An interconnected world now faces the reality that the postwar “G” model, long a bastion for Western states, no longer reflects global realities. Strategic positioning has fundamentally changed and so-called ‘variable geometry’ is here to stay.  The pressing challenge is to find forms of governance that respect the new
pluralism.  Europe’s influence stands to fade unless it learns to wear one face.


From the September 11 terrorist attacks through the near-failure of the December Copenhagen climate summit, the first decade of the new century has so far demonstrated a shortfall in global governance. The need for rules and institutions capable of enforcing them is evident in critical fields such as security, international finance and trade.
The final documents of recent major summits, while brimming with good intentions, have fallen short in this regard. Some set goals in the near future (2020), others in the mid-term (2050).
But as Renato Ruggiero writes in an accompanying piece, the short-term has already shown a marked failure at the core of “world government.” The world’s existing international institutions are struggling to deal with changes in the global political balance.
Institutions born after World War II and that once looked to the United Nations to establish their center of gravity — at least in terms of keynote decisions — have since been supplanted by new associations and alliances.
The central feature of the new governance has been the systematic introduction of “variable geometry,” including the various “Gs” (G8, G20 and others). These international forums are adapting visibly to the evolution in the global political balance and to international problems.
At the same time, it’s also becoming increasingly clear that summit diplomacy, now lacking in institutional depth, is falling short of its goals. Global financial reform, where the need for innovation is urgent, has become a venue for advanced solutions. The economic crisis and its response demonstrates the need pull out the stops in an effort to create new and effective instruments of multilateral intervention.

Putting order into the “Gs”
The G8 (then numbering six nations) was born in 1975 in Rambouillet, France, with the intention putting the leadership of the world’s major powers in the same room to encourage conversation and debate over major issues. Over time, its annual G8 sessions became increasingly important and the meetings of heads of state were invariably preceded by a plethora of ministerial-level encounters covering a variety of sectors.
These meetings contained high hopes and as a result usually attracted a response from “no-global” protestors. But the markedly Western composition of the parties (minus Japan, though some consider Tokyo more West than East) began causing growing discontent.
A major correction occurred at the 2007 summit in Germany, where “variable geometry” made its first important appearance with the launch of the “Heiligendamm process” through which the G8 tended a hand to the G5 composed of Brazil, China, India, Mexico and South Africa. The Paris-based OECD was charged with creating a platform for the dialogue. In June 2009, at the G8 meeting in L’Aquila, Italy, the results of the ongoing conversation were discussed (the G8/G5 issued its first-ever joint declaration) and the Heiligendamm Aquila Process (HAP) was launched. Over the next two years, the HAP discussions are expected to yield concrete results on a wide range of issues as well as producing an institutional spillover effect that, at least in theory, could see words transformed into deeds at the G8 summit scheduled for France in 2011.
But will there really be a G8 in 2011? During the L’Aquila meetings, even the future of these meetings be came an ingredient in the overall debate. The G20, created in 1999 to ensure contact between finance ministers and the central bankers of major industrialized and emerging countries, has gained clout. Its consensus is fall less Western, all the more so since the global economic crisis, which by its international nature made the G20 more potent than ever, all but creating a parallel path.
Technical meetings bolstered by meetings between heads of state and government, which culminated in the Pittsburgh Summit, held on Sept. 24-25.
Why Pittsburgh, when G20 chair belonged to Great Britain? For a number of reasons: To help out leaders who here also attending meeting being held at the UN General Assembly; to send a positive message from a city that has regained a bit of momentum after a period severe deindustrialization; but also to satisfy U.S. President Barack Obama, who is determined to be a key player in process.
“Variable geometry” made its presence felt even in Pittsburgh.
In addition to the European Union, the German Central Bank and the original 19 nations (Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, Korea South, Turkey, United Kingdom, and United States), Spain and Holland were also present, as were Singapore, Thailand and Ethiopia as representatives of the three regional organizations, APEC, ASEAN and NEPAD.
After the Pittsburgh meetings, finance ministers and bankers gathered in St. Andrews, Scotland on November 7 for their regularly scheduled meeting. This slew of meetings, including the G20 and G8 encounters, badly overcrowded the international agenda, which should be a bit more settled in 2010. How so? For starters, by redefining the role of the G8, which non-member states have begun looking at with no small measure suspicion, considering it a kind of elite G20. That, at least, would be the impression looking at the calendar. The next G8 meeting, set for Canada, will be held immediately before the G20 meeting, also in Canada.
t the same time, most major industrialized nations don’t consider the G20 ready to take on more general political issues because its leadership represents markedly different rule systems and varying degrees of adherence to democratic principles and philosophies. The G8 is safe, at least for now. But it will be stripped of many ministerial-level meetings in an effort to return to its “in the same room,” campfire spirit. Lofty declarations will be put aside in favor of demonstrations of unity of purpose.
But as “variable geometry” redefines the size and shape of participation and increases its broad-based political weight, the “G192” is bound to suffer: These are the member states of the United Nations.
Countries excluded from top-level summits issue their objections in various forms. But it’s no coincidence that UN reform continues dragging on without any clear results.
On the other hand the UN is not just the sum of the General Assembly but also a membrane composes of dozens of programs and agencies. All the good intentions xpressed by the many “Gs” will still need to pass through them when it comes to the implementation phase.

