UPSC Essentials | Weekly news express : G20 Summit 2023 — Key takeaways and points to ponder (Part 1)

Group 1	Group 2	Group 3	Group 4	Group 5
Australia	India	Argentina	France	China
Canada	Russia	Brazil	Germany	Indonesia
Saudi Arabia	South Africa	Mexico	Italy	Japan
USA	Turkey	UK	South Korea

— The presidency rotates from group to group. However, each country within a group is eligible for presidency when it is their group’s turn. Thus, the countries in the eligible group negotiate among themselves to determine the group’s presidency.

What does the G20 presidency entail?

— The presidency is responsible for setting the G20 agenda for the year. This is done in consultation with other members as well as pertinent global developments.

— The president also gets to host various meetings and the G20 Leaders’ Summit, which is the culmination of all the work done by the group at lower levels through the year. It is in charge of all logistics and in absence of a permanent secretariat, provides the human and material resources to successfully conduct the workings of the forum for the year.

— Moreover, the G20 president also has the prerogative to send invitations to other guest countries and organisations to take part in G20 processes for the year.

— In short, the G20 presidency is a major honour and responsibility, one which allows the country to determine the workings of the group for a year.

What is the working structure of the G20?

— The G20 works in three major tracks — two of them are official and one is unofficial, former Indian diplomat JS Mukul, who served as sous-sherpa for the G20 process and was involved in six G20 summits between 2008 and 2011, told The Indian Express.

— The official tracks are the Finance Track and the Sherpa Track. The unofficial track includes engagement groups or civil society groups.

FINANCE TRACK: Headed by the finance ministers and central bank governors, who usually meet four times a year, it focuses on fiscal and monetary policy issues such as the global economy, infrastructure, financial regulation, financial inclusion, international financial architecture, and international taxation. It currently has 8 working groups.

SHERPA TRACK: Established after the inception of G20 Leaders’ Summit in 2008, it is headed by Sherpas, who are the appointed representatives of the member countries’ president/prime minister. It focuses on socio-economic issues such as agriculture, anti-corruption, climate, digital economy, education, employment, energy, environment, health, tourism, trade, and investment. It currently has 13 working groups.

ENGAGEMENT GROUPS: The unofficial track comprises non-government participants from each member country dealing with a gamut of issues. These groups draft recommendations to the G20 leaders that contribute to the policy-making process. There are 11 Engagement Groups at the moment.

Who were invited to this year’s G20 Summit?

— In addition to the member countries, each year, the G20 president invites guest countries to participate in the G20 meetings and the Summit. This year, India has invited Bangladesh, Egypt, Mauritius, the Netherlands, Nigeria, Oman, Singapore, Spain and UAE as guest countries during its G20 presidency.

— The president also invites certain international organisations (IOs). India has invited the International Solar Alliance (ISA), the Coalition of Disaster Resilient Infrastructure (CDRI) and the Asian Development Bank (ADB) as guest IOs in addition to the regular G20 IOs (who participate every year) which include the UN, the International Monetary Fund (IMF), the World Bank (WB), the World Health Organization (WHO), the WTO, the International Labour Organization (ILO), the Financial Stability Board (FSB) and the Organization for Economic Cooperation and Development (OECD).

— India also invited the chairs of the following regional organisations (RO): the African Union (AU), the African Union Development Agency-New Partnership for Africa’s Development (AUDA-NEPAD) and the Association of Southeast Asian Nations (ASEAN).

Do the invitees remain the same every year?

— One of the main prerogatives that comes with the G20 presidency is the ability to invite guest countries, IOs and ROs. These invitations are a tool for the president to set the agenda and guide G20’s workings.

— For instance, experts have pointed out that India’s invitations to African countries and ROs this year are part of a concerted Africa outreach by the Narendra Modi government, an effort to counter China’s ever-growing presence in the continent. India has even made calls for AU to be made a permanent member of the G20.

Why are the International and Regional Organisations invited?

— IOs and ROs are important for the G20 to achieve its aims of furthering international cooperation and implementing any pronouncements made by the group.

