The security precautions that will effectively shut down Toronto’s downtown core during the final week of June will be a unique experience for residents. By now you’ve probably heard that the University of Toronto St. George campus will be closed for at least four days. Maybe you’ve read about the dozens of banks and law firms located in the downtown core that will be uprooted and flung into the fringes of the city so they can maintain regular operations throughout the week. Perhaps the most obvious evidence of these security measures is the three-metre high security fence that will be constructed, stretching from Wellington St. south to Lakeshore Boulevard, reaching as far east as Bay St. and west to Blue Jay Way.
The reason for this unprecedented lockdown of the city’s core is the widely publicized Group of 20 summit, a forum for the leaders of the world’s industrial powerhouses to discuss global economic issues. On June 26 and 27, Prime Minister Stephen Harper will host a series of meetings, press conferences, and private talks will take place in downtown Toronto.
These multi-national meetings came about in 2008 when there appeared to be no end in sight to the disastrous impact of the global financial crisis. In response, the Group of 20 held its inaugural world leaders summit in Washington D.C. The leaders have since gathered in London and Pittsburgh in 2009 and will meet again in Seoul in November 2010.
The guest list for the upcoming summit demonstrates the diversity of economies and populations that are represented within the G20: from King Abdullah bin Abdul Aziz, of the wealthy oil exporting state of Saudi Arabia, to President Cristina Fernández de Kirchner, from the agricultural Argentina. The upcoming summit will also be the first for newly elected British Prime Minister David Cameron while the Canadian Prime Minister and host of the event, Stephen Harper, has attended all the summits thus far.
When so many world leaders gather in one place controversy is guaranteed to ensue. There will be no shortage of groups demonstrating on behalf of a wide range of issues. The Canadian federal government has already found itself under intense scrutiny for the purported $1.1 billion price tag for security and summit costs.
But beyond the media uproar over the cost, the threat of violent protests, and police crackdowns, there are far more basic questions that should be addressed. For instance, what do the leaders of some of the most prosperous countries in the world hope to accomplish through these incredibly expensive but brief summits? Will the leaders of such a diverse group of countries make significant progress toward mutual goals through the decisions that emerge from the meetings? Are the goals of these countries even the same?
Five’s company, twenty’s a crowd
The G20 was not hastily created in the wake of the 2008 financial meltdown. It is an international body that has arguably been in the making for decades. Ministers from affluent, industrialized countries have gathered regularly since 1973 when the “Group of Five” – the U.K., the U.S., France, Germany and Japan – sent their finance ministers to Washington D.C. to discuss major events that had recently shaken the world’s entire economic system.
Eventually the group expanded, drawing Italy, Canada and most recently Russia into the forum to become the Group of Eight. Annual meetings have been held since 1975, bringing the heads of state of each country together for a series of meetings. Lower profile meetings occur throughout the year between the foreign, environment, and finance ministers from these countries. The current G8 summit will be held in Huntsville, Ontario on June 25 and 26, prior to the much larger G20 summit.
By the late 1990s it was clear that global financial concerns would be addressed more effectively in a forum that included a larger number of economically powerful countries. On the initiative of the G7 (all the countries of the G8 except Russia), a group of finance ministers and central bank governors from 33 countries was assembled in early 1999. Later in the year, the number of nations with official voices in the forum was narrowed down to 19, plus the European Union, giving birth to the G20 that exists today. Primarily pressured by the 2008 global financial crisis, meetings involving the leaders of each of the 20 states began in 2008 at the Washington D.C. summit.
The diversity of the regions represented within the group is impressive but even this is eclipsed by its sheer size: representing two-thirds of the world’s population. In terms of the economic clout behind the group, the statistics are equally staggering: taken together, the economies within the G20 comprise 85% of global gross national product.
A Bretton Woods for the 21st Century
The economic turmoil that has characterized the last three years has led state leaders to call for increased regulation of global financial markets. Media commentators and even some of the participating leaders have noted that the G20 summits could, eventually, result in massive changes to the structure of the global economy, similar to the revolutionary measures implemented through the Bretton Woods conference that followed World War II.
