G20: Uniting Nations, Igniting Progress
With the recently concluded G20 Summit in New Delhi & India being at the helm of the 2023 G20 Presidency has really piqued interest of this inter-governmental grouping of nations among the masses not only just in the cities where the G20 meetings were hosted but across India right from the smallest villages to the biggest cities.
A series of questions regarding G20 , its members , its work and its importance as well as influence in the global arena are being constantly asked by everyone right from an eight year old schoolkid to an eighty year old pensioner. Let’s find it out in today’s blog.
What is G20?
G20 or Group of 20 is an intergovernmental socio-economic & political forum compromising of 19
countries along with 2 regional blocs namely the European Union & African Union (AU beingincluded as a member at 2023 New Delhi Summit).
The main aim of G20 is strengthen global economic and political co-operation , shaping global governance policies on all major economic issues as well as tackling those issues such as global financial stability, sustainable development etc.
Origins of G20:
The idea of G20 originated at the 1999 G7 (Group of Seven) Summit held in Cologne (Köln), Germany as the finance ministers of the G7 Countries (United States, Canada, Great Britain, France, Germany, Italy & Japan) were particularly worried about the economic disruptions &
massive debts in the emerging markets around the world in the 1990s starting with the 1994 Mexican Peso Crisis , followed by the 1997 Asian Financial Crisis & 1998 Russian Financial
Crisis.
The Canadian Finance Minister Paul Martin along with the American Treasury Secretary Larry Summers & German Finance Minister Hans Eichel remarked that in a rapidly globalising world , it
is impossible for the G7 , the G8 (Group of Eight - an intergovernmental forum consisting G7 Countries & Russia) & the Bretton Woods Financial System to provide financial stability & therefore a new permanent grouping of major nations consisting of both developed & emerging
nations is required which give these emerging nations a voice & responsibilities towards maintaining financial stability.
The membership for this new grouping namely the G20 was decided by the German & American Deputy Finance Ministers Caio Koch-Weser and Timothy Geithner respectively. With the list of 20
nations including emerging countries such as India ,China , Brazil etc., The First G20 meeting was held on 15th & 16th December 1999 in Berlin, Germany with Paul Martin as the first
chairman & Hans Eichel as the host of the meeting.
The countries which were included in the 1999 Invitations were other than the G8 Nations were:
● Australia
● Argentina
● Brazil
● China
● Indonesia
● India
● Mexico
● Saudi Arabia
● South Africa
● South Korea
● Turkey
● European Union (with a special inclusion as a regional bloc)
Ministerial Meets Era (1999-2006):
The G20’s initial focus has been the global governance of the global economy with the primary agenda being focused on the sustainability of sovereign debt and global financial stability in an inclusive format to bring the largest developing economies together as equal partners in the global financial system.
Initially , the G20 Meetings were primarily attended by the Finance Ministers & Central Bank Governors of the member nations to discuss the above agenda. The ministerial meetings were the only platform of the G20 Nations until 2006.
Summits Era (2008 onwards):
After the 2007-2008 Global Financial Crisis, The G20 Ministerial Meets of the Finance Ministers & Central Bank Governors on the insistence of the then-American President George W. Bush
initiated the G20 Summits as the response to the 2007-2008 Global Financial Crisis as well as include emerging countries who were not a part of the grouping through invitations for the
Summits.
The Summits were led by the Head of State of Member Countries as well as included several key portfolios such as Foreign Affairs, Trade, Science & Technology , Labour Empowerment &
Welfare , Women Empowerment etc.
The portfolios were divided into three “workstreams” comprising of experts and officials from
relevant ministries to lead an in-depth analysis and discussions on internationally relevant issues
in their respective areas of focus which are as follows :
● Sherpa Track
It primarily includes discussions on portfolios essential for social development such as Education, Sustainable Development, Disaster
Management, Culture etc.
● Finance Track
It primarily includes discussions on global macroeconomic matters
through meetings of Finance Ministers & Central Bank Governors.The key
issues include monitoring the global economic outlook and risks, global financial stability, international taxation, funding quality infrastructure, sustainable finance, financial inclusion, financial sector reforms.
It is the predecessor of the G20 Ministerial Meetings.
● Engagement Groups
It comprises of Non-Government participants from each G20 member
nations which provide recommendations to the G20 Leaders and contribute towards the policy-making process. Participants include Business Leaders, Civil Society, Trade Unions, Speakers of Parliament, Scientists, Supreme Audit Institutions (in case of India : Comptroller & General of India {CAG}), Start-up Entrepreneurs , Mayors of Cities & Women Leaders from all sectors.
