Enrique Berruga Filloy, a former ambassador who heads COMEXI, told Today's Zaman in an interview on Tuesday that the G-20 was struck by a governance crisis and is in desperate need of soul-searching. “It has become many things at the same time; we do not know the G-20's role in international governance. It has become a distorted enterprise that nobody knows what it is,” he said.
“If this keeps going on, people will lose interest in the G-20. Nothing is happening. It will be a lost opportunity because these are a very important group of countries,” he said, noting that the G-20 members represent 80 percent of world trade. Filloy emphasized that the G-20 should be able to deliver results inwards, meaning that they will be able to tackle most pressing issues among themselves, including but not limited to financial market stability, open trade, growth and the reform of the International Monetary Fund (IMF) and the World Bank.
Filloy believes the G-20 lacks leadership and that the group of G-20 countries is more fractured than ever. Stressing that the world is in an emergency situation, he criticized the G-20 for not delivering results. “The lack of capacity to deliver tangible results greatly worries me. They are just checking one another in this group and pursuing their own national interests,” he said. Filloy describes the G-20 summits as a forum where leaders announce points on which they agree. “But they do not do anything about it. They do not implement any strategies,” he stated.
He recalls the US leadership role under Bill Clinton, when Mexico was confronted with a huge economic crisis in 1994. “Despite the risks to the US economy, Clinton managed to get $50 billion to stimulate the Mexican economy. Not only did that help the Mexican economy recover but it proved to be a very profitable deal for the US Treasury,” he explained, adding that the world lacks similar leadership today. “They [the Europeans] tried to solve the Greek debt crisis with 150 billion euros, but they acted very late.”
He also blames the German government for continuing to pump money into Greece even though the Germans knew very well that Greece could not pay it back before the crisis erupted. “Maybe that is what the G-20 should do: Draw the red lines [on how much money a country can borrow]. Because your problems become my problems if they are not resolved right away,” he said, lamenting that such a discussion is not taking place within the G-20 forum. “It is a political discussion, of course,” he added.
Filloy does not see a problem with the fact that every G-20 member tries to bring its own issues to the table at the G-20 meetings. “When the meeting takes place in Seoul, technology may become a very important issue. When it happens in Mexico, the environment may be more important. I'm sure Turkey will bring its own flavor when it hosts the summit in 2015," he stated, adding that most important is setting up a mechanism to deliver results. “Then you can have any discussion you like.”
Commenting on the IMF's announcement last month that it has secured commitments of over $430 billion in funding to help the IMF safeguard economies from the debt crisis in Europe, Filloy questioned how this money will be used. “[IMF Managing Director Christine] Lagarde says these funds will be used responsibly. Can she help out Greece? Than do it,” he said, noting that the world financial situation is in shambles and countries must act quickly to solve this problem. “The issue we should concentrate on most at the G-20 summit is the arrangement of financial markets,” he said. The IMF will announce the exact sums of money at a G-20 leaders' summit in Los Cabos next month.
The COMEXI leader also said he is worried about the increasing trend of protectionism in the world. Noting that Mexico's competitiveness is a success story because of its open trade policy, he said the protectionist inclination in some members of the G-20 is a threat to the world economy. He was referring to Brazil and Argentina, both G-20 members in Latin America. Brazil pressured Mexico into limiting car imports while Argentina introduced arbitrary customs controls. Some analysts worry that the pattern may disrupt the supply chain. As 75 percent of Mexico's manufacturing industry relies on the import of intermediate or semi-finished products, it may lose a lot because it will impact its exports in return. IMF data show Chile and Mexico are the most trade-dependent countries in Latin America.
“Breaking agreements and rules is something that is quite worrying. For example, China says we can't do anything about property rights. We have a nasty relationship with Brazil regarding the auto industry. In effect, they say if I do not win all the time, I do not want to play the game,” said Filloy, stressing that trade expansion is very important for Mexico.