Korea Gears Up for G20 Seoul Summit
This is the third in a series of articles on Korea's growing international status and its vision of becoming an advanced country. This series is a joint project between The Korea Times and the Presidential Council on Nation Branding.
By Na Jeong-ju
Staff Reporter
Korea's hosting of the G20 Summit next year is expected to serve as a turning point for the once major recipient of international aid to join the ranks of the world's mainstream economies.
Policymakers here have called the hosting a diplomatic triumph as the summit will provide a venue for major economies to set the future course of action for the global economy.
It also gives a crucial opportunity to the world's 15th largest economy to reflect voices from developing nations in reforming the global financial sector and creating a new economic landscape, officials said.
At the third G20 Summit in Pittsburgh in late September, Korea gained unanimous support from participating nations as the host of the fifth summit, slated for November next year. Canada will host the fourth on June 26 and 27 in Toronto.
Korea is the first Asian country to host the forum of the world's 20 major economic powers, launched in September last year to coordinate a global plan to fight the worst recession since the Great Depression. The G20 nations account for about 85 percent of global output.
In early November, the administration chose Seoul as the host city and launched a presidential panel to prepare for the G20 Seoul Summit, aiming to make it the biggest and most successful premier economic forum ever.
The last G8 Summit, which U.S. President Barack Obama hosted in Pittsburgh, decided to shift the main focus for economic decision-making from the G8 to the G20, which includes major developing countries like China, India, Brazil and Korea.
The G8 is comprised of the United States, Britain, France, Germany, Italy, Japan, Russia and Canada.
"The hosting is a remarkable achievement for Korea and the Korean people. I will propose diverse solutions to help the world achieve sustainable growth following the economic crisis and address the issues of climate change, poverty and energy crisis," President Lee Myung-bak said during a press conference at Cheong Wa Dae on Sept. 30.
In the following months, the administration will focus on developing the agenda for next year's summits in close cooperation with Canada, global organizations and economists.
"I feel a great deal of responsibility," said Sakong Il, chairman of the Presidential Committee for the G20 Summit.
"At the Seoul summit, we will play a leading role in forming key global economic policies. I hope it will create momentum for the country in becoming a global economic power."
The summit will be the largest international forum ever to be held here, drawing more than 10,000 participants, including the leaders of more than 25 countries and major international organizations.
On the sidelines, Korea will also hold meetings for economic ministers, business leaders and working-level officials at various locations nationwide to ensure effective policy coordination among countries.
The committee includes the minister of strategy and finance, the minister of foreign affairs and trade, the chairman of the Financial Services Commission (FSC) and most senior presidential secretaries.
An advisory group of foreign economists and business leaders will also be formed soon.
Former FSC Vice Chairman Lee Chang-yong will serve as the panel's secretary general, leading working-level policy coordination with participating countries.
As the host nation, Korea has the right to invite some non-G20 member nations to the summit. The countries will be selected early next year, according to committee officials.
Exit Strategy
The G20 gathering is nothing like ASEM and APEC, which are mostly ceremonial events.
Policymakers here hope the hosting of such a high-profile meeting will raise the country's voice and profile in the international community.
At the previous G20 summits, President Lee proposed countries focus on preventing protectionism, expanding foreign currency supply to emerging nations and stimulating economies through more government spending and lower taxes.
Explaining his economic policies, he said Korean banks should lend more to businesses at low interest rates; corporate management and labor unions should cooperate and lawmakers should adopt measures to boost the economy.
Analysts, however, expect global exit strategy and post-crisis growth measures to top the agenda at the Seoul summit.
Amid signs of recovery, the world's industrial powers have agreed that the upcoming summits will be even more significant as a majority of countries start devising coherent exit strategies.
"The Pittsburgh summit didn't hammer out hard details of a global exit plan because it was premature to adopt it. Some economies are at risk of falling back into a slump," said Kwak Soo-jong, an economist at the Samsung Economic Research Institute.
"But the next summit is when we're going to be seeing global leaders aggressively coordinate their exit plans. And it's meaningful that South Korea is going to be at the center of such an influential gathering."
