G20 meetings are closed to the public and the press. The organization, so unstructured it has no secretariat, is often hard-pressed to get its members to agree on anything. The group of world leaders, moreover, is now holding only its third meeting.
But now Britain’s Prime Minister Gordon Brown tells Reuters that the G20, meeting in Pittsburgh starting Thursday night, will become institutionalized as “the world’s main economic governing council.” "The G20 will take a bigger role in economic cooperation than the G8 has in the past," said Mr. Brown.
If the next two days do indeed bring that to pass, the result would be a greater voice in the world economy for rapidly developing nations, such as Group of 20 members India and Brazil, economists say. It might also mean that the G8, the group of major industrialized countries that is accustomed to deciding important economic issues, is on its way to becoming the Ford Edsel of international organizations.
In addition, the apparent plan, the details of which have not been made public, would almost certainly raise eyebrows – and probably more – from those who are suspicious of international governing bodies. (Remember the Tri-lateral Commission?)
“There are a lot of folks in various countries that take as a serious issue self-governance,” says Chester Spatt, a professor at the Tepper School of Business at Carnegie Mellon University here. “They have concerns about ceding too much authority.”
Indeed, at a Thursday press briefing, Treasury Secretary Timothy Geithner said he doubted any state would give up its sovereignty for a consensus. But he added, “I think it’s important that we get people to agree all of us are performing together.”
It's good for nations to talk, says Mr. Spatt. But “usually when one says an institution is really important, the institution has demonstrated importance,” he says, inferring that's not yet the case for the G20.
With President Obama and the first lady now in Pittsburgh, attention shifts from New York and the United Nations to the work of the Group of 20. The G20 finance ministers first met in 1999 and try to get together annually. They will gather again in November. The member nations account for about 90 percent of the world's production.
But more than a few economists question whether this body, with just three meetings under its belt, is up to the task of directing the world economy.
“It’s an ad hoc group,” says Simon Johnson, a former economist at the International Monetary Fund (IMF) and now a senior fellow at the Peterson Institute for International Economics in Washington. “They had a good meeting in April, but I don’t think they have demonstrated they are the world’s economic council.”
Last November, as the financial crisis began to ripple through the world, the G20 leaders pledged cooperation to try to stimulate their economies. In April, they pledged financial aid to poor nations. This time, their agenda includes whether member nations should continue with fiscal stimulus, whether to introduce regulation of bankers’ compensation, and perhaps whether and how to balance world economic growth.
Some economists express discomfort about the notion of giving the G20 a lot of influence. One is Stuart Hoffman of PNC Financial in Pittsburgh, who calls the G20 “an important forum, not a governing body.”
But, on a positive note, he says, the G20 format gives smaller nations “more of a voice."
Even if the leaders include in their final communiqué a reference to the G20 as a governing council, some economists doubt the group's decision will have any teeth.
“The rich nations control the major institutions, such as the IMF and World Bank,” says Mark Weisbrodt, an economist with the Center for Economic and Policy Research in Washington. “The G20 will still be just a place to talk.”
The talk may yield a press release that sounds as if the G20 accomplished something, says Mr. Johnson. “The leaders just want to escape without a pounding from the press,” he says. “They are just hoping for good press coverage the next couple of days.”
Johnson expects the group will term the meetings a success. However, as Spatt notes, the members have some fundamental disagreements. “The way they will be taken seriously is by action,” he concludes.
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