G20 faces credibility test on markets, climate
The Group of 20 rich and developing economies, fresh from a triumphant show of unity at Pittsburgh, faces months of deal-making and communication to markets that will test its credibility as the premier global forum for economic cooperation.world Updated: Sep 26, 2009 23:50 IST
The Group of 20 rich and developing economies, fresh from a triumphant show of unity at Pittsburgh, faces months of deal-making and communication to markets that will test its credibility as the premier global forum for economic cooperation.
“It worked,” G20 leaders declared of their response to the global financial crisis. “Our forceful response helped stop the dangerous, sharp decline in global activity and stabilise financial markets,” they said in the final summit communique.
US President Barack Obama called the gathering a success for a commitment to global economic growth that is “balanced and sustained” and cited in particular a deal to phase out fossil fuel subsidies.
“I am proud that G20 nations agreed to phase out $300 billion worth of fossil fuel subsidies. This will increase our energy security, reduce greenhouse gas emissions, combat the threat of climate change, and help create the new jobs and industries of the future,” he said on Saturday.
The leaders agreed that their summits would supplant those of the Group of Seven nations as the high table of global policy making, promising to give rising powers such as China more say in rebuilding and guiding the world economy.
While G7 states were right to accept the inevitable dilution of global economic power caused by the rapid industrialisation of poorer countries, analysts said the size and diversity of the group would probably complicate policy coordination.
“There are a lot of cooks in the kitchen ... I would wait until we declare victory,” said Simon Johnson, a former chief economist of the International Monetary Fund. “They have to prove their value and legitimacy.”
Challenges to the group’s new mantle lie everywhere, from inertia on climate change to scepticism in global financial markets.