THE GROUP OF TWENTY : A H ISTORY The study of the G-20’s History is revealing. A new institution established less than 10 years ago has emerged as a central player in the global financial architecture and an effective contributor to global economic and financial stability. While some operational challenges persist, as is typical of any new institution, the lessons from the study of the contribution of the G-20 to global economic and financial stability are important. Because of the work of the G-20 we are already witnessing evidence of the benefits of shifting to a new model of multilateral engagement. Excerpt from the closing address of President Mbeki of South Africa to G-20 Finance Ministers and Central Bank Governors, 18 November 2007, Kleinmond, Western Cape. 2 Table of Contents Excerpt from a Speech by President Mbeki....................................................................2 Executive Summary...........................................................................................................5 The Group of Twenty: a History ......................................................................................7 Preface............................................................................................................................7 Background....................................................................................................................8 The G-22 .............................................................................................................12 The G-33 .............................................................................................................15 The Formation of the G-20 and Its Structure...............................................................17 Mandate of the G-X.............................................................................................18 Reform of the Interim Committee ........................................................................19 G-20 Links to the Bretton Woods Institutions .....................................................19 G-20 Membership ...............................................................................................20 Chair of the G-20 and the Establishment of the Troika ......................................22 Processes .............................................................................................................24 Response to the Establishment of the G-20 .........................................................25 G-20 Objectives, Work Programme and Evolution.....................................................27 Members’ Assessment of Objectives and Work Programme ..............................39 Relationship of the G-20 to Other International Institutions and Groups....................42 The G-7 and the G-20 .........................................................................................45 Operational Effectiveness of the G-20.........................................................................46 Institutional Effectiveness of the G-20 ........................................................................48 Looking Forward .........................................................................................................53 References....................................................................................................................55 Annex A: Study Group Participants..............................................................................58 Annex B: Officials Prominent in the Establishment of the G-20 who were Interviewed for this Report...........................................................................59 Annex C: Summaries of Past Chairs, Communiqués and Background Documents .60 Chair Summary, 1999 (Canada) ..................................................................................60 Communiqué, 1999......................................................................................................63 Background Documents, 1999.....................................................................................64 Chair Summary, 2000 (Canada) ..................................................................................65 Communiqué, 2000......................................................................................................68 3 Background Documents, 2000.....................................................................................70 Chair Summary, 2001 (Canada) ..................................................................................71 Communiqué, 2001......................................................................................................74 Background Documents, 2001.....................................................................................75 Chair Summary, 2002 (India) ......................................................................................76 Communiqué, 2002......................................................................................................82 Background Documents, 2002.....................................................................................84 Chair Summary, 2003 (Mexico) ..................................................................................85 Communiqué, 2003......................................................................................................89 Background Documents, 2003.....................................................................................91 Chair Summary, 2004 (Germany)................................................................................92 Communiqué, 2004......................................................................................................96 Background Documents, 2004.....................................................................................99 Chair Summary, 2005 (China)...................................................................................100 Communiqué, 2005....................................................................................................103 Background Documents, 2005...................................................................................105 Chair Summary, 2006 (Australia)..............................................................................106 Communiqué, 2006....................................................................................................113 Background Documents, 2006...................................................................................117 Chair Summary, 2007 (South Africa)........................................................................118 Communiqué, 2007....................................................................................................121 Background Documents, 2007...................................................................................126 Annex D: Charts ............................................................................................................127 Nominal GDP.............................................................................................................127 Purchasing Power Parity (PPP) GDP.........................................................................127 Trade as a Percentage of Nominal Global GDP ........................................................128 Foreign Reserves........................................................................................................128 Global Financial Integration ......................................................................................129 Annex E: Groups for G-20 Chair Rotation .................................................................130 4 The Group of Twenty: A History Executive Summary In September 1999, the finance ministers and central bank governors of the Group of Seven countries (the G-7) announced their intention to “broaden the dialogue on key economic and financial policy issues among systemically significant economies and promote co-operation to achieve stable and sustainable world economic growth that benefits all.” This announcement marked the official birth of what subsequently became known as the Group of Twenty countries (the G-20). This new international group was launched primarily to address challenges to international financial stability posed by the widening crisis in emerging economies that had begun in Asia in 1997. Although ad hoc groups had been initially struck in an effort to deal with these issues, it became increasingly apparent that a permanent forum for informal dialogue between advanced and emerging economies was required. The G-20, whose membership consists of systemically important advanced and emerging economies, representing all regions of the globe, the European Union, and the Bretton Woods institutions, filled an important gap in the governance structure of the international economic and financial system. The establishment of the G-20 recognised the considerable changes in the international economic landscape over the previous decades. The growing importance of emerging economies, along with the increasing integration of the global economy and financial markets, underscored the importance of broadening the scope of international economic and financial co-operation. The G-20’s mandate was to help shape the international agenda, to discuss economic and financial issues in areas where consensus had not yet been achieved, and to “lead by example.” In particular, the Group was seen as an important forum for the discussion of ways to prevent and resolve international