On October 22, the White House announced that President Bush invited the heads of state of the Group of 20 (G20) to join him for a summit on November 15 to discuss the current global financial and economic crisis. The G20 includes 10 major emerging economies of the world—including Brazil, China, India, Saudi Arabia, and South Africa among others—along with the members of the G8, Australia and the European Union. This could represent a major step toward a new architecture in global financial and economic relations as a first step in global governance reform more broadly. This will be the first ever meeting of G20 countries at head of state level and gives the next president of the United States an opportunity to demonstrate a commitment to the G20 as a better global steering committee than the G7/8.
As early as April 2004, we argued in a Brookings policy brief (Policy Brief # 131), and then again in April 2006 (Policy Brief # 152), that the G8 had lost in effectiveness and legitimacy and that a G20 summit forum would represent a pragmatic approach to reflecting the dramatic changes in the economic structure of the world, where the emerging markets economy now plays a critical role in maintaining global economic stability and prosperity. A G20 would include those countries whose participation in a search for effective solutions to key global challenges is essential. Among these challenges we highlighted the risks of financial instability and the need to reform the global financial institutions.
Since then the debate about global governance reform has continued. Despite spirited arguments from many sources, most prominently among them Canada’s former Prime Minister, Paul Martin, only limited progress has been made in opening up the G8 summits—by inviting only a few of the larger emerging market economies as mere guests, not full participants—and timid steps have been taken to reform the governance of the International Monetary Fund and the World Bank. In October 2007, we laid out the reform agenda (Policy Brief # 163) and concluded with this statement:
“We see renewed energy in the debates and even some progress on global governance reform. Whether this pace of change is sufficient, or whether it will take a major crisis to bring about fundamental changes in the global order and in global governance remains to be seen. We hope the specific ideas which we presented above can help speed up the gradual process. We know from history and bitter experience that global crises cause devastation and suffering. The creation of a global governance system which reflects the new economic and demographic realities and responds effectively to new global challenges of the 21st century is urgently needed to help avoid crises and create a better future.”
A major global crisis, unfortunately, is now upon us. We believe that the G20 summit, which Mr. Bush has now convened, is the right forum for forging a cooperative approach to the crisis and for building a stronger, more inclusive international financial and economic architecture, and beyond to addressing other global challenges such as energy and climate change, security and terrorism, poverty and health. This crisis and the G20 summit on November 15 provide a historic opportunity for the next president of the United States to chart a new course for global cooperation, overcoming the transatlantic and Western biases of recent years, integrating Asia and other emerging economies into the global leadership forum, thereby creating a more effective and legitimate global steering mechanism.