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The CN Tower is seen behind a security fence for the upcoming G20 summit in Toronto, June 7, 2010.

Monday, June 14, 2010 12:35 PM

G20 keeps its friends close - and enemies closer

Kevin Carmichael

Now for a word from the outside of the security fence.

On Friday, civil society leaders from 17 countries met in Ottawa with Len Edwards, Prime Minister Stephen Harper’s representative at the Group of 20, and Graham Flack, a senior international official at the Finance Department. Peter Harder, a former Canadian sherpa, chaired the meeting, which was the first official contact between the G20 and its non-governmental critics.

This was a significant development. To become effective, the G20 must establish legitimacy beyond the governments that make up the group. One way to achieve this is by listening to your critics. Think of it this way: If you know you are being watched, you might as well invite the watchers in for tea. It builds trust. Failure to do so only creates doubt, of which there already is plenty.

The civil society groups were brought together by FIM-Forum for Democratic Global Governance, formerly known as the Forum international de Montreal. Rajesh Tandon, the chairman of FIM-Forum, said their meeting with the Canadian officials revolved around these themes: individuals’ anger that billions in public money was used to rescue the same institutions that caused the crisis; concern that the banking system is receiving more attention than issues such as unemployment and food security; and accountability.

On the first two, Dr. Tandon said in an interview from Ottawa on Sunday that they asked the G20 to “look at the future through the lens of a green economy that eradicates poverty.” In other words, create a global economy is less geared toward banks and bond traders. “You don’t have to rescue the model,” Dr. Tandon said. “While rescuing the economy you can construct a new model.”

On accountability, Dr. Tandon said they encouraged the Canadian sherpas to institutionalize a dialogue between civil society and the G20 much like had been done between NGO’s and the G8. This isn’t a given. Not all G20 countries - China, for example - are fans of public criticism, let alone striking up a relationship with those critics. But in Dr. Tandon’s view, this is where the G20 will prove itself as a political body. If it can encourage China and others to take a warmer view on free speech and open debate, it might be worth supporting.

According to Dr. Tandon, the G20 also must end the deadlock surrounding an overhaul of governance at the International Monetary Fund, a major symbolic issue for emerging countries who tend the view the institution as a tool of the White House, or at best, a tool of the White House and Brussels.

In Pittsburgh, the G20 leaders pledged to change the formulas that determine shares in the IMF and World Bank to give the bigger emerging markets a bigger say in how the institutions are run. The World Bank changed its voting structure in April. By all accounts, the IMF is deadlocked, as European nations that would lose clout under a new arrangement cling to power. Beyond simply chaning the share structures, civil society also wants the U.S. and the Europe to drop their historic right to choose the heads of the World Bank and IMF, respectively, Dr. Tandon said.

“Unless it is delivered, the public’s faith in these institutions will not revive,” Dr. Tandon said. “We told them that we are watching and if by the end of 2010 we don’t see significant reform enacted, we will be quite disappointed on G20’s ability to deliver.”

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Kevin Carmichael

Kevin Carmichael writes about economics and economic policy for the Globe and Mail. A native of Williamstown, New Brunswick, a tiny farming community in the Upper St. John River Valley, he graduated from Carleton University in Ottawa with a combined degree in journalism and political science. Kevin worked for The Canadian Press in Ottawa and Halifax before joining the Ottawa bureau of Bloomberg News in 2000. In 2005, Kevin moved to Bloomberg's Washington bureau to cover the Treasury Department. Kevin returned to Ottawa to join the Globe and Mail in 2008. Kevin has covered summits or finance ministers meetings in seven of the Group of Eight countries and is negotiating with his superiors to send him to France in 2011 so he can complete the cycle.

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