Author: Explains

Note4Students – A prelims question can be framed from any of the given details.

CONTEXT 

As more than 50 ministers and world leaders met in Argentina for this year’s G20 summit, they will have three priorities in mind: the future of work, infrastructure for development and sustainable food production.

 

INTRODUCTION

• The recent 13^th G20 summit in Buenos Aires was a success because at least it managed to issue a Joint Communique, unlike in the case of the APEC summit which took place in Papua New Guinea in October when the two economic giants, the US and China, did not agree on a joint communique.
• Communiques matter. While they are non-binding in the legal sense, they are binding in the political sense. Leaders and officials fight tooth-and-nail over the commitments included in the communique.
• These commitments are used to pressure countries into action. Countries use them to sell difficult reforms domestically. Skillful politicians use them to leverage domestic legislatures.
• When observed over time, the commitments in APEC and G20 communique reveal the unmistakable power of multilateral forums to build a global consensus on some of the most pressing challenges facing the world.

 

About G20:

• Formed in 1999, the G20 is an international forum of the governments and central bank governors from 20 major economies.

• Collectively, the G20 economies account for around 85 percent of the Gross World Product (GWP), 80 percent of world trade.
• To tackle the problems or the address issues that plague the world, the heads of governments of the G20 nations periodically participate in summits. In addition to it, the group also hosts separate meetings of the finance ministers and foreign ministers.
• The G20 has no permanent staff of its own and its chairmanship rotates annually between nations divided into regional groupings.
• The first G20 Summit was held in Berlin in December 1999 and was hosted by the finance ministers of Germany and Canada.

 

Objectives:

• The Group was formed with an aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.
• The forum aims to pre-empt balance of payments problems and turmoil on financial markets by improved coordination of monetary, fiscal, and financial policies.
• The forum seeks to address issues that go beyond the responsibilities of any one organisation.

 

Member Countries:

The members of the G20 consist of 19 individual countries plus the European Union (EU).

• The 19 member countries of the forum are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom and the United States.
• The European Union is represented by the European Commission and by the European Central Bank.

 

• Shaktikanta Das, the former Secretary of the Department of Economic Affairs (DEA), has been appointed as India’s G20 Sherpa till December 31, 2018 for the Development Track of the G20 summit.
• A Sherpa is a personal representative of the leader of a member country at an international Summit meeting such as the G8, G20 or the Nuclear Security Summit and are responsible for thrashing out the details before the meeting of the leaders.

 

The G20 Troika

Every year, when a new country assumes the presidency (Argentina in 2018), it works hand in hand with the previous presidency (Germany) and the next presidency (Japan) in what is known as the troika. This ensures continuity in the group’s agenda.

Significance of G20

Together, the G20 members represent –

• 2/3rd of the world population.
• 85% of the global gross product.
• 75% of international trade.
• 80% of global investments in research and development.

Because the G-20 is a forum, its agreements or decisions have no legal impact, but they do influence countries’ policies and global cooperation.

Takeaways for India @ 13^th G20 Summit

JAI

• It was the first meeting among the three leaders of Japan, India and USA. Currently, India’s relation with Japan and America are the best that they have ever been. All the three countries are democracies therefore, in terms of values; they are on the same page.
• What really brings them together at the moment is the convergence of interests such as ensuring stability, prosperity, and security in the Indo-Pacific region. Greater importance was also given to India in terms of economic, political and security architecture by both countries.
• Free, open, inclusive and rules-based order is essential for regional peace and prosperity. The Prime Minister also offered some ideas on how JAI countries should take forward on the concept of Indo-Pacific and how the three countries can work together to promote this concept.
• These meetings were useful and they should continue on the margins of subsequent G-20 meetings.
• Japan, India, and the USA are also engaged in Quadrilateral Security Dialogue (initiated in 2007 and reestablished in 2017) in parallel with joint military exercises of an unprecedented scale, called Exercise Malabar. Such dialogues are important in providing a counterbalance to tensions created in South China by especially China.

 

China issue

• In the last few years, China has expanded its influence and assertiveness in the region particularly in the South China Sea.
• It continues to create and occupy more islands and militarize them in the South China Sea despite opposition from the neighboring countries like the Philippines and ASEAN as well.
• This has also brought India, US and Japan together.

 

Action on economic offenders

• Prime Minister Narendra Modi presented a nine-point programme on ways to take action against fugitive economic offenders. India managed to push through a clause in the final communiquéwhich calls for a universal law which allows the assets of economic offenders in other nations to be frozen, and their repatriation expedited. 
• This is significant given that some defaulters have fled the country after transferring assets abroad.

