Group 20 – A Forum for International Economic and Financial Solutions

The G20 is a forum of the world’s twenty largest economies that meet once a year to discuss global policy on a wide range of trade, health, and climate issues. However this year the Russian war in Ukraine and the possibility of a nuclear confrontation dominated the deliberations and derailed a consensus on other pressing issues

By Col Alok Mathur

Representational Image

The 17th G-20 or Group of Twenty summit — an intergovernmental forum made up of 19 countries and the European Union is in progress in Bali, Indonesia to discuss major global economic issues like international financial stability, climate change, and sustainable development.

The G20 countries come together to prepare for a better future. The primary mandate of the grouping is to foster a spirit of international economic cooperation and shape the global economic agenda to prevent future financial crises across the world.

The annual summit is attended by the heads of state of member nations, the European Union Chairman as well as officials from the World Bank and the International Monetary Fund. The EU is represented by the European Commission and the European Central Bank. The United Nations, the African Union, and ASEAN are some of the other permanent guest invitees. Other countries, international organizations, and nongovernmental organizations are also invited to attend the summits, some on a permanent basis. Spain participates in leader summits as a permanent non-member invitee. The G20 nations comprise Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.

The G20 this year will be attended by President Joe Biden, Chinese President Xi Jinping, Britain’s Prime Minister Rishi Sunak, French President Emanuel Macron, German chancellor Olof Scnloz and Australian PM A Albanese. Russian President Vladimir Putin will again skip the G 20 Summit.

Joko Widodo, the president of Indonesia is the current Chairman of G-20. Indian PM Narendra Modi will take over as the G-20 Chairman for the next year with effect from 1 Dec 2022. By virtue of this India will convene the G20 Leaders’ Summit for the first time in 2023.

Indonesia has been under pressure from the Western countries and Ukraine to expel Russia from the group because of the war in Ukraine but managed to resist the suggestion by claiming that it does not have the authority to do so. Even Ukrainian President Volodymyr Zelensky made it clear that he would not take part in the summit if Putin who was expected to join virtually – did so. Zelensky has also been invited to address the summit virtually.

The current conference could possibly see Prime Minister Narendra Modi interacting with Chinese President Xi Jinping on a one-on-one basis since the Galwan border clash in June 2020 as well as a meeting between Joe Biden and Xi Jinping for the first time since taking over as the POTUS.

During the two-day summit, G20 leaders will deliberate on key issues under the theme “Recover Together, Recover Stronger” and focus on the global economy, health, digital transformation, sustainable energy and climate change, among other topics. There will be three working sessions. The first session will focus on Food and Energy security, the second session on Health and the last session will be on Digital transformation. There will be several Bi lateral meetings within member countries. The most important bilateral interaction was held between China and USA to defuse tension on the Taiwan issue. European Union will highlight the acute energy crisis and loss of human life due to the Ukraine War and is likely to blame Russia.

The main objective behind the G-20 summit is to bring together industrialised and developing countries on the same platform and cordially work out a solution to global economic, financial and welfare issues.

The foundation of G 20 was laid almost 24 years ago on 26 Sep 1998 as a congregation of Finance ministers of member countries in Berlin Germany. Initially, the FM Level summits were held in an unplanned manner on an ad hoc basis. The final shape of G20 emerged in 2008 when it got global recognition and heads of member states along with a delegation were invited to the designated host country.

The first G 20 Summit was held in Washington DC United States under the leadership of George W Bush in 2008, the second summit was organised in London UK in April 2009, the third summit was at Pittsburgh USA in Sept 2009, the fourth summit was held in June 2010 at Toronto Canada, the fifth one was at Seoul, South Korea in Nov 2010, Sixth summit was scheduled at Cannes, France in 2011. A number of other ministerial-level G20 meetings have been held since 2010. Since 2011, the G20 summits have been held only once a year.

The seventh meeting was held at Los Cabos Mexico in 2012, Eighth G20 venue was Saint Petersburg, Russia in 2013, the Ninth summit was in Brisbane, Australia in 2014, 10th summit was held at Serik Antalya in Turkey in 2015, 11th Summit was at China, Hangzhou in 2016, 12th Session was held at Hamburg Germany as Angela Merkel as the head in 2017, 13th Venue of G20 Summit Buenos Aires Argentina in 2018, Japan hosted the 14th summit at Osaka in 2019. The year 2020 was a watershed because of the Covid -19 pandemic across the globe. The 15th summit was held virtually in Riyadh, Saudi Arabia on 21-22 Nov 2020. 16th Summit was organised in Rome, and the 17th Summit was held in Italy in 2021. The 17th summit is now being held in Bali, Indonesia. India and Brazil will now go on to host the 2023 and 2024 summits respectively.

The G20 is composed of most of the world’s largest economies, including Developed and developing countries. It accounts for 80 % of the gross world product, 60% of land area, 60 -70% of world trade and 66% of the global population. The G20 forum has the potential to recover the world from financial crises due to war, recession, inflation, debt, pandemics and natural calamities. Its relevance today lies in the fact that today various economies like Sri Lanka, Afghanistan, Iraq, Syria, and Ukraine are on verge of collapse. They can be revived by strict financial discipline and economic resurrection.

The G20 is an informal forum which has no permanent staff of its own. Each year, a different member country assumes the G20 presidency starting from 1 December to 30 November. The term begins in December. This system has been in place since 2010. A rotation system is followed to select the head of the forum. The G20 Presidency rotates between members and the tenure is for one year. The head of the state of a member nation takes over as the president of the organisation.

