THE BLOG

The G20 at a Crossroads

18/11/2014 09:36 GMT | Updated 17/01/2015 10:59 GMT

While headlines from this weekend's G20 summit in Brisbane focus on Putin and climate change, other discussions show that the G20 might be in crisis.

The G20 offers a negotiating space between two blocs - G7 rich countries bloc and the bloc of emerging economies like Brazil, India and China.

After decades of failure, there is little or no hope that the G7 rich countries will take action to end poverty and reduce inequality. But there is such hope in emerging economies. Some of them, like my native Brazil, have made substantial progress in fighting poverty and inequality, though strong social policies, universal access to services, increased employment, higher wages and cash transfers. As the G20 is now a key player -more significant than the G7 - these successes should inform the G20's re-shaping of the international arena to make it more effective in tackling poverty and changing the institutions that maintain injustice.

Some initiatives in emerging economies are headed in the right direction, as seen in bilateral cooperation between Brazil and Mozambique to support smallholder farmers and improve food security. But at other times, the same countries replicate past inequalities with investments in biofuels and large scale commercial farming that threaten the rights of smallholder farmers.

The public relations strategy is to label these initiatives as "win/win deals", but some countries tend to win bigger and more often than others. It is critical that emerging countries overcome such contradictions and ensure that eradicating poverty and inequality become a priority at the G20.

If the G20 can serve as a venue for negotiation between the two blocs, it might serve a constructive purpose. But is that what the G20 is doing?

On key issues like financial regulation, the G20 seems to be just talking. Some of the talk is good, but the global financial system is not yet fundamentally different from the one that seven years ago nearly led to global financial collapse.

There has been movement on international tax reform, especially the problem of transparency. But a key issue for poor countries has been left off the table. Big companies tend to have operations in many countries. If a US company does business in Sierra Leone, should the company pay tax in the "residence" country (the US) or in the "source" country (Sierra Leone) or in both? The G20 outcome document has stronger language on this issue than before; but there's still little assurance that African countries will be able to collect a fair share of tax.

For poor countries in Africa and around the world, the silence is deafening. Poor countries have been denied the opportunity to invest in necessary and sometimes life-saving basic social services - health care, education, and job-creating development policies. The legacies of colonialism and the failed International Monetary Fund (IMF) structural adjustment policies of the 1980s and 1990s can be seen in the pitiable amounts in the treasuries of many developing countries. Tax dodging limits the possibility of public investment even further.

When we look at what these emerging economies say in other forums - the BRICS group of Brazil, Russia, India, China and South Africa for example - one gets the impression that their minds are elsewhere. They put a lot of emphasis on increasing voting share in the IMF and the World Bank, on obtaining seats at the UN Security Council, and on pushing forward multilateral trade agreements.

Critics might say that they seem more concerned with ensuring their own seats at the tables of power than in strengthening the hand of the powerless.

The global financial system failed in large part because it only served rich countries - and within rich countries, it served rich people more than everyone else. In order to build a better system, we need to make the interests of those who have been excluded from our top priority. If large developing and emerging countries are to play a constructive role in this process, they must stand in solidarity with poor countries and with the poor in their own countries. To do otherwise is to condemn ourselves to a never-ending cycle of boom and bust - with the poorest continuing to suffer most.