Make G20-plus transparent

We live in a world where, like it or not, economic and political governance is in the hands of the Group of 20 nations (G20). This is historic because, unlike in the G8 world, for the first time "systemically important" emerging countries - growing states that are crucial to the international economic system - have been given a voice in the core of global governance.

The G20, however, is not perfect and, among other things, continues to be dogged by questions of "input" legitimacy. Its exclusive nature, and lack of broader inputs from the wider world, is undermining its legitimacy.

First, it comprises 19 countries plus the European Union, selected in 1999 without using any objective criteria; Europe is clearly over-represented. Five representatives of Europe - the United Kingdom, France, Germany, Italy and Spain - and the presidents of European Commission and European Council sitting around the high table along with the 19 other members of this "self-select" group.

But as we know, this is not new and mirrors a similar composition of the International Monetary Fund (IMF) and the World Bank boards. Given that we are moving from a unipolar to a multipolar world, this over-representation has to go. In this context, the bold decision of South Korea not to invite the Netherlands to the G20 summit in Seoul last year was a step in the right direction.

Second, how the voice of other countries - accounting for more than 60 percent of the world's population - can be heard when they are not sitting at the high table? Something has to be done.

The G20 practice has been to invite regional organizations on an ad hoc basis at the discretion of the host. For example, the UK invited ASEAN and the New Partnership for Africa's Development (NEPAD), Canada added the African Union (AU), South Korea brought in the Global Governance Group (3G), and France brought in the Cooperation Council for the Arab States of the Gulf (GCC) for the G20 summit in November 2010. Strictly speaking, 3G is a Singapore-led coalition of small- and medium-sized states from across the world left out of the G20; it is not a regional organization.

But it was nonetheless invited under the ad hoc invitation system.

Regional organizations had a choice. Either they could resist, call for a more representative system and wait. Or they could go along with the G20 practice and engage pragmatically and constructively to promote their region's voice. Although not fully satisfied with the G20 practice, many regional organizations have chosen the latter option of constructive engagement. For example, the leaders' statement from the 2010 ASEAN Summit stated: "ASEAN strongly believes that it can contribute to the deliberations of the G20 through continued participation of the ASEAN Chair and the ASEAN Secretary General."

Also, at the time of the first summit in 2008, the head of AU's executive committee appealed to the organizers of the G20 meeting to think of Africa's right to be an active player in the process and "not to suffer, as always, the consequences of other people's mistakes". This has since been rectified.

Had regional organizations chosen the path of resistance, their wait would have been long. The Stiglitz Commission appointed by the United Nations has recommended the involvement of the UN. But a UN-ization of G20 is perhaps not a good idea because of the trade-off between inclusiveness and effectiveness. Besides, UN Secretary-General Ban Ki-Moon, who now participates in the G20 summits, has endorsed that the two institutions are different and complementary.

There has also been a suggestion for creating a Global Economic Council, comprising country constituencies modeled on the lines of the IMF board after the reform of the IMF's voting power. But governance reform at IMF proceeds at a glacial pace.

At the Seoul summit last November, the G20 took an important step toward institutionalizing the previous practice of ad hoc invitations. The declaration said: "We reached broad agreement on a set of principles for non-member invitations to summits, including that we will invite no more than five non-member invitees, of which at least two will be from Africa." The G20 has now become G20+5.

While the formalization of membership of two regional organizations from Africa is appropriate because the entire continent had only one representative (South Africa), how about membership of other regional organizations? Given that at least two will now be from Africa and given Spain's "permanent guest" membership, it means that they have to compete for at most two seats and the system of ad hoc invitations will continue for them.

This decision would surely have disappointed ASEAN which has attended all summits, 3G which has been invited since the Seoul summit; GCC which has been invited to the Cannes summit this year, and any other regional groupings aspiring for G20 membership.

The Cannes summit on Thursday and Friday should complete the institutional reform process begun in Seoul. The shift from an ad hoc system to the "G20 Plus" is good, now it should be made more transparent.

First, just as the Netherlands is no longer a guest member, Spain should be requested to give up its "permanent guest" status. Spain gained entry into G20 with the support of France and then consolidated its position when it took up the EU presidency. Now there is no clear rationale for its membership. Moreover, Europe is over-represented.

Second, G20 should categorically announce that the five regional organizations to participate in its future summits would be the AU, NEPAD, ASEAN, 3G and GCC.

The guessing game of who will or will not be invited should end. Full membership of these five regional organizations should be formalized in Cannes. These actions will greatly enhance the "input" legitimacy of G20.

In return, these five regional organizations should strengthen their outreach programs with their constituencies and represent them effectively at the G20 high table. Even with the above reforms, many countries would be left out of G20. For them, a system of indirect participation should be considered. For example, South Africa has set up a Committee of Ten (C10) finance ministers and central bank governors from around Africa to support its participation in G20. Clearly, the time has come for a new economic architecture that the whole world can embrace.

The author is associate professor in international political economy at the S. Rajaratnam School of International Studies, Nanyang Technological University, Singapore.

(China Daily 11/01/2011 page9)