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Interview with Paul Martin: Co-Founder of the G20

Paul martin
On the eve of the Chinese G20 summit in Hangzhou, Dawn Nakagawa sat down with Paul Martin – the former Prime Minister of Canada and co-founder of the G20 – to discuss the summit’s purpose, accomplishments and future prospects. 
 
Dawn Nakagawa:      The lore is that the first draft of the G20 plan was written on a cocktail napkin over drinks between you and Larry Summers. Is that true? 
 
Paul Martin:         Well actually, it was a blank piece of paper and it was the two of us after a G7 meeting in Washington, although your story would make a better movie.  
 
Dawn Nakagawa:      What was the motivation to create it?
 
Paul Martin:      The G20 was created in the wake of financial crises of the late 90s. I had first suggested the concept during the earlier Mexican peso crisis but it didn’t take root until two years later during the Asian currency crisis. Larry [Summers] was the Secretary of the Treasury and it was his support at the meeting between the two of us that gave it the life it needed. What happened was, during the Asian crisis the G7 lectured the countries involved about what had to be done. Their response was that they were not interested unless they had a seat at the table and a voice in the process. This had been my position from the beginning. When Larry agreed that we needed a more inclusive process that was more reflective of how the world was changing the G20 was the obvious answer. 

My view from the very beginning was two-fold: first, that the G20 mission is to make globalization work for everyone, not just the G20 countries. Second, that its mission goes far beyond the purview of the economy. 
 
Dawn Nakagawa:      When we spoke a couple of years ago, I came away with the impression that in your view the G20 was primarily a crisis management mechanism for the global financial system, but in a recent speech you describe a much broader mandate. Has your view of its role changed?
 
Paul Martin:        My view from the very beginning was two-fold: first, that the G20 mission is to make globalization work for everyone, not just the G20 countries. Second, that its mission goes far beyond the purview of the economy. 
 
Dawn Nakagawa:       What have been its most important accomplishments so far? 
 
Paul Martin:         I believe the 2009 London Summit under Gordon Brown which prevented trade protectionism from taking hold and would have led to a global depression was a major success.   
 
The creation of the Financial Stability Board (FSB) during the same crisis was another. The FSB was created out of the ashes of the Financial Stability Forum which was little more than a talk shop, whereas the FSB was able to move the yardsticks when necessary. What has to happen now is for the FSB to be given treaty status and the capacity not simply to react, but to also prevent future banking crises which, as we have all learned, have unparalleled negative economic consequences. 
 
Dawn Nakagawa:         Every year the agenda has a different focus reflecting the concerns of the host country and often goes far beyond economic and financial issues. Are you concerned about mission creep?
  
Paul Martin:           You can’t make a rigid distinction between economic and social crises. For instance, on the one hand climate change is a social issue, but with huge economic implications, and on the other the 2008 banking crisis was an economic failure  but with massive social consequences. For this reason one of the G20's most important responsibilities must be to support the great multilateral institutions that have universal membership, whether their role be economic, such as the International Monetary Fund or the World Trade Organization, or social, such as the UN Commissioner for Refugees or the World Health Organization. 

Are we better off because the G20 exists? The answer is unequivocally yes. But is it succeeding in its role? Not as much as I would have hoped! 
 
Dawn Nakagawa:        Is the G20 living up to the mission you envisioned for it? 
 
Paul Martin:         Are we better off because the G20 exists? The answer is unequivocally yes. But is it succeeding in its role? Not as much as I would have hoped! Failing to adequately support the great multilateral institutions like the World Health Organization (as was witnessed during the Ebola crisis) or the UN High Commissioner for Refugees today is simply unacceptable. In my opinion, the need to support these organizations is what gives the G20 its legitimacy.  
 
Dawn Nakagawa:         Do you believe a permanent secretariat would improve the G20? 
 
Paul Martin:          If it limits its activities to logistics and continuity, a secretariat would be helpful, but not if it seeks to do more than that. The G20 must not create a secretariat that would infringe on the roles and responsibilities of the multilateral institutions – as an ambitious secretariat might tend to do. What would truly improve the success of the G20 summits is to return to less formal meetings during which leaders can talk more frankly and exchange ideas. Today’s summits are much too large and bureaucratic and too often there is little give and take between the leaders.                                     
 
Dawn Nakagawa:         What do you hope to see the Chinese G20 accomplish? 
 
Paul Martin:          The Chinese Summit will be very important as will the German Summit that will follow. It’s clear that the need for global economic growth is presently of paramount importance. The major problem our economies face – as witnessed by China and Germany – is the aging of our populations. Monetary policy alone cannot address this; fiscal measures have a crucial role to play as well. Education, discovery or basic research, and infrastructure investment provide the way ahead and historically low interest rates make this an opportune moment to act.  
 
I would hope as well that the Chinese Summit will expand the climate change debate to include the fate of the global ocean which is being ignored at our peril. We talk a lot about the Green Economy but we must also focus on the Blue Economy. The need for environmental protection here is manifest but so is the economic opportunity in everything from food security and pharmaceutical R & D to tourism.   

Paul Martin is the former Prime Minister of Canada and is a member of the Berggruen Institute's 21st Century Council. Dawn Nakagawa is the Executive Vice President of the Berggruen Institute.