The Group of Twenty (G20) Summit will take place in Bali, Indonesia, next month. The G20 Summit, formally known as the “Summit on Financial Markets and the World Economy,” was held in Rome, Italy last year but was not attended by Chinese President Xi and Russian President Putin.
China had sent its minister of foreign affairs and Russia, its minister of finance. For this year’s summit, host Indonesia has, however, confirmed the participation of leaders of both, China and Russia. Indonesia will lead the group for a year before handing it over to the 2023 Summit host, India.
The pandemic-affected world is at present passing through a severe financial crisis. Countries are struggling to cope with growing food and energy scarcity. Climate change has already created havoc in the form of devastating natural disasters.
The war in Ukraine has brought back the fear of World War III, and threats of using nuclear weapons have become routine. The world is fast getting divided into two camps. At this critical time, the possibility of getting American, Chinese, and Russian Presidents under one roof for two days (Nov. 15-16) is itself a remarkable thing and raises high expectations from the Bali Summit.
The G20 consists of a regional organisation, the European Union, and 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, and the US.
Coordinating cooperative response
There is no doubt that the world is facing several serious crises. However, the G20 came into existence in 1999 as an informal network of finance ministers and governors of central banks to coordinate a cooperative response to the Asian financial crisis.
The G20 meeting was elevated to the leaders’ level by US President George W. Bush when the great recession of 2008 became out of control for his outgoing administration. He realised that the G8 countries even lacked the heft to face the economic crisis successfully.
So, he called an emergency summit of G20 leaders in November 2008, just a couple of months before moving out of the White House. In less than a year, the G20 gained momentum, and at the Pittsburgh Summit, the G20 saw itself as the premier body of global economic coordination.
Representing 65 per cent of the world’s population, 80 per cent of the global trade, and 85 per cent of the world’s total GDP, G20, in its first few summits, showed impressive collaboration to contain the free fall of the global economy by bringing in stimulus measures and shedding several protectionist policies.
The newfound bonhomie also helped to get an agreement to change the voting quotas of the IMF in favour of China and other emerging economies, resulting in a nearly three times increase in resources for the global financing institution.
Cooperation among the world’s major economies was the primary instrument in preventing the Great Recession from becoming another Great Depression.
Loss of consensus approach
However, the G20 lost most of its consensus approach when the world started to emerge from one of its worst economic crises. The partial economic recovery in the US and Europe in the first half of the last decade also reduced their willingness to bring much-needed further reforms to global financial institutions.
G20 achieved limited success, but there is still much to be done. The focus of the G20 has been primarily to increase global economic growth.
Still, the world at presents severe challenges, such as expanding income inequality between and within countries, massive youth unemployment in many developing regions, and growing concerns over gender inequality.
The economic growth worldwide — before the Covid-19 pandemic — failed to become inclusive, resulting in the rise of populism and the decline of democracies in several countries. When the world faced a once-a-century pandemic in 2020-2021, the G20 had an opportunity to grab the leadership role, but it failed because the US, under Donald Trump, adopted an inward-looking approach.
At the same time, the G20 also failed to endorse the G7’s net zero emission by 2050 pledge. The share of G20 countries is 80 per cent of global emissions, but they don’t agree to limit global warming to 1.5 degrees C.
The war in Ukraine has divided the G20 into two warring camps. The disagreement has reached such an extent that the meeting of finance ministers and central banks of G20 countries in Bali in July this year failed to issue even a joint communique.
The G20 lacks a permanent secretariat as there has been no unanimity among the member-states over its location. While the world is facing a serious crisis on many fronts, a divided G20 will never be able to successfully assume the leadership role it had during the great recession.
The Presidency of the G20 is based on regional rotation and changes every year. This year, it will be Indonesia, and next year it will be India.
Both these countries have followed some sort of non-aligned policy on the Ukraine issue. Both countries thus have the opportunity to use the G20 platform to bring the US and China camps together and to help the G20 regain the leadership role to pursue an equitable and economic recovery and build a global partnership against the threat of climate change.