— As mentioned previously, the G20 itself is an informal grouping, in the sense that it does not have any direct power to govern or implement any pronouncements made. Rather, it depends on its members and IOs to do that. This is why it is crucial to involve IOs in the workings of the G20.

— For instance, one of the areas India’s G20 presidency has emphasised has been health. An organisation such as the WHO is crucial in this regard, as decisions made in the G20 can be implemented and carried forward by it.

— Similarly, ROs being a part of the G20 helps further the group’s reach to countries that otherwise might not be members but who remain crucial to the G20’s agenda nonetheless. For instance, ASEAN as an RO can represent the interests of all its member countries including the likes of the Philippines and Thailand which are not otherwise a part of the G20.

Let’s go to basics…

How was G20 created?

Explained by Arjun Sengupta

— The G20’s emergence in the international order was not “the outcome of a carefully designed plan” by world leaders to address pressing international issues. As writer Karoline Postel-Vinay puts it in the book The G20: A New Geopolitical Order (2014), “The emergence of the G20 in the international order arose from a combination of chance and necessity. It is partly the product of improvisation. It is also a logical consequence of the socioeconomic evolution of the world.”

— In the 1990s, as the “spectre of communism” became a thing of the past and vibrant economies emerged in the Global South, there was a need for reform in world institutions that had hitherto been dominated by nations from the Global North.

“World institutions such as the UN and the International Monetary Fund (IMF) had not managed to overcome the North-South divide in their mode of deliberation… the G8 … perpetuated this dichotomy,” Postel-Vinay wrote. “For large countries that were both rich and poor, such as China, India and Brazil … from the standpoint of the world order, the North-South divide was no longer as clear … the G20 offered an initial response to the need for reform,” she added.

— Thus, the G20 emerged in the context of a growing recognition among Global North nations (specifically the G7) that emerging economies in the Global South were not adequately represented in global economic discussion and governance.

Aftermath of the Asian financial crisis

— The G7 was set up in 1975, in the aftermath of the twin exchange rate and oil crises of the early 1970s. Originally comprising France, West Germany, Japan, Italy, the UK and the US, Canada joined in 1976. Finance ministers and central bank governors of the G7 meet annually to discuss important economic issues and challenges.

— In 1997, the Asian financial crisis ripped through some of the fastest-growing economies in East Asia. It soon spread to Latin America, another hub of rapidly developing Global South nations. It was in the context of this crisis that the G22, G20’s earliest iteration, was set up in 1998. While initially conceived as a one-time crisis-response meeting, in early 1999, two more meetings were convened including 33 members (G33) to discuss reforms of the global economy and the international financial system.

— The dissatisfaction with the ad hoc nature of the G22 and G33 processes, however, led to the eventual formation of the G20 in late 1999. The joint communique issued by finance ministers of the G8 (Russia was added in 1997 and removed in 2014) on September 1999 read:

“[W]e propose to establish a new mechanism for informal dialogue … among systemically significant economies … in December in Berlin, we will invite our counterparts from a number of systemically important countries from regions around the world to launch this new group.”

— Between 1999 and 2008, it operated, mostly outside the public eye, with annual meetings between members’ finance ministers and central bank governors. Another crisis would catapult it to its present status.

The global economic crisis of 2008 and the creation of the G20 leaders’ summit

— The earliest proposal to create a G20 leaders’ forum was championed by Canadian Prime Minister Paul Martin in 2005, but opposition from the US slowed progress.

“Everybody was onside, except the United States. George Bush himself was reluctant, he went back and forth, he wasn’t against it but he wasn’t for it. I was very sure, as were a number of us, that it would take a crisis to bring it to the leaders’ level, and that’s exactly what happened,” Paul Martin said in an interview in 2018.

— In 2008, the world saw perhaps the greatest economic crisis to hit since the Great Depression (1929-39). France, which held the EU presidency at the time, backed by the UK, argued for an emergency summit meeting to address the crisis. But whom to invite?

