A proposal to enhance the G20’s “input” legitimacy

We live in a world where, like it or not, economic and political governance is in the hands of the G20. This is historic because, unlike in the G8 world, for the first time systemically important emerging countries have been given a voice at the core of global governance.

The G20, however, is not perfect and continues to be dogged by questions of “input” legitimacy. First, it comprises 19 countries, plus the EU, selected in 1999 without using any objective criteria, and Europe is clearly over-represented. Seven representatives of Europe – UK, France, Germany, Italy, Spain, and the Presidents of European Commission and European Council – sit around the high table of this “self-select” group. But as we know, this is not new and mirrors a similar composition of the IMF and World Bank boards. Given that we are moving from a uni-polar to a multi-polar world – actually, as Arvind Subramanian (2011) has argued in his most recent book, to a G1 world led not by the US but by China – this over-representation has to go. In this context, the bold decision by Seoul not to invite the Netherlands last year was a step in the right direction.

Second, how can the voice of 172 countries - accounting for over 60% of the world’s population - not sitting at the high table be heard? Something has to be done.

Past G20 practice

The G20 practice has been to send out invitations to regional organisations on an ad hoc basis at the discretion of the host. For example, the UK invited ASEAN and New Partnership for Africa’s Development (NEPAD), Canada added the African Union (AU), Korea brought in the Global Governance Group (3G), and France brought in the Cooperation Council for the Arab States of the Gulf (GCC) for November’s summit. Strictly speaking, 3G, which is a coalition of small and medium states left out of the G20 and led by Singapore, is not a regional organisation (Rana 2010). But it was nonetheless invited under the ad hoc invitation system.

Regional organisations 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 organisations have chosen the latter option of constructive engagement. For example, the leaders’ statement from the 2010 ASEAN Summit states that “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” (ASEAN Leaders’ Statement 2010). Also, at the time of the first summit in 2008, the head of AU’s executive committee appealed to the organisers 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” (cited in Cooper 2011). This has since been rectified.

Had regional organisations chosen the option of resistance, their wait would have been long. The Stiglitz Commission appointed by the UN has recommended the involvement of the UN (United Nations 2009). But UN-isation of the 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. Vestergaard (2011) has suggested reforming the voting power of emerging markets at the IMF and creating a Global Economic Council comprising country constituencies modelled after the IMF board. But governance reform at IMF proceeds at a glacial pace.

From ad hoc system to G20 Plus: Seoul Summit

At the Seoul Summit last November, the G20 took an important step in institutionalising the previous practice of ad hoc invitations. The declaration mentions “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” (G20 Seoul Summit Leaders’ Declaration 2010). The G20 has now become the G20+5.

While the formalisation of membership of two regional organisations from Africa is appropriate because the entire continent had only one representative (South Africa), how about membership of other regional organisations? Given that at least two will now be from Africa and 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, and any other regional groupings aspiring for G20 membership.

A proposal for the Cannes Summit

The Cannes Summit on 3-4 November should complete the institutional reform process begun in Seoul. The move from an ad hoc system to the G20 Plus is appropriate, and 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 the 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. Besides, Europe is over-represented. Second, the G20 should categorically announce that the five regional organisations to participate in its future summits will be the AU, NEPAD, ASEAN, 3G, and GCC. The guessing game of who will or not be invited should end. Full membership of these five regional organisations should be formalised in Cannes. These actions will greatly enhance the “input” legitimacy of the G20. In return, these five regional organisations should strengthen their outreach programs with their constituencies and represent them effectively at the G20 high table.

Even with the above reforms, there will be countries left out of the G20. For them, a system of indirect participation should be considered. For example, South Africa has set up a Committee of Ten finance ministers and central bank governors from around Africa to support its participation in G20. Brazil could adopt a similar approach in Latin America, India in South Asia, and Australia in the South Pacific.

References

ASEAN Leaders’ Statement on Sustained Recovery and Development (2010), aseansecretariat.org, Hanoi, 9 April.
Cooper, AF (2011), “The G20 and the Regional Critics: Search for Inclusion”, Global Policy, Volume 2, Issue 3, May.
Rana, PB (2010), “Reform of International Financial Architecture: How can Asia have a greater impact in the G20?” RSIS Working Paper 201. June
Subramanian, A (2011), Eclipse - Living in the Shadow of China’s Economic Dominance, Peterson Institute of International Economics, Washington DC
The G20 Seoul Summit Leaders’ Declaration (2011), g20.org, 11-12 .
United Nations (2009), Report of the Commission of Experts of the President of the UN General Council on Reform of International Monetary and Financial System, New York, 12 September.
Vestergraad, J (2011), The G20 and Beyond: Towards Effective Global Economic Governance. DIIS Report 2011.04