G20 members urged to allow S. Korea to host G20 summit next year: scholar

By Hwang Doo-hyong
WASHINGTON, Sept. 23 (Yonhap) -- A U.S. scholar Wednesday called on the Group of
20 economic powers to allow South Korea to host another G20 summit next year in
order not to undercut the global efforts to recover from the worst recession in
decades.

"Not allowing the Republic of Korea, which is scheduled to chair the G-20 in
2010, to host a leaders' summit would seriously undermine the credibility of
global efforts, sending a signal that while the G-20 summits were convened in
recognition of the importance of rising powers, only old G-8 members will be
permitted to host summits," said Stephen Schrage, who holds the Scholl chair in
international business at the Center for Strategic and International Studies.
Leaders of major advanced and emerging economies will get together in Pittsburgh
Thursday for another G20 summit, the third since the recession broke out last
September, to discuss ways to help revive the global economy. They are also to
decide on whether to hold another summit next year.
"After almost a year of G-20 summits, there is still no official answer on
whether the G-20 leaders' summits will even continue into next year, leading to
what is truly a G-20," Schrage said in a contribution to the CSIS Web site.
"World leaders will be looking to President Obama to set the course not only on
substantive issues but on the structure of the way forward."
South Korea, the host of the G20 finance ministers' meeting next year, wants to
hold the summit so the 20 countries, which account for more than 85 percent of
global output, could continue to play an important role in the shaping of the
post-crisis economy. This comes as criticism mounts about the effectiveness of a
G8 summit of advanced economies alone.
Britain, which hosted the G20 summit in London in April, is this year's
chaircountry for the G20 finance ministerial meeting.
Schrage called for sweeping reform of the International Monetary Fund and World
Bank, which critics hold accountable partly for the ongoing global economic
crisis, due mainly to their failure to come up with early warning systems for the
crisis and proper measures to regulate financial institutions.
"With efforts to reform the IMF and World Bank pending, 2010 is shaping up to be
a critical year for determining whether our often-creaking, 1940s-era
institutions can be brought up to speed for the 21st century, or face a path of
declining legitimacy and influence," the scholar said.
The first G20 summit was convened in November amid criticism that the G8 summit
as well as the International Monetary Fund and World Bank failed to head off the
recession and even nurtured the atmosphere for the economic crisis without proper
reform measures within themselves.
The G20 is said to have played a greater role in helping the global recovery
through coordinated measures against protectionism and implementing expansionary
fiscal and eased monetary policy, although its efforts against protectionism were
tarnished by U.S. punitive tariffs on Chinese tires and an ensuing move by China
to retaliate in recent weeks.
South Korea and some developing economies hope that the G20 will eventually
replace the G8 summit of advanced economies.
Sakong Il, a special adviser to South Korean President Lee Myung-bak and head of
the presidential preparatory committee for the G20 summit in Pittsburgh, recently
said, "The G8 summit is no longer the appropriate forum to produce solutions for
the imbalance in the global economy, the growing trade and budget deficit of the
U.S., and the burgeoning trade surplus in some emerging economies."
The Pittsburgh summit comes as the global economy recovers faster than expected.
The Organization for Economic Cooperation and Development recently forecast an
annualized U.S. quarter-on-quarter growth of 1.6 percent and 2.4 percent each for
the third and fourth quarters, up from the zero and 0.5 percent predictions made
earlier this year.
The International Monetary Fund has forecast that the global economy will shrink
by 1.4 percent this year, and predicted next year will witness a growth of 2.5
percent, up from an earlier projection of 1.9 percent growth.
The upcoming summit is likely to focus on new capital requirements for financial
institutions, the so-called exit strategies for phasing out of expansionary
budgets and excessively low interest rates, financial oversight measures,
including a limit on bonuses to top employees of financial institutions to reduce
the kind of excessive risk-taking that triggered the financial crisis on Wall
Street.
Also high on the agenda are ways to reform the IMF and the World Bank to increase
the quota of developing countries to reflect the growing presence of China, India
and other emerging economies.
A possible replacement of the U.S. dollar as the key currency in international
trade will not likely be dealt with, though China and some other countries have
attributed the spread of the U.S.-initiated financial crisis abroad to excessive
dependence on the greenback.
Chinese President Hu Jintao did not raise the alternative currency issue when he
met with U.S. President Barack Obama Tuesday, a U.S. official said.
hdh@yna.co.kr
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