In 1944, as the war drew to an end, economists and policymakers from the victorious allied nations gathered in Bretton Woods, New Hampshire to pick up the pieces of the war-shattered economies of Europe and reshape how countries approached international trade and finance. Among the developments that emerged from Bretton Woods was the Gold Standard, an exchange rate system pegging the American dollar to a fixed weight of gold, leading to stable worldwide exchange rates. The International Monetary Fund (IMF) and the precursors to the modern World Bank and World Trade Organization were also created during conference.
Since the Bretton Woods conference, the Gold Standard has been abandoned and the limited successes of the World Bank and IMF have led to a rash of criticism of both institutions. Many G20 leaders consider the current financial crisis to be an important opportunity to reform the inner workings of the global economy with the summits as an ideal venue to formulate these reforms. Political leaders, such as French President Nicolas Sarkozy and former British Prime Minister Gordon Brown, have suggested that the G20 meetings could result in a new international financial framework similar to that which emerged from Bretton Woods. Yet, ideas on what this new framework would encompass remain to be articulated.
One possibility is that international institutions would be granted more power to regulate economic activity within countries. At the 2009 London summit, World Bank President Robert Zoellick declared that “if leaders are serious about creating new global responsibilities or governance, let them start by modernising multilateralism to empower the World Trade Organization, the IMF, and the World Bank Group to monitor national policies.”
Another option – that has its origins in the theories of influential economist John Maynard Keynes – is to create a global reserve currency managed by an international financial body, an option that has been supported by China. This move to a global reserve currency may be viewed negatively by the United States, due to the many economic privileges the American dollar holds as the preferred reserve currency of major banks and international institutions across the globe.
Richard Sandbrook, a political science professor at U of T, thinks that the odds are low that the upcoming Toronto summit will yield any new regulations or major policy shifts. However, he believes that a small but effective tax on immediate currency conversions, known as a “Tobin tax” (named for Nobel laureate economist, James Tobin), is likely to emerge from the summit.
“A small tax of about 0.05% on financial transactions involving the exchange of currencies would bring in hundreds of millions of dollars, which could then be allocated to the development and transfer of clean technologies and the advancement of various other development goals,” Sandbrook explains.
“At the same time, it would reduce the volume of speculative money movements that have wrought economic havoc periodically in the past 30 years. Several European leaders now favour the tax, which appears to be technically feasible to collect. The scheme would work to the advantage of lower-income countries that form a significant element of the G20.”
The Canadian Contribution
Canada has been a member of the G7 since 1976 and played an integral role in the decision to expand the group and the creation of the bi-annual G20 world leaders summit. Prior to 2008, the meetings gathered only the finance ministers and central bank governors of the G20 countries. Former Prime Minister Paul Martin, in his previous role as finance minister, was the first chairman of the finance ministers’ G20. When he took the Prime Minister’s office he became a fervent supporter of regular meetings for the leaders of the G20 countries even prior to the 2008 financial meltdown. He wrote extensively on the possible agenda and role of the larger group and its potential relationship with other international organizations.
Growing pains
If the G20 summits held in London and Pittsburgh in 2009 were any indication, Torontonians should be prepared for the presence of baton wielding riot police, tear gas, and arrests as leaders meet in the fenced-off, highly secured downtown core. Over 100 protesters were arrested at each of the summits and one death was recorded during a protest in London. In the past, protestors have demonstrated concerns ranging from climate change, to the massive bank bailouts, to the general economic policies of member nations.
A wide variety of groups have scheduled events during Toronto’s G20 summit. The North end of Queen’s Park is the designated protest zone, but groups plan on using Trinity Bellwoods, Allan Gardens, and several major streets within the downtown core as venues for their demonstrations. The Ontario Coalition Against Poverty plans on protesting what they see as the “ruling elite’s” deference to military spending and tax cuts for the wealthy. Progressive advocacy group the Council of Canadians will be holding an event on June 25 at Massey Hall. Speakers at the event will include best-selling author and outspoken critic of corporate globalization Naomi Klein, host of the award winning news program Democracy Now! Amy Goodman, and International President of the United Steelworkers Leo Gerard.
