By: Stacy Larson
Pace International Law Review, Senior Associate
The G-20 is the premier forum for international economic development that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. By contributing to the strengthening of the international financial architecture and providing opportunities for dialogue on national policies, international co-operation, and international financial institutions, the G-20 helps to support growth and development around the globe. It was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy such as reducing abuse of the financial system, dealing with financial crises and combating terrorist financing. G-20 membership is comprised of the finance ministers and central bank governors of the following 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey, the United Kingdom, and the United States of America; the European Union represents the 20th member.
At the most recent G-20 Summit Meeting held June 26-27, 2010, in Toronto, Canada, world leaders endorsed a bold pledge by wealthy nations to cut budget deficits in half in three years and stabilize or reduce government debt-to-GDP ratios by 2016. [The GDP (gross domestic product) measures the value of all goods and services and is the broadest gauge of economic health]. This endorsement came despite concerns by some that cutting stimulus spending too quickly could stall the global recovery. Canadian Prime Minister Stephen Harper, host of the G-20 summit, said it was critical that the countries “send a clear message that as our stimulus plans expire, we will focus on getting our fiscal houses in order.” Harper told the leaders that they needed to walk a “tightrope” between deficit spending this year, ensuring the fragile recovery continues, and then switching to deficit reduction programs.
Harper’s proposal can be contrasted to the priorities set forth by United States President, Barack Obama. Obama urged the G-20 countries to avoid the costly mistake made during the 1930s, when countries reduced government support too quickly and ended up prolonging the Great Depression. Obama’s view, however, represented the minority position as most other countries agreed with the need to reduce deficits. In a bow to U.S. concerns, a statement in the final communiqué cautioned that efforts by several nations to trim deficits could end up slowing the recovery. “There is also a risk that the failure to implement (budget) consolidation where necessary would undermine confidence and hamper growth,” it also said. In the end, however, what has become the European view that debt must be faced and faced now emerged the winner. The G-20 in Toronto promised to implement “credible, properly phased and growth-friendly plans to deliver fiscal sustainability, differentiated from and tailored to national circumstances.”
Outside the Summit Meeting Harper’s plan attracted public supporters, but it also attracted protesters unhappy with economic globalization. The demonstrations turned violent on Saturday as protesters torched at least four police cruisers, hurled bottles at police and smashed windows with baseball bats and hammers. A total of 604 people have been arrested since the protests broke out June 18, said Constable Tim Garland of the Ontario Provincial Police. At least 253 of those arrests came on Sunday, he said.