Ahead of the G20 Leaders’ Summit, which is currently taking place in Indonesia’s Bali, an article was published by The Jakarta Post which said “G20 leaders, please don’t come to Bali just to quarrel”. The 17th G20 summit is being held from Nov 14-16 where the leaders of the bloc will deliberate on key issues under the theme “Recover Together, Recover Stronger”. India will also formally take over the presidency for one year.
Coming back, this news headline reflects the general sentiment of the international community towards the event.
But why is this event looked down upon? Before we discuss that, lets understand how did they come into being, in the first place.
The origin of G20
Apart from G-20 am very sure you would have heard about G-7 and G8 as well. These G meets are annual meetings of exclusive world leaders, where they discuss global issues, and of course, pose for an obligatory photo session. But how did we get into this G-meeting madness?
After the first oil shock of the 1970s, global leaders of the advanced nations decided to come together and solve their common problems. Canada, France, Germany, Italy, Japan, UK, and the US formed the G7. Russia was included in the club in 1998 (and thus G8) but was kicked out in 2014 after its annexation of Crimea (from Ukraine).
From informal get-togethers to expensive monstrosities
The Russian addition raised the questions like – If Russia, why not China? and what’s with the whole “largest economies” thing anyway?
To respond to that concern, a new forum was created in 1999: a meeting of the finance ministers of the 20 largest economies, called (you guessed it) the G-20. Voila!
While G-7 or the “Group of Seven” had to do with politics, G-20 is all about money and is a little less exclusive than the G-7. Its members are a mix of the world’s largest advanced and emerging economies representing 85% of global economic output, 80% of global investment, and over 75% of global trade. The members are Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK, US, and the EU.
During the 2008 financial crisis, the US called for a G -20 summit to strengthen coordination and dialogue with emerging countries amidst the global crisis. What was intended as an emergency summit then went on to become an annual gathering.
Jack of all trades…
The relevance of this bloc has been questioned time and again. Except for its heroic performance in managing the global fallout of the 2008 financial crisis, G20 has merely meandered around important challenges to the world economy, doing pretty much nothing about it.
During the earlier days, there was still some enthusiasm and optimism about the outcomes. But in the last 10 years, the summit agendas have become vast, lofty, and practically meaningless. Rather than solving the most pressing problems, the group has shifted its focus towards all much larger and vague issues. Issues like a new financial architecture, achieving the UN’s sustainable goals, and climate change cooperative action was taken up and discussed time and again whereas immediate trade-related issues have been left to be discussed separately in bilateral talks on the sidelines.
….but master of none
In earlier summits, when the group was small and all members shared common beliefs, pushing agendas was easy. But with a broad group like G-20, broader issues had to be brought in its kitty to give all its parties a chance to raise their pet topic and find a place in the summit communiqués, often just to give them a sense of importance.
From talk the talk to walk the walk
While it is important for world leaders to talk and consult each other, there are plenty of opportunities for that. Be it United Nations General Assembly each September, or the regular Bretton Woods meetings, or the many global conferences, the possibilities to come together informally and share ideas are many and of course much less expensive.
This year’s summit is being held against a backdrop of tension between the world’s great powers, a looming war, and an impending global recession. A joint statement or a significant breakthrough to solve the current crises in energy, climate, and food looks highly unlikely. But does that mean should we write off this summit and future ones too?
Sharing experiences, shaping thinking
In our view, although these summits have not achieved great results, they have still influenced policymaking. For eg., German officials said because of G20 commitments their government developed a financial literacy and education program for youngsters. Vladimir Putin too embraced female economic participation after learning about the benefits through the G20. G20 has also pressured members not to devalue their currencies in pursuit of competitive trade advantage and also improved the communication of central banks on future policy changes.
These benefits might not have grabbed the headlines but are important developments behind the scenes. And if they make the world even a tad better than what it was, it’s worth it.
Disclaimer: This write-up is solely for educational purposes. This in no way should be construed as a buy/sell recommendation. Please consult your investment advisor before investing.
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