Background and Development Direction of the G20 Summit

To diagnose the future of the G20 Summit, which will lead the global economic order, and its implications for Korea, and to explore G20 strategies for the post-crisis world order, the East Asia Institute held the 6th Infrastructure Vision Forum on November 24, 2009, with Ambassador Park Dong-sun of the Ministry of Foreign Affairs and Trade as the guest speaker, on the theme of “Background and Development Direction of the G20 Summit.” At this forum, Ambassador Park Dong-sun presented on the establishment, achievements, and future tasks of the G20, followed by a lively discussion on the G20 vision and Korea's G20 strategy. The discussants agreed that the G20 framework is important for the progressive future of Korean diplomacy and that Korea needs active G20 strategies and efforts to sustain the G20 framework even after overcoming the economic crisis. Furthermore, they proposed the following three specific G20 strategies for Korea: First, internationally, to enhance the sustainability of the G20 framework by establishing its identity and mission; second, internally within the G20, to play a bridging role as a middle power by actively building networks and positioning power; and third, to strive for domestic consensus on the importance of the G20 and the promotion of Korea's active G20 strategy. The following is a summary of the presentation and key discussions.

Presentation Content

Establishment of the G20 Summit

The G20 Summit emerged amidst changes in the world order and the chaos of the economic crisis. In terms of security order, a shift from a US-centric unipolar system to a G2 system with China as another axis began, while economically, emerging economies rose, and the concept of the nation evolved from territorial states to states of technology and knowledge capital. Amidst these changes, the global economic crisis of 2008 brought forth the necessity of the G20 Summit as a means to address the common challenge of 'economic recovery.' The G20 framework, representing two-thirds of the world's population and 85% of global GDP, began to emerge as the new international order. It is noteworthy that although the G20 Summit began with the momentum of overcoming the economic crisis, it is not simply a gathering of the world's top 20 economies by economic size. Driven by the growing recognition that an international discussion forum encompassing emerging economies, not just developed countries, was necessary to resolve the economic crisis, major emerging economies such as Korea, China, and Australia participated in the G20 Summit. With the participation of the then-ASEAN (Association of Southeast Asian Nations) Chair, Thailand, and the NEPAD (New Partnership for Africa’s Development) Chair, Ethiopia, determined by the dynamics of the international order, the G20 Summit established itself as a forum for discussion among 24 major developed and emerging countries on global issues.

Achievements of the G20 Summit

The G20 Summit is significant for achieving economic recovery. Specifically, first, the G20 Summit achieved unprecedented international cooperation by pursuing expansionary macroeconomic policies such as interest rate cuts and economic stimulus measures. Second, it succeeded in curbing the trend of protectionism that emerged during the economic crisis. Third, it agreed to establish a 'Framework for Strong, Sustainable, and Balanced Growth.' To this end, countries agreed to set common fiscal and monetary goals, such as increasing savings and promoting consumption, develop country-specific implementation plans, and verify them through peer review. Fourth, efforts are being made to improve the international financial system. In particular, the Pittsburgh Summit set financial reform agendas, including strengthening bank capital regulations, reforming the over-the-counter derivatives market, establishing procedures for resolving multinational financial institutions, and regulating excessive bonuses, and agreed to actively implement them. Fifth, it is promoting reforms of international financial institutions. The G20 Summit agreed to enhance the voice of non-G8 countries by increasing the share of emerging economies and developing countries in the IMF and the World Bank, and improved the crisis response capabilities of international financial institutions by agreeing to mobilize $1.1 trillion in additional resources for them.