— The G8 was not sufficiently influential on its own to stabilise a crisis on this scale. Typically, there would be extensive discussion among various countries to decide the invitees. But there was simply no time to go through that.

— The G20, which had been functioning for nearly a decade by that time, was the obvious answer. As Postel-Vinay put it: “In 2008, it [G20] was in the right place at the right time.”

— The first G20 leaders’ summit (the ‘Summit on Financial Markets and the World Economy’) was convened in Washington DC in November 2008. In addition to the 20 members, the heads of the IMF, the World Bank and the United Nations were invited, along with Spain and the Netherlands. Annual summits have been held ever since.

BTW

Why G20 matters despite its failings?

By: New York Times

— Most of the group’s joint statements since it formed in 1999 have been dominated by resolutions as solid as gas fumes, with no clear consequences when nations under perform.

One example: At the 2021 summit in Rome, G20 leaders said they would limit global warming with “meaningful and effective actions,” highlighting a pledge to end the financing of coal power plants overseas.

— But the communiqué left out domestic coal investments. And in 2022, coal-fired power generation worldwide reached a new high, according to the International Energy Agency. This year, investment in coal is expected to rise by another 10%, to $150 billion — despite G20 statements and a scientific consensus that coal use must end immediately.

What has the G20 accomplished?

— The G20 began with a meeting of finance ministers after the wave of steep currency devaluations in the late 1990s, and added an annual meeting of world leaders after the global financial crisis a decade later.

— Senior officials (mostly Germans, Canadians and Americans) pushed for what they saw as a more flexible, inclusive forum than the Western-led Group of 7 nations, or G7. They believed that convening both established and rising powers would better protect the global economy, and early evidence suggested that they were right.

— Many experts praised the group for stabilizing the financial system in 2008 and 2009 by agreeing to spending measures worth $4 trillion and instituting bank reforms to rebuild trust.

— The 2016 summit in China also showed the power of bringing leaders together when President Barack Obama and the Chinese leader, Xi Jinping, announced that their countries would sign on to the Paris Agreement on climate.

— More recently, in 2021, the G20 supported a major tax overhaul that included a global minimum tax of at least 15% for each country. It also backed new rules that would require large global businesses like Amazon to pay taxes in countries where their products are sold, even if they lack offices there.

— The plan promised to add billions in government revenue and make tax havens less of a driving force for corporations. But, as with a lot of G20 statements, follow-through has been weak.

“The global tax agreement is an important step in the right direction,” the International Monetary Fund declared this year, “but it is not yet operational.”

Why has the G20 struggled to make an impact?

— Some critics argue that the G20 was flawed from the start, with a membership roster based on the whims of Western finance officials and central bankers.

— According to Robert Wade, a political economy professor at the London School of Economics, German and U.S. officials “went down the list of countries saying, Canada in, Portugal out, South Africa in, Nigeria and Egypt out, and so on.”

— For example, Argentina is neither an emerging economy nor among the 20 largest. It is a G20 member, many argue, because one of its former economy ministers, Domingo Cavallo, was a Harvard roommate of Larry Summers, the U.S. Treasury secretary from 1999 to 2001. In an email, Wade said the organization still suffered from a “lack of representational procedures,” without a well-defined process for inclusion. “A given state is in or out, permanently,” he said.

— The group’s summits have also become a forum for the forces pulling against the established post-World War II order. When the G20 started, there was more consensus about how to hold the world together. Free trade was ascendant; great power rivalry seemed but a memory; and optimists worldwide hoped that the G20 would lead to a broader power base for aging institutions like the United Nations and the International Monetary Fund.

— Those hopes are still there, and blossoming elsewhere (the recent BRICS summit in South Africa is the latest example). But conflicts have supplanted G20 team efforts. The United States and China have become bitter competitors. Nationalism has surged as networked economies have come to look far riskier after the COVID-19 pandemic and the war in Ukraine, which has pushed up food and energy prices for countries far from the front lines.

