G20, Italian Style

Posted on: 13 October 2009 by Daniel Kitts

Tonight's discussion centres around the shift of responsibility for discussions on the global economy from the G8 group of countries to the larger G20 group and what that means for Canada's international influence and interests.

The G8 is one of the world's most exclusive international clubs. As such, Canada's inclusion in it is a point of pride among many of the country's foreign policy elite. At the same time, Canada has had to deal with the view of some that the country doesn't belong in the G8 because, well, it just isn't important enough.

But if it's any comfort to those who care about such things, we're not the only people that have to put up with questions about our G8 legitimacy. Italians are another.

Interview: A view from Italy

So as we discuss Canadian concerns about the shifting global order, I thought it might be interesting to see if Italians are having similar discussions about where they fit in the world. I asked Domenico Lombardi, president of Oxford University's Institute for Economic Policy and senior fellow at The Brookings Institution, to provide us some insight.

Lombardi (pictured above) is a G8 and G20 expert. In addition, he is a former executive board member representing Italy at the IMF and the the World Bank. I am grateful to him for taking the time to share his thoughts. Here is the text of our interview, conducted via e-mail:

Q: On the news that the G20 would become the key international forum to discuss issues related to the international economic crisis, the following appeared in the September 26 edition of the Financial Times:

"'If you want to find out what the world is going to do then take the U.S. position and take China’s position and draw a line somewhere in the middle,' said David Rothkopf, a former official in the Clinton administration. 'As regards to the G20, it would have been more efficient to kick Canada and Italy out of the G8 and invite China and India to replace them. But inter-governmental co-operation always adds, it never subtracts.'"

How do Italians react to the notion that they really don't belong among the top-tier of economic powers?

A: The sustained rise of large emerging-market economies is forcing Italians to reconsider their role in the global economy. But first and above all, they have especially felt the hit by the decline in their products’ competitiveness vis-à-vis roughly-similar exports produced by Asian economies. This has been compounded by Italy’s membership of the European single currency, the euro, which has reduced the flexibility of its economy, at least in the short run, in coping with cheap manufactured products from the emerging world.

Q: How has the Italian foreign policy establishment reacted to economic responsibility being diverted from the G8 to the larger G20 group?

A: Following the economic impact, the country has more recently experienced the “political” consequences of the new emerging global order. While Italy holds the chair of the G8 this year (in 2010 it will be Canada’s turn), the country has experienced first hand the increasing relevance of the G20 culminated in the recent declaration by President Obama at the Pittsburgh Summit that the G20 will become the premier forum for global economic policy-making.

This has spurred a debate in the country’s elites about what role Italy can realistically pursue in the global arena. Besides populist statements, the country ought to ask itself how to realistically calibrate foreign policy goals with the resources it intends to make available for pursuing them. One thing is certain: the prospect of maintaining prominence in the international scene as Italy has managed to do since the end of WWII now looks increasingly unfeasible. After several centuries when the country or its different regions/cities have played a key role in the world in one way or another, and well beyond its limited economic weight, the country is now facing the prospect of a sizable adjustment in its international ambitions.

Q: Is there any concern that this move "dilutes" Italy's influence or prestige on the world stage?

A: There is not doubt that the shift from the G8 to the G20 is going to dilute Italy’s international weight. First, the G7/G8 is a club of like-minded countries which have shared a significant part of the recent history. Moreover, the group is unipolar with the US in the leading position. This has clearly benefited Italy which has forged a meaningful political, military, economic and cultural relationship with the US. In contrast, the G20 is much more diverse. Although the US is still the leading country, there are nations (take China or India, for example) whose cooperative attitude may not be taken for granted. For a medium-sized country like Italy, this adds to the complexity of how to interact with the emerging new world order.

Q: Many Canadians see our inclusion in the G8 as a key symbol of our international prominence. How do Italians think about their inclusion in the G8?

A: Italy’s membership of the G8 (earlier the G7) has been seen as the most tangible outcome of longstanding foreign policy efforts. Following the destruction of the economic and political foundations of the country in WWII, its post-war leaders worked steadfastly for the country to gain international prominence alongside other more established Western democracies like Canada. These efforts culminated with its inclusion, together with Canada, in the G7 in the 1980s. Meanwhile, Italy has supported its key allies in various ways and also militarily. Most recently, it sent troops to Afghanistan and Iraq under very difficult domestic circumstances. Earlier on, when the West was facing the spectrum of communism, the country hosted a NATO nuclear missile base.

Q: What role does Italy see for itself in a world where new economic powers (such as Brazil, China, and India) are rising?

A: The rising of new powers with an immense economic potential challenges the role of Italy in the world. But its post-war leaders devised an “exit strategy” by having Italy as a key founding member of what is now the European Union and the euro area. Clearly, this implies that Italy will be facing this challenge through the heavier weight of the EU. This also entails, however, that the country will have to put more political capital on an issue—that of European integration—that appears to have lost momentum in Europe and, in particular, in Italy.

Q: I guess this means Italy is the Canada of Europe. How do you feel about that?

A: Not really. Italy like other members of the EU has the opportunity, but also the duty, to contribute to the formulation of EU- or euro area-wide decisions. It is a complex mechanism but it offers a framework for reaching European decisions on issues such as international trade or monetary policy. In the near future, we may witness increased cooperation in foreign policy and even in the military. Canada may have to make an extra effort. Geopolitically, it is bound to be close to the US, but it is going to be tough for Canada to engage its powerful neighbor and have it co-decide on issues that are of common interest.

Your Turn

Do you have any thoughts on tonight's program? Or on the shift to the G20 and what it means for Canada? Share your views here by posting a comment to this blog.

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