GATINEAU, Que. — Prime Minister Stephen Harper is raising questions about the value of the G20 even as he prepares to host the group’s first summit as a permanent organization.
“I think the actions of the G20 truly averted in the last year what could easily have been a worldwide depression. So that’s a pretty impressive achievement,” Harper told business leaders from G20 countries.
“But the G20 still has much to do . . . to really prove its worth on the economic files.”
Harper, who welcomes the G20 countries to Toronto in June, said global trade talks have little hope of progressing this year. Instead, he encouraged countries to embrace “aggressive bilateral trade strategies.”
The prime minister also said issues such as development for poor countries should be kept to the G8, since that’s where all the donors are.
“It is a smaller group of countries that share values and perspectives and status,” Harper said, contrasting the rich G8 economies to the broader and new G20 that includes emerging market economies.
Harper’s remarks are likely to raise eyebrows in emerging countries, such as Korea, which is co-hosting the G20 this year along with Canada and has said international development should be a priority.
Harper’s comments taken together amount to a denunciation of multilateralism in foreign policy, said Liberal trade critic Scott Brison.
“The host of the G20 has a responsibility to lay out an ambitious agenda,” Brison said.
Instead, Harper is lowering expectations and undermining the chances of the G20 of making solid progress, he said.
The G20 became a meeting of leaders only during the global financial crisis, holding its first summit in Washington in November 2008. At the third summit in Pittsburgh last fall, the leaders decided to make their meetings more permanent.
They decided to turn the G20 into the leading body of global economic decision-making, replacing the G8 with a more diverse group of developed and emerging powers.
Toronto will host the first meeting of the permanent group, drawing in the most powerful politicians not just from the United States and Europe, but also China, Brazil, India and elsewhere.
In his comments Thursday, Harper said a few times that “the jury is out” as to whether the G20 can co-operate enough to plot a path to global economic stability.
“Will the G20 continue to be as effective going forward? My bet is, it will be, not just because I’ve seen some global signs, but also because there has to be such a thing. In a sense, it has to work.”
That’s because globalized markets need some sort of global guidance, he said. But he added that the G20 still has to prove that it’s up to the task.
Harper is expressing publicly what many analysts have also wondered: can the large group of diverse countries negotiate a way to get Asia to spend more money in the West, and to get the West to control its debt?
Experts have said the future of the G20 — and global stability — depends not just on China allowing its currency to appreciate, but also on bolstering demand for imports across Asia. At the same time, the United States and other big borrowers need to devise a medium-term plan to control their burgeoning debts.
Business people at Thursday’s meeting at the casino in Gatineau, Que., expressed some frustration that the G20 had not been more effective in stabilizing financial institutions and encouraging free trade.
The G20 can’t just issue pretty words about the benefits of free trade, while the global free trade talks started years ago in Doha flounder, said Helen Alexander, president of the Confederation of British Industry.
“The leaders do need to get this process back on track,” she said.
Similarly, the G20 is so busy talking about reforming rules for banks and financial institutions that it risks allowing another crisis develop without having taken any action, said Hans-Peter Keitel, president of the Federation of German Industries.
“There is lots of discussions, but nothing has been done,” he said.
The public has indulged governments as they bailed out banks over the last couple of years, but they will have no patience if states can’t act to prevent another round of crisis, Keitel said.
“Society would not accept that states go beyond their limits to bail out a second time,” he said, pointing to the risks of the sovereign debt crisis in Greece spilling over to other parts of the world.