— “There’s a lot more dissatisfaction with hyper-globalization, open trade and free capital,” said Stewart Patrick, director of the Global Order and Institutions Program at the Carnegie Endowment for International Peace. “In a situation where the global economy is fracturing and countries are pursuing their own thing, the question is, what do you do when you still have rules and institutions that were created for a very different environment?”

Does the world need the G20?

— Few critics want to see the G20 eliminated. They worry that it is already weakening, with Xi skipping this year’s meeting. (Russian President Vladimir Putin will also be a no-show.)

— Many foreign policy experts argue that the G20’s failures simply point to the need for modernization in international institutions.

— As Dani Rodrik and Stephen M. Walt wrote last year in Foreign Affairs: “It is increasingly clear that the existing, Western-oriented approach is no longer adequate to address the many forces governing international power relations.” They predicted a future with less agreement, in which “Western policy preferences will prevail less” and “each country will have to be granted greater leeway in managing its economy, society and political system.”

— Wade has called for a reformulated G20, with a core of economic powerhouses complemented by a rotating set of smaller nations. Patrick said the G20 could play a leading role in the “post-neoliberal” order by discussing how to separate the benefits of trade from the risks of overindulging the free-market system that the organization was built to protect.

“The G20 would be a natural place to begin hammering out what rules of peaceful coexistence permit countries to share in a more tempered globalization,” he said. “That would be a positive agenda.”

(This article originally appeared in The New York Times.)

What is the G20 logo and its significance?

— India introduced the lotus as its logo and the Sanskrit phrase ‘Vasudhaiva Kutumbakam — One Earth, One Family, One Future’ as the theme. Bharat, the other name for India, is also written alongside.

— A government press release said: “The G20 Logo draws inspiration from the vibrant colours of India’s national flag – saffron, white and green, and blue. It juxtaposes planet Earth with the lotus, India’s national flower that reflects growth amid challenges. The Earth reflects India’s pro-planet approach to life, one in perfect harmony with nature.”

— Introducing the lotus logo via a video conference last year, Prime Minister Narendra Modi said, “India’s G20 presidency is coming at a time of crisis and chaos in the world… The world is going through the after-effects of a disruptive once-in-a-century pandemic, conflicts and a lot of economic uncertainty… The symbol of the lotus in the G20 logo is a representation of hope in this time. No matter how adverse the circumstances, the lotus still blooms. Even if the world is in a deep crisis, we can still progress and make the world a better place.”

— He said, “In Indian culture, both the Goddesses of knowledge and prosperity are seated on a lotus. This is what the world needs most today. Shared knowledge that helps us overcome our circumstances. Shared prosperity that reaches the last person at the last mile… This is why, in the G20 logo, the Earth is placed on a lotus too.”

— “The seven petals of the lotus in the logo are also significant. They represent the seven continents. Seven is also the number of notes in the universal language of music. In music, when the seven notes come together, they create a perfect harmony. But each note has its own uniqueness. Similarly, the G20 aims to bring the world together in harmony while respecting diversity,” he added.

— The logo is to reflect the idea of Vasudhaiva Kutumbakam (the whole earth is a family). “The lotus flower symbolises our Puranic heritage, our aastha (belief) and boddhikta (intellectualism),” the PM said.

What is the significance of the G20 theme?

— According to the official G20 website, the theme – “Vasudhaiva Kutumbakam — One Earth, One Family, One Future’” – is drawn from the ancient Sanskrit text of the Maha Upanishad. “Essentially, the theme affirms the value of all life – human, animal, plant, and microorganisms – and their interconnectedness on the planet Earth and in the wider universe,” it adds.

— “India, with its mantra of ‘One Sun, One World, One Grid’, has called for a renewable energy revolution in the world. India took up a campaign of ‘One World, One Health’ to strengthen global health. Now, in the G20 also, our mantra is One Earth, One Family, One Future. These thoughts and values of India show the way for the welfare of the world,” the Prime Minister said.

— Further, the website says the theme also spotlights LiFE (Lifestyle for Environment), “with its associated, environmentally sustainable and responsible choices, both at the level of individual lifestyles as well as national development, leading to globally transformative actions resulting in a cleaner, greener and bluer future.”

