G20: rebutting some misconceptions

G20: recent developments

Mike Callaghan

Russia’s plans

Russia has been very active since taking over the chair of the G20 on 1 December 2012. They appear well organised, having published a detailed meeting schedule for 2013. And it will be a busy year. In addition to the summit in September, G20 related events organised by Russia will include:

• five meetings of finance ministers and central bank governors;
• a joint meeting of finance ministers and labour ministers;
• a meeting of labour ministers;
• a meeting of labour ministers with social partners;
• five Sherpa meetings;
• 15 working group meetings (framework, international financial architecture, anti-corruption, development, energy sustainability);
• three meetings of a task force on employment;
• six seminars (public debt management, financial literacy and education, international financial architecture reforms, trade, energy, financial inclusion);
• three conferences (economic growth and sustainability, rating agencies, financial literacy and education);
• Civil 20 summit;
• Business 20 summit;
• Y20 summit;
• Business 20 meeting;
• Civil 20 meeting;
• meeting of social partners (B20 and L20); and
• a Think 20 meeting.

Russia’s priorities

Russia has indicated that they see the items on the G20 agenda as intertwined parts of three overarching priorities:

• Growth through quality jobs and investment;
• Growth through trust and transparency; and
• Growth through effective regulation.

The concept of introducing linking themes and concentrating on ‘igniting a new cycle of economic growth’ is commendable, but it remains to be seen how this will be put into practice.

The range of issues listed as priorities by Russia are very wide and ambitious, covering:

1. Framework for Strong, Sustainable and Balanced Growth and Financing for Investment.

- Work on the Framework will include revised public debt targets for members, enhancement of the accountability assessment process, and analysis of persistent imbalances by members.

-Financing for investment, which is a new topic Russia has added to the G20 agenda, will cover: strengthening the role of public-private partnerships; supporting investment in small- and-medium enterprises and start-up companies; meeting the capitalisation needs of banks; regulatory changes to change bank business models towards funding the economy; analysis of FDI trends; and how to increase the lending capacity of the MDBs.

1. Jobs and employment

A Task Force on employment has been established which will deliver:  a declaration by G20 labour ministers on employment; a database of best practice policies to facilitate job creation; a set of recommendations on policies to stimulate job creation; and a progress report on the implementation of G20 commitments related to youth employment.

1. International financial architecture reform

The outcome for this stream of work includes: completion of the 2010 IMF quota and governance reforms; completion of the review of the IMF quota formula and the 15^th general review of quotas; progress on developing global liquidity indicators; implementation of the action plan to support development of local currency markets; further development of regional financing arrangements and closer cooperation between them and the IMF; and review of the guidelines on public debt management.

1. Strengthening financial regulation

The objective for this topic has been expressed as ‘providing the Financial Stability Board (FSB) with favourable conditions to carry out its reforms.’ The FSB will focus on: implementation of Basel III; supervision of domestic systemically important financial institutions; shadow banking regulation; development of the global legal entity identifier; reduction in reliance on credit rating agencies; completion of over-the-counter derivatives regulation; and, FSB transformation into a fully-fledged international organisation.

1. Energy sustainability

Under this work-stream the objectives include: a progress report on the G20’s contribution to enhancing transparency and the functioning of international commodity and energy markets; recommendations for a framework for forecasting commodity price volatility; draft principles for efficient energy market regulation to stimulate infrastructure investment; recommendations on the voluntary peer review process for fossil-fuel subsidies; progress report on JODI-oil and the launch of JODI-gas; best practice database for green energy and energy efficiency policies; and implementation of the global marine environment protection initiative.       

6.         Development for all

Work on development will cover: food security; a skills database; financial inclusion and financial literacy; infrastructure; contributing to the post-2015 development agenda; and development of an accountability mechanism to assess progress on previous G20 commitments.

7.         Enhancing multilateral trade

The aim under this work stream is to ‘solve the issues on the Doha round agenda’ by leading the effort to: curb protectionism; strengthen the development of the multilateral trade system; and better understand global value chains.

8.         Fighting corruption

The work on anti-corruption will be focused on: implementation of the G20 Anti-Corruption Action Plan; anti-corruption training; deepening the engagement of the business community; promoting financial transparency and disclosure for public officials; and eradicating corruption in major events.

