DISCOURS SUR LE G20 & LE G8 A LA NIAGARA FOUNDATION
Chicago (IL), le 9 février 2011. Discours prononcé par le Consul général de France à la Niagara Foundation sur le thème "Le G20 et le G8".
Chicago (IL), February 9, 2011. Speech given by the Consul General of France at the Niagara Foundation on the theme "The G20 and the G8".
The G20 and the G8
Today, I would like to present the initiatives and priorities of France’s dual G20-G8 presidency since it will head the 2 groups until the end of 2011.
The G20, a group of Twenty advanced and emerging economies, was established in 1999, in the wake of the 1997 Asian financial crisis, to promote global financial stability. It was only in response to the global financial crisis of 2008 however, that the G20 emerged as a major player on the world stage, reflecting the change in the balance of world economic powers. Today, the G20 is recognized as the only international forum with the influence, authority and ability to ensure that such a crisis never occurs again, and provide world growth with more stable, sustainable foundations.
1. The G20 Summit in Pittsburgh in September 2009 marked a major step forward in the reform of global governance by designating the G20 as the “premier forum for international economic cooperation.”
The G20 members represent some 85% of global GDP and /two thirds of the world’s population. Confronted with the deepest economic and financial crisis since World War II, the G20 went into high gear in late 2008. At the initiative of the French Presidency of the European Union and the United States, the G20 met for the first time at the level of Heads of State and Government in Washington in autumn 2008. At this pioneering Summit, the group agreed on an extraordinary plan of action to prevent the financial system and the global economy from collapsing. It also engaged in a long term dialogue to resolve the dangerous imbalances that plague the global economy. It took shape with the establishment of a framework for strong sustainable and balanced growth.
2. The G20 Summit in Seoul in November 2010 focused mainly on exchange rates and global economic imbalances. A monitoring system is being set up to observe persistent economic disparities and under the French Chair, indicators to identify these imbalances will be developed.
The G20 has demonstrated its capacity to meet its commitments for example with the prudential regulation of the banks (“Basel III”) or the reforms of the governance of the IMF. G20 action over the last two years has more than tripled the IMF’s resources and its governance was rebalanced in Seoul, with a transfer of over 6 % of the capital to the emerging and developing countries (more than the 5 % target set by the G20 in Pittsburgh) and a new executive board on which the emerging countries have a full seat. The G20 in Seoul took forward the action in support of fully responsible, better regulated capitalism (continuing work on countering non-cooperative jurisdictions, developing an anti-corruption action plan, etc.).
Members of the G20 were able to offer a collective and effective response that mitigated the impact of the crisis and restored confidence at a faster rate than many analysts had predicted. The world was pulled out of the financial crisis with a comprehensive package of measures including budgetary and monetary aid, support for the banking sector so it could continue to finance the global economy, protection of global trade and a determination to safeguard the financial flows to emerging countries, particularly by giving a significant capital injection to international financial institutions. The call of protectionism was also resisted, proof that we had learned the lesson of the Great depression 80 years before.
II. G20 priorities : an ambitious yet realistic French presidency
France is chairing the G20 from November 12, 2010 through to the next Summit in Cannes in November 2011. Ministerial meetings (finance ministers, agriculture ministers, labour and employment ministers, and most likely development ministers) and meetings of experts will prepare for the summit. A number of symposia and seminars will also be held throughout the year.
“Our presidency’s ambition is simple : we live in a new world, so we need new ideas” (President Sarkozy January 24th 2011). This new order is marked by :
an extraordinary change in the balance of world economic powers.
a totally interdependent and increasingly volatile world, where disparities have not only escalated quickly, but have also grown in magnitude.
global challenges such as climate change and development, which call for global and coordinated responses.
The President has set six priorities for the G20 under the French Chair, confirmed by mandates decided on by the G20 in Seoul :
1. Coordinating economic policies and reducing global macroeconomic imbalances
The G20 is a key body for ensuring coordination of economic policies over both the short and longer term. Over and beyond its leadership during the crisis, the G20 has created the Framework for Strong, Sustainable and Balanced Growth, whose goal is to redirect national economic strategies in a direction that provides greater benefit for the world economy. France will continue these efforts in 2011 and will follow up on the commitments made in Seoul, whereby each member of the G20 agreed to implement measures tailored to national circumstances to reduce macroeconomic imbalances and boost global growth.
2. Strengthening financial regulation
To strengthen financial sector oversight on a lasting basis, it is crucial that we ensure a thorough implementation of the rules agreed to by the G20. France will also work to stiffen the rules wherever they have proved missing, for example with respect to regulation of the "shadow banking system" (i.e. the non-bank financial institutions whose practices are not regulated) and concerning financial market integrity and transparency.
