G7 Summit:Delegates Follow The Rule Book

G7 Summit: Delegates Follow The Rule Book


Finance ministers, central bankers and VIPs rarely throw
out the rule book at meetings like the G7 summit, writes Sky's Ed Conway.


4:38pm UK,
Saturday 11 May 2013

George Osborne (r) speaks to US Treasury Secretary Jack
Lew at the summit

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Ed Conway

Economics Editor

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Here's how international finance ministers' meetings like the G7
usually work: the ministers, central bankers and a few other VIPs like the head
of the International Monetary Fund get together in a room. Usually one without
windows.

They each read out a prepared opening statement, each of which can last 10 or
20 minutes. That takes up so much of the meeting that they have only a short
time left to, well, debate and negotiate.

The so-called Sherpas - senior officials who sit in the meetings representing
each country - have usually pre-written a communique to be issued at the end of
it all, and because there's so little time for genuine debate, the content often
remains unchanged.

That, of course, makes it almost impossible to achieve genuinely
ground-breaking international agreements on the economy.

For instance, before the financial crisis it was clear to all finance
ministers that there were deep problems with the structure of the global economy
which needed to be addressed. And yet summit after summit went by, all of them
failing to deal with these imbalances.

It's only very rarely - in times of crisis, generally speaking - that the
rule book I've spelt out above gets thrown away.

That's what happened back in autumn 2008: as the world stood on the brink of
financial disaster, ministers (meeting this time at the IMF) threw away the
pre-written communiqué, dispensed with the pre-written statements and got down
to business.

They had a stern discussion about the risks the world economy was facing and
came up with a short, to-the-point statement committing to nationalise their
banks as need be. At the time, it was revolutionary.

And it was this spirit of 2008 that the Chancellor and Bank of England
Governor were trying to summon up here at the G7 meeting in Hartwell House in
Buckinghamshire this weekend - only without the immediate crisis.

They made the conscious decision of doing away with the communiqué and the
long opening statements, and, said Sir Mervyn King: "I can't recall another G7
where the atmosphere was so productive - there was a genuine exchange of views,
and people really engaged. As a result we made real progress in taking forward
the arguments."

The arguments in question mainly focused around three areas: currency policy,
bank resolution (in other words what to do when a bank collapses) and tax
avoidance / evasion.

It is on the latter of these that perhaps the most progress was made. The
Japanese and Germans had hitherto been quite resistant to a new scheme
championed by the UK which automatically shares information on tax and
individuals' and companies' accounting data between countries, but according to
officials they displayed more willingness to sign up to such a scheme.

But cheering as it is that ministers have made some progress behind closed
doors on tax, there are other deep-seated issues that remain. Central banks
around the world have pumped an unprecedented amount of cash into the world's
financial veins; they have conducted fiscal easing on a significant scale.

And yet, despite five years of extraordinary measures, there are still large
parts of the world which remain trapped in stagnation: the UK among them. More
worryingly, no-one really knows why this is, or indeed what to do to rectify
this.

If it weren't so tragic, you'd call it a conundrum. And it will take more
than a 24-hour G7 meeting to sort it out - communiqué or no communiqué.

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