Setting the agenda at G-20World powers made headway on mending their deficits at the recent G-20 Summit in Toronto, Canada. The 20 countries agreed to halve their deficits by 2013 and stabilize or reduce government debt-to-GDP levels by 2016. The initiative suggests that the G-20, which has served as an effective platform for global economic issues since the financial meltdown two years ago, has veered away from its commitment to salvage the global economy and moved on to tightening and austerity measures to restore fiscal health in individual nations.
The agreement is a kind of middle ground, packaged to satisfy both the United States, which has continued to deliver aid to its limping economy, and European countries, which are carrying out an austerity campaign following the credit crisis that originated in Greece. The leaders agreed to bolster their economies based on individual circumstances.
As a result, the initiative’s language lacks the weight and coherence of earlier summits, when the leading economies presented a united front in order to defend the global economy. These conflicting interests were underscored in the proposal on taxing bank profits. The G-20 leaders agreed in principle on the need for a global bank tax, but left the decision to each country.
In this way, the G-20 served as a forum for a mixed batch of ideas that are not likely to have a significant impact on the global economy.
The questions raised during the G-20 meetings in Canada were therefore set aside for the upcoming summit in Seoul in November. As the summit host, we have additional responsibilities as well as opportunities. We will have to be flexible in moderating differences of opinion among countries. If we succeed in ironing out the differences, however, we will be gaining an opportunity to help establish order in the global economy in the aftermath of one of the worst financial crises in recent history.
To prepare for the upcoming summit, we should present action plans for each economy, set criteria for regulating the banks and encourage major financial lenders to take steps toward reform. We should also come up with a country report on efforts to eliminate trade barriers and reform proposals for world bodies like the International Monetary Fund. We must endeavor to reap the results of our own proposal to establish a global financial safety net. Generating consensus for these plans will not be easy.
Meanwhile, we should beef up our efforts to prepare for the G-20 meeting. We are the first country outside of the Group of Eight to host a G-20 Summit, and we need to set the example that an emerging nation such as ours is capable of leading on the world stage.