The G20: What to Know, What to Expect
What is the G-20?
The G-20 is short-hand for the Group of Twenty finance ministers and central bankers who represent the European Union and the following 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and United States of America. Collectively, the G-20 member nations are responsible for about 90 percent of world economic output. The group was created in 1999 in the wake of the Asian Financial Crisis. It is intended to give the leaders of the world's leading economies a place to discuss issues related to global stability that also included emerging economies such as China and India that were not represented in the older Group of Eight forum. As a result of the current economic crisis and the growing role of China in the world economy, the stature of the G-20 has risen and, some would argue, has surpassed that of the G8.
What is the purpose of the Pittsburgh Summit?
The G-20 finance ministers and central bankers meet at least once a year over two or three days. Due to the crisis, they have met twice this year, both times in London, followed by gatherings of the G-20 leaders. The Pittsburgh Summit is for leaders and has been cast as an opportunity for them to take stock of what they have accomplished since meeting in April and to start talking about what the world will look like after the crisis.
What did they agree to in April?
In April, the G-20 pledged to coordinate their response to the global downturn, strengthen regulation of the global financial system, and triple the resources of the International Monetary Fund, the world's lender of last resort. Even before April, several G-20 countries enacted stimulus measures, including the United States, and central banks lowered key interest rates in order to help get credit flowing again. Finally, the G-20 nations went on record saying they oppose protectionism and erecting unfair trade barriers.
Did they do what they said they would?
Since April, the combination of loose monetary policy and stimulus spending has begun to show results in some G-20 nations, including the United States and China, where the downturn appears to be losing steam. But any recovery remains fragile. The G-20 finance ministers and central bankers agreed earlier this month to maintain stimulus spending until a recovery gains more traction. Since April, the G-20 also followed through on its promises to boost IMF resources. Reform of the global financial system, however, is moving more slowly. The European Union is pushing for tough restrictions on bankers' compensation, while the United States is pushing to require banks hold more capital to cover potential losses. The G-20 also agreed to move ahead on reforming the IMF and the World Bank, another multilateral institution that deals with development, so that they better represent the growing economic clout of countries such as China and Brazil, but there too, reform is moving slowly. Despite their pledges against protectionism, trade barriers have been rising around the world, as seen most recently in the spat between the United States and China over President Obama's decision to slap tariffs on Chinese tires.
What is expected will happen at the summit?
President Obama and other leaders are expected to arrive in Pittsburgh Thursday and gather for a leaders-only dinner. Friday, the leaders will attend a plenary session in the morning, followed by a working lunch and another plenary. At the end of the day, representatives from the participating countries will hold press conferences and release a communique outlining the next steps the group will take to deal with the economic crisis. The current consensus appears to be for G-20 nations to maintain stimulus efforts but also to begin thinking about a so-called "exit strategy." The communique is expected to reiterate opposition to protectionism.