— “The logo and the theme together convey a powerful message of India’s G20 Presidency, which is of striving for just and equitable growth for all in the world,” the press release adds.

Highlights of G20 New Delhi Leaders’ Declaration

ON UKRAINE WAR

ALL STATES must act in a manner consistent with purposes and principles of UN charter in its entirety.

THEY MUST REFRAIN from threat or use of force to seek territorial acquisition against territorial integrity and sovereignty or political independence of any state; also from use or threat of use of nuclear weapons is inadmissible.

PEACEFUL RESOLUTION of conflicts, and efforts to address crises as well as diplomacy and dialogue are critical.

“THERE WERE different views and assessments of the situation.”

“TODAY’S ERA must not be of war.”

ON GRAIN/FOOD/ENERGY SECURITY

CALLS ON Russia and Ukraine to ensure immediate and unimpeded deliveries of grain, foodstuffs, and fertilizers/inputs from Russia and Ukraine.

EMPHASISING importance of sustaining food and energy security, called for cessation of military destruction or other attacks on relevant infrastructure.

POTENTIAL FOR high levels of volatility in food and energy markets remains.

ON ECONOMIES & FINANCIAL MARKETS

“WILL PROTECT the vulnerable, through equitable growth and enhancing macroeconomic and financial stability.”

REAFFIRM April 2021 exchange rate commitment made by G20 finance ministers and central bank governors.

ENDORSE financial stability board’s high-level recommendations for regulation, supervision and oversight of crypto-assets, activities.

FINANCE MINISTERS and central bank governors will discuss taking forward the cryptocurrency roadmap at their meeting in October.

RENEW our commitment to ensure a level-playing field and fair competition by discouraging protectionism, market distorting practices.

ON CLIMATE CHANGE

NEED TO ACCELERATE efforts to phase down unabated coal power, in line with national circumstances.

WILL WORK towards facilitating low-cost financing for developing countries to support their transition to low carbon.

WILL PURSUE and encourage efforts to triple renewable energy capacity globally through existing targets and policies, in line with national circumstances by 2030.

REITERATE our commitment to take action to scale up sustainable finance.

REITERATE use of carbon pricing and non-pricing mechanisms and incentives toward carbon neutrality and net zero.

RECOGNISE need for increased global investments to meet our climate goals of the Paris agreement.

NOTE NEED OF $5.8-5.9 trillion in pre-2030 period required for developing countries, in particular for their needs to implement their emission targets.

CALLS ON parties to set an ambitious, transparent, and trackable New Collective Quantified Goal of climate finance in 2024, from a floor of $100 billion a year.

ON GLOBAL DEBT VULNERABILITIES

COMMIT TO promoting resilient growth by urgently and effectively addressing debt vulnerabilities in developing countries.

CALL FOR swift conclusion of the debt treatment for Ethiopia.

ON HEALTH

REMAIN COMMITTED to strengthening global health architecture.

WILL ENHANCE resilience of health systems and support development of climate-resilient and low-carbon health systems in collaboration with multilateral banks.

‘Global South’

North-South divide, and G20 as a forum which gave voice to the Global South

Explained by Arjun Sengupta

— Prime Minister Narendra Modi have repeatedly invoked the term ‘Global South’. Earlier this year, at the G20 Development Ministers’ meeting in Varanasi, the Prime Minister said that “development is a core issue for the Global South”.

The North-South divide

— The term ‘Global South’, in conjunction with ‘Global North’, was first used in 1967 by the American academic Carl Oglesby to refer to the “centuries of dominance” that some countries (the North) have exercised over others (the South). It became much more popular by the turn of the century.

— Today, this categorisation is ubiquitous in international development and political discourse. While traditionally powerful, industrialised nations are seen as the ‘Global North’, the ‘Global South’ refers to nations further behind in their development journeys.

— The South — which is not the same as the geographical south, or the southern hemisphere — includes countries in Africa, Asia, Latin America, and Oceania (sans Australia and New Zealand) whereas the North includes countries of Europe, the United States, Canada and Australia-New Zealand.

