balance with different players represents a challenge that cannot be resolved in only a few years. Must we then consider that the G-20 declarations––in spite of their noticeable elusiveness––are punctuating the way towards this new global governance, or must we point a finger, as many observers do, to a wait-and-see attitude and indecisiveness? Time will tell.

One cannot but recognize that times of crisis often represented gestation periods for momentous reforms. But for these to be permanently implemented, both time and hindsight are required. Let’s remember the meaningful reform of the 20th century––the 1945 birth of the United Nations, which was the culmination of decades of political efforts and a horrific world war.

So, the issues addressed at the Toronto G-20 Summit are consistent with the problems of the current pivotal era, which on one hand is faced with the conclusion of the brunt of the crisis, and on the other, sows the seeds of revival concerning international governance.

Thus, and in spite of occasionally disappointed expectations, we can only hope that future G-20 summits continue to be the anteroom for a new important reform of international cooperation. Next November in Seoul, heads of states and of governments will probably discuss the definitive solutions to end the crisis and will establish a first report on the effectiveness of the various programs implemented since the founding summits held in Washington and in London. It is advisable that in 2011 in France, the G-20 Summit puts forward new international rules for regulation, namely in agriculture and food issues.