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G20: Wedged between Syria and finance reforms

The G20 summit in St Petersburg this week is overshadowed by tensions between Russia and the US over Syria. The summit is supposed to be addressing economic issues.

Russian President Vladimir Putin has spared neither trouble nor expense to be a perfect host for the G20 summit of leading industrial and emerging countries on Thursday (05.09.2013). The Constantine Palace on the shores of the Gulf of Finland is easily shielded from demonstrators. Hundreds of journalists will be shipped in across the water from nearby St Petersburg. The idea is that they should report on a harmonious summit that will help provide the world with more jobs and greater prosperity.

Between hope and reality

That, at least, is what Putin is hoping for. However, the current international situation suggests that the seventh meeting of the G20 nations will be anything but harmonious. The conflict in Syria may not be on the summit agenda, but it is sure to be the main topic of discussion. The EU said on Friday it did not plan to add Syria to the agenda, but Putin himself has now said he thinks it would be a good idea to discuss it. There is no indication as yet whether Putin and US President Obama will meet in private. Relations between the two are very strained; not only because of their opposing positions on Syria, but also because of Russia's decision to grant asylum to the American whistleblower, Edward Snowden.

Focus on economic issues

In spite of everything else that's going on, the G20 - which is not intended to be a forum for foreign policy issues - will primarily be addressing economic issues. On the one hand, it will be taking stock of the current situation on the financial markets and assessing the progress of reforms. It was the collapse of the American bank Lehman Brothers five years ago that brought the group together.

In a video over the weekend, German Chancellor Angela Merkel reaffirmed that the meeting in St Petersburg would focus primarily on finance and the economy, but that development was also an issue. The G20 summit in South Korea three years ago had, she said, ensured "that we do not overlook the fact that there are poorer countries that may not be permanently represented in the G20 process, but that the world economy can only function well when we also promote development in the world's poorest countries." Issues of foreign policy would, however, also be discussed on the sidelines, the Chancellor said - and Syria would certainly be among them.

Stability on the financial markets

The heads of state and government can be reasonably satisfied with the reform of the financial markets, first introduced at the London summit in 2009. Martin Faust of the Frankfurt School of Finance and Management says that quite a lot has been achieved. "Banks now have a much better capital cushion," Faust told DW. However, he added that some banks were too big, and that this was still a problem. If such a bank got into difficulty, the state - that is, the taxpayers - would still have to prop it up. "They weren't systematic enough in dealing with this issue. We keep hearing the phrase 'too big to fail.' The big international banks should have been downsized accordingly."

Dangers remain

Sven Giegold, a critic of globalization and a member of the European Parliament for the Greens, also believes that the regulation of the financial markets is on the right track, but the danger is far from over. It's true, he says, that the banks now have more equity, the mysterious world of derivatives is slowly becoming more transparent, and hedge funds are at least subject to supervision. "But the dangers of another crisis are far from over, because the excess debt is still just as high," Giegold told DW. "We're still sitting on the same debt bubble, and that can keep resulting in negative developments in various different areas."

National debt not the main issue

At the 2010 meeting in Toronto the G20 undertook to reduce national debts. There has been little change on that front - except in Germany. However, Berlin is repeatedly called upon to justify its excessive austerity policies.

National debt is very low on the agenda in St. Petersburg. The current economic upheavals in emerging countries, like India and Brazil, are more likely to be the topics of discussion. There will also be a vote on a G20 initiative to curb tax evasion by multinational companies. The group also wants to rein in the so-called shadow banking sector, which is worth trillions of dollars.

The G20, then, has a lot of matters to attend to. The delegates will be able to work undisturbed - Vladimir Putin has made sure of that. The right to demonstrate has in any case been drastically reduced in Russia, and security measures are extreme. St. Petersburg's international airport has even been closed: From Wednesday to Friday there will be no regular flights in or out.

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