Current Challenges for the G20 Summit

Two major challenges can be identified for the G20 Summit. First is the issue of defining its relationship with the G8 Summit. In fact, after the economic crisis was resolved, G8 countries denied the sustainability of the G20 Summit and decided to continue the "Heiligendamm-L'Aquila Process," a consultation body of the G8 and the G5 (China, India, Brazil, Mexico, South Africa), until 2011. However, through the efforts of countries like Korea and Australia, the G20 Summit was regularized at the Pittsburgh Summit, and the scope of discussion expanded and developed from 'overcoming the economic crisis' to 'post-crisis management systems,' leading all participating countries to now support the continuation of the G20 Summit. Therefore, it is expected that the G20 will likely play a role in economic and financial issues, while the G8 will handle political and security issues in global governance, with the G8 potentially acting as a caucus within the G20.

The second challenge is the direction of institutionalization of the G20 Summit. With the regularization of the G20 Summit, institutionalization has already begun. However, issues such as the establishment of a secretariat and the method of selecting the chair country remain unresolved. Regarding the establishment of a secretariat, there is still no consensus on whether its establishment is essential for the smooth operation and development of G20 meetings. As for the selection of the chair country, Korea became the first non-G8 country to chair the summit and host the Seoul meeting next year, but a clear method for selecting the chair country has not yet been decided.

Another additional challenge that the G20 Summit should consider is the issue of supporting poverty-stricken countries (Outreach). The G20 Summit, which has not yet established a clear mission and identity, can strengthen its legitimacy and representativeness by discussing and providing various forms of support to non-G8, non-G20 countries and extremely poor countries, such as those in Africa and Arab nations.

Discussion

Necessity of the G20 Framework

The G20 framework, which creates a new international cooperation system of checks and balances, holds significant meaning for Korea. First, unlike the G8, where Korea's voice could not be reflected, the G20 allows for the proposal of policies that align with our national interests as major agenda items. Second, active participation in key issues can enhance Korea's image as an attractive country. Strictly speaking, Korea is unlikely to play a central role in setting the direction and resolving issues within the G20's major agenda discussions. However, this also means that Korea can freely voice its opinions on various global issues. By actively and consistently engaging in discussions on issues where progress is hindered by international dynamics, Korea can play a productive role in the G20, thereby enhancing its image and attractiveness in the international community. Third, the G20 will be a valuable opportunity for the progressive future of Korean diplomacy. Recent Korean diplomacy has shown a shift from resource-based diplomacy to a network-centric approach. Discussions on playing a balancing or bridging role as a middle power are also an extension of this change. It is a time when consideration of 'network power' or 'positioning power' is needed. The G20, comprising ten developed countries and ten emerging economies, offers an excellent opportunity to pursue a bridging role as a middle power by actively building networks and establishing positioning power. Therefore, we must strive to ensure the continuation of the G20 framework and its leading role in global issue discussions, even after overcoming the economic crisis.

International Efforts to Establish the Identity and Mission of the G20

Although the G20 has rapidly established itself over the past year, exercising leadership in international order discussions, its sustainability and development direction remain unclear. Because the G20 was formed with the specific momentum of the economic crisis, there is a significant possibility that the driving force of the forum itself will naturally decline once the economic crisis is resolved. On the other hand, given that both the United States and Russia are uncomfortable with the current G8 system, and China, which is emerging as a new axis, also harbors strong dissatisfaction with the G8 system, there is also a considerable possibility that the G20 framework will continue to exist.

Amidst this uncertainty, Korea must actively pursue efforts to ensure that the G20 can continue to exist beyond the economic crisis by establishing a long-term vision and identity, as the continuation of the G20 framework aligns with Korea's national interests. Therefore, Korea must continuously paint a grand picture emphasizing the necessity of the G20 Summit within the global governance system for the sustainability of the G20 framework. The G20 framework must establish its legitimacy as a framework for global governance that addresses the various global imbalances caused by globalization in a more equitable and productive manner, and it needs a mission that will enable it to become an international cooperation body that combines efficiency and representativeness. The core of the identity that can enable this is membership. By emphasizing that the G20 framework, which reflects the voices of emerging economies, is a more democratic governance and a fairer system, and by emphasizing this along with other countries like Australia, we must increase the survival prospects of the G20 Summit.

