Korea’s Challenge and Opportunity as Chair of the G20
November 18, 2009
South Korea is highly motivated to play the roles of host and chair of the G20 in 2010, following Britain’s chairmanship in 2009. This is a historic moment since it will be the first time that a non-G7 country has been engaged in leading global financial coordination efforts. There is much at stake for Korea and for the international community precisely because success will strengthen the credibility of the G20 process, while failure may underscore the need for further reevaluation and raise questions regarding the merits of the G20 as the premier forum for global financial governance.
Korea has indicated an aspiration as it takes on this task to balance between the developed and the developing economies. A fundamental objective for South Korea as a chair should be to ensure that the global financial system will be structured in such a way as to enable an operating environment in which developing countries are able to follow successful development paths that other countries, such as Korea, have already taken. Without the strong tailwind provided by the crisis itself, those responsible for steering the G20 will inevitably encounter greater resistance and trickier crosswinds that will complicate the task of navigating the vessel safely to shore.
There are at least four “rebalancing” challenges that Korea will face as it takes on its new responsibilities in 2010: a) Rebalancing between early “exit” (or transition) and countries that have continued need for stimulus; b) Promoting discussions of rebalancing between the U.S. as debtor and China as creditor, especially by facilitating discussion of exchange rates and other global effects of the need for the United States to increase savings while China expands consumption; c) Rebalancing between international oversight and the coordination of sovereign political processes – efforts to promote global financial stability are simultaneously at odds with and dependent on political understandings among G20 leaders; and d) Rebalancing between the G7 and the G20, including the question of whether the G20 leaders’ meetings will address global political issues beyond the core financial issues. Korea will need to consider this challenge as part of its stewardship of the G20 process.
Korea’s hosting of the G20 may also provide the context for developments at both a regional and national level. At a regional level, the possible development of an Asian caucus within the G20 may have an influence on the development of Asian regionalism in its various forms, including APEC, the East Asian Summit, and ASEAN Plus Three. This configuration, if it materializes, might have an influence on the development of Asian regionalism by placing regional coordination in the service of the global imperative of financial stability. Asian countries involved with the G20 process may find themselves in a position to link regional trends with global objectives.
Finally, the G20 agenda serves Korea’s own national needs as the current administration has stated its objective of promoting a “Global Korea,” or a Korea that is poised to play a larger role on the international stage. The chairmanship of the G20 is one tangible way in which Korea’s international role has expanded, but it will only be successful if Korea provides international contributions in proportion to its role in the global economy. Perhaps the best emergent example of this is the Korean government’s effort to promote “low carbon, green growth” as an organizing principle for the national economy, and to contribute to international engagement on these issues through various international forums.
Scott Snyder directs The Asia Foundation’s Center for U.S.-Korea Policy. Yesterday he presented on the topic of Korea’s role in the G20 at a roundtable conference in Seoul, co-organized by the Korea Institute of Finance and the Institute of International Finance. He can be reached at [email protected].
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