This is a very wide-ranging list of priorities. It largely carries on with the agenda Russia inherited from Mexico, although work on disaster risk management has been dropped along with a focus on green growth. The main intended outcome on green growth now appears to be the best practice data base for green energy and energy efficiency policies. In addition, work on climate change financing has not been listed as one of the priorities of the Russian chair.

The main addition to the G20 agenda by Russia is work on financing for investment. Again, the topic is wide ranging, covering financing for infrastructure projects, start-up capital for small business and the capitalisation of banks.

The proposed agenda ranges from detailed proposals in some areas to broad objectives in others. For example, the Russians have provided little guidance about how they propose to ‘solve the issues on the Doha round agenda.’ In addition, it is not clear what will be the main issues raised at the leaders’ summit in September.

But it is still early days.

Some indication of Australia’s priorities for 2014

With Russia’s term as chair of the G20 just beginning, it is premature for Australia to be publicly outlining in detail its priorities for 2014. However, the Prime Minister and Deputy Prime Minister have each identified an issue which will be pursued by Australia in 2014.

On 30 January 2013 at her address at the National Press Club, the Prime Minister stated: ‘ …we see more genuine competitive movement of capital and of profit centres to seek the highest private returns than there has ever been: although … some of the movement does look like it’s about movement of the accounting of capital and profit. This is an area where the G20, which Australia chairs next year, can and should find a fruitful agenda and we will be using our special status to get this done.’[1]

Similarly, in advance of the meeting of G20 finance ministers on 15-16 February 2013, the Deputy Prime Minister wrote to his colleagues emphasising the importance of collectively dealing with the issue of base erosion and profit shifting.

In a speech to the Asian Financial Forum in Hong Kong on 14 January 2013, the Deputy Prime Minister also indicated that Australia will focus on regional infrastructure development when it chairs the G20 in 2014.[2]

Lowy G20 Studies Centre paper on relaunching the G20

On 30 January 2013 the Lowy G20 Studies Centre released a paper calling for a relaunching of the G20.[3] It observed that Australia and the world needed a focused and effective G20. But the forum is losing its way. The paper identified nine key lessons from the G20’s history that can help relaunch the forum. In particular, the G20 needs an explicit multi-tracked approach. While a wide range of issues should continue to be advanced in the G20, leaders should focus on a few key areas where they can have an impact. Given the vulnerabilities confronting the global economy, the paper suggested that the priority should be achieving sustainable economic and jobs growth.

G20 finance ministers and central bank governors meeting: 15-16 February 2013

Key aspects of the meeting of finance ministers and central bank governors included:

• Exchange rates
• Debt targets
• Finance for investment
• IMF reform
• Tax

Exchange rates

In the lead-up to the meeting, the focus was on what steps the G20 would take to avert the concern over so-called ‘currency wars’ – that is, competitive devaluations. The language in the communiqué was largely reported as calming currency war fears. The key passage was:

‘We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals and to avoid persistent exchange rate misalignments. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will refrain from competitive devaluation. We will not target our exchange rates for competitive pressures, will resist all forms of protection and keep markets open.’[4]

This is a strong statement. Any expectation that the G20 would refer to the actions of specific countries was unrealistic. More importantly, it appears that ministers discussed the importance of resisting protectionist measures. Jim Flaherty, the Canadian finance minister, stated that the mood of the meeting was on the need to ‘desperately … avoid protectionist measures … that mood permeated quite quickly.’[5] He also said the G20 statement had been hardened by ministers. The IMF Managing Director said after the meeting that ‘people did talk about currency worries. The good news is that the G20 responded with cooperation rather than conflict today.’[6]

Debt targets

There was an expectation prior to the meeting that a new round of public debt targets would be established, building on those agreed at the Toronto summit in 2009. However no new targets were specified at this meeting, although the statement did say:

‘Advanced economies will develop credible medium-term fiscal strategies in line with commitments made by our Leaders in Los Cabos by the St Petersburg Summit.’

Financing for investment

This topic is a priority for Russia. The main outcome from the meeting was reference to a diagnostic report prepared by the international organisations which assess the factors affecting long-term financing. This report is to be the basis of future work in the G20, which will be advanced by a newly established Study Group on Financing for Investment.

IMF reform

The previous deadlines on IMF quota reform – ratification of the 2010 quota and governance reforms by the 2012 annual meetings and completion of a review of the quota formula by January 2013 – were not met. The meeting statement did not provide any indication as to how the reforms would be completed. The statement ‘underscores’ the importance of completing these reforms and notes that key elements of the quota formula review and the 15^th General Quota Review would be secured by the St Petersburg summit. It has not been specified what these key elements would be.

