Adrian Hamilton: G8 and G20: what's the difference?

Share
Related Topics

You have to feel sorry for the poor Canadians. With a right-wing government hell-bent on massive public expenditure cuts, they have to fund not just one grand international summit with the G20 this weekend, but two, with the G8 summit on Friday. And in separate places. The G8 summit takes place in Muskoska, the G20 meeting in Toronto. All the security, the transport and accommodation doubled.

And for what? So that Canada's Prime Minister, Stephen Harper, can play host to world leaders and preen himself on his and his country's continued importance? We're back to the worst years of the G8, when world leaders could parade themselves with an air of importance while achieving very little of economic value, and certainly nothing that couldn't have been done in a few telephone calls between the relevant premiers and their staffs.

The commencement a year-and-a-half ago of summits of the G20 was supposed to change all this. Where the G8 – the US, UK, Canada, France, Italy, Germany, Japan and, later, Russia – was a club of the established economic big boys of the post-war, founded in 1975 in response to the oil crisis, the G20 summits of world leaders are a forum for a much wider grouping, including the major developing countries, begun in answer to the world financial crisis of 1977/8.

The world was now being rebalanced towards the East. The financial crisis represented a global disaster in which all were involved. It was time to recast the international institutions to reflect the fact. Indeed, the G20 as a stage for world leaders was seen as taking over from the G8 within a matter of years.

So went the theory. The practice has been rather different. The financial crisis was a crisis largely in the West, with ramifications elsewhere, and it was, as the French rather pointedly put it, a drama of Anglo-Saxon finance. The US and Europe (with the exception of Germany) were now the debtor countries, China, Saudi Arabia and South Korea were now the creditors.

In the minds of the "old world" of the G8 was the hope that, by widening the group, they could spread the burden of a solution to the financial disaster that had befallen them. Just as with climate change, the old generation wanted the new generation effectively to pay for their sins. And, just as with the Copenhagen Summit, it isn't quite working like that.

The first summits had decided to alter the structures of the IMF and World Bank, to enlarge their funds, loosen its lending criteria and (credit to Gordon Brown where credit is due) to increase substantially the sums in aid and help to the poorest countries suffering most in the financial crisis and the resulting recession.

In the event little has been done to alter the leadership or structures of the international lending institutions. The funds available for lending have gone up but the draw-down has been surprisingly slow. Instead of the G20 uniting the major economies, advanced and developing, the divisions have only increased with the recession, as China and India have recovered and the West remains stuck in – at best –slow growth. Washington has used everything from threats of a trade war to pleading to get China to agree to allowing its currency to float upwards. But it has been very much a bilateral affair. By announcing a fairly modest change in policy Beijing has avoided seeing it as an issue in Toronto. But it is doubtful that this was the reason it did so.

America's other target at the moment is Germany and Europe and its current vogue for cutting expenditure to reduce their budget deficits. The move, argues President Obama in phone calls and letters to EU leaders, will only make the recession worse and, in Germany's case, is entirely unnecessary. If it (and China) want to help the world, they should be expanding their consumption and sucking in imports rather than driving for export-led expansion.

But the leaders of the G20 aren't interested in helping the world. They're interested in managing their domestic politics. Faced with a world of debt and doubt, the German public wants a retreat to financial probity on the part of their government. A maximum deficit is now written into the constitution. The economics of continued deficit financing may be right. They are. But the politics isn't there.

The US administration is no different than any other country when it comes to pursuing its own domestic interests. Faced with rising deficits itself and an appreciating currency, which makes exports more difficult, it would like its potential markets to help it out of its difficulties. They won't. Over time perhaps you can see China, and even Germany, move to a more consumerist society, but not in any dramatic or government-directed way.

When it comes to banking tax reform, the positions are reversed. Washington has become the block to reform, not its facilitator. The US and Canada don't want to harm their revived banking sectors, China and India want to grow theirs, while the politics of Europe demand that even a Tory Prime Minister in Britain seek their punishment.

At the first summit of the G20 in Washington in November 2008 there was talk of a new Bretton Woods; globally-agreed rules to regulate the banks and a brave, re-ordered world of East-West co-operation. Less than two years later, the G20 resembles nothing so much as the old G8 it is supposed to be replacing – a talking shop for premiers to strut the world stage and send messages back home of their importance. As the protesters gather for their annual demonstrations against globalisation and the UN Secretary General makes his regular plea not to forget the poor, all one can feel is a terrible sense of what today's leaders could do and how little they will.

a.hamilton@independent.co.uk

For further reading

'The Stiglitz Report: Reforming the International Monetary and Financial Systems in the wake of the Global Crisis', by Joseph Stiglitz (2010)

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive + incentives + uncapped comms: SThree:...

Ashdown Group: Reporting & Analytics Supervisor - Buckinghamshire - £36,000

£34000 - £36000 per annum + benefits: Ashdown Group: Analytics & Reporting Tea...

Recruitment Genius: Junior Web Developer

£16000 - £20000 per annum: Recruitment Genius: This company is a world leader ...

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

Day In a Page

Read Next
 

Daily catch-up: the SNP’s ‘fundamental problem’, says Corbyn, is that too many people support it

John Rentoul
An investor looks at an electronic board showing stock information at a brokerage house in Shanghai  

China has exposed the fatal flaws in our liberal economic order

Ann Pettifor
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future