 

RIC

• Leaders of India, China and Russia called for reforming multilateral institutions, including the United Nations (UN) and the World Trade Organization (WTO), as they understood the benefits of a multilateral trading system and an open world economy for global growth.
• They also agreed to have regular consultations to jointly promote international and regional peace and stability, to strengthen cooperation through BRICS (Brazil, Russia, India, China and South Africa), the SCO (Shanghai Cooperation Organization) and the East Asia Summit (EAS) mechanisms, to address global challenges such as terrorism and climate change.

 

Criticism Insufficiently legitimate

 

• The G20 is in a dangerous downward spiral of its own. Much like Argentina, it requires a return to global cooperation if it is to break out of it. US President Donald Trump has made the upcoming G20 meeting all about his bilateral meeting with Chinese President Xi Jinping.
• But if the G20 is to find durable long-term solutions to the challenges facing the world, it cannot allow itself to be sidelined so easily into a Trump-style Punch-and-Judy show. Global challenges require global solutions.
• The consensus approach is now being aggressively challenged. It leaves many wondering whether this week’s G20 meeting will be doomed to the same fate as that of APEC.
• President Trump is no fan of the G20. His extreme views and unreasonable demands mean that G20 meetings quickly become the ‘G19 versus one’. Bilateral dealing is designed to help him circumvent this problem. He has created a great deal of hype about his bilateral meeting with President Xi. 

No permanent secretariat

• Simultaneously, the informal structure of the G20, with a rotating chair and no permanent secretariat, means that agendas are determined each year by the chair and so can swing widely, and formal mechanisms to monitor follow-through on countries’ public commitments are weak.

Bias

• The G20 is composed of 20 large and important economies. This creates a situation in which small countries have to follow their big brothers, in order to survive.
• The main threat to the G20’s effectiveness is its lack of domestic legitimacy within member countries. The group is widely perceived by the public as transnational elites hatching plans behind closed doors in insulated centers of power.

• The US had a big presence and clearly, the most unpredictable and volatile President Trump dominated the entire meeting and the Communique echoed Trump’s words regarding the need to reform the WTO and the world trading system.
• Without genuine ex-ante engagement to build trust and support with diverse domestic constituencies such as labor, business, civil society, and the members of parliaments and congresses that purportedly represent these different interests — leaders will never have space within the G20 to negotiate meaningful agreements.

Failed to live up to the expectations

• Finance ministers and heads of state now come to the table with their hands tied, their positions determined in advance by their governments and a formal script that precludes meaningful and creative compromises.
• And the problem only increases once leaders leave summits to return home. Bound internationally by public commitments, but without the ability to get those agendas enacted at home, the effective implementation of commitments is even weaker than the ability of leaders to forge meaningful agreements in the first place.
• The G20 summit has in effect become a G30 because countries unhappy about being frozen out of the club have turned up anyway.

More showoff and less efficient

• Meetings have become talkfests and photo opportunities. The willingness to come together in the hostile environment of late 2008 and early 2009 has entirely dissipated.
• The G20 agenda utterly fails to break with the tired, broken policies of the free market.

• Today the 20 countries have a different identity than when G20 was founded. Intended to be setting a framework for global governance, it has become a stage for an increasing number of authoritarian and populist leaders.  This year, the controversial presence of Prince Salman bin Mohammad of Saudi Arabia created a stir.
• The G20 summits come at a great cost, especially for a country like Argentina which is still reeling under high inflation and an austerity drive.

What impact does the G20 have?

The G20 is the most important forum for international cooperation. During the meetings, the main challenges of the world are discussed and the main policies are coordinated at the global level. In the face of an uncertain international context, international cooperation is key, and thus the G20 acquires even more relevance.

The main achievements of the G20 include:

• the increased participation of emerging countries in global issues,
• the reform of international financial institutions,
• the monitoring of national financial institutions,
• the improvement in the regulations of the economies whose problems led to the crisis and the creation of safety nets to prevent problems in the future.

The G20 also specifically helped to provide emergency funds during the 2008 crisis and plays an important role in financing for development. 

Conclusion:

• Differences aside, the global alliances played out on the G20 stage are a reminder of the benefits of having such a forum to establish consensus on the issues that matter.
• They might not always deliver on the promises made but such platforms give hope of talk followed by meaningful action.
• It is only when their leaders sit down together that there is a real chance of finding collective solutions to globally pressing issues.
• The G20 is capable of delivering practical outcomes if countries use it strategically.

 

The complete story can be found here – 

G20 : Economic Cooperation ahead