beyondbrics

Mexico, led by president Felipe Calderon (pictured),  should use its G20 presidency to push for a streamlined membership and a radical overhaul of the G7 at its core, an influential voice in global economics has said.

In an interview with the FT, Jim O’Neill, chairman of Goldman Sachs Asset Management, said that a new-look G7 could consist of the US, Japan, a single seat to represent eurozone countries, and the four so-called Bric nations of Brazil, Russia, India and China.

Among other things, such a shake-up would mean the UK and Canada losing their places. But O’Neill insisted that it would better reflect recent shifts in global and economic power.

“Why do eurozone nations need to represent themselves if they share a monetary and fiscal policy?” said O’Neill, who cemented his fame in 2001 after coining the acronym ‘Bric’. “And then there is the UK and Canada. Do they deserve to be in it?”

The resulting re-allocation of seats would also help “re-energise” the G20’s agenda, which had become bureaucratic. “A lot of people have lost their enthusiasm [for the G20],” he said. “There is so much formal presentational stuff that not much seems to get done. It needs to have an ambitious proposal.”

O’Neill said that Mexico was the perfect nation to push for such a proposal – in part because of its size and the fact that it belonged to a group of countries with high-growth potential. At the same time, it did not belong to the Bric nations and so could not be accused of pushing its own interests.

Now in his last year in office, centre-right Mexican President Felipe Calderón has made it clear that he wants to achieve concrete advances at the forthcoming G20 Summit, to be held in the Mexican resort of Los Cabos in June.

The country’s foreign ministry has been working behind the scenes for months to try to ensure a successful agenda during Mexico’s presidency of the group. Meanwhile, officials at the finance ministry have stated in private their determination to limit the focus the Summit to stand a better chance of achieving tangible outcomes.

O’Neill also said that Mexico should use the forthcoming June Summit, to be held in the Mexican resort of Los Cabos, to push for a redefinition of special drawing rights (SDRs), the system of supplementary foreign exchange reserve assets administered by the International Monetary Fund (IMF).

“We should be looking with confidence at a reformed SDR, with the renminbi, and possibly the ruble in there by 2015,” said O’Neill. “The Mexicans should be the ones to take this forward.”

Related reading:
The Growth Map, FT book review
Latin America: A more self-confident continent faces the world, FT
Mexican peso: back in vogue, beyondbrics
Mexico telcos: battle of the billionaires,  beyondbrics
Mexico: more tourists than ever, beyondbrics