On May 11-12, 2013 the Third Sherpas' Meeting within the framework of Russia's G20 Presidency was held in St.Petersburg. The most pressing issues of the G20 agenda, as well as the outcomes of the G20 Finance Ministers and Central Bank Governors' Meeting held recently in Washington D.C., and results of a series of the outreach-events devoted to the issues of sovereign debt management, financial inclusion and literacy and other issues of the global development agenda were discussed at the meeting.
The Russian G20 Sherpa, Chief of the Presidential Experts' Directorate Ksenia Yudaeva noted that Sherpas had discussed the situation in the global economy and its latest trends, and found it changing quite fast, which makes it too early to indicate particular measures to be discussed by the G20 Leaders during the St.Petersburg Summit.
During the Third Sherpas' Meeting there were heated debates which particular strategy - growth and demand support or fiscal consolidation - should be reflected upon as the most important one. "In the short term we should concentrate on the issue of growth, though fiscal consolidation is very important for a number of countries," Ksenia Yudaeva said. "Nevertheless in the mid term there is no contradiction between the two."
The G20 Sherpas also discussed the issues of the financial sector, such as fragmentation of the financial markets and risks of financial market bubbles. "In this sphere there are much more questions than answers," Ms. Yudaeva stated. "The more detailed research in this sphere is, in a way, the task on behalf of Sherpas to the Financial track."
The Deputy Finance Minister Sergey Storchak, who took part in the meeting, mentioned that some of the questions discussed by Sherpas would be considered during the forthcoming Finance Ministers and Central Bank Governors' Deputies Meeting in June. In particular, he indicated Sherpas' call for preparing the recommendations aimed at identifying possibilities of decreasing economic growth dependency from banking sector and achieving balance between such sources of growth as the banking sector and the financial markets.
The Deputy Finance Minister gave high evaluation of the G20 Sherpas' proposal to merge the efforts of the G20 Development Group (dealing with the issues of the international development assistance for the least developed countries) and efforts of the recently established study group on defining particular sources of long term finance. The G20 Sherpas pointed out that the aims of these two bodies are quite corresponding, and suggested their synergy should be promoted by allowing the Development Working Group utilize the findings of the study group work.
As for the preparatory process for the Joint G20 Finance and Labour Ministers' Meeting, the G20 Sherpas paid attention to the issues of labour market development and job creation. The core of the discussion pertained to the supply side of the labour market, including enhancing the qualification and education of the labour force, especially among youth, and developing institutions for youth employment support. "The search for balance between the strategy of job creation and fiscal consolidation will become one of the key topics during the Ministerial discussion," Ksenia Yudaeva explained.
"The task of conducting the Joint Finance and Labour Ministers' Meeting set by the Leaders is quite complicated," Sergey Storchak admitted. "But in this field there is no way back - the problems of employment and job creation must be solved. One of the key topics of the Russian Presidency - financing long-term investment - is closely linked to these problems, though it is not always true that investment in the real sector ensure a dramatic increase of jobs. Quite often the solution for the employment issue lies in the sphere of modernization aimed to increase the quality of jobs, though it sometimes leads to the decrease of jobs quantity. It won't be easy to find the right balance."
Likewise, during the G20 Sherpas' Meeting were actively discussed the issues of multilateral trade, which is a significant factor of economic growth. A possibility to prolong the G20 countries standstill commitment to refrain from protectionism measures, as well as to continue the protectionism measures monitoring was considered by Sherpas. Possible ways to support the WTO negotiation process and assure the success of the WTO Ministerial Conference in Bali in November this year were also discussed.
The St.Petersburg Meeting was marked by close attention paid to the recommendations of the outreach groups - the Business 20, the Civil 20 and the Labour 20 - on all the issues of the G20 agenda. For the first time in the G20 history business, labour and civil society representatives had an opportunity to discuss their proposals with Sherpas, receive feedback and therefore influence the G20 decision-making process. The Third Sherpas' Meeting became the key point for the outreach partners before the forthcoming (in June and July respectively) Summits of the Business 20 and Civil 20, and the G20 Labour Ministers' Meeting with Social Partners, where their final recommendations for the G20 Leaders will be presented.