3. The reform of the international monetary system
in particular to combat excess volatility in exchange rates and to improve the coordination of the economic policies of the major economic zones. In Seoul, the G20 mandated the IMF to work on “a more stable and resilient international monetary system” in the perspective of the Cannes Summit later this year. We need to find a method and a forum for dialogue on exchange rate issues, as the G7 did in the past (Plaza and Louvres agreement), to protect ourselves against massive capital inflows and outflows, to reduce the risks by diversifying the composition of currency reserves. Of course, it is a sensitive issue that needs a lot of thorough thinking and discussion in light of the instability in currency exchange rates and the accumulation of unproductive reserves. A first seminar on the reform of the international monetary system will take place in China in March, Germany and Mexico will co-chair the working group.
4. Commodity price volatility.
At the September 2009 Pittsburgh Summit, the G20 examined the issue of excessive fluctuations in commodity prices for the first time, but few concrete measures have been taken to date. France would like to find collective solutions in order to reduce excessive commodity price volatility, particularly of agricultural commodity prices, which undermines world growth and threatens food security for populations around the world. The volatility, which we are currently witnessing (65 % increase in wheat, the oil price bouncing from 40 to 140 $ per gallon in six months in 2008), must be addressed with pragmatism. We must also look at a better regulation and transparency of derivative markets in energy, and other commodities (metals, rare earths, etc.). We cannot allow soaring food prices and wild swings in energy prices to threaten the lives of so many. We need to have greater transparency on commodity market trading and pricing. We will propose setting up a joint database to improve the knowledge of production, consumption and stock prospects and further measures to exempt food aid from export restrictions and build emergency stocks.
5. The reform of global governance.
The G20 gave a decisive impetus to the recent World Bank and IMF reforms. Now, it is a good time to think about the articulation between G20 and the UN, and other international organizations like the WTO or ILO (international Labour organization). On the eve of the G20 Summit, the first ever social summit will be held to discuss about a minimum standard of universal social protection. The environment is also a case in point : this area is addressed by many international organisations and institutions without any real coordination. The question of possibly establishing a G20 secretariat is also worth putting to improve work preparations and follow-up, even if there is as yet no agreement over this. France will seek to support the G20 in its role as the premier economic cooperation body. France will also strive to foster more consistent economic, social and environmental actions by the dedicated international institutions, and to identify areas in which this governance is inadequate. In particular, synergy between the G20 and the United Nations will have to be strengthened.
6. Working on behalf of development
Today, the G20 is seen as an appropriate body for providing concrete solutions to development issues. The Seoul Summit in November 2010 represented a crucial milestone in this regard, with the adoption of the first G20 action plan on development. In a world in which national economies and destinies are increasingly interdependent it is essential to share the management of the planet among all the counties and peoples. We must cooperate to prepare a better future. This interdependence makes each country responsible for the development of its partners. During its presidency, France will seek to raise this priority higher on the agenda. In that context, the issue of innovative financing will be important notably to meet the Millennium development goals and the Copenhagen climate commitments. You know that France is in favour of a tax on financial transactions.
France also took over the Chair of the G8 on January 1st, 2011. The Summit of Heads of State and Government will be held in Deauville on May 26 & 27 of this year.
Created in 1975 after the first oil shock at the Rambouillet Summit, The G7/G8 is a forum of open, upfront discussions among leaders that forms its strength. It will not address the same subjects as the G20, but will complement its work in concentrating on other areas in which it can make a real difference.
The new G8 will concentrate on three areas :
challenges of common interest, such as the harmonious development of the Internet (access, protection and economic aspect), and the new growth springboards, such as green growth and innovation.
The “peace and security” track will be a key element of the Summit. In addition to political affairs (Iran, Middle East, Afghanistan, Pakistan and non-proliferation), the President of the French Republic has proposed putting the issue of cocaine trafficking on the agenda, especially in the light of the new routes (Latin America/West Africa/Europe), and discussing countering terrorism, especially in the Sahel.
Thirdly, an important track on the partnership with Africa : we will take forward the exercise launched by the Canadian Chair on monitoring the G8 countries’ commitments, especially in the areas of health and food security. In a spirit of “mutual accountability” with the African countries, we need to improve the efficiency of our public aid. We will also address the issues of peace and security, especially in the Sahel, and focus on building African capacities to deal with regional crises and the new common threats, particularly drug trafficking and the spread of terrorism.
In conclusion, as the global economy is facing major challenges, the question is how to generate adequate levels of international cooperation to effectively tackle a range of shared problems and to define a new cooperative pattern for global governance. We know that these are complex issues that will not be solved in one Presidency but we hope to make a contribution in opening up the debate./.