"It was simple stuff, but it made you realize that you really need to understand these people and have them at the table and understand what is going on in their economy," remembers Terrie O'Leary, who was Mr. Martin's chief of staff at the time. Creating that kind of understanding became, for Mr. Martin, a crusade.
Meanwhile, contagion was spreading throughout global markets. The shocks of the Mexican peso crisis sucked Argentina and Brazil into its wake. The Asian financial crisis stretched from Thailand to South Korea. And Russia's ruble crisis threatened to disrupt the increasingly intertwined economies of Europe and the United States.
"It was clear that the plain, ordinary regulatory apparatus that we had internationally was not working very well," recalls David Dodge, who was Mr. Martin's deputy at Finance, and later governor of the Bank of Canada.
Yet change, at first, was tentative. At meetings of the G8 (which is what the G7, a gathering of finance ministers, becomes when it's a meeting of leaders and Russia joins in), developing-world leaders were invited to attend as guests.
Along with Mr. Martin, Gordon Brown, then Britain's Chancellor of the Exchequer, was a strong proponent of giving the emerging nations a voice. There were two obvious ways: Reform the International Monetary Fund, and expand the G7/G8. They decided to split the jobs.
The British would concentrate on the notoriously unwieldy IMF. "It was too formal, there were too many people," recalls Gordon Thiessen, who was Governor of the Bank of Canada through the currency crisis and the forming of the G20. At a typical IMF meeting, "There must have been 500 people in the room. …There used to be little wars about who was going to get chairs."
Canada, meanwhile, would train its efforts on the G7/G8.
"What you had was really very Eurocentric … and it didn't make a lot of sense," says Robert Rubin, who was Mr. Clinton's treasury secretary before Mr. Summers. Five of the eight members were European: Germany, Great Britain, France, Italy and Russia, balanced by the United States, Japan and Canada.
Negotiations over the G20 pitted the Anglosphere nations against the Continent. The Germans and the French, in particular, feared that additional members would dilute their influence on the world stage.
"The French were so annoyed," recalls Ian Bennett, now president of the Royal Canadian Mint, but then an associate deputy minister, who did much of the legwork in establishing the forum. "They hated it."
But deteriorating economic conditions overpowered the dissent. On Sept. 25, 1999, just five months after Mr. Martin and Mr. Summers sketched out their vision of an expanded group of finance ministers, the G20 was officially unveiled - with Mr. Martin as the inaugural chair.
Mr. Rubin argues that the Americans were as committed to the idea of the G20 as Canada was, though he describes Mr. Martin as a "very strong voice." But there was an important reason for handing the reins to Canada: The U.S. didn't want to be seen as dictating to the Europeans.
"There was a sense that this would be better if it wasn't a completely American initiative," says Mr. Thiessen. "So Paul became the guy who was front and centre, and Canada more generally, in organizing this."
Canada, of course, had its own stake: This nation entered the G7 in 1976 more or less by accident - the Europeans wanted to add Italy, and the Americans agreed on the condition that Canada be admitted as well. But by the late 1990s, if any country was bumped out to make way for China or India, Canada could be among the first to go. With the G20, the country was firmly anchored, and Canada's role in helping forge it gave it special prominence.
But along with that status, Mr. Martin also inherited the sensitive, and often tortuous, task of helping guide the final selection of inductees. There were howls from some countries that were not invited, especially, of course, in Europe.
"If you give more to some people, somebody has to give something up," explains Mr. Rubin. "But that didn't sit so well, in particular with some of the smaller countries."
Jim Peterson, who was then a secretary of state under Mr. Martin, recalls walking into the finance minister's office and hearing him yell down the telephone: "Once and for all, Holland is not getting on the G20, and that's all there is to it!"
Breakthrough in Montreal
To placate the chagrined Europeans, the first meeting of the G20 finance ministers took place in Berlin in December, 1999. The ministers talked about exchange rates, the impact of government debt on national economies, and the mixed promise of globalization, but things went badly - Germans and Canadians struggled over who was really in control, and the meeting was awkward and inconclusive.
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