A new global order
The Group of 20 nations, comprising developed and emerging economies including China, Brazil, India , on Friday permanently replaced the elite club of rich nations called the Group of 8 as the global forum for economic policy.
The move highlights the growing economic importance of Asia and some Latin American nations, particularly since the US and many European countries have found their banking systems crippled by an economic crisis originating in excesses in the American mortgage market.
For more than three decades, the main economic group was G7 — the US, Britain, Canada, France, Germany, Italy and Japan.
During the Clinton years, Russia was gradually added, not because of the size of its economy, but to help integrate it with the West. Administration officials said the group would still meet twice a year to discuss security issues. But for practical purposes, the smaller group will become more like a dinner club that defers to the broader group on the economic issues that have dominated summit meetings for nearly three decades.
“Today, leaders endorsed the G20 as the premier forum for their international economic co-operation ,” said a White House statement after a G20 summit dinner in Pittsburgh on Thursday night. “This decision brings to the table the countries needed to build a stronger, more balanced global economy, reform the financial system and lift the lives of the poorest.”
The deal was thrashed out by US President Barack Obama, who first showed doubts about the suitability of G8 as a forum for solving the world’s problems in July in L’Aquila , Italy.
At the time, his aides characterized the session as merely a way station between G20 meetings.
“We view this meeting and this discussion as a midpoint between the London G20 summit and the Pittsburgh G20 summit,” said Mike Froman , the president’s chief negotiator.
The merits of the different sizes of gathering — eight nations, 19 or sometimes something in between — have been vigorously debated.
Proponents of the smaller group say the friendships it fosters are important when friction arises in the group or outside it in one-on-one policy disputes between nations.
They also point to complications that arise when 20 countries with vastly different economies try to reach agreement on setting exchange rates or other complex financial questions.
Supporters of the larger group say the emerging nations, and the huge slice of the world’s population that they represent, must have a seat at the table to debate not only economic issues, but also environmental issues.
Britain had earlier pushed for the promotion of the G20 as the steering committee for the global economy, but faced concern from some European countries that this would be at their expense. Italian Prime Minister Silvio Berlusconi, currently chairman of the G8, urged the two forums be kept separate and made a coded call to maintain the dominance of the smaller group.
“It is essential that there should be the closest coordination between the G8 and G20 presidencies, and that the differences between the two are clear,” Berlusconi wrote in a letter to Obama.
The new role for the G20 as the premier forum for international economic co-operation will begin with two summits next year, in Canada and South Korea, then annual summits.
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