Jul 04, 2017 01:23 PM

Opinion: Upcoming G-20 Gathering Offers Opportunity for Asian Economies to Show Leadership

The G-7 is falling apart. Russia has been isolated. The United Kingdom has isolated itself. Germany continues a tense relationship with much of Europe. The NATO alliance has been rocked, and the future of the European Union remains uncertain. The United States appears determined to oppose its oldest allies on climate, trade, immigration and perhaps still on Russia.

Out of chaos comes opportunity. There is an opportunity for the G-20, particularly the emerging Asian economies, to capitalize on these divisions, show leadership, break deadlocks and refresh the G-20. Most importantly, there’s a chance to make the G-20 less G-7-centric and entrench the position of the emerging markets in global governance.

Germany needed to find common ground with the Trump administration if it was to deliver an effective G-20 summit in Hamburg on Friday. Infrastructure, investment, multinational tax avoidance, terrorist financing and the impact of automation on displacing workers could have been fruitful areas for debate and cooperation.

But with the two-day summit just around the corner, Germany appears to have failed. Instead of seeking common ground, German Chancellor Angela Merkel has gone on the offensive. Unable to mask her contempt, she has mocked Trump’s speeches as being “culturally interesting.” She has quipped that “it’s interesting to see the thought environment he inhabits.” She has warned that the EU might not be able to rely on the United States in the future.

As it looks right now, positive progress at the upcoming G-20 summit is off the table. The best hope is to limit how far backward the G-20 slides on global cooperation.

A primary appeal of the G-20 to leaders is that it delivers them political wins. Used productively, it can help them address global challenges that impact their economies. It can also help them sell a policy domestically, give them a new policy idea, give international context to their problems and bolster their credibility as statespersons on the international stage.

Used unproductively, the G-20 can also be used for cheap political-point scoring. Rather than cooperation on big global challenges, scarce political capital and media coverage at the upcoming summit could be wasted on petty rivalries: The handshake between Trump and Macron. Whether Merkel gets a handshake at all. Whether Trump and Putin look too cozy. Whether Trump decides to physically push anyone. And whether he walks with the other leaders to the meeting or takes off with his golf cart alone.

The G-7 meeting in May was Trump’s opportunity to air his grievances about the United States’ oldest allies. The G-20 in July is his opportunity to air his grievances about the emerging market economies, of which he appears to have many more. Unfair trade, currency manipulation, climate hoaxes, immigration, military expansion — Trump is bringing a long list of complaints to Hamburg.

Far from being a punching bag, the emerging Asian economies need to grab the initiative presented by a divided G-7 to benefit themselves and refresh the G-20.

The solidarity of the G-7 voting bloc was a hindrance to emerging countries’ establishing common ground with individual G-7 countries. There is now room for them to maneuver on climate change, trade and development. Strengthening relations with France, Germany and the United Kingdom issue by issue is on the agenda. China has already been proactive in vowing to partner with Europe in reducing emissions. While the United States is busy tearing up trade agreements, China and other Asian economies can work with Europe, Russia and the United Kingdom, who are desperate for bilateral progress on trade.

Asian G-20 countries can give Germany much-needed deliverables in its G-20 host year and demonstrate leadership in the process. They can boost the G-20’s flailing growth agenda by articulating domestic reform programs to bolster the growth strategy process. The G-20 committed to increase G-20 gross domestic product by 2.1% by 2018. Instead, it is currently forecast to fall 6%. Asia’s domestic actions on climate change, trade, financial reform and investment can feature in the Hamburg Action Plan and give it credibility on serious structural reform.

Asian G-20 countries could bolster their leadership credentials by unilaterally funding G-20 initiatives like the Global Infrastructure Hub. They could strengthen the global financial safety net by creating additional currency swap lines and use their regional clout to push for further cooperation between the Chiang Mai Initiative Multilateralization and the International Monetary Fund. China could seek G-20 endorsement for the “Belt and Road” initiative, or at least have it reflected in the growth strategies and the Hamburg Action Plan.

A divided G-7 gives Asia a time to shine. The G-20 gives it a platform on which to do it. A strong G-20 and progress on trade, investment, financial stability, climate and growth are manifestly in the interests of the global community.

Adam Triggs is a research scholar at the Crawford School of Public Policy, Australian National University. He was formerly a member of the Australian G-20 Task Force.

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