“So under my presidency, I intend our country to promote the imperative of better global governance. The financial and economic crisis has shown the current institutions’ limitations. The G20, which had allowed us to respond urgently to the banking crisis, must again reflect on its role, because we’re a long way from the essential financial regulation.”
François Hollande, President of the Republic - Paris, 27 August 2012
A. Why the G20?
The G20 was established in 1999 in response to the financial crises in the emerging countries at the end of the 1990s. It was originally conceived to bring together, once a year, the finance ministers and the central bank governors of the industrialized countries and the emerging countries in order to facilitate international cooperation in the economic field.
Faced with the most serious economic and financial crisis since the Second World War, the G20 was transformed at the end of 2008, at the instigation of France, which held the presidency at the time, into an economic steering authority, bringing together the major public decision-makers at the highest level. During the founding summit in Washington in November 2008, the heads of State and government reached an agreement on an exceptional action plan to prevent the collapse of the financial system and the global economy.
Since then, the G20 has met on a regular basis: London in April 2009, Pittsburgh in September 2009, Toronto in June 2010, Seoul in November 2010, Cannes, under French presidency from 3-4 November 2011, and Los Cabos, Mexico, from 18-19 June 2012. The next G20 summit will be held on 5 and 6 September 2013 in St. Petersburg, under Russian presidency.
Although it is an informal organization (the G20 is not an international organization, but a forum for meetings and collective decisions), it has become the primary forum for economic and financial cooperation aimed at ensuring world growth based on sound, solid foundations.
B. Who are the members of the G20?
G20 countries account for 85% of global output and two thirds of the global population. It is made up of South Africa, Germany, Saudi Arabia, Argentina, Australia, Brazil, Canada, China, South Korea, the United States, France, India, Indonesia, Italy, Japan, Mexico, the United Kingdom, Russia, Turkey and the European Union.
Each year, the members of the G20 have the option of inviting a limited number of other countries (5 in principle, including Spain which is a permanent guest) and regional organizations to their summits.
In order to successfully complete its work, the G20 relies on the technical expertise of the international organizations, notably the International Monetary Fund (IMF), the World Bank, the Organization for Economic Cooperation and Development (OECD), the International Labor Organization (ILO), the World Trade Organization (WTO), the United Nations (UN) and the Financial Stability Board (FSB).
C. How does the G20 function?
The G20 is based on an annual rotating presidency system that is not very formalized. Each year, a G20 member country is responsible for organizing and furthering preliminary negotiations for the summits of the heads of State and government throughout the year. France had the honor of assuming this responsibility for 2011, Mexico for 2012. Russia assumes the rotating presidency from 1 December 2012 and during the first 11 months of 2013, before Australia takes over in 2014, and then Turkey in 2015.
Under the “Troika” system, which was introduced following the Cannes summit, the incumbent presidencies work with the immediate past and future presidencies to develop the agenda of the preparatory meetings and the summit.
The decisions of the heads of State and government are prepared by their personal representatives (“Sherpas”) and also by the finance ministers and the central bank governors (“financial” sector). The Sherpas and the finance ministers meet on a regular basis.
The Sherpas and the ministers also coordinate the work of several thematic groups (development, the fight against corruption, energy and raw materials, international financial architecture, etc.). These working groups are not permanent: each presidency can choose to continue them or not. Each group is co-chaired by two member countries of the G20.
The presidency of the G20 can also organize specialized thematic meetings. Accordingly, in 2011, France organized a G20 of labor and employment ministers and a G20 of agriculture ministers. The meeting of the ministers of employment took place again during the Mexican and Russian presidencies, the latter having also organized a joint meeting of employment and finance ministers. The Mexican presidency organized, on 19 and 20 February 2012, an official meeting of the ministers of foreign affairs, the first and so far during a G20 summit, even if many ministers of foreign affairs usually come to deal informally with international political issues within bilateral or plurilateral meetings.
D. Opening up of the G20 to civil society
During the course of successive presidencies, several initiatives have been introduced in order to complement the actions of the leaders and to give the G20 increased visibility and raise its profile among civil society. These initiatives are usually referred to as outreach initiatives. They are directed toward different categories of the population: the Youth G20 (Y20), bringing together students from the 20 countries and the invited countries, the Business G20 (B20), bringing entrepreneurs together, Labour 20 bringing trade unions together, Civil 20 (G20 of the NGOs), the T20 (G20 of the think tanks).