In the sphere of employment the Labour 20 underscored the need for the G20 member-countries to implement taxation reform and measures against rising unemployment. They call to support investments in education and quality public services, support active labour market programmes; reverse the rise in income inequality. The Business 20 recommendations in this field included proposals on enhancing flexibility of the labour legislation and labour market; creating enabling environment for enterprises and entrepreneurship; supporting small and medium enterprises, as well as widespread introduction of employees' training and re-skilling programs as a measure aimed at increasing labour efficiency and involving vulnerable groups into the labour market.
In the sphere of anti-corruption the B20 recommendations included a number of practical steps in the areas of enhancing the dialogue between Business 20 and G20; combating the solicitation of bribes; introducing anti-corruption standards in companies, including SMEs; and encouraging collective initiatives in the fight against corruption. The Civil 20 in their recommendations emphasized the significance of ratification of the UN Convention against Corruption and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as well as active engagement of the civil society institutions in assessment of these Conventions implementation. Additionally, the civil society representatives highlighted the necessity to pay particular attention to such issues as curbing illegal financial transactions; ensuring transparency within extractive industries; developing whistleblower legislation; promoting and supporting anti-corruption education and training in the public and private sector, and implementing efficient measures of fighting corruption during sports events.
As far as the energy sustainability issue was concerned, the social partners' recommendations encompassed sustainable use of energy resources, increasing energy efficiency, phasing out the inefficient fossil fuel subsidies, as well as addressing the issue of climate change and marine ecosystems protection, thereby supporting the G20 efforts on promoting Global Marine Environment Protection initiative.
Addressing the development agenda the Civil 20 representatives introduced recommendations in three main areas. In the area of food security the C20 recommended deeper analyzing the causes and impacts of food price crises, supporting smallholder agriculture, ensuring the effectiveness of investment in agriculture, and promoting civil society engagement and responsible food consumption. In the area of financial inclusion and education the Civil 20 outlined such possible measures, as ensuring the dissemination of the best practices in financial services, consumer protection and financial education, protecting people with insufficient financial literacy, and improving the financial literacy of the vulnerable groups. The social partners' recommendations also touched upon the issue of the post-2015 Millennium Development Goals (MDGs), urging the G20 members to demonstrate political will to achieve the current MDGs; support the current UN-member led post-2015 process; and provide inputs to the post-2015 process in the areas of the G20-specific expertise.
The Business 20 recommendations in the sphere of investment and infrastructure focused on boosting investment in the G20 through reducing restrictions on free flow of capital; stimulating private investment in infrastructure; and encouraging application of the best practices to increase productivity of investments in infrastructure and green energy.
As for the financial architecture reform the Civil 20 emphasized the importance of restoring confidence in the financial system and limiting excessive regulations, supporting financing for investment and development. They called the G20 to address the issue of sovereign debt management, and equalize access to financing between the G20 countries. Civil society also suggested that the system for best practice dissemination in financial sphere, as well as uniform standards for project financing and implementation should be created, and voiced in favor of supporting private-public partnerships and engaging the private sector companies into the public projects.
Stressing the role of the G20 in developing financial markets regulation standards, the Civil 20 presented precise proposals on the issues of shadow banking, OTC derivatives trading, IMF quota and governance reform, as well as regulations regarding systematically important financial institutions (SIFIs) and food prices speculation. The Civil 20 insists on strengthening regulation and increasing the tax burden for the financial sector. According to the civil society recommendations, the G20 activities on eliminating global imbalances must be focused on ensuring stability while decreasing income in-equality.
"The G20 Sherpas encouraged our innovative initiative of conducting discussion with the outreach groups, and considered this exercise to be extremely useful," Ksenia Yudaeva concluded. "Many interesting and valuable ideas were presented. Many of them need review and improvement in order to be reflected and implemented by the G20, but this is a good material for developing the final versions of the social partners' recommendations for the G20."