WILL THE G20 BE EFFECTIVE?

DILEMMA FOR THE G20

The Japan Times, November 14, 2010

The promise of the Group of 20 was a new system of global leadership that would be more representative of real economic power and, thus, more effective in decision making. The 2008 economic downturn thrust the G20 into the spotlight. The speed with which its participants found common cause and their readiness to initiate measures to deal with the crisis sparked hope of a new era of global economic governance.

As the crisis has lessened, so too has the sense of urgency to fix problems that created the worst economic downturn since the Great Depression. For sure, progress has been made in identifying weaknesses in how the global economy works as well as in remedying some structural flaws in economic governance. But, at times, the G20 seems no better suited than its predecessors to making hard decisions or putting substance behind its declarations.

At last week's G20 summit, hosted in Seoul by South Korean President Lee Myung Bak, participants agreed to curb the "persistently large imbalances" in consumption and savings. Tolerance for the steady and massive trade surpluses run by Germany and China, and for the corollary U.S. deficits, is the most important source of global economic instability.

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