Created to deal with one global economic crisis a decade ago, the Group of 20 is getting its real coming-out party in the midst of a second global economic crisis at this Saturday’s Washington summit hosted by President Bush.
In multilateral jargon, the G-20 may lack the name recognition of the G-7 — seven major industrial powers; the G-8 — the G-7 plus Russia; or even the P-5 — the five permanent members of the U.N. Security Council.
But in an international crisis that has staggered wealthy and developing countries alike, the G-20 has proven the most workable forum for getting the key players in the same room at the same time.
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“To have 20 countries discussing these problems is better than just eight countries,” said Arkady Dvorkovich, economic adviser to Russian President Dmitry Medvedev. “You can’t just put aside the concerns of countries like China, Brazil and other big players.”
The G-20 was created in 1999 in the wake of the financial crisis that started in Asian currency markets, spread to such emerging market economies as Russia and Brazil, and even claimed such prominent U.S. victims as Long-Term Capital Management.
For the emergency financial summit, the United Nations, where every nation gets a vote, was too large and unwieldy. By contrast, the G-8 — the United States, Britain, France, Germany, Italy, Canada, Japan and Russia — omitted too many key players, notably China, the country with the world’s fastest-growing economy and the biggest hoard of foreign exchange reserves.
The G-20 includes the G-8 members plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea, Turkey and the European Union. Also attending Friday’s White House dinner and Saturday’s summit will be the heads of the United Nations, the World Bank, the International Monetary Fund and the Financial Stability Forum.
The summit will be a breakthrough for the group, which had previously met only at the level of finance ministers and central bankers. This will be the first time the heads of the 19 member nations and the European Union will gather for a G-20 summit.
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Brian Setser, a fellow in geoeconomics at the Council on Foreign Relations, said the G-20 became the forum of choice almost by default.
“It’s as good a grouping as any, and it already existed,” he said. “If you wanted to have a meeting at the leaders’ level, you either had to create a new group, which would be an enormous diplomatic nightmare, or you have to fall back on an established grouping.”