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Analysis

A Summit of Significant Success:
G20 Los Cabos Leaders Deliver the Desired Double Dividend

John Kirton and Julia Kulik, G20 Research Group
June 19, 2012 14:00 MDT

The seventh G20 summit, held in Los Cabos, Mexico, on June 18-19, 2012, has been a summit of significant success. It has delivered the globally demanded and urgently desired double dividend, by both controlling an escalating Eurocrisis and advancing a priority and built-in agenda that it broadened in important ways.

To control the Eurocrisis it promised to support Greece's path to reform and sustainability and, through its euro area members, to take swift, specific short-term moves to supranational European-wide banking regulation and deposit insurance, and "all necessary policy measures to safeguard the integrity and stability of the area." To generate global growth and jobs, it set a credible strategy that emphasized stimulus now and fiscal consolidation soon, and to this end mandated more discretionary and automatic fiscal stimulus, monetary policy and a broad array of structural reforms. In support of these two critical, central advances, it strengthened employment and social protection, trade and investment, the international financial architecture, financial regulation and inclusion, food security and commodity price volatility, development, green growth, corruption and G20 governance and accountability, while addressing gender issues and the proliferation of weapons of mass destruction for the first time.

This double dividend, embedded in at least 95 clear commitments in the core 14-page communiqué, was driven above all by the sequence of severe and spreading shocks erupting in Europe, led by Spanish bond yields escalating well before G20 leaders met to turn the tide. Support came from the key international institutions, notably the International Monetary Fund (IMF) in helping raise $456 billion in new resources, the G8's Camp David Summit in pioneering a fiscally responsible global strategy for growth and jobs, the G7 finance ministers June 17 accommodating statement in response to the pro-European, pro-austerity results of the elections in Greece, and the BRICS summit on June 18 that supported Europe, new IMF resources and the G20 itself. G20 leaders recognized that they had the predominant share of the world's economy and responsibility, even if accelerating growth in North America and slowing growth in Europe and the BRICS exacerbated inequalities within the G20. G20 members' growing convergence on political openness, led by transitions in political leadership in Russia and China, strengthened the solidarity of the group. Among the many new leaders, looming elections and political transitions, there was a strong core of committed G20 summit founders and veterans, led by Mexican president and host Felipe Calderon, who were able and willing to lead. This personal bond was reinforced by an intense summit interaction within and overlapping the G20 that had made the G20, as an institution and its leaders as individuals, the embryonic club at the hub of a dense, expansive network of global governance as a whole.

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