Unfinished G20 summit diplomacy

By Heo Mane

South Korea has played a good orchestra conductor in an effort to reconstruct the global economy hit by the 2008 financial crisis. To be frank, the previous G20 summits have only demonstrated a splendid show of words.

It is, nevertheless, a small flaw that this orchestra has produced some discord in reconstructing new global financial and economic frameworks on this historical occasion. But the orchestra performing in Seoul is believed to have opened a new chapter in global finance and economics, although no specific goals and deadlines were decided upon.

The Seoul summit barely escaped the war on the exchange rate issue as it is transferred to a new market-determined system. The Cannes summit in France is thus expected to deliberate this hot issue in 2011.

Positively supported by the less developed countries, the summit leaders adopted the Seoul Development Consensus for shared growth that aims to reduce development gaps between developed and developing states, focusing on self-reliant economic potential. To this end, the G20 leaders agreed to set indicative guidelines to assess current account surpluses and deficits by 2011.

This is South Korea’s multi-year action plan seeking more concrete measures for sustainable and balanced development. The summit agreed to carry out historically significant reform of the International Monetary Fund (IMF). The leaders noted that the current voting quota allocations have not adequately reflected the emerging market’s growing power.

The leaders with the IMF are resolved to set indicative guidelines for preventive and corrective action. They also agreed to create a financial safety network and new financial regulations. The financial safety network offers both a pre-cautionary credit line and a flexible credit line simultaneously to developing nations, most of which are often exposed to economic crises.

And they agreed to create institutions to meet the challenges or contingencies resulting from failures in the global financial system. To this end, they agreed to strengthen regional safety networks such as the Chiang Mai Initiative and global financial institutions such as the IMF.

In addition, global leaders adopted the Seoul Action Plan that aims at a comprehensive, cooperative and country-specific policy action.

The plan is basically designed to carry out macroeconomic policies such as reflecting basic economic fundamentals and a more market-oriented exchange rate system, the enhancing of exchange rate flexibility, and the refraining from competitive devaluation of currencies.

Simultaneously, the leaders gathered in Seoul showed their renewed determination to firmly fight protection measures, striving to survive as agreed in the G20 Business Summit in Gyeongju. Business leaders clearly voiced their determination to settle the Doha Development Agenda, which will open the way to free trade for developing and underdeveloped states.

Lastly, it apparently is a historic achievement that the Seoul summit initiated the business summit as a regular economic forum for the years to come. This decision, in all respects, is considered an essential path to sustainable and balanced economic development for both advanced and developing countries.

Moreover, this writer strongly hopes that the G20 summit will transform itself into a means of future global governance for sound, free, and continuing economic growth.

All in all, it is quite significant that the Lee Myung-bak government as an orchestra conductor has dealt more effectively than ever before with macroeconomic policy cooperation on the one hand, and a global financial safety networks on the other.

Viewed from these achievements, the G20 Seoul Summit has achieved good results, although it failed to address an essential issue _ how to achieve a denuclearization of the Korean Peninsula at an earliest possible date.

Obviously, they forgot to hammer out a stronger measure to get North Korea to give up its nuclear ambitions. The North, which has been engrossed on the hereditary inheritance of power from its leader Kim Jong-il to his third son Jong-un, made a deadly torpedo attack on the South warship Cheonan in March this year.

The Kim regime appears ready to conduct another nuclear test in an effort to disrupt peace and security on the Korean Peninsula and to strengthen his rule. It is a decisive flaw that the summit leaders engaged only in economic and financial issues.

It is practically unthinkable to bring about strong, sustainable, and balanced development without first realizing a nuclear free-Korean Peninsula. Denuclearization is a pivot to move toward the goals of the G20 Seoul Summit and those of the Cannes G20 Summit. From this point of view, the Seoul summit diplomacy unfortunately is an unfinished symphony.

It is important to promote the “Korea Initiative” designed to bridge development gaps between advanced and developing nations, and to narrow the differences of their development strategies. It remains to be seen if the unfinished symphony will be a finished one in Cannes next year.

Heo Mane is president of the Korea-EU Forum. He can be reached at mane398@naver.com.