Five myths about the G-20

Another drama of our financial-crisis era is coming up next week: a G-20 summit, where world leaders will gather to develop and debate solutions to the global economic turmoil. But for all their pomp, what do these meetings really accomplish? As President Obama and other heads of government travel to Cannes, France, let’s set straight some misconceptions surrounding these high-level gatherings.

1.The G-20 has 20 members.

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Actually, the Group of 20 is a group for our times: The numbers don’t add up. The host governments usually invite additional countries, whether to represent particular regions or assuage complaining neighbors. So there are usually about 25 nations present, plus the heads of international organizations such as the World Bank, the International Monetary Fund and the United Nations. (The European Union has the most seats, usually with six or seven countries as well as representatives of the president of the European Council, the presidency country and the European Commission.)

The countries around the table account for about 85 percent of global GDP. Of course, the bigger developed economies — especially the United States — carry considerable weight, though their troubled performance in recent years lessens their pull. The views of large developing countries, such as China and India, are also important, but midsize economies can punch above their weight by mobilizing others around a specific issue. For example, Australia and South Africa have pushed this month for consideration of various options to supplement IMF resources if financial markets dive again.

2.The G-20 was born during the financial crisis of 2008.

Though it achieved prominence in the aftermath of the collapse of Lehman Brothers in the fall of 2008, the G-20 was created in 1999, after the Asian financial crisis that spread to other emerging markets. At that time, a collection of finance ministers, led by Canada’s, argued that developing nations needed to have a greater voice in global debates over economic policy.

Illustrating the ad hoc nature of the new group, the G-20’s membership still reflects some oddities of the initial self-selection process: South Africa and Saudi Arabia wanted to take part, for instance, but Egypt and Nigeria did not sign up. Even so, the creation of the G-20 was an early signal that the era of the G-7 — the old club of developed nations comprising Britain, Canada, France, Germany, Italy, Japan and the United States — was waning.

Apart from a 2004 agreement on tax matters, the G-20 served largely as a discussion group in its early years. In October 2008, however, President George W. Bush wanted to assure finance ministers and central bankers assembled in Washington for the World Bank-IMF annual meetings that his administration was committed to preventing a global economic breakdown. He met first with the G-7 but recognized that the changed world called for a broader group, so he asked to speak to officials from the G-20 nations, chaired that year by Brazil. Then, urged on by President Nicolas Sarkozy of France and others, he convened the first G-20 summitin Washington the following month.