G20 sum­mit should aim for progress on ma­jor is­sues

Pakistan Observer - - INTERNATIONAL -

OUR CORRESPONDENT BEI­JING—The Group of Twenty (G20) Sum­mit in Brus­sels should push for­ward change on in­come in­equal­ity, fi­nan­cial sta­bil­ity, cli­mate change and migration, said an ex­pert on global eco­nom­ics. The sum­mit should fo­cus on a num­ber of is­sues which re­ally need in­ter­na­tional co­op­er­a­tion, said Gun­tram Wolff, di­rec­tor of Brus­sels-based think tank Bruegel told me­dia in a re­cent in­ter­view.

One topic to pur­sue is the global rise of in­come in­equal­ity, said Wolff, a former eco­nom­ics and fi­nan­cial ex­pert with the Euro­pean Com­mis­sion. “There is a global prob­lem that global in­come goes more and more to cap­i­tal in­come and less and less to la­bor in­come, so that the la­bor in­come share glob­ally is fall­ing,” said Wolff.

Gov­ern­ments must tax cap­i­tal and pre­vent it from il­le­gally reach­ing tax havens, he added. Though tax­ing cap­i­tal in­come is ex­tremely dif­fi­cult, he be­lieves the G20 coun­tries could lead on this is­sue by step­ping up co­op­er­a­tion. The se­cond topic the sum­mit should fo­cus on is sta­bi­liz­ing the fi­nan­cial sys­tem or even re­struc­tur­ing it, ac­cord­ing to Wolff.

The fi­nan­cial sys­tem has a very large and wellde­vel­oped bank­ing sys­tem but too small cap­i­tal mar­ket­based fi­nan­cial in­ter-me­di­a­tion such as eq­uity or bond mar­kets, which are less de­vel­oped and less well-su­per­vised, he said. “This will end up be­ing a prob­lem be­cause when the bank­ing sys­tem hits trou­ble, fi­nanc­ing dries up,” said Wolff.

This is par­tic­u­larly rel­e­vant to China and the Euro­pean Union. Both need to make their fi­nan­cial sys­tems more ro­bust and more con­ducive to global growth, he added. As for the is­sue of how to step up ef­forts on cli­mate change, Wolff said a good fol­low-up process to the Paris agree­ment is ur­gently needed. The G20 should send clear sig­nals to the mar­ket that ei­ther an emis­sion trad­ing sys­tem or tax­a­tion of green­house gases will come into ef­fect.

The coun­tries mak­ing progress on com­bat­ting cli­mate change have a dis­ad­van­tage tem­po­rally be­cause of tax penal­ties on some in­dus­tries. Some in­dus­try will move from one coun­try to oth­ers that are re­luc­tant to take ac­tion, which will be un­fair be­cause fight­ing cli­mate change is a com­mon goal, Wolff said.

“This is re­ally a co­or­di­na­tion prob­lem that can be achieved at the G20 level,” he added. In ad­di­tion to the above, Wolff said he would like to add the is­sue of migration, a key con­cern for a num­ber of G20 coun­tries. “The con­flict in Syria is a global con­flict with a lot of play­ers in­clud­ing Rus­sia, the United States, the EU, Turkey and so on; it’s re­ally a global is­sue that should de­serve the at­ten­tion of the G20 also,” he said.

Migration is­sues ba­si­cally in­cludes two as­pects, ac­cord­ing to Wolff. One is achiev­ing peace in or­der to re­duce the num­ber of refugees, and the other tech­ni­cally man­ag­ing the cur­rent migration prob­lem.

“We should en­cour­age the coun­tries which are not tak­ing refugees to take them: in­clud­ing the United states and Bri­tain,” he said. Migration should not be seen a prob­lem put to Ger­many and Swe­den, or Greece and Italy, be­cause the ori­gin of this con­flict dates back to long ago and many play­ers that sit around the G20 table are also in­volved in it, he added.

“It’s also a hu­man­i­tar­ian catas­tro­phe and I hope the G20 could jointly make some progress,” Wolff said. China will host the 2016 G20 Sum­mit in the eastern city of Hangzhou on Sept. 4-5 un­der the theme “Build­ing an in­no­va­tive, in­vig­o­rated, in­ter­con­nected and in­clu­sive world econ­omy.”

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