Building G20 Positioning Power by Leveraging Middle Power Status

Korea's relative strength within the G20 lies in its status as a middle power. To gain positioning power as a middle power, Korea must maintain consistency along with active networking. Failure to achieve consistency will inevitably lead to a loss of positioning power. Maintaining consistency does not mean taking sides on every issue or rigidly adhering to a stance on one issue across all issue areas. The power dynamics and resolution directions differ for each issue area, so Korea's position must also vary accordingly. However, within a single issue area, one must not reverse their stance based on the situation or convenience at the time. This is the behavior that must be most guarded against.

Furthermore, when opinions are divided on a particular issue, instead of remaining neutral or taking one side, there is a need to play a role in facilitating alternative solutions. For example, even if the positions of the United States and China are completely opposed on issues such as exit strategies, cooperation frameworks for sustainable balanced growth, or climate change, the two countries cannot completely ignore each other and break away, as this would not align with their national interests. The issue is that when the conflict between these two countries deepens, it is necessary to continuously strive to resolve the conflict and create a forum for dialogue. Maintaining such a forum for dialogue and creating alternatives is possible even for non-great powers. To achieve this, one must have a flexible attitude and ideas, observe trends carefully, and earn trust.

Domestic Efforts to Promote G20 Strategy

Domestic consensus-building efforts are also necessary to pursue an ambitious G20 strategy. In particular, in relation to hosting the G20 Seoul Summit in 2010, it is necessary to consider not only what agenda Korea will offer to the international community through the development of the Seoul Initiative agenda, but also what agenda will be offered to the Korean public. Unlike the government, which welcomes the enhancement of national status through hosting the G20 Summit, the public's reaction is lukewarm at best. This is a stark contrast to the 1988 Seoul Olympics, which, in addition to improving Korea's image, also brought about intangible benefits such as increased national pride. Even among opinion leaders and elites in Korea, there is a lack of conviction about the importance of the G20. There is a need to communicate why the G20 is important for Korean diplomacy and, furthermore, for the global governance system. Additionally, consideration must be given to which aspects of the G20 meetings should be highlighted. Approaching the G20 from the perspective of national pride, as was done with the Olympics, is likely to generate skeptical reactions. This is because opinion leaders are not only cynical about excessive exaggeration of the G20 but may also suspect political motives. It is necessary to highlight how the G20 can benefit Korea's national interests and serve as an alternative, rather than for political reasons. An objective assessment is needed to ensure it is viewed without prejudice. Another important point is the need to simultaneously prepare for the post-2011 G20 framework alongside the preparations for next year's summit. 2011 will be a crucial year for the G20. If the exit strategy is successful, the G20's momentum may weaken. Conversely, if the exit strategy fails, the global economy will face a more severe crisis, as governments, having exhausted their fiscal capacity, will have no room for further stimulus measures. For Korea, which needs the G20 framework, measures must be prepared to sustain the G20 Summit, whose momentum may weaken due to the success or failure of the 2011 exit strategy. Rather than solely focusing on preparing for next year's Seoul Summit, efforts and contingency plans for the post-2011 situation are also necessary.■

Ambassador Park Dong-sun of the Ministry of Foreign Affairs and Trade completed his doctoral studies in International Politics at Columbia University Graduate School and previously served as Deputy Chief of Mission at the Permanent Delegation of Korea to the OECD and Consul General at the Consulate General in Chengdu.

Presenter

Park Dong-sun, Ambassador for Economic Cooperation, Ministry of Foreign Affairs and Trade

Moderator

Kim Byung-kook, Professor, Korea University

Discussants

Koo Min-kyu, Professor, Yonsei University

Son Yeol, Professor, Yonsei University

Lee Dong-sun, Professor, Korea University

Lee Seung-joo, Professor, Chung-Ang University

Jeong Ju-yeon, Professor, Korea University

Han Seok-hee, Professor, Yonsei University