Author: VK
On December 1, 2012 the Russia's presidency in the "Group of Twenty", an informal association of the largest economies in the world, began. At the Gaidar Forum 2013, which ended on Sunday, Sergei Storchak, Deputy Minister of Finance, spoke about the role of the G20 in addressing key global economic issues.
According to him, by 2008, a financial mechanism for the coordination of regulatory policies has already existed for almost 10 years: “During that time contacts have been established, working groups were created, people learned to communicate with each other, to negotiate, to listen to each other on the most painful and most sensitive issue - the issue of money: who gets more, who gets less, who makes concessions, and where the consensus to solve global problems is. In this sense, I believe that the leaders are terribly lucky: they did not need to create new and innovative mechanisms, because the mechanisms existed. Another thing is that it turned out that in the period before the recent crisis the global economy and the economies of individual countries developed in rather comfortable conditions. This practice, these traditions have been successfully raised to the level of leaders, and it was found that, in the presence of an "umbrella" of leaders, many issues that were not resolved for years may be solved much more quickly and efficiently. Here, of course, first of all we are talking about reforming the financial sector, financial regulation”.
According to Storchak, the financial sector actually pulled away from the rest of the economy. “Instead of being a reliable intermediary between resource owners and those who need the resources, the financial sector began to dominate everywhere. The leaders felt it, and that was the core of the decisions that were taken. The mood for restoring the balance of economic development, when there is not only one large sector, in this case financial, and there is a balance in the economy, is one of the tasks of structural reforms”.
Storchak likes to give an example of Germany: “Germany was among the few countries that retained domestic economic balance when there was industrial development, the contribution of which to the country's GDP was as much as that of the financial sector, and the exact opposite happened in the U.S. and in the UK, where the financial sector has become dominant, and as a result we got what we got. I'll give another concrete example of the positive impact of the G20 on the decisions that are taken. This is the appearance in various jurisdictions of the Financial Stability Board”.
“The G20 was formed by itself, there were the developed economies, the largest economies, but also the largest economies created the Financial Stability Board, which first united the largest financial markets”, Storchak recalls. “The two clubs have existed in parallel, we were involved in the G20, the Financial Stability Board with our small, modest financial markets was closed for us, and no one invited us. It was strange to participate in the meetings of the G20, when ministers and central bank governors discussed the topic of financial stability, the decisions made in the other place, and we sat and listened to what we did not understand. But the leaders intervened and stopped this strange dichotomy. Now, the Financial Stability Board exists in the same form as the G20. This is a very big help, especially the regulator of both the banking sector and the financial one. We know that the Bank of Russia has a department of financial stability now, and there is an interdepartmental working group or commission on financial stability in Russia. I can list the achievements of the G20 for a very long time, but the achievement which is probably the best known in our country is the cushion of financial security, the establishment of a stabilization
fund and all the other solutions. This is one of the elements that gradually formed the basis of communication within the G20, as the issues of asset management periodically emerged during the favorable 2000s”.
Speaking on the Russian presidency in the G20, Alexander Shokhin, president of the Russian Union of Industrialists and Entrepreneurs, said that the key cross-referring theme was creating jobs and restoring balance and quality of economic growth, and the theme which Russia provided as a priority - energy - is considered also in the light of innovation policy. “One of the problems faced by large companies is innovative mining, closed for many countries. In particular, even the "shale revolution" that took place in the U.S. remained for many years a big secret for companies from other countries, constructing this kind of technology, as well as technologies for the depleted fields - for example, Standard Oil has these technologies, but they do not extend further than within the U.S. and in countries where Standard Oil acquires these depleted fields and applies its technologies. So it would emphasise not only the question of access to raw materials, access to transit, and so on, but also of access to high technology in the energy sector”.
“The topic of job creation is a separate topic”, Shokhin says. “It is connected to social investments, investments in human capital, in the format in which this topic is traditionally discussed, including on the grounds of international organizations. These topics are oriented to youth employment and the fight against youth unemployment. By the way, for me it was a surprise that President Putin in the Federal Assembly mentioned the theme of apprenticeship as a form of employment. It seems a very specific topic, but the ILO and the International Organization of Employers or trade unions consider it to be one of the traditional, classical themes on these sites”.
As for estimating the effectiveness of implementation of the recommendations of the G20, Shokhin told about a working group of assessing the dialogue between business and the Group of Twenty: ”We certainly hope that our recommendations to some extent will be implemented in the text of the final document G20; we look forward to working closely with the financial track. Our offer will be reflected in the recommendations of the final communique, but we believe that it is important not only to assess the textual results, but also to evaluate the previous proposals, in particular - proposals to be corrected, that is, not simply seeing what failed and what did not. It is important to see what could not be done, given the fact that the situation is changing in the world, and the fact that five years ago or three years ago it was important, and now there is a different view. Therefore, some solutions will certainly be corrected, and we believe that this kind of analysis, of course, must be made. Besides the fact that we are attracting leading business organizations, and we believe that it is their job to consolidate national businesses to formulate their opinions, of course, we are working with international consulting firms - McKinsey, Boston Consulting, Ernst & Young, we are working, as I said, with the OECD, the International Chamber of Commerce, the Davos Economic Forum. And in terms of the intellectual make-up and in terms of public discussion we would like to be an open structure. It is important for us to promote business positions to the maximum”.
Touching upon the subject of the interaction between the G8, the G20 and other structures. Shokhin said that “some of the subjects, generally speaking, are controversial and disputed - for example, the subject of trade, the fight against protectionism and WTO issues. The G20 and the WTO dispute whether the G20 should discuss topics of trade, if there is the WTO as an organization in which now everyone is involved, including Russia. Therefore, we must identify, apparently, the key issues. Perhaps discussing the fate of the Doha Round of trade negotiations can be done at the G20, but it is clear that this is rather the task of the WTO. I would have thought that in 2013, during the presidency of Russia of the G20, Russia's accession to the OECD should take place. It would be a good result, and we could just be proud of this, in my opinion. Russia would become a member of all international organizations, all clubs”.
