The unfolding story of the G-20 warrants a critical exposition. Hosted
by Germany and Canada, on December 15-16, 1999, the Finance Ministers
and Central Bank Heads of the twenty countries met in Berlin, Germany
and gave birth to the G-20.
Member countries of the G-20 are:
( 1) Australia, (2) Argentina, ( 3 ) Brazil, ( 4) Mexico, (5) USA, (6)
Canada, (7)Germany, (8)France,(9) Italy,(10) UK,(11 )Japan, (12) South
Korea, (13) China, (14) India,(15) Indonesia,(16) South Africa,
(17)Saudi Arabia, (18) Turkey, (19) Russia and ( 20) the European Union.
The European Union with its membership of the twenty-seven economies on
the map of Europe (EU-27), the family of Europe, quoting the word of
Monnett, commands the largest share of world output at about 30 percent,
when the USA's share is at about 28 percent ( data of 2005).
The Managing Director of the International Monetary Fund (IMF), the
President of the World Bank, the chairs of the International Monetary
and Finance Committee and Development Committee of the IMF and the World
Bank are invited participants at the G-20 meetings. Thus the G-20
ensures cooperation with the post-WWII Breton Woods institutions.
The G-20 has no permanent secretariat. The G-20 Chair rotates on a
regional basis. In 2009, the UK is the chair, and in 2010, South Korea
will take it over. The recent most G-20 meeting was held in 2009 in
Pittsburgh, USA. In 2008, the G-20 meeting was held in Sao Paulo, Brazil.
In 1980 they instituted G-5 - USA, UK, France, Germany and Japan. Soon
joined by Italy and Canada, the G-7 annual summit,attended by the heads
of member states became a global media event. In 1997 Russia came in and
we welcomed the G-8. Was Russia invited to attend all the meetings of
the Group.
The sequence of events that led to the convening of the G-5 in a regal
hotel in Manhattan, NYC on -------- began with discontinuation of the
US dollar from its fixed gold value, one ounce of pure gold valued at
US$ 35, on August 15, 1971. President Nixon signed the protocol
following France's demand for the delivery of gold for the current
account balance the USA then owed to France. The proxy gold standard
came to its end. The president of the American Economic Association
forcefully and rightly argued that the US dollar could not support the
post-WWII exchange rate stability for the free world for an indefinite
period. The G-5, the group of the five leading industrialized economies
took the bold step to contain the risk of exchange rate fluctuations.
They elected not to do the needful within the institutional umbrella of
the International Monetary Fund (IMF) whose membership of 185 sovereign
nation state economies proved to be a challenging forum. Overwhelming
majority of the economies of the world, 192 as per the membership
roster of the United Nations (UN) are pre-industrialized agricultural
economies, each individually commanding marginal share of world GDP. As
such they are left in the IMF to do their things following the decision
of the select group of mature industrialized economies.
In the twenty-first century, the G-8 faces a new economic paradigm They
welcomed the emergence of the newly industrialized and newly
industrializing economies of the world.
The G-20 with a population total of two-third of the world and eighty
percent of world GDP will expectedly work on agenda where all the people
of the world will enjoy a life-style free from poverty, disease,
death and destruction . The peoples of the world will share the
affluence now limited to a select group of member economies of the
world.
The G-20 has made a promise. Before the G-20 can be called upon to
address itself to the delivery of its agenda of shared economic
prosperity with all countries of our world, with immunity from
preventable diseases, deaths and destructions, the G-20 has to address
to its institutional structure. Of course, the G-20 will replace G-8. It
will be the only club. Will the group function as the UN Security
Council, each with a veto power? Will the G-20 follow the principle of
the EU-27, each of the twenty-seven member states must approve each and
every decision taken by a treaty signed by the EU-27 before it becomes
operational. The consensus principle with no majority vote
has been the EU's principle of accession.
The G-20 membership warrants a critical review. Four members of the
G-20 - Germany, France, Italy and the United Kingdom are members of the
EU-27. If the EU is accepted as a member of G-20, these four must be
denied the double voting privilege. One suggestion will simplify the
G-20 institutional structure. Let the EU-27 be one member, the EU
president or his/her designated individual will attend the G-20
meetings. Indeed, several other countries on the map of Europe will
sooner or later be admitted to the the EU membership. Europeanization of
Europe has reached its high point. Thanks to the Irish referendum on
Friday October 2, 2009 approving the Treaty of Lisbon by two-to-one
majority. In the Americas, the North and the South, each may have
one rotating member, be it the USA in the North America and Brazil in
the South America. Following the American Hemispheric Economic
Conferences, beginning with the maiden one hosted by USA in Florida in
1994, and the agenda of Free Trade Area of the Americas (FTAA) offer
challenging queries. The African Continental Conference in 2002 in
Durban, South Africa instituted the African Economic Union which now
commands membership of all 54 member economies on the map of Africa.
They have promised the African Money with the African Central Bank by
2023. Can Asianization of Asia remain far behind? The Asian Summit of
the 4 ( Japan, Korea, China) and 10 ( Indonesia, the Philippines,
Malaysia, Thailand, Singapore, Myanmar, Laos, Cambodia, Vietnam, Brunei)
has been in function and they have recently proclaimed that time has
come for the Asian money. They also have indicated their preference for
the Asian Free Trade Area following the EU-model with one membership of
the World Trade Organization (WTO) with one vote. Be it noted that since
the Asian Financial Crisis of 1997-98. the Asian Group initiated
frequent conferences amongst Korea, Japan. China and the five original
ASEAN members in Southeast Asia. The 4 plus 10 group fo Asia may elect
one representative to G-20.
Russia, a bi-continental economy, with its enormous land area and
resource base may continue to be one member. The West Asia, Turkey to
Afghanistan plus the west Asian sovereign nation-state economies,
Tajikistan, Uzbekistan, Kazakhstan may constitute yet another regional
economy with one membership of the G-20.
The G-20 will then become G-7 or G-8, working with the consensus
principle. Each member of the Group will be represented by the Group's
Finance Minister and the Central Bank Chief. The IMF cannot be a forum
for this group. The EU-27 will have to resolve the problems of the
3-out-members, namely Denmark, Sweden and the United Kingdom, the three
members of the original EU-15, who remain outside the euro-regime under
the European Central Bank(ECB). Germany, France, Italy are founding
members of the Euro-regime.The rest of the EU-27 are in the process of
joining the euro, four of them already being admitted to the regime.
The G-8 elected to take themselves outside of the IMF. The Asian
countries had their share of disappointment with the IMF as it failed to
do enough with promptness when they were exposed to the Asian Financial
Crisis. They asked if the IMF do too little, too late. It is also
critically important to note that the IMF has denied the ECB its full
membership.
In the absence of a well-defined institutional structure, the G-20 will
remain a slogan, a tragedy indeed.