Global financial reform
The recent economic crisis has focused the greatest amount of critical effort — with the highest expectation of success — on the creation of a new  set of ground rules for the managing of global finance. At the hub of this activity is the Financial Stability Board (FSB), created in 1999 as the Financial Stability Forum and upgraded by the London G20. Its recent transformation would seem to place it at the core of a new world financial  authority, a sort of advanced Bretton Woods whose presence takes effect over time. The FSB, currently chaired by the Bank of Italy Governor Mario Draghi, regularly meets with government representatives, the heads of central banks and the supervisors of national financial institutions and markets. It also meets with the leaders of international financial institutions, international regulatory authorities and the supervisory agencies of central banks in an effort to promote international financial stability and improve the functioning of markets and limit systemic risk through information exchanges and international cooperation.
Speaking on Dec. 9, Draghi took stock of the challenges facing the financial world and its regulators in an era when the OECD nation public debt exceeded 100 percent of GDP, automatically increasing the risk of systemic crises. In Pittsburgh, G20 leaders asked the FSB to prepare new proposals by October 2010. Draghi responded by saying there was no “silver bullet” or “one-size-fits-all” solution, but that the FSB was working in three directions: first, to “reduce the probability and impact of the failure” of any
major institution; second to establishing “credible resolution frameworks” to preserve the continuity of the system even in case of crisis (including the imposing of losses on “shareholders and unsecured creditors); third, to strengthen the “core financial infrastructure and markets to reduce contagion risk.”
The FSB is also examining the possibility of imposing stringent measures on tax havens and exercising “peer review” among its full membership, both country-bycountry and by topic.
But are G20 countries really willing to accept the idea of people poking their noses into their domestic affairs?
There’s room for doubt. The St. Andrews meetings produced the watered-down formula of “mutual assessment,” namely pledges that emphasize the importance of mutual trust. These in turn are tantamount to the kind of “selfimposed” goals and limitations China mentioned repeatedly in Copenhagen while at the same time balking on external regulation of environment-harming emissions.


Seeking appropriate institutions
Insiders fear that once the global crisis has passed it will be business as usual, as if nothing happened.
Even if the FSB is successful and effective, skeptics warn, it will eventually have to hand crisis-management back to the same international organizations responsible for a slew of failures, namely the International Monetary Fund (IMF) and the World Bank. “After having tried all manners of informal, pragmatic cooperative arrangements, in an endless string of Gs,” Fabrizio Saccomanni, the general manager of the Bank of Italy said recently, “the international community seems to have gone back fullcircle to the long neglected safe haven of the IMF. This is not surprising: informal groupings can not deal with financial emergencies unless they have an institutional arm with adequate instruments and resources.”
This is a major turning point. Just over two ago, Italy’s then-Economics Minister Tommaso Padoa Schioppa was assigned to head an international committee which had the thankless task of collecting ideas intended to give new life to the IMF, whose policies had been discredited and whose very existence was questionable give the abundance of private capital in the global market. Now, the IMF is returning to center stage, where it was in the early years of the new global financial order launched at Bretton Woods.
But both the IMF and the World Bank are still viewed suspiciously by nations wary of its perceived pro-Western tendencies. Share redistribution took place in 2008, but was marginal. Comprehensive reform remains a pressing need. When it takes place, IMF reform should necessarily overlap onto the World Bank, strengthening the Bank’s role in major public investment, which is considered necessary particularly in light of climate change. Everything I’ve said so far suggests the world is in a period of transition. The new political balance is finding it hard to carve out an international niche, a forum to call its own. At the same time, all sides are rediscovering that national functionality depends on multilateral institutions operating properly. These complications are clear even in the matter if international trade. G20 countries say they want to finish up the Doha negotiations by the end of 2010, but few experts see that as a feasible goal. In the United States, Barack Obama, who has been focusing his attention on domestic health care reform, faces domestic “midtermelections,” whose outcome may affect his legislative power.
 That makes the prospect of a new approach to reining in protectionism difficult to contemplate, to say the least. At best, a “stand-still,” or freeze, on new protectionist measures, seems the likely 2010 status quo.
Pascal Lamy, who heads the World Trade Organization, fears is that while Doha discussions continue, so will “low-intensity protectionism,” based on bilateral and regional agreements that essentially negate the multilateral spirit of dismantling barriers that gave birth to the WTO.
If nothing else, there is an international trade body charged with making political inroads. As far as the environment goes, there’s no such body or agency. The Copenhagen summit produced meager results that will have to be confirmed at the next climate meeting set for Mexico City later this year. Strange as it may seem, the entire multilateral enterprise dedicated to climate change is upheld by an institution that doesn’t really exist, the United Nations Framework Convention on Climate Change (UNFCCC). It’s a “framework,” not even a body unto itself, and has a small secretariat. Discussions toward turning it into a functional UN agency, a sort of World Climate Organization (the French would like to see it based in Paris) haven’t progressed far. Even on the subject of climate, consensus is a long way off. The old slogan, “too many Europeans,” once again interferes with the goals of variable geometry. This in turn has provoked mistrust toward OECD, based — where else — in Paris.
If Europe can learn a lesson from the events of the day, it’s this: Division is increasingly the face of pe ril. Europe’s many national viewpoints, accepted in the various “Gs” for historical reasons, are at risk of becoming subversive, a weakness. In truth, European divisions are old news in a world where institutional reform is a pre-eminent reality that’s likely to change the nature of the IMF and World Bank. Europe’s many sides, with strategic positions that often cancel one another out, is an invitation to vulnerability when it comes to global governance. New European structures brought to life as a result of the Treaty of Lisbon should also serve to ensure a more coordinated and effective European position. The next step is finding out if the political will exists to allow one position to flourish.