Tax

Steps were taken to combat base erosion and profit shifting with a commitment to collective action based on a ‘comprehensive action plan’ that will be presented by the OECD at the July meeting of G20 ministers.

The surprising success of the G20?

Mark Thirlwell

Two narratives and a funeral?

There are three increasingly common narratives about the relative success of the G20 since its crisis-prompted elevation in 2008 from a meeting of finance ministers and central bank governors to a meeting of leaders.

The first, and probably still the most common, holds that while the G20 provided an effective response to the global financial crisis, its subsequent ability to deliver effective international economic cooperation has been much more limited.[7]

So the G20 got off to a good start with the November 2008 Washington DC Summit, with the summit communiqué and Action Plan setting out the G20’s plans: to provide more impetus to the Basel III framework; to upgrade and broaden the membership of the Financial Stability Forum (FSF); to expand the resources available to the IMF and reform its governance; and to ‘refrain from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures to stimulate exports’ for the following 12 months.[8]   This good start got even better, with the London Summit of April 2009 – cited by some proponents as one which ‘may well go down in history as the most significant summit since the G6/7/8 was formed in 1975.’[9] It delivered some US$5 trillion of coordinated fiscal measures, along with more than US$1 trillion of measures for the International Financial Institutions, including new resources to the IMF, and a strong declaration of intent regarding reform of the Bretton Woods institutions.  London also saw the upgrading of the FSF to the Financial Stability Board (FSB) and an extension to 2010 of the G20’s standstill on protectionism.   This all culminated in September 2009 with the Pittsburgh Summit at which leaders ‘designated the G20 as the premier forum for our international economic cooperation’ and introduced the ‘Framework for Strong, Sustainable and Balanced Growth’ (FSSBG), ‘a compact that commits us to work together to assess how our policies fit together, to evaluate whether they are collectively consistent with more sustainable and balanced growth, and to act as necessary to meet our common objectives.’[10]

According to this view of the G20, Pittsburgh represented the peak of the group’s success.  As the immediate sense of crisis faded, so too did the impetus for cooperation.  The Toronto Summit held in June 2010 was widely viewed as a disappointment.[11] As the November 2010 Seoul Summit approached, cooperation had given way to open disagreement on issues such as US monetary policy, China’s exchange rate policy and so-called ‘currency wars’.  Given this inauspicious backdrop, Seoul lived down to expectations.  According to an FT editorial with the title ‘G20 shows how not to run the world,’ ‘If the Seoul Summit of the Group of 20 large economies did not disappoint, it was only because public expectations had been sufficiently managed down in advance.’[12]  Subsequent leaders’ summits at Cannes and Los Cabos were overshadowed by the crisis in the Eurozone and did little to restore the G20’s image.[13]

A second view of the G20 offers an even more pessimistic take, focusing on prominent failures like the continuing inability to successfully conclude the Doha Round of trade negotiations despite leaders’ repeated pledges to do so.  Indeed, according to this view, even the positive successes of the early period of G20 summitry are no more than a mirage.  For example, after dismissing the progress on financial regulation as insufficient and the reform of the international financial institutions as too small, one assessment declares acerbically that ‘to claim these as successes and conclude that the G20 has proved itself ... is as far from plausibility as Greece is from solvency.’[14]  Another argues that the failure to deliver on specific promises means that the G20 is ‘a grouping whose ratio of rhetoric to action was set to be stratospheric’ and goes on to dismiss the G20 as ‘more spin than substance.’[15]

These views tend to suggest at best that the prospects for the G20 have faded, and at worst that any serious attempts at international economic coordination – or indeed international cooperation more generally – are doomed in the current environment.[16]  However, while it is patently true that there are elements of the G20 that are in need of reform, the G20 has actually been more successful than many pessimists would allow.[17]  Certainly, no burial is called for.

Keeping it in perspective

In judging the G20’s performance, it is critical to find the appropriate perspective.  In particular, it is important to benchmark the reality of the G20, warts and all, against what we might reasonably expect from such a body, rather than against some idealized view of what international economic governance might deliver in the best of all possible worlds. 