— Notably, the North still shares hierarchical relations with the South in the international order, which is perhaps the best reflected in the make-up and workings of international forums and institutions. Last year, on the day India assumed the G20 presidency (December 1, 2022), External Affairs Minister S Jaishankar had said that the country would be the “voice of the Global South, that is otherwise under-represented in such forums”.

Genesis of the divide

— To understand how the North-South divide in international affairs works, one first needs to understand how it came into existence. Simply put, the North-South divide is a product of colonialism and the hierarchical relations between colonial empires and the colonised.

— As the colonial powers industrialised and developed first, exploiting labour and resources from their colonies, an ever-growing imbalance of power emerged. This imbalance of power continues to dictate relations between modern nation states, largely mirroring the North-South divide.

— Even after the emergence of the post-World War II international order, with its promise of decolonisation and democracy, these hierarchies in the international sphere did not disappear. As Alexander Barder wrote in Empire Within: International hierarchy and its imperial laboratories of governance (2015), while “canonical approaches to international theory continue to…obfuscate the reverberating impacts of such hierarchical relations”, these relations endure, both in the economic gap between the North and South, and the institutions that are charged with global governance.

Gs of North, Gs of South

— Nearly all the international institutions and fora that emerged post-1945 reflect the North-South divide — from the United Nations and its offshoots to financial institutions such as the World Bank and IMF to the various “Gs”, or constellations of nations with shared interests.

— Much before the G20 came into being, the G7 came up, during the economic crises of the 1970s. It comprised France, Canada, Italy, West Germany, the United States, the United Kingdom and Japan — the strongest economic powers of the time.

— There were other ‘Gs’ too, notably among nations from the South, such as the G77 (1964) and the G24 (1971). These largely unsuccessful groupings were born out of a desire to counterbalance the dominance of the North in global governance. But by doing so, they too affirmed rather than challenged the North-South dichotomy.

— As Karoline Postel-Vinay puts it in The G20: A new geopolitical order (2011): “All of the ‘Gs’ that have come into being since the postwar period show evidence of “asymmetric global governance”, to use Roy Culpeper’s expression.” They were either groupings of the North or groupings of the South.

The rise of China, India, Brazil

— However, entering into the last decade of the 20th century, the North-South divide, while still very much in existence, was no longer as clear cut as earlier. Emerging economic powers such as China, India, and Brazil exhibited characteristics of both the North and the South.

— On one hand, their gross national income could rival that of richer Global North nations. On the other hand, socially and politically, they were grappling with challenges that are typical to the Global South. Despite the breadth and depth of their socio-economic challenges, the sheer weight of their populations and the growing size of their economies underlined the significance of these countries to the rest of the world.

— This is why the G20 – where nations from both the Global North and South are equal members – is important. “…What the constitution of the G20 points up is that it is impossible today to consider the world according to a clear division between North and South and settle for a dialogue that is confined to this overly simplistic representation,” Postel-Vinay writes.

— The G20 was founded in the aftermath of the Asian financial crisis, but it became truly important in global geopolitics post the 2008 global economic crisis. As much of the world reeled from the effects of the recession, it was obvious that only North countries could not provide all solutions, and that the Global South needed to have a greater say in the way global challenges were addressed.

— As Peter I Hajnal put it in The G20: Evolution, interrelationships, documentation (2014): “…The shift of the balance of power from advanced market-economy countries to emerging giants — especially China, India and Brazil — made clear the need to include both kinds of actors as full equals… This development [rise of the G20] was inevitable and necessary for effective global governance. Beyond realpolitik, this shift also has to do with equity, if only by implication.”

In the upcoming part this special edition of weekly news express we shall focus on questions such as:

African Union in G20: What is the group?

What is India-Middle East-Europe Economic Corridor?

Domestic woes, friction with the US, or to snub India? Behind Xi Jinping’s no-show at G20 summit

G20 Summit: How win-win came, para by para?

and many more points to ponder…

Share your views, answers and suggestions in the comment box or at manas.srivastava@indianexpress.com. 

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