The member countries are divided into five groups comprising a maximum of four countries each. Most of the groups are formed on a regional basis that is countries from the same region are usually put in the same group. Group one consists of Australia, Canada, Saudi Arabia, and the USA. Group two includes India, Russia, South Africa, and Turkey. Argentina, Brazil, and Mexico are included in Group three. Group four includes all European countries like France, Germany, Italy, and United Kingdom. Group five comprises of East Asian countries namely China, Indonesia, South Korea, and Japan. The EU, the 20th member, is not a member of any of these regional groups.

Each year another country from a different group assumes the G20 Presidency. The countries in a group themselves decide who would take on the Presidency when it is their group’s turn. It is the responsibility of the host country to provide a secretariat for the duration of the tenure. The incumbent chair establishes a temporary secretariat for the duration of its term, which coordinates the group’s work and organizes its meetings. The countries within a group also decide who will organise the next G20 Summit. The rotating Presidency was introduced in 2010 when South Korea held the G20 Presidency.

French President Nicolas Sarkozy proposed the establishment of a permanent G20 secretariat, similar to the United Nations in 2010 with Seoul and Paris as the possible locations for the G-20 headquarters. Brazil and China supported the proposal though Italy and Japan rejected the idea. South Korea went a step ahead by suggesting a “cyber secretariat”.

Another system followed is the concept of ‘Troika’. It refers to the top grouping within the G20 that consists of the current, previous and incoming presidencies — Indonesia, Italy and India. As a Troika member, India will work closely with Indonesia and Italy to ensure consistency and continuity of the G20’s agenda. It is pertinent to note that Italy hosted the G20 summit in October 2021 where India raised the issue of Afghanistan’s future following the takeover by the Taliban. Indonesia took over the G20 presidency on 1st December 2021.

The G20 membership does not exactly reflect the mindset of the 20 largest economies of the world at any point in time. According to an Asian Development Bank (ADB) report, the larger Asian economies such as China and India would play a more important role in global economic governance in future. The report predicted the emerging market economies and heralding of a new world order, in which the G20 would become the global economic steering committee.

The G20 engagement groups are independent collectives led by organisations of the host country. They represent a diverse group of stakeholders who work collectively to develop non-binding policy recommendations which are formally submitted to the G20 leaders for consideration. For the 2022 G20 the host Indonesia, formed 10 engagement groups to develop proposals and policy recommendations for the G20 leaders.

The preparatory process for the G20 Summit is conducted through the Sherpa and Finance tracks that prepare and follow up on the issues and commitments adopted at the Summits.

The Sherpas’ Track focuses on non-economic and financial issues, such as development, anti-corruption and food security, while addressing internal aspects such as procedural rules of the G20 process.

The Finance Track focuses on economic and financial issues.

Both the Sherpa and Finance tracks rely on the work of a series of expert working groups. Additionally, the thematic agenda is developed through several Ministerial Meetings, such as the Joint Meeting of Finance and Development Ministers, and the Labour, Agriculture and Tourism Ministerial meetings.

The main agenda of the G20 summit is financial stability and economic strength of the members and also the whole world by supporting the nations in economic crisis and providing health care facilities for all. Digitalisation must be incorporated by all countries to crush the parallel black economies.

However, the G20’s legitimacy and influence over the management of the global economy and financial system have been challenged. A Danish Institute for International Studies report criticised the G20’s underrepresentation of African countries and the practice of inviting observers from non-member states as a mere “concession at the margins. Even former US President Barack Obama admitted that it was not possible to please everyone: “Everybody wants the smallest possible group that includes them. So, if they’re the 21st largest nation in the world, they want the G21, and think it’s highly unfair if they have been cut out.”

There has been wide criticism of the Group as an exclusive club. Norwegian Prime Minister Jonas Gahr Støre called the G20 “one of the greatest setbacks since World War II” as 173 nations who are all members of the UN are not among the G20. This includes Norway, a major developed economy and the seventh-largest contributor to UN international development programs, which is not a member of the EU and thus is not represented in the G20 even indirectly. Significantly Norway has little or no voice within the group. Støre argued that the G20 undermines the legitimacy of international organizations like the IMF, World Bank and United Nations set up in the aftermath of World War II.

Russia too has been the target of the USA and other European countries. There was a demand for its expulsion even when it annexed Crimea in 2014 but was ruled out. The USA and its allies again wanted to exclude Russia in the 2022 session. China opposed the proposal. Incidentally, Russia was President of the G20 with effect from 1 December 2012 followed by Australia in 2014 and Turkey in 2015. Norway and Poland also want to be members of the G20 and question the special status of Spain. It is also said when the Organisation of Economic cooperation and development (OECD), a group of 37 countries exists and functions efficiently on the same agenda why duplicate another organisation? Despite all shallow criticism, G20 stands tall and firm as a strong, relevant and important International organisation as it provides a forum for defusing bilateral issues between belligerent nations and strengthens world peace and prosperity.

As a founding member of the G20, India has used the platform to raise issues of vital importance which impact the most vulnerable segments around the world.

Indian PM has announced that once India takes over as head of G 20, the core theme will be “One Earth, One Family, One Future based on the Vedic philosophy “Vasudhaiva Kutumbakam”, which underlines the message of equitable growth and Share future for all. He emphasised that the Ukraine war must be stopped with Joint efforts as it has disrupted the world supply chain. He was quoted as saying ‘We want the whole world together.

-The writer is an Indian Army veteran and a defence analyst. He has keen interest in Geo-strategic affairs and writes regularly on internal and external affairs issues related to India and neighbours. The views expressed are personal and do not necessarily reflect the views of Raksha Anirveda