The 2008 G20 Summit held at Washington DC was the first G20 Summit with the primary topic being the 2008 Global Financial Crisis. The years 2009 & 2010 saw the 2 consecutive G20 Summits,one held in London (UK) in April 2009 while the other was held in Pittsburgh (USA) in September 2009. As for the year 2010, Toronto (Canada) hosted the G20 Summit in June 2010 while the other summit held in November 2010 was hosted in Seoul (South Korea)
The 2010 Seoul G20 Summit saw the initiation of the “Presidency System” under which each member nation gets to chair the G20 Summits for a given year.All members except the European Union & African Union are assigned in 5 groups consisting 4 members each (except Group-3 consisting of Latin American Countries which have only 3 members). The grouping as follows:
The Presidency for the year 2023 was led by India under the leadership of Prime Minister Narendra Modi with the Summit being held in New Delhi with the theme of “Vasudhaiva Kutumbakam (वसधु वै कुटुम्बकम्)- One Earth, One Family, One Future”. The Summit was held at the Bharat Mandapam International Exhibition-Convention Centre at Pragati Maidan, New Delhi on 9–10 September 2023.
The Presidency for the year 2024 will be led by Brazil under the leadership of the Brazillian President Luiz Inácio Lula da Silva. The 2024 Summit will be held in Rio-de-Janerio , Brazil.
Economic Influence of G20
The G20, or Group of Twenty, plays a crucial role in the global economy for several reasons:
1. Global Economic Governance: The G20 brings together the world's largest economies, representing a significant portion of global GDP and population. As such, it serves as a key forum for international economic coordination and cooperation.
2. Crisis Management: The G20 has been instrumental in addressing global economic crises, such as the 2008 financial crisis. It provides a platform for leaders to coordinate policies and take collective action to stabilize and stimulate the global economy.
3. Trade and Investment: G20 countries are major players in global trade and investment. Their policies and agreements on trade, investment, and market access have a significant impact on the global economic landscape.
4. Financial Regulation: The G20 promotes financial stability through agreements on financial regulations and supervision. Bodies like the Financial Stability Board (FSB) operate under its umbrella to enhance the resilience of the international financial system.
5. Development Assistance: The G20 discusses and supports initiatives for sustainable development, poverty reduction, and infrastructure financing in low-income countries. This contributes to global economic growth and stability.
6. Exchange Rate Policies: G20 members discuss exchange rate policies to avoid competitive devaluations and currency wars, which can destabilize the global economy.
7. Climate Change and Sustainability: In recent years, the G20 has increasingly focused on climate change and sustainable development, recognizing the economic implications of environmental challenges.
8. Technology and Innovation: The G20 addresses issues related to digitalization, innovation, and intellectual property rights, which are critical in the modern global economy.
G20 is economically relevant because it provides a platform for major economies to coordinate policies, address economic challenges, and promote global economic stability and growth. Its decisions and agreements have far-reaching implications for the world economy.
G20 : A Complex Political Prism in a Multipolar World
The G20 along with its economic influence has a considerable political influence as well. The members nations have a considerable influence. The G20 in its initial days was seen as an extension of the powerful G7 Countries having a considerable economic might as well as a short-term crisis-management forum mainly formed for the 2008 Financial Crisis.
However in the recent years, The G20 has moved from a short-term crisis management forum to a long-term agenda setting forum reflected mainly after the 2016 G20 Summit in Hangzhou (China) which can also be seen in the themes of post-2016 Summits such as the 2017 Summit in Hamburg (Germany) with the theme : ‘Shaping an interconnected world’ or 2020 Summit in Riyadh (Saudi Arabia) with the theme : Realising opportunities of the 21st century for all’.
The G20’s emergence as a dominant political forum is happening a multi-polar world with multiple powerful nations in each region unlike the G7 which was formed during the height of the Cold War in a bipolar world whereas the G8 was an outcome of a unipolar world of American Dominance & the fall of USSR & East Bloc. Although the G20 was an outcome of the failure of the Western-led International
Financial Institutions (IMF & World Bank) to manage the 1997 Asian Financial Crisis , it has been noted that G20 has successfully managed to break the dominance of the G7 & G8 Forums in international finance & policy-making with its inclusion of emerging superpowers namely China & India.
The G20 has also become a platform to deal complex & conflicting national interests among the peer nations as well as a show of power by the host nation to gain international prestige especially after 2016. The 2016, 2017 & 2023 Summits have been the best example in this regard. The 2016 & 2017 Summits
were held in the middle of the intense trade-war between China & United States as well as the Donald Trump Administration’s America First Policy leading to the American withdrawal from the 2015 Paris Climate Accord as well as ending protectionist benefits for fellow G20 members which were dealt significantly with help of communiques & strong presidency leaders of 2016 (Chinese President Xi Jinping) & 2017 (then-German Chancellor Angela Merkel) Summits. In case of the 2023 Summit held in New Delhi, India has clearly shown its power as well as its landmark foreign policy in the times when themulti-polar world is ever divided on the account of the Russia-Ukraine War.
The coming times will be a test of challenge for the G20 with ever-increasing division of the multi-polar world as well as complex political situations arising out of this division in a post-pandemic world with a pool of complex political interests.
Researched by-
Mast. Shrotriya Aanuj.A.
Mast. Shinde Arya. P.
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