To this end, it’s useful to think about what we knew about the prospects for global economic governance before the elevation of the G20 to leaders’ level in late 2008.  Most importantly, we already knew that – given the ongoing shifts in global economic power and the consequent rise of a more multipolar world economy – the G7/G8 club of developed economies was no longer a viable candidate for formulating a credible response to the global financial crisis.  A change was required and if the world hadn’t had the existing model of the G20 to draw upon, it would have had to invent something similar.  In addition, however, we also knew some quite important things about both the theory and the practice of international economic cooperation and coordination.

Start with what we knew about international economic cooperation and coordination in theory:

• We knew that club theory (applicable to international organisations like the IMF but also to groupings like the G20) told us that it is difficult to scale up clubs.  They tend to become more unwieldy as their membership expands, making it harder to meet the preferences of all members, and risking a problematic combination of mission creep and declining effectiveness.[18]
• We also knew from both theory and experience that a large number of requirements are needed to sustain successful macroeconomic policy coordination, including: (i) agreement on the case for such coordination – that macroeconomic spillovers exist and are substantial; (ii) agreement on a common diagnosis of the problem(s) to be tackled; (iii) agreement as to the actual starting point of the economy(ies) in question; (iv) agreement on the appropriate policy objective(s); and (v) agreement on the appropriate economic model linking policy actions to economic outcomes.  Moreover, even if agreement on all of these issues can be reached, this still has to be followed by bargaining over any gains from coordination, and negotiations over how the subsequent agreement would be policed and enforced.[19]
• Likewise, we knew that international policy coordination is most likely to succeed when (i) it centres on narrow, technical issues rather than high profile or politicised policies; (ii) it is institutionalised; (iii) it is concerned with preserving a policy regime rather than a shift to new policies; and (iv) it takes place ‘in the context of broad comity among nations.’[20]

On this basis, we would have had to expect that moving from a smaller and more homogenous grouping like the G7/G8 to a larger and more diverse group would pose a range of challenges.   In addition, given the great political sensitivity of many of the issues on the agenda, including exchange rates, fiscal and monetary policies as well as fundamental questions about the nature of economic models and the operation of the international monetary system, we would have expected significant difficulties in reaching any agreement on many of these matters.

Next, we could have drawn on the experience of a series of case studies to remind us of the practical difficulties involved in delivering successful international cooperation. 

• For example, we knew that the actual experience of the policy coordination exercises of the 1980s tended to suggest that, despite the rhetoric, ‘each country continued to pursue what it saw as its own interest, generally unaffected by the “international coordination” process.’[21]

• Likewise, we had the lessons of the abject failure of the IMF’s attempts to deal with global imbalances in the years leading up to 2008, including the Fund’s so-called multilateral consultations.[22]
• Finally, we had the experience of the transition from the GATT to the WTO, the rise of the developing country G-20 within the latter, and the repeated failures to deliver on the Doha Round of trade negotiations well before G20 leaders issued their first declaration on the subject as a cautionary case study of the consequences of multipolarity upon multilateralism.[23]

Keeping all of the above in mind, any sober analysis of the prospects for international economic cooperation as of 2008 would have to have been an extremely cautious one.  The shift to a more multipolar world economy, the growing diversity of the key economic players, the complexity and political sensitivity of many of the issues that would have to be discussed, and the extremely patchy record of past efforts at cooperation and coordination would all have argued for very limited expectations of what any initiatives in global economic governance were likely to deliver.  Granted, by the end of 2008 the worsening crisis could have been expected to concentrate leaders’ minds and the salutary prospect of hanging together or hanging separately would have offered some grounds for optimism in terms of forging international agreements.  But it seems reasonable to judge that this would still have led to fairly minimalist expectations for any governance innovation. 

This perspective should have been further reinforced by the subsequent events in the Eurozone, which have provided another example of the difficulties involved in cross-country policy cooperation, even when the stakes are very high (the survival of the single currency) and when the countries involved are closely linked and relatively similar (at least compared to the G20 membership).

Praise (and reform) the G20, don’t bury it

When judged against the appropriate benchmark – that of sensibly calibrated expectations regarding the realistic prospects for successful international policy cooperation and coordination – the record of the G20 can be seen as one of surprising success rather than the disappointment - or worse.  Concrete initiatives such as the creation of the FSB, the raising of resources for the IMF, and the standstill on protectionism represent successful outcomes.  But the G20 has also achieved success in the more general but still important sense of forging a body that recognizes the new realities of the distribution of international economic power and that has meaningfully incorporated a diverse range of economic players into the mechanisms of international economic governance.  This surprising success also increases the premium on sustaining the G20 and on delivering the kinds of reforms that will increase its effectiveness and hence its longevity. 

