Home ›› 25 Nov 2022 ›› Editorial
The G-20 formed in 1999 is a group of twenty of the World’s largest economies that meets regularly to coordinate global policy on Trade, Health, Climate and other issues. It is the premier forum for international cooperation on the most important aspect of the international economic and financial agenda. It brings together the world’s major advanced and emerging economies. In the past the summit had addressed the COVID-19 pandemic, 2008 financial crisis, the Iranian nuclear programme, and Syrian Civil War. The G-20 is strategic multilateral platform connecting the World’s major developed and emerging economies. The G-20 holds a strategic role in securing future global economic growth and prosperity.
Together the G-20 members represent more than 80 per cent of the world GDP, 75 per cent of the world’s international trade, and 60 per cent of the world population. The 19 countries representing G-20 are Argentina, Australia, Brazil, China, Canada, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, South Africa, Saudi Arabia, Turkiye, United Kingdom, United States and European Union as one regional organization.
The objectives of G-20 are:-
Policy Coordination between its members in order to achieve global economic stability and sustainability;
To promote financial regulations that reduce risks an d prevent future fin ancial crises and;
To create a new international financial structure.
The G-20 was set up in response to both financial crises that plugged a number of emerging countries and to a growing recognition that some of these countries were not adequately represented in the global economic issues and governance. In December, 1999 Finance Ministers and Central Bank Governors of advanced and emerging nations met in Germany to have an informal discussion about global economic stability. Since then regular yearly meetings are taking place. By 2008 this group meeting has been raised to Summit level to address the global financial and economic crisis of 2008. So far 16 Summits have taken place and now the 17th is being held between November 15-16/22 at Bali, Indonesia.
The theme of G-20 Bali Summit is “One Earth, One Family, One Future”. The G-20 plays a critical role in creating an enabling environment for inclusive global growth and development. The group works for ensuring financial stability, promoting growth and avoiding and managing crises and supporting the opportunities and facing the challenges for LDCs. This year Bali has to play an important role as it has been chosen to be the location of the 17th Summit.
G-20 has certain limitations. For example, it’s inability to revive the Doha Development Round of Multilateral Trade negotiations at WTO. On the other hand its inability to arrest the drift towards mercantilism on the part of world’s biggest trading nations—the US and China. Since it is an informal, non-treaty based network, its decisions do not constitute legally binding rules such as declaration of the IMF or WTO.
A question is often arises whether the G-20 is part of UN or not. The answer lies in the negative. While the G-20 does not belong to a specific unit of the UN, it is considered to be a fundamental part of the modern international system. There is a basic difference between G-7 and G-20. G-7 comprised of all democratic countries made up of US, UK, Japan, France, , Canada, Germany and Italy is a more political group. Beside those European Union has been included in the group. These are all wealthy countries. They deal with political as well as financial issues.
The Bali Summit has brought together leaders of the major economies in physical meeting for the first time since the COVID-19 pandemic began. According to the Indonesian Presidency the summit would focus on three interconnected issues namely the global health architecture, the sustainable energy transition and digital transformation to secure a sustainable future, while driving digital innovation. To achieve this aim, it has highlighted the need for further reform in global taxation, stronger cooperation in fighting corruption, deeper infrastructure financing and more democratic international cooperation. Its informal nature makes G-20 a vital global platform as it brings together leaders of all major developed and emerging economies regardless of their political systems.
In a global context characterized by growing rifts between the major geopolitical powers, the Bali Summit could present an opportunity to show how committed countries are still to follow multilateral rules and also to show trust remains to sustain the G-20’s customary voluntary commitments. However, this possibly could not be achieved this year. As a sign of the growing rift between US and EU and Russia and China, most of the meeting failed to issue a communiqué.
The G-20 summit at Bali concluded as scheduled. Now is the time to evaluate what were discussed and achieved at Bali Summit. The Group of 20 wealthiest nations concluded a two day summit on the Indonesian island of Bali deploring Russia’s aggression on Ukraine in the strongest terms. The major decisions emerged from the summit had been (i) Condemning the Russian Aggression (ii) US-China ties on better footing (iii) Focus on Global Economy (iv) Food Security (v) Climate Change and (vi) China outreach.
Condemning Russia’s Aggression: The leaders at Bali Summit adopted a declaration deploring the Russian invasion on Ukraine and demanded its unconditional withdrawal. They also recognized that while most of the members condemned the war, there were other views and different assessments of the situations and sanctions. Members including the host, President of Indonesia said all had shown flexibility and felt that the war had been causing untold human sufferings and exacerbating existing fragilities in the global economy, constraining growth, increasing inflation, disrupting the supply chain, heightening energy and food insecurity and elevating financial stability risks. The leaders at the summit also discussed the threat of the use of the nuclear weapons. However, the Russian Foreign Minister in absence of the Russian President Vladimir Putin condemned the decision as politicization of the summit.
Eye on the US-China bilateral meeting: The leaders at the summit observed the outcome of the pre-summit meeting (preceding the summit meeting between US President Joe Biden and Chinese leader Xi Jinping) to be a positive one even though few tangible results had been there. Both sides discussed issues of tensions such as Taiwan, Trade relation and Technology transfer. Both sides agreed to keep communication open and to avoid confrontation.
Focus on Global Economy: The G-20 economies agreed to pace the Interest Rates Risks Rise carefully to avoid spillovers and warned of the increased volatility in currency movements. The spillover was a nod to emerging economies concerns about the potential for huge capital outflow if aggressive US rate increases continue. With the war in Ukraine on, as well as COVID-19 pandemic era spreading packages blamed for fuelling red-hot-inflation, the G-20 countries said further fiscal stimulus measures should be temporary and targeted. On debt the leaders voiced their concern about the deteriorating situation in some Middle Income Countries and stressed the importance of conditions sharing the burden.
Food Security: The leaders promised to take coordinated action to address food security challenges and appreciated the Black Sea grains initiative, but civil society group criticized the move saying that it did not have any concrete steps on hunger. In this regard (food security), the G-20 is merely repeating old commitment from the previous year as viewed by the Group of Global Citizen. According to Global Citizen Group the leaders simply commit rather than taking on leadership by themselves. The Citizen Group viewed that at least 50 million people are now on the brink of starvation. Recently Government of Bangladesh has allocated Taka 5000 crore( Taka 50,000 million) for food security.
Climate Change: G-20leaders agreed to pursue efforts to limit the global temperature increase to 1.5 degree Celsius confirming that they stand by the temperature goal fixed in 2015 Paris Agreement on climate change. This probably boosted negotiation at the COP-27 climate summit recently concluded at Sharm –El-Sheikh, Egypt, where some leaders feared that the G-20 would fail to back the 1,5 degree Celsius goal, thwarting a deal on nearly 200 countries at the UN talks In this regard $100 billion fund creation is yet to take a concrete shape. African Group at COP-[i] 27 raised voice saying that commitments are made not to fulfill. At the Bali summit US and Japan along with their partners mobilized $20 billion of Public and Private finance to help Indonesia to shut down Coal power plants.
The outcome of the G-20 summit at Bali has given China outreach and has scope to have bilateral meetings with world leaders signaling a willingness to mend ties with critics. The summit paved the way to. Xi-Jiaping met Joe Biden, US President, Australian Prime Minister, South Korean President, France President and Canadian Prime Minister and set a date a week later to meet the Japanese Prime Minister. These meetings are not decisive but important steps towards trying to reduce disagreement among themselves.
The writer is former Director General, EPB. He can be contacted at [email protected]