ON MY MIND: Merkel’s tough G20 balancing act
The leaders’ summit is an opportunity to forge co-operation on international issues — but success will require particular skill from the German leader, given the global context and personalities involved
The 12th summit of the G20 taking place in Hamburg, Germany, on July 7-8 represents the culmination of that country’s presidency of the international forum this year.
As expected, the German government has run an effective presidency, giving substance to the guiding theme, “Shaping an Interconnected World”, and building consensus around the leading topics of “building resilience”, “improving sustainability” and “assuming responsibility”.
SA is currently the only African state in the G20, but there has been significant focus on the continent during the German G20 presidency, with two specific, interconnected initiatives emerging on Africa. One is the Compact with Africa (CwA); the other is the Marshall Plan for Africa. The first is an initiative of the German finance ministry, which chairs the finance track of the G20 this year, while the second, crafted within the German development ministry, is intended as a bilateral initiative between Germany and Africa.
Côte d’Ivoire, Morocco, Rwanda, Senegal and Tunisia signed up to the CwA at the meeting of G20 finance ministers in March, while Ghana and Ethiopia signalled their intention to do so at the G20 Africa conference in Berlin in June.
Germany’s focus on Africa has its roots in the migration crisis the country has faced since 2014 and a recognition that the flow of migrants will not be stemmed by closing borders, but by addressing the root causes: instability and weak economic opportunities in originating countries.
The CwA and Marshall Plan together aim to create a better environment for private-sector participation in African economies and encourage sustainable investments by reducing the perceived risks that foreign companies associate with investing in the continent.
However, the focus in Hamburg will shift from Africa to pressing international concerns. Key among these is the effect of the US’s Donald Trump presidency on global processes and commitment to the liberal international trade order, which has its foundations in the Bretton Woods conference that took place in the wake of World War 2.
Global leaders then agreed that, to avoid future international crises, an interconnected and interdependent global economy could spur nations to collaborate rather than compete. There was broad consensus that the protectionist measures introduced after World War 1 and the Great Depression were detrimental to individual states, and that open and fair trade could allow for mutually beneficial development.
The pace of globalisation accelerated and, alongside rapid technological advancement, the world integrated and connected on an unprecedented scale.
The creation of the G20 after the 2008 financial crisis was an attempt to address problems created by the unfettered movement of capital across the world; it was never an attempt to erode the Bretton Woods principles. Yet rising global inequalities — an outcome of the form that globalisation and financialisation took — have helped spawn populism as a perceived antidote.
Many states are aware that more fairness and inclusiveness have to be pursued in the economic policy architecture. However, Trump is pursuing a protectionist agenda that may cause significant disruption, withdrawing from large international trade negotiations, rolling back agreed-to financial regulations such as the Dodd-Frank Act, and pulling out of the Paris climate change agreement.
If the 2017 North Atlantic Treaty Organisation and G7 summits are anything to go by, the prospect for greater disagreement between the US and other leading nations is high.
The G20 has expanded from being a forum to address the 2008 financial crisis to one in which issues that affect global economic growth and prosperity are discussed alongside climate and sustainability concerns.
In Hamburg, leaders will talk about the resilience of the world economy, global trade, employment, financial markets and tax co-operation. Their discussions on sustainability will include climate change and energy, the UN’s 2030 Agenda for Sustainable Development, digitalisation, health and the empowerment of women. And when talking about taking responsibility, the agenda will focus on the causes of displacement of people, the partnership with Africa, how to combat terrorism and corruption, and co-operation in agriculture and food security.
Some have argued that the G20 agenda is too broad, veering from its founding objectives. However, having a broader agenda will allow German Chancellor Angela Merkel to find areas of commonality with the US outside of the web of climate change and trade liberalisation.
And, of course, there are other actors that will try to use the G20 summit to test their global influence, including the UK (which is soon to leave the EU) and the young French president, Emmanuel Macron, who provides a welcome foil to the populist Trump.
In a similar style, Canadian Prime Minister Justin Trudeau will try and show what liberal global leadership can offer. But the absence of Saudi Arabia’s King Salman bin Abdulaziz should signal that in a time of extreme instability in the Middle East, the G20 needs to find common ground around solutions to the spiralling conflict there.
No doubt North Korean leader Kim Jong-un’s missile test this week will also feature, as the summit brings together China, Japan, South Korea and the US — all with direct interests in developments on the peninsula.
Shifting global power means that the G20 is the preeminent global body to help forge co-operation on global challenges. It will require skill from the chancellor to secure positive outcomes, given the personalities and global context.
* Elizabeth Sidiropoulos is the CE of the SA Institute of International Affairs; Talitha Bertelsmann-Scott is the head of the institute’s economic diplomacy programme