G20 effectiveness: be careful what you wish for

Jason Sharman

Much of the commentary on the G20 has tended to regard the leaders’ summits in 2008 and 2009 as, in retrospect, the high-water mark of G20 effectiveness. Since that time there has been an increasing current of doubt, more and more openly voiced, that the G20 may be devolving into yet another ineffectual international talk shop, good only for issuing pious declarations that are never fulfilled, or retrospectively endorsing decisions already taken for unconnected domestic reasons. The spread of the G20 into ‘non-core’ areas is said to exemplify the danger of dissipating this group’s focus and energies.

Here, though, I take a different line in looking at a cluster of related issues centring on corruption, money laundering and tax evasion where the G20 has been consistently effective. The G20 has confined itself to a steering role, and has generated important political momentum for existing initiatives in a way that has produced significant results. The second point, though, is that this evidence of effectiveness is not all good news. The G20 is a club, and clubs tend to be a lot more concerned with the interests of members than non-members. As a powerful club, the G20 has tended to adopt double standards and solutions that favour insiders at the expense of outsiders. The G20 may present itself as the selfless guardian of the general global good, but as the brief discussion below illustrates, there are some reasons to be skeptical of this claim.

Corruption, money laundering and tax evasion are not the same thing, but they are closely related policy issues as profit-driven crimes depending on some measure of financial secrecy. It has been argued that the rise of borderless finance has exacerbated each problem and, correspondingly, made the need for international collaboration to combat them more important. These common elements are reflected in common solutions, sometimes designed, but more usually endorsed after the fact, by the G20. For each type of crime the common essence of the policy response is to mandate greater financial transparency. Specifically, governments must require that their countries’ private financial institutions (especially banks) collect more information on customers, and governments must then be more willing to share the resulting information with foreign counterparts.

Perhaps the most positive example of G20 action on this front relates to action against corruption, and in particular the sort of large-scale kleptocratic activity where leaders loot their own countries and stash the resulting wealth in a foreign financial centre. The G20 Anti-Corruption Working Group was established in 2010 at the Toronto meeting, but was really energised by the Arab Spring of early 2011. Tunisian and Egyptian demonstrators in particular were incensed by the widespread corruption of their elites at a time when the majority of the population faced diminishing economic opportunities. Much of this illicit wealth had been secreted abroad, whether in the form of luxury real estate in London and Paris, or bank accounts in Switzerland and the United States.

Partly as an accident of timing, the G20 Anti-Corruption Group resolved to make denying safe haven to kleptocrats’ stolen wealth a priority. Led by its French and Indonesian co-chairs, the Group deliberately did not try to re-invent the wheel by designing new standards, but instead urged members to sign up to existing agreements like the United Nations Convention on Corruption, and instructed international organisations like the World Bank and the Financial Action Task Force (FATF) on Money Laundering to address this issue.  The latter body, which had previously regarded corruption as someone else’s problem, immediately began to design policy solutions as to how anti-money laundering measures can be used to combat international corruption. The World Bank established a program to provide the Arab Spring countries and others like South Sudan with practical assistance in tracing and repatriating the proceeds of corruption held abroad. There was a notable shift as previously recalcitrant G20 members began to sign up to international anti-corruption agreements and pass the supporting domestic legislation and regulations. Even generally critical NGOs like Global Witness and Global Financial Integrity regard this G20 action as making a significant positive difference.

Perhaps one of the key elements of success here was the G20 not trying to do too much, but instead putting its weight behind existing initiatives in a way that achieved results in weeks that might otherwise have taken years, or never happened at all. Just as importantly, the G20 members sought to lead by example, making sure their own houses were in order and only then calling on the rest of world to follow. Although corruption is arguably not core business for the G20, as one of the biggest obstacles to economic development it is hardly a trivial matter. Given the international cast of the problem, there is good reason to think that such a co-ordinated response will be more effective than G20 members acting in isolation. All this was achieved without the commitment of any significant new funds.

