International summits have earned themselves a bad reputation for being no more than a photo opportunity and a stage for speeches full of froth with little substance let alone impact. This year’s G20 summit in eastern China, which ended on Monday, did not disappoint those who had hardly any expectations for this gathering of the major world economies’ leaders.
It ended with a long and tedious communique that reiterated what we know already about the state of the global economy: growth is insufficient and austerity backfires. It was another example of many leaders on display, but no leadership to show for it.
Despite the funfair of hosting the most powerful leaders in the world, the climax of this high powered weekend gathering took place before most dignitaries even landed at the airport of the city of Hangzhou. On the eve of the summit President Obama confirmed that the United States and China, who together account for the emission of 38 percent of greenhouse gases, will formally ratify the Paris climate change agreement. It seemed to be the only silver lining in an otherwise mundane summit, which failed to inspire the world with both vision and policies to tackle growth in the global economy
The lack of creative thinking and new ideas in a summit entitled, “Towards an innovative, invigorated, interconnected and inclusive world economy,” is both ironic and disheartening. After all the G20 represents 90 percent of the global economy and 80 percent of global trade. Angel Gurria, the General Secretary of the Organization for Economic Co-operation and Development (OECD), sent a stark warning to the participants in Hangzhou that “The world’s central banks are ‘pretty close’ to the limits of their ability to stimulate economies.”
Since the beginning of the economic crisis of 2008, many central banks dropped interest rates to almost zero and were pumping money into the economy through what is known as quantitative easing. Yet, the most optimistic growth forecast suggests no more than a modest 3 percent growth in the global economy this year. This is not that surprising considering the reluctance to question the very foundations of the current global economic system, instead of constantly tweaking the failing one.
In a world in which more than half of the population is under the age of 30, not addressing the needs and well-being of the young can only be regarded as criminal neglectYossi Mekelberg
Innovation and invigoration should not be seen in “pure” economic terms, but also as social-political rejuvenation. It is especially the young that will be affected by an increasingly bleak and uncertain future with dwindling job opportunities, rising house prices, mounting debt and political instability. This is at a time when the accumulation of wealth among a relatively small number of multinational corporations and individuals is constantly growing.
In a world in which more than half of the population is under the age of 30, not addressing the needs and well-being of the young can only be regarded as criminal neglect. The State Department itself recognizes that “…86 percent of civil unrest occurs in societies where a significant majority of the population is younger than 30.”
There is an obvious difference between the hardships faced by the young in the developed world to those in the developing parts of it, but in both cases it results in a sense of hopelessness and exclusion. The lack of access to jobs and economic opportunities, as much as very limited opportunities for civic and political participation, ends in economic stagnation and socio-political malaise and even unrest.
Lack of courage
Summits such as the G20 became synonymous with producing hype with very few concrete outcomes because they lack the courage to address the root causes of the global disconnect the world is experiencing. A report by Oxfam concluded that the richest 1 percent now have more wealth than the rest of the world put together. It claims that the combination of power and privilege “… is being used to skew the economic system to increase the gap between the richest and the rest.”
Only a few months ago the exposure of the Panama Papers revealed part of the global network of tax havens that enable rich individuals to hide an estimated $7.6 trillion. Last week’s ruling by the European Commission, ordering Apple to pay the state of Ireland €13bn in taxes, may be a landmark ruling in the right direction. However, this is only the tip of the iceberg of collusion between governments and big businesses to avoid paying tax at all.
In the case of Apple, it reportedly paid tax on European profits at a rate of between 0.005 percent and 1 percent, which needless to say, is not a tax rate available to sheer mortals in Ireland, who pay up to 40 percent of their income. The consequences of allowing this socially irresponsible accumulation of wealth through tax avoidance condemns the fight against poverty to fail.
It is not however only the neglect of abject poverty, which leads to conflict and migration, but also the crippling erosion in the standard of living of most wage earners and small entrepreneurs that have an adverse impact on the long term economic growth and political stability. While overcoming the current protracted economic slowdown requires a global and inclusive reply, world politics is increasingly divided.
Disputes over the South China Sea, Syria, the future of the EU in the wake of Brexit, rising nationalism and anti-migration trends, hinder, and even halt, reaching any sort of global consensus. Much of it is due to lack of leadership and statesmanship with a readiness to take some tough, yet necessary, decisions.
China’s President Xi Jinping, the host of this year’s G20 summit, has rightly urged his counterparts to avoid “empty talk” if they are serious about accelerating economic growth. Yet, without everyone’s agreement that the global economic system requires a genuine structural change, which revaluates some of the fundamental relations between politics, society and economy, this summit as many before it, will bring no change to most of the planet’s population.
Yossi Mekelberg is an Associate Fellow at the Middle East and North Africa Program at the Royal Institute of International Affairs, Chatham House, where he is involved with projects and advisory work on conflict resolution, including Track II negotiations. He is also the Director of the International Relations and Social Sciences Program at Regent’s University in London, where he has taught since 1996. Previously, he was teaching at King’s College London and Tel Aviv University. Mekelberg’s fields of interest are international relations theory, international politics of the Middle East, human rights, and international relations and revolutions. He is a member of the London Committee of Human Rights Watch, serving on the Advocacy and Outreach committee. Mekelberg is a regular contributor to the international media on a wide range of international issues and you can find him on Twitter @YMekelberg.