5 Things to Know About the G20 Summit
French President Nicolas Sarkozy (second from left) and President Obama meet before the start of the G20 meeting in Cannes, France. Photo by Lionel Bonaventure – Pool/Getty Images.
World leaders from the Group of 20 are meeting Thursday and Friday with their eye on how to improve the global economy — a tall order given the growing European debt problems overwhelming their original agenda.
We consulted with Heather Conley, senior fellow and director of the Center for Strategic and International Studies’ Europe Program, for what to watch during the meeting.
#1: The Basics
Twenty world leaders, representing about 80 percent of the world’s GDP, are holding their annual G20 meeting in Cannes, France. (View a list of member countries here.)
Their goal: maintaining a strong global economy, which hasn’t been the case for the last two years with the European debt crisis, the weakened U.S. economy, and the earthquake and subsequent nuclear problems in Japan, said Conley. “The main economic engines of the world are sputtering.”
#2: Fait Accompli?
How will we know if anything gets accomplished? There won’t be concrete deliverables, Conley said. The G20 is more like an important step in a process. At last year’s meeting, the G20 leaders came up with an ambitious agenda to work toward reforming the international monetary system, making sure commodity prices are not so volatile, and how they should pursue instituting “global governance reform,” including possibly expanding the U.N. Security Council.
But since their last meeting, the European growing debt crisis has consumed the agenda. Much of the discussion this week will be trying to glean as many details of the European Union’s plan devised last week to address the problem. Look for expressions of encouragement and support from G20 members, Conley noted.
Economic analysts discuss how the European debt deal is meant to address the eurozone’s problems:
For a more current G20 agenda, read the roadmap prepared at the October meeting of the participating countries’ finance ministers.
Financial reform is one of the items on the docket. If the eurozone’s debt problems don’t take up all their time, the G20 leaders will be trying to set up regulations for the banking sector to avoid another 2008 financial crisis, when institutions like Lehman Brothers collapsed.
#3: Where Leaders Disagree
The Europeans, particularly the Germans and French, like the idea of a financial transaction tax in order to have banks pay for their own bailouts rather than the taxpayers. But Britain and the United States are not keen on it. They feel their financial institutions, which are larger, would suffer more, and that the taxes themselves would be easy to evade.
There’s also a divide over the issue of austerity. Some countries, such as those in Europe, endorse and have enacted spending cutbacks as a way to restore economic stability, while others, including the United States, tend to think stimulating growth to encourage the private sector to begin hiring again is the way to go.
#4: Obama’s Task
President Obama has a tricky task ahead, according to Conley. His message will be that he is pushing for American jobs and economic growth as part of worldwide economic growth, but “it’s hard to paint an optimistic picture when we see so many indications of continuing economic challenges both internationally domestically.” Look for Friday’s job figures and October unemployment rate which will be posted here for an indicator of how the United States is faring economically.
He’ll be meeting on the sidelines with French President Nicolas Sarkozy, as a nod to the host of the G20 summit, with German Chancellor Angela Merkel — underscoring the leading role Germany has on determining how the sovereign debt crisis plays out — and with Argentina’s recently reelected President Cristina Fernandez de Kirchner, who represents a country that’s fared relatively well despite the global economic turmoil.
#5: China’s Role
China plays perhaps the most interesting role at the meeting, possibly even as kingmaker, said Conley. Many of the world leaders want to see the Chinese currency appreciate in order to level the playing field and be more competitive. And the Europeans are interested in having China play a more robust role in buying its debt. So the Chinese leadership likely will want to keep the focus on Europe and away from the exchange rates and where the Chinese currency is valued, she said.
Updated Nov. 4: At the close of the meeting, the G20 members issued a Communique, as released by the White House, summarizing the meeting’s results.