Global Expectations at the Hangzhou Summit
By JC Collins
There is an ongoing legitimacy issue involving the G20 and its responses to economic and financial crisis. The alignment on monetary reform and policy implementation between the nations which make up the G20 hasn’t always been productive or conducive to a productive environment. But much of that is changing in the coming months and years.
China is heading the G20 throughout 2016 and the Summit being held this September in Hangzhou is sure to provide some exciting and worrisome developments. High on the agenda are issues involving changes to global governance and international monetary reform. These matters are flagged with the G20’s role as a global forum as opposed to an actual institution which can make and enforce decisions.
Legitimizing the G20 will take the agreement of all members and the influence of an outside and super sovereign governing body to ensure fragmentation between groupings within the G20, such as BRICS, G7, and MITKA (Mexico, Indonesia, Turkey, Korea, and Australia), do not continue.
One method which has been discussed in international circles is the transformation of the G20 into the actual Economic Security Council arm of the United Nations. Such a change would align with the larger consolidation mandates of the global governance agenda and ensure all nations and institutions are speaking from the same script and implementing the appropriate policy changes.
China is pushing hard for this transformation of the G20 and the international monetary framework, as are most other nations. The United States has been the most hesitant of the group to move forward on monetary and systemic reforms. This should not be considered an unwillingness to achieve the same objective but caution in how that objective is reached and the effects on America itself.
There are five objectives which are on the agenda for the Hangzhou summit. They are as follows:
- Establish a UN G20 Secretariat which can facilitate coordination and decision making between finance ministers and central bank governors.
- Expand use of the SDR alongside the USD to promote planned responses to economic crisis as opposed to reactive responses. This is the cornerstone of global governance and monetary reforms.
- Developing the G20 objectives for the next five years, including infrastructure development goals, energy security, food security, and managing global financial challenges.
- Legalizing the G20’s relationship with the United Nations. This includes the aforementioned objective of transforming the G20 into the Economic Security Council arm of the UN, which would include establishing global institutions, such as the IMF, BIS, WTO, BRICS, etc., as extended secretariats. An organizational chart is provided below on how this could potentially look.
- Create a more aligned and bi-directional flow of information between China and the United States, as they are the two largest members with the most influence and leverage of what will take place in the coming years.
Geopolitical challenges such as those currently taking place in the South China Sea, in the Middle East, and in Eastern Europe, will no doubt provide some stress points along the fragmentation lines of global governance. But as I’ve stated before, all players are moving towards the same objective of global governance and monetary reform.
No one nation will be allowed to pull in a different direction and cause further delays and imbalances. The United States is becoming more and more isolated in the world on these matters. But the world needs the US to facilitate the transformation. As usual, the back and forth which has been taking place for years will continue as the powerful players, such as the US, China, Russia, and many more, position themselves for advantages in the new and emerging framework of global governance and monetary reform. – JC