[EAI Commentary No. 14] What the G20 Seoul Summit Left Behind

How will the G20 Seoul Summit be remembered in history? Perhaps we can imagine three possible memories.

Above all, this summit will be remembered as a rare occasion in the post-World War II era where the United States faced intense criticism on the international stage and its prestige as a hegemonic power was diminished. Prior to the summit, major powers had already engaged in fierce debates over currency exchange rates and macroeconomic imbalances, leading to considerably low expectations for the Seoul Summit within the international community. While many assessments pointed to the meager results of a grand process, as Le Monde critically stated, "The mountain gave birth to a mouse," there were significant achievements, including the IMF quota reform, the Basel III agreement, and the proclamation of the Seoul Consensus for Development. Nevertheless, it is highly likely that the Seoul Summit will be remembered more for the decline of U.S. influence than for these accomplishments. Therefore, a discussion of its international political implications is necessary.

The period when the G20 gained prominence as an international institution or a global governance system was immediately after the 2008 global financial crisis. The policy coordination achieved at the London Summit, particularly the expansion of fiscal spending, was possible because all countries were facing the crisis. However, as time passed, the divergence of interests between countries that had overcome the crisis and those struggling with recovery became more pronounced, leading the G20 into a downturn, and the Seoul Summit clearly reflected this phase of conflict. Theoretically, this can be interpreted as follows:

As an international institution, the G20 reflects the power distribution structure among nations. An international institution functions effectively when a hegemonic power exists, the interests of core states are complementary, and international norms reflect the interests of the hegemonic power. Conversely, an international institution loses its efficacy when changes in the power distribution structure are underway, interests among core states clash, and multiple norms compete with each other. In this regard, the current G20 starkly demonstrated that it is in a transitional period where U.S. hegemony is declining, but no new hegemonic power has emerged.

The United States' new norm, which designated China, an emerging competitor, as a currency manipulator and proposed numerical targets (4 percent of GDP for surplus/deficit) for excessive current account surpluses and deficits, urging their resolution, met with collective opposition. This was because the U.S. had artificially lowered the value of the dollar through quantitative easing amounting to $600 billion. This act was seen as abandoning its responsibility as a hegemonic power to provide international public goods, leading China and Brazil, which had been at odds with the U.S., as well as major Western countries like Germany, France, and the UK, to criticize the U.S. proposal in unison. The isolated United States managed to save face by agreeing to finalize guidelines for assessing the appropriateness of each country's current account balance in the first half of the following year, but it had to watch helplessly as China's influence grew. However, China has not yet reached a level where it can propose new international norms to replace those of the U.S. Considering this context from a realist international political perspective, the G20 Seoul Summit was bound to have limitations from the outset, and the host country Korea's efforts could not alter the fate of the institution.

On the other hand, the G20 reflects the ontological changes in 21st-century international politics. It is evolving into a network-based institution through the emergence of diverse actors and the linkage and complexity of issue areas. Network institutions, characterized by informality, flexibility, resilience, and arbitrariness, as expressed in the term "G-x process," encompass a governance structure that includes the G20 as the premier forum, the still-functioning G7/8, and the newly emerging G2. Therefore, it cannot be definitively concluded that the G20 has completely failed as an institution simply because it only managed to contain conflicts. This is because major actors will strive to overcome conflicts by utilizing various G-x processes. At this G20, the U.S. found itself isolated, with the exception of South Korea, which has always been by its side. If this situation is expected to continue, the U.S. will likely seek to utilize other networks, such as the G7, in a complex manner. European countries may also seek more diverse combinations in the future. Although the Seoul Summit ended with conflicts between nations being contained, in the future, key countries will recognize the G20 as a combination of network-based and power-balance-based institutions and will cautiously endeavor to establish norms and rules.

Second, the G20 Seoul Summit will be remembered in history as a stage for U.S.-China confrontation. President Obama of the United States, who crossed the Pacific with the aftermath of the midterm election defeat, was focused on diplomacy for U.S. economic recovery, as his re-election would depend on it. His specific efforts included the U.S.-Korea Free Trade Agreement (FTA), the Trans-Pacific Partnership (TPP), preventing currency manipulation by competitor nations, and correcting macroeconomic imbalances.

However, upon closer examination of these economic issues, one can discover hidden strategic interests of the United States from a broader perspective. Furthermore, as indicated by the itinerary connecting India, Indonesia, South Korea, and Japan, a complex strategy is being implemented to control China's assertive economic and political influence. Specifically, supporting India's bid for a permanent seat on the UN Security Council, making a significant gesture to India, working towards the ratification and entry into force of the FTA with South Korea, and emphasizing the TPP over "ASEAN+3" are all means to alleviate the strategic anxiety that China's expanding economic influence could block the Pacific. This represents a strategy to expand the U.S. network to contain China in East Asia. In contrast, the G20 served as a venue for direct confrontation with China, mediated by allegations of currency manipulation. Ultimately, the G20 was at the center of the preceding tour, which led up to the G20 Seoul Summit.

However, the anticipated U.S.-Korea FTA negotiations were not concluded. Although Japan announced its intention to join the TPP, which the U.S. has been diligently pursuing, at the APEC summit following the G20 Seoul Summit, it remains to be seen how effective the TPP will ultimately be. Despite these circumstances, the U.S. engaged in heated debates with China at the G20 Seoul Summit and entered into a competition to garner support. This G20 can be seen as an occasion that has led to a more confrontational dynamic in the future relationship between the two countries.

Finally, the G20 Seoul Summit will be remembered as a turning point in Korean diplomacy. While the Korean government did prepare for the G20 as an event, numerous learning experiences were gained in the process. As the presiding nation, Korea made significant efforts in agenda-setting, such as the 'Korea Initiative,' and in mediating between major powers to play an important role. Although there were instances where Korea overstepped due to a lack of understanding of international realities, such as in the case of establishing a global safety net, the most crucial asset gained is experience. Korean officials likely realized how important knowledge is as a resource in diplomacy, how difficult it is to mediate between great powers, and witnessed the harsh reality that national interests cannot be secured by solely following the U.S. They likely lamented the lack of ability to view issues complexly from a global perspective, beyond the familiar horizon of the Korean Peninsula, and keenly felt the necessity of understanding the complexity of issues and responding diplomatically, recognizing that the G20 is not merely an economic issue but a political one. Furthermore, they would have recognized the need for domestic policy networks that gather the intellectual capacity of society, not just government knowledge.

The G20 has provided a valuable opportunity for Korea to refine its complex diplomacy. This involves formulating a diplomatic strategy that utilizes soft power, such as knowledge, and network power for mediation, the ability to view issues complexly from the perspectives of the Korean Peninsula, East Asia, and the global level, the capacity to interlink various issue areas, and the ability to engage diverse domestic actors. The task is to move beyond the sense of accomplishment from the G20 and translate experience into strategy.■

Son Yeol (Yonsei University)

Cho Hong-sik (Soongsil University)

The East Asia Institute (EAI) is a core research institution for the MacArthur Foundation's "Asia Security Initiative" program and receives financial support. "EAI Commentary" aims to provide in-depth analysis and practical alternatives through a balanced perspective on major domestic and international issues. Please cite the source when quoting "EAI Commentary."