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An Australian Leadership Challenge

By John Lipsky Coumessas, France

If stated today, the words "Australian Leadership Challenge" almost certainly would be assumed to refer to the recent Prime Ministerial switch, and/or to the upcoming general elections. Regardless of the election outcome, however, Australia's 2014 G20 Presidency will represent an historic challenge (and unique opportunity) for Australian leadership on a global stage. As the principal manifestation of this challenge, the world's most powerful political leaders -- representing about two-thirds of the world's inhabitants and more than 80% of world GDP -- will gather in mid-November next year to attend the Brisbane Summit.

In the opinion of many observers, this historic event will come at a critical juncture for the G20, and for the near-term prospects for effective international cooperation on the economic and financial issues that form the core of the G20's policy goals. As the principal global institutional innovation stemming from the Global Financial Crisis, the G20 Leaders from their first Summit in November 2008, set themselves three primary goals: (1) establishing "strong, sustainable and balanced growth"; (2) repairing and reforming the global financial system; and (3) reforming the international financial institutions. After a promising start -- especially at the London Summit in April 2009, and the Pittsburgh Summit in September 2009 -- doubts have increased about the principal countries' commitment to cooperative policy setting. This despite the incomplete success to date in achieving these three basic goals -- especially reflected in the ongoing disappointment with persistent sluggish growth and high unemployment -- and despite the general perception that cooperative policy actions in the wake of the Lehman bankruptcy in 2008 had played a major role in preventing a much more severe downturn. 

As Summit hosts, Australia will have the responsibility for organizing the proceedings, setting the agenda and taking the lead in negotiating the agreements (or lack of them) that will be codified in a thick set of Summit documents. Australia will be taking over the G20 Presidency at the end of this year from Russia, whose St. Petersburg Summit will take place in early September -- scant weeks away. Thus, the Australian authorities will have plenty of time to prepare for their G20 challenge.

Despite the scale and potential importance of the G20 Leaders process, there is limited public awareness about it. This is concerning, because if there are no expectations of success, there will be no perceived cost of failure. Lack of prior communication regarding Summit prospects therefore undermines the G20's credibility.  Nonetheless, a set of technical Working Groups at the Deputy Finance Minister/Deputy Central Bank Governor level (who prepare prospective policy agreements for their respective Ministers and Governors), plus the G20 Sherpas (personal representatives of the Leaders in preparing the political aspects of the Summits, including high-level agreements) are working hard, although almost entirely out of the public eye. Their responsibility is provide the substance that will justify the Leaders' claim that the G20 constitutes the leading venue for addressing economic and financial issues.

These groups have negotiated roadmaps for progress relative to all three of the G20's principal goals, and further advances are well within their grasp. But technical planning alone isn't a guarantee of success: Without a clear and meaningful political commitment by the G20 Leaders themselves to pursue coherent economic and financial policies, doubts will continue to grow about the prospects for significant progress in achieving the G20's three key goals. For sure, Australian authorities can't force the largest countries to cooperate against their will. Nonetheless, the Australian senior civil servants who form the backbone of Australia's G20 team are highly respected for their organizational skill, their technical capabilities, their seriousness, their dedication and high energy and -- in traditional Aussie style -- their willingness to "tell it like it is." Moreover, Australian policymakers long have been committed to multilateral cooperation. At the same time, many academic, business and labor leaders are willing to support the G20 process, and the international financial institutions are providing extensive technical assistance.

In sum, if the Australian Presidency can't get the G20 on track to make a more meaningful contribution towards achieving its principal goals, doubts about the usefulness of the G20 Leaders Summits will become more substantial, perhaps overwhelming. In contrast, a successful Brisbane Summit would represent an historic milestone in establishing a more effective, cooperative and coherent process for constructing a successful post-crisis global economy. 

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