And then there were Twenty

Large global organisations are notoriously inefficient.  Detractors like to accuse them both of forming shadowy international conspiracies that threaten the Earth, to being incompetent, incapable and corrupt.

The World Trade Organisation is often subject to such protests.  Every one of its 153 members (even tiny Rwanda at 0.006% of the world economy) has a veto and can prevent any meaningful work being done.  Accordingly, the Doha round of trade talks has been in dead-lock since 2001.

For this reason, some of the bigger economies like to get together and discuss things informally and see if they can come to an “arrangement”.

The Group of Eight (or G8) was originally created by France in 1975 as a way for the leaders and finance ministers of the world’s largest economies to gather and chat.  Russia joined in 1997, after the financial collapse there indicated that not having them at the table could be disasterous.

However, the world economy has moved on.  Firstly, it is more integrated and not including major representatives of other regional groupings meant that the G8 was coming to be seen as illegitimate.  Secondly, Canada’s economy is now smaller than China’s and Brazil’s bigger than Russia’s.  Not having them along is simply outrageous. 

In 2005, Brazil, China, India, Mexico, and South Africa were invited to join in as “observers”.  However, this wasn’t going to be sufficient.

This isn’t just about egos.  The credit crisis, which started to unravel back in 2007, has brought about a resurgence in the importance of global organisations.  The IMF and World Bank have been critical to unlocking cash quickly for countries in financial distress.  Yet, despite having the most available cash for lending, China and Saudi Arabia have little representation on these bodies and little say over how their money – should they choose to lend it – be spent.

The inevitable happened and, at the joint G8/G20 summit in Pittsburgh in the US in September, it was announced that the G20 would now replace the G8 in importance.

The G20 is a behemoth.  Collectively, their economies comprise 85% of global gross national product, 80% of world trade and two-thirds of the world population.  Russia’s influence has been diluted, and some of the big international spoilers (China, Brazil, Saudi Arabia and Turkey) have been brought inside the big tent.

This won’t stop the international protestors complaining, and it’s not even guaranteed that the new importance of the group will get things done.  However, it does now take into account the rebalanced world economy and the diversity of social and political approaches around the world.

South Africa is the sole African representative and, with Argentina, is the real light-weight of the group.  It will be interesting to see how South Africa handles this new role.  The experiences at the UN Security Council, where South Africa voted to protect both Zimbabwe’s Robert Mugabe and Burma’s General Than Shwe, were embarrassing enough.  A South Africa, where the government’s largest partner is actively calling for an end to private property and the nationalisation of all business in a new communist dictatorship, will be met with a certain degree of trepidation.  Even the Chinese no longer believe in communism (although they do like dictatorship).

That said, there is plenty for the G20 to discuss.  From climate change, to global credit flows, to the growing military instability posed by Iran.

Even South Africa may be concerned by the hazard posed to trade through our ports by the potential for the newly-opened Northwest Passage to allow shipping to bypass Africa entirely.  As the least represented area in the world, South Africa will have the task of both encouraging investment in the continent, as well as explaining why it should happen at all.

The G20 won’t be about playing to the ineffectual gallery at the UN.  That doesn’t mean that they can get things done, but it is a start.