Policy Cooperation in the G20: The Role of Middle Powers and Proposals for the Turkish Presidency in 2015
Turkey’s G20 presidency in 2015 comes at a key moment for the global economy. International cooperation is needed to reduce economic risks and promote growth, and Turkey’s ‘middle power’ status could help it drive this process.
The G20 was more than an organizational initiative born in the 2008–09 financial crisis; it also represented a new global consensus on growth and development. Turkey’s presidency of the G20 should choose its priorities to leverage this consensus on the management of the global economy.
The priorities should include two key areas. One should be to continue the focus on infrastructure investment to boost economic growth. On this there is wide agreement among G20 members, and good progress has been made on technical issues where the G20 has shown it can deliver.
The second priority should be to push for international coordination to reduce risks to global growth from policy ‘spillovers’ and ‘spill-backs’ – the international impacts of policies and reactions by other countries. Here the G20 consensus has frayed, and these risks will increase in 2015–16.
The G20’s ability to help coordinate an orderly response as the US normalizes monetary policy will be a key test of its effectiveness, particularly given the likelihood of more volatile capital flows and currency movements. ‘Middle powers’ such as Turkey can play a major role in reasserting the early G20 mission of international cooperation and in reinvigorating the forum.
Mina Toksoz is an Emerging Markets and Country Risk consultant and an associate fellow of the Chatham House International Economics Programme.