If the action to tackle corruption and kleptocracy represents the positive potential of the G20, the measures taken against tax havens and money laundering are more ambiguous. Somewhat surprisingly, one of the most contentious matters at the London G20 summit in April 2009 was a list of alleged tax havens drawn up by the Organisation for Economic Co-operation and Development (OECD). China and France in particular were deadlocked over whether or not to endorse the list, with France very much in favour and China opposed. At the eleventh hour the newly-elected Barack Obama brokered a compromise whereby the meeting would ‘note’ the list and include it in the official summit documents.

As underwhelming as ‘noting’ an OECD list may sound, this decision proved to have an electrifying impact on those named on the list. The background was that, since 2002, the OECD and a group of three-dozen tax havens had agreed in principle to share tax information on demand, a major reversal for the previously secretive havens. The problem, however, was that in the interim the agreement in principle had not translated into signing many specific agreements by which tax information could actually be exchanged. A particular sticking point was that the havens refused to budge unless Switzerland agreed to the same terms, which the Swiss (veto-wielding members of the OECD, but not the G20) resolutely refused to do. Within weeks of the summit, however, not only Switzerland but every other country on the list dropped their objections and began signing bilateral tax exchange agreements.  Hundreds of such agreements have been reached since 2009.

Here the G20 had exercised its authority to break a deadlock and promote international co-operation in working to solve a shared problem of international tax evasion. Once again the G20 had not tried to do too much, especially as it delegated the details of implementation to the OECD, and of course it had not spent any extra money. So where’s the problem?

Critics pointed out the incongruity of publicly naming and shaming (and implicitly threatening) tiny Pacific islands like Nauru and Niue who were on the list, while studiously avoiding any equivalent condemnation of the G20 members like the United States that actually bore most of the responsibility for the financial crisis and the resulting massive economic dislocation and suffering imposed on other countries. Nauru and Niue are unlikely hosts for foreign tax evaders, given that neither hosts a single bank branch, let alone a financial sector. In contrast, only a few weeks after the collapse of Lehman Brothers the 2008 Washington summit offered an anodyne expression of regret that ‘Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets.’ The ‘advanced countries’ at fault here for precipitating the whole crisis were never named, presumably on the grounds that it’s bad manners to embarrass the host.

Finally, the issue of anti-money laundering standards again exemplifies both the ability of the G20 to get things done, and the tendency to push for tough action against those outside the club while going easy on member states. Like the issue of corruption and tax evasion, money laundering is not core G20 business. Moreover, despite some far-fetched claims to the contrary, tax evasion, corruption and money laundering had nothing to do with the financial crisis, and are largely irrelevant to the stability of the global financial system. Nevertheless, the G20 acted with alacrity to address the issue of money laundering.

Despite having no formal authority to do so, the G20 instructed the FATF to draw up a blacklist of countries that were derelict in their anti-money laundering standards, rather like the OECD’s blacklist of tax havens. The resulting meeting happened so quickly that the Australian delegates did not have time to fly to Paris to participate. The FATF drew up a blacklist as instructed, with the rationale of sticking to systemically important countries. In practice, this process devolved into one targeting marginal financial centres such as Bangladesh and Nepal. In contrast, despite a 2012 US Senate report that the American subsidiary of HSBC had failed to apply proper anti-money laundering scrutiny to $60 trillion (not million or billion) of wire transfers, enough to fund every criminal scheme in history, the United States itself was never in danger of being blacklisted.

But it would be grossly unfair to suggest that problems of double-standards and hypocrisy are limited to the United States alone among G20 members. The current president of the group, Russia, has made ‘Growth through trust and transparency’ one of its three priorities. One does not have to know too much about the way Russian elections are run, or the way the criminal justice system or bureaucracy work in that country, to see this commitment to trust and transparency as an egregious example of ‘do as I say, not as I do’ logic at work. Again, however, it is unlikely Russia will be held to account for its conspicuous failings here, least of all from fellow troika member Australia; such straight talk is only for non-members.

In sum, detractors may have been too quick to condemn the G20 for a lack of effectiveness. At least when it comes to the related areas of corruption, tax evasion and money laundering, the G20 has taken rapid and decisive action that has produced important political results with a minimum of effort and effectively no additional money. This is no mean feat given the complexity of the issues at stake and the inherent difficulty of international collaboration. At its best the G20 has intervened judiciously and lead by example. Much less edifying, though, is the tendency to be quick to condemn those outside the club for their real or alleged failings, while taking a much more forgiving attitude towards the powerful states inside the club.

NOTES