G20 Seoul Summit to end Korea Discount

This interview is part of a package of articles highlighting Korea’s preparations for the Nov. 11-12 G20 Summit slated for Seoul, marking the D-100 day for the summit today. — ED.

By Kim Jae-kyoung

For Korea, 2010 will be a milestone year as the country will be the first host and chair of the G20 Summit from the Asian region as well as from the emerging world.

The hosting of the international gathering has two key implications for Asia’s fourth largest economy. One is that the Seoul Summit will be a ceremony where Korea officially joins the league of advanced economies. The other is that Korea will upgrade its status to a “rule maker” from a “rule taker” by taking an initiative in setting the key agenda during the G20 process.

Sakong Il, chairman of the Presidential Committee for the G20 Summit, believes that the G20 Seoul Summit will give the finishing touch to the country’s decades-long efforts to become a force in the global community.

“I believe that the successful hosting of the G20 Summit will verify Korea’s elevated status in the global community by boosting its international reputation and strengthening its national brand,” Sakong said in an exclusive interview with The Korea Times on July 27. The interview was conducted ahead of the D-100, which falls today.

“I’m confident that the Summit will help upgrade the undervalued image of Korea and its products by turning ‘Korea Discount’ into ‘Korea Premium,’ which I believe will bring enormous economic benefits,” he added. He estimates that 1 percent reduction in the Korea Discount can be equivalent of producing $4.4 billion worth of added value.

The 71-year-old former finance minister believes that if the Seoul meeting comes up with meaningful outcomes, it can become a landmark in solidifying the G20 as the new premier forum for international cooperation. The significance of the November gathering has been increasing as questions are rising about the legitimacy of the G20 following the Toronto Summit.

“Since there were no meaningful deliverables in the Toronto Summit, G20 leaders have high expectations for the Seoul Summit. They expect us to bring about workable and substantive agreements on key issues, including IMF reform,” Sakong said.

“We seek to ensure that agreements made at previous meetings are followed through and that clear policy directions are set for strong, sustainable and balanced growth,” he added.

Bridging the gap

The veteran economist with a Ph.D. in economics from the University of California, Los Angles, said that with exactly 100 days to go until the Seoul Summit, the biggest challenge is to bridge the perspectives between the advanced and emerging economies on thorny issues such as redistribution of the IMF quota.

“As the chair country, we are working hard to find the middle ground between the two parties to come up with workable outcomes. But it is not easy to mediate because they have different perspectives. In addition, we also have to find ways of international organizations not feeling isolated during the process,” he said.

Sakong was confident, saying that Korea, as the first non-G7 country to chair the G20 process, is in a unique position to resolve the problem.

“As the first recipient-turned-donor country in the OECD Development Assistance Committee, Korea has an especially good understanding of the pain and agony involved in development. Korea is also a veteran of the 1997-1998 Asian financial crisis and overcame it faster than other countries,” he said.

“Korea is well placed to bridge the gap between advanced and developing nations and to provide outreach to non-G20 countries in the G20’s endeavor to enhance its legitimacy,” he added. “Korea can be particularly responsive to the 172 U.N. member countries”

In fact, he himself is traveling around to resolve the issue. In June, he flew to the U.S. to meet key U.S. policymakers to discuss the re-distribution of the IMF quota as part of efforts to persuade rich countries to give up part of their voting rights in the IMF for developing countries.

Regarding the G20 Business Summit, Sakong said that it will be the first gathering to reflect the voice of the private sector in the G20 process.

“So far, governments and central banks have played a key role in fixing the global financial system and supporting the economic recovery. Without support from the private sector, it is impossible to achieve sustainable and balanced growth,” he said.

“Around 80 CEOs from G20 countries and 20 from non-G20 nations will participate in the Seoul Business Summit and exchange views with G20 leaders,” he added. “The Business Summit is a continuous process and hence we are seeking to play a key role in institutionalizing it.”