Sakong, however, said nothing had been decided yet on the topics and that the agenda will be formed following consultations with countries and global organizations.
On the sidelines of the Seoul summit, President Lee is expected to hold one-on-one talks with the leaders of major countries.
He may propose a global deal to stop the downward spiral of the global economy and tackle surging unemployment rates, according to Cheong Wa Dae officials.
"The President will urge the world to lower trade barriers, saying removing barriers for trade and investment is key to overcoming the global crisis and spurring economic growth," presidential spokesman Park Sun-kyu said.
The country is upbeat about the prospect of the G20 becoming the world's premier economic forum, replacing the more elite G8, which has excluded major emerging economies.
"The G20 gathering became a regular forum and adopted an institutional framework through the Pittsburgh summit. The shift to G20 from G8 is now occurring," said Shin Je-yoon, deputy finance minister.
"We will also try to strengthen the role of the International Monetary Fund (IMF) to more effectively stabilize financial and macroeconomic conditions. The World Bank will be given more power to coordinate the development agenda in the developing world."
To that end, 5 percent of the IMF quota will be taken away from advanced economies and be reallocated among developing ones.
The G20 nations will provide poor countries with financial and other resources necessary for sustainable economic development, rather than simply handing out food and other basic necessities.
The G20 was founded in 1999, as a co-initiative of Canada and the United States.
However, it was largely a symbolic forum when it came to economic policy coordination, as non-G8 members were clearly "second-class" countries.
Through the framework, major countries tried to engage developing countries in dialogues on issues such as climate change, over which the two sides had differed.
Analysts say the transition to the G20 as the premier economic forum can be seen as an indication of what was really accomplished at the last summit in Pittsburgh: a restructuring and re-ordering of the global economic hierarchy.
Gone are the days when the powerful and wealthy G8 members could dictate their plans on the global economy to the lesser, non-G8 bystanders, and the rest of the global community.
The rise of the G20 should be seen not as a magnanimous offer by the Western economic cabal and Japan to cede power and influence to formerly, less-influential developing economies.
"Two years of financial market turmoil, which began in the rich world, have enhanced the economic role of fast-growing countries," Deputy Minister Shin said.
"Giving the G20 the main role for coordinating economic policy would make it more important than the G7 and G8 groupings of the industrialized nations which have long dominated the world's economy."
At the upcoming talks, Korea aims to play a leading role in mapping out post-crisis global economic programs and represent the interests of emerging economies to help the world achieve a more balanced growth.
President Lee has said Korea would continue to increase its donations to help promote economic development in poor countries and share its growth experience with them.
"As our global status rises, our global responsibility also grows. We should contribute more to the world as a country standing at its center," Lee said following a bilateral summit with U.S. President Obama in Seoul in November.
Positive Growth Outlook
His confidence reflects positive assessments by global economists on Korea's economic potential.
Economists say Korea is recovering faster than many other major countries as improving exports, consumption and corporate investment ease jitters over a global recession.
According to the latest growth outlook of the IMF, released Tuesday, the Korean economy will mark 0.25 percent growth this year, compared with an earlier projection of 1 percent contraction.
"The downside risks stem primarily from sluggish growth in Korea's advanced economy trading partners. These are balanced by the upside risk to growth from a stronger than projected recovery in emerging economy trading partners, inventory rebuilding and a boost to consumption from firming labor market conditions," it said.
The upward revision was the steepest adjustment among the G20 countries. It was also much higher than the average of 0.2 percent by which the IMF revised for G20 countries.
The IMF painted a rosier outlook for Asia's fourth-largest economy for next year as well.
It forecast the economy will grow 4.5 percent in 2010, up from its October prediction of 3.5 percent.
The Organization for Economic Cooperation and Development (OECD) is also positive about Korea's growth outlook.
OECD Secretary General Angel Gurria said in a seminar in Seoul last month that the Korean economy will likely expand by more than 4 percent next year, performing better than the government's outlook. The Ministry of Strategy and Finance forecast the economy will grow 4 percent in 2010.
The secretary general proposed Korea maintain its economic stimulus measures as growth is still at an early stage and is mostly driven by state-led expansionary policies.