Laura's Blog: Mexico at the Helm of the G20

In a few days Hillary Clinton will land on the sunny shores of the Mexican Pacific Ocean to take part in an unusual meeting of foreign ministers. Los Cabos is hosting the ministers of G20 countries, plus a few selected guests, as part of the run-up to the G20 summit to be held in the same peninsular beach resort in June. Mexico took over the presidency of the G20 last December.

The meeting is unusual because foreign minister meetings don't normally form part of the Group of 20 process. But the Mexican government seems to have decided on a strategy of multiple and frequent preparatory meetings as the best guarantee for a successful summit--at a time when the odds against that happening are particularly high.

The G20, with 19 countries and the European Union, claims to represent 90% of global GDP, 80% of international global trade and 64% of the world’s population. It started as a meeting of finance ministers talking about global financial governance and economic policy. Then it morphed into an informal organization with presidential participation that grapples with the world's most pressing issues in a 'members-only club' setting.

The foreign ministers are meeting in part because the G20 is experiencing mission creep at precisely the time when it finds it most difficult to deal with the issues it already has. Because of the hermetic nature of the organization, it's hard to say what Clinton will be talking about, and we likely won't have a clear idea even after the joint declarations and photo ops come out. Mexico has promised more civil society participation and public information, but as hundreds of people work on the elaboration of documents and proposals, getting details from the outside has been like pulling teeth.

The Mexican government may be regretting its decision to take over the 2012 presidency. In the past few meetings the G20 has been virtually paralyzed by the European economic crisis--without reaching effective solutions and without being able to deal with other issues. Mexico hoped to have the European crisis, and particularly the Greek situation, resolved before it held the summit. Not only has the crisis continued, but it threatens to flare up again in a big way despite the Grecian parliament's acceptance of a deal.

The road to Los Cabos has been strewn with obstacles for the beleaguered powerhouses of the world. Besides the crisis, the division between developed countries and developing countries, which Mexico claims to represent, has been growing. Before going into the obstacles, it's important to ask: Why is Mexico doing this? What does the Calderon government hope to obtain?

Mexico has laid out five priorities:

1. Economic stabilization and structural reforms as foundations for growth and employment.
2. Strengthening the financial system and fostering financial inclusion to promote economic growth.
3. Improving the International Financial Architecture in an interconnected world.
4. Enhancing food security and addressing the issue of commodity price volatility.
5. Promoting sustainable development, green growth and the fight against climate change.

Since the first priority is practically the sin qua non for the rest, the whole agenda depends on a miracle to a large degree. Calderon stated that the crisis should be resolved before June to make progress on the G20 agenda. His goal is to "resolve the euro crisis, to isolate the effects of the crisis on viable economies, like Italy or Spain and avoid systemic contamination and, of course, to discount the part of the Greek debt that is simply unpayable." Although he offered some specific measures to reach this goal, it is looking more and more impossible, especially given the current strategy of brutal austerity measures. Instead of an end to the economic crisis, at this rate we can expect it to spread into a broader political crisis.

The proposals for reaching the other goals support the current economic system that got us into this mess in the first place. In trade, the Mexican government recommends free trade, no to all forms of protectionism and a blind faith that fixing macroeconomic factors will eventually improve the lives of the population.

Strengthening the financial system and fostering inclusion appears to be understood as instituting vigilance and monitoring mechanisms, with structural reforms and regulation off the table. Inclusion does not mean a fairer distribution of wealth generated, but access to the banking system for the poor.

The core proposal for improving the international financial architecture put forth to date is to increase funds in the International Monetary Fund (IMF). Mexican government officials have stated that this will be a fundamental goal at the meeting. However, to date it has received few echoes as nations struggle to find funds for rescue programs in their own countries. In member nations, such as Brazil and Argentina, enthusiasm is low, to say the least, for running funds through a non-representative and orthodox IMF that continues to heavily condition its loans.

In food security, Mexico will promote an agenda aimed at reducing volatility but without curtailing speculative markets. Calderon has publicly recognized the link between food prices, poverty and hunger, and the role of speculation but so far has not supported calls for ending speculation in basic foods.

Finally, "green development" and climate change should be the hallmarks of the Mexican G20 presidency but here, especially, the chances of success and the approval of energetic measures in these critical areas appears distant.  Mexico calls for attacking climate change through market mechanisms including promoting carbon markets, REDD+ and payment for environmental services, without a universally binding system of emissions controls--a necessary idea that was already proven politically dead in the water at the Climate Change Conference that Mexico hosted in December of last year.

Mexican civil society has organized in almost as many groups and sub-groups as the G20, to monitor, influence, critique or protest the official events--depending on who you talk to and what tack they're taking. Getting detailed information on the procedures and content of materials and proposals poses difficulties but the idea is to use the meeting to raise issues that affect real people. The question of the basic legitimacy or lack of legitimacy of the G20 as a forum for making global decisions--due to its lack of clear rules and exclusive membership--as well as its orientation toward the interests of the world's wealthiest and most powerful nations--remains central to strategies.

See also G20 Update