PM Kevin Rudd wins place at new G20 seat of power
Dennis Shanahan, Pittsburgh | September 26, 2009
http://www.theaustralian.news.com.au/story/0,25197,26126927-7583,00.htmlAUSTRALIA is a founding member of the world's new premier forum for global governance and economic management, which has been finalised at the Group of 20 leaders' summit in Pittsburgh.
In a stunning transformation in the past year of the global financial crisis, the G20 group of finance ministers, originally formed to fight the Asian financial crisis, has evolved into the world's leading economic forum and eclipsed the powerful G8 - the world's eight richest nations - as the pivot of economic decision-making.
On his arrival in Pittsburgh from the UN in New York, an ebullient Kevin Rudd said "the G20 has emerged as a key body for economic co-operation".
"I have long argued that the G20 must remain an important body for strengthening the global economy into the future," the Prime Minister said.
"The G20 provides Australia with a voice in the decisions of the management of the global economy, which directly affects us - a seat at the top table for the first time, which we have not had before at head of government level, and a table where the decisions on the future of the global economy are taken."
The enhanced body will have almost unprecedented powers of international co-operation and the ability to check and approve individual national economic planning.
A spokesman for US President Barack Obama, as host of the G20 leaders summit, confirmed after the initial welcome to Pittsburgh that the G20 would become the world's main economic forum, overtaking the G8, which would remain the world's premier body for foreign policy and security.
The decision to spread global economic management across all of the continents, including the major developing economies of Brazil, India and China, three Muslim nations and have an African representative is a victory for Mr Obama and Mr Rudd.
There has been strong resistance from European nations to expanding the size of the G8 or diluting its power with the preferred position of consolidating the world's richest nations in a group of 15 that would include China but exclude Australia.
Apart from some differences over the treatment of salaries and bonuses for corporate high-flyers and merchant bankers, the G20 leaders' summit is expected to endorse all the recommendations of the finance ministers' meeting two weeks ago, which included Wayne Swan as sessional chairman.
In a further boost to the economic arguments of Mr Rudd and the Treasurer, the G20 is urging a cautious approach to winding back economic stimulus worldwide.
"There are big challenges facing the global economy. The G20 has done a very important job over the past nine months, but there is so much more to do," Mr Swan said in Pittsburgh.
The global financial crisis and the ensuing global recession have elevated the role of the G20, which was formed in 1998 to deal with the Asian financial crisis and has grown into a global leaders' summit that is broader than the G8 and the Asia-Pacific Economic Co-operation forum and smaller and more effective than the UN.
The new G20, which includes the International Monetary Fund, will have a watchdog role on international banking and double-check national economic plans for recovery from the global recession.
Mr Rudd would not comment on the announcement last night, despite news leaking out in Pittsburgh and a White House statement.
But earlier at a press conference at Carnegie Mellon University, which is closely tied to Australian universities, Mr Rudd said: "There are challenges which of course we need to wrestle with at this meeting in Pittsburgh.
"Firstly, we've got to confirm the implementation of our existing commitments made in London on fiscal stimulus, on the reform of the international financial institutions, including the IMF, on continued stabilisation of financial markets, progress on the reform of financial regulations, as well as maintaining our commitments on trade."
Mr Rudd said the proposed G20 framework was "virtually unprecedented - global macroeconomic co-ordination".
"That is, a framework whereby individual governments, from time to time or on a regular basis, would bring forth their own national economic plans, development strategies for a period ahead, provide them to one another for appropriate examination, and to take any necessary actions if there was a macroeconomic problem emerging from that," he said. After being greeted by Mr Obama, the G20 leaders held their first session on global governance and on the need to reform the international financial institutions, including the World Bank and the IMF.
A spokesman for Mr Rudd said Mr Obama called on the President of Korea, Lee Myung-bak, and Mr Rudd as the two lead speakers in this session. Mr Rudd told the meeting the G20 "is an important addition to global institutional architecture" and "contains a good balance of legitimacy, through representation and effectiveness".
Mr Rudd also argued China needed a greater say in the IMF.
He later met the Chinese Premier, Hu Jintao, for the first time since Australian-Chinese relations had fallen to historically low levels over the arrest of an Australian mining executive, refusal of Chinese company takeovers and price wars over resource exports.
Last night Andrew F. Cooper, associate director of the Centre for International Governance Innovation, a Canada-based global think tank, said the replacement of the G8 - which comprises Britain, Canada, France, Germany, Italy, Japan, Russia and the US - by the G20 as the "hub of global governance" would mean "Australia will emerge as one of the winners".
"The G20 has shown that it has the right mix of countries to initiate systemic change, having surpassed its first major test as an economic crisis committee, and can now collectively take on other challenges like climate, health and development aid," Mr Cooper said.
"As witnessed previously at Washington and London, Prime Minister Rudd has made good use of his seat at the G20 table.
"Certainly, he has been one of the biggest supporters of the expanded club.
"If the G20 is to continue at the leaders' level, it will be a reward for Australia, recognising its ability to mobilise and enhance global debates."
Apart from the newly enhanced global role, the Pittsburgh summit contains no other policy surprises, with a broad endorsement for the London finance ministers' agenda expected.
The US defeated French efforts to impose caps on executive compensation. Instead, the G20 leaders will adopt standards for pay that more closely link compensation to performance.
Mr Swan said: "I think that there will be a rigorous framework outlined, which is very important because some of the packages have encouraged very risky behaviour, which goes to the very core of some of the issues in the financial system that we've lived with the consequences of over the past six to nine months, so it's an important part of regulation and supervision."
