June 28, 2010

ROK President Lee Myung-bak (right) meets with U.N. Secretary General Ban Ki-moon (left) before attending a welcoming ceremony of the G20 summit in Toronto, Canada on June 26.

This weekend’s G-20 summit in Toronto, which chose to put off a number of thorny topics, was seen as preparation for South Korea to host the next session in November that may decide the fate of the new premier forum for international economic cooperation.

South Korean government officials said the G-20 members produced some agreements in Toronto, such as reduction in deficits, but relegated the more difficult issues to the Seoul forum.

The G-20 members set their top goal of strong, sustainable and balanced growth, but “Seoul will be the stage for producing tangible fruits,” one official noted.

Overshadowed by the eurozone debt crisis, world leaders put controversial proposals of bank taxes, readjustments of IMF quotas, and so-called exit strategies on the back burner. This led a Seoul official to observe: “For South Korea, the November summit is a high-return and high-risk event.”

The largest economies are reportedly split over the balance between growth and belt-tightening when there is still fear of a double-dip recession. The U.S. has called for the main economies to continue stimulus spending to maintain recovery, but European members, wary of the broader impact of the Greek debt crisis, demanded a speedy shift to government belt-tightening. They reached a compromise to at least halve their deficits by 2013 but left the door open for flexibility in implementing the non-binding deal.

The G-20, launched in 2008 to counter the global financial crisis, is widely credited with having prevented the world from plunging into a greater economic depression. There was remarkable unity at the three previous summits in Washington, London and Pittsburgh. But to some, the G-20 has already lost steam and its future is up in the air, so the Seoul summit will be a watershed.

South Korea hopes to play a bridging role between advanced and developing nations, taking advantage of its experience of transition from aid recipient to donor.

ROK President Lee Myung-bak formally proposed that development issues be discussed in the Seoul session, as well as his offer to establish global financial safety nets to minimize the impact on emerging countries from sudden capital flows.

Read the full Toronto G-20 Summit Declaration here