The results of these parallel meetings are generally taken up to the level of the leaders’ summit, whether through meetings, reports or recommendations.
In addition, the presidency has considerable freedom to organize high-level conferences, seminars and meetings on the G20 priorities during the year.
A. The results of the G20
The concerted action of the G20 has allowed us to mitigate the effect of the growth and employment crisis and restore confidence sooner than forecast by analysts.
Indeed, the G20 countries have found new ways to support the global economy: massive and coordinated fiscal stimulus plans, injections of liquidity by the central banks, measures to support banks’ credit activities, considerable strengthening of the capacity of international organizations to provide assistance to emerging or developing countries.
However, the G20 has also tackled the root causes of the crisis: the accumulation of global macroeconomic imbalances and financial regulation failures. To reduce global imbalances, the G20 created a “framework for strong, sustainable and balanced growth,” to refocus national macroeconomic strategies in a direction that is more favorable for the world economy. This framework is reviewed and updated every year at the summit.
The G20 reached an agreement on an unprecedented financial regulation plan, commensurate with the scale of the financial crisis. The scope of monitoring and financial surveillance was expanded to include high-risk players, products, activities and behaviors that until now were subject to little or no supervision within the sector.
Finally, the G20 has brought about in-depth change in terms of economic decision-making methods at the global level, in particular by reforming the governance of the IMF and the World Bank.
Beyond the coordinated response to the crisis, which inspired its creation, the G20 is a unique consultation forum, bringing together developed countries and emerging countries, and allowing a dialogue that goes beyond “bloc-wide” positions.
B. The Russian presidency of the G20
The G20 members met in St. Petersburg on 5 and 6 September. Besides the G20 members, Russia invited Spain (permanent guest at the G20), Ethiopia, Kazakhstan, Brunei Darussalam and Singapore, as well as the UN, the World Bank (WB), the International Monetary Fund (IMF), the Economic Cooperation Organization (ECO), the World Trade Organization (WTO), the International Labour Organization (ILO) and the Financial Stability Board (FSB).
The main success of the G20 Summit lies in the fight against tax evasion and taxation of multinational companies. The G20 accelerated the implementation of automatic exchange of data – between tax administrations and regarding all taxpayers- which will be effective in 2015 and was initiated by France. The G20 members also agreed on a two-year action plan regarding the taxation of multinational companies. This action plan was prepared by the OECD to prevent erosion of the tax base and profit-transfer.
Within the context of the work begun under the French Presidency, the G20 has made it a priority to support growth and job creation, especially for the youth. The G20 underlined the importance of apprenticeship and of specific labor market inclusion measures, such as the “Garantie jeunes”, introduced in France. In addition, each country will present its growth strategy to the other members during the next summit (under the Australian presidency in Brisbane).
From an economic perspective, the G20 welcomed the consolidation of the euro zone and called for further action in the rebalancing of the global economy, through minimum duplication of efforts between surplus and deficit countries.
During the St. Petersburg Summir, France has made progress on three of its main objectives:
Development, with the support of the G20 for the post-2015 agenda;
Financial regulation, with the decision to continue to prevent systemic risks and to reduce risky compensation practices among financial institutions;
The fight against climate change: the G20 recognized the costs of the delay in its implementation and stressed the importance of the climate conference organized in Paris in 2015.
The G20 encourages increased collaboration with the United Nations, which is a universal forum (the “G193”). During its presidency, France has worked to strengthen the complementarity between the G20 and the United Nations, in particular, through better informing the General Assembly about the ongoing work of the G20 (the “General Assembly’s briefings”).
Resolution 67/289 on the role of the United Nations in the global economic governance, adopted by the General Assembly on 9 July 2013, focuses on the relationship between the United Nations and other competent international actors, in particular the G20. While stressing that the United Nations, particularly the General Assembly and the Economic and Social Council, must play a central role in the definition of answers to the global economic challenges, the text recognizes the importance of the G20 action and encourages better coordination between the two entities. The resolution stresses the need to pursue informal exchanges between the General Assembly and the G20, in particular in the form of the briefings organized by France during its presidency. It also encourages the Secretary General, who represents the United Nations at the G20 summits, to engage in dialogue with Member States on his participation to the summits. Finally, the Resolution stresses that the strengthening of the global economic governance also involves a further reform of the United Nations towards greater effectiveness.
19 June 2012 - Los Cabos Growth and Jobs Action Plan
4 November 2011 – Cannes Action Plan for Growth and Jobs