G20: A compass and a corridor

Politics takes centre stage

While the summit issued glittery statements recognising global challenges, it failed to offer radical solutions to confront them.

Geopolitical tensions, migration, terrorism, climate change, and the uncontrolled development of artificial intelligence all affect the stability of the global economy. As such, the G20 has expanded its scope beyond its original focus on the economy to manage risks of a non-economic nature. 

The 2020 Covid-19 pandemic was a major stress test for globalisation, international cooperation, and the coordination of global responses, in a climate of mistrust that wasn't lost on G20 countries.

Like other countries, G20 nations also implemented nation-first economy policies prioritising their citizens' needs over international considerations and political alliances.

They later pumped more than $5tn into the global economy to counter the epidemic's social, economic, financial, and health impacts. They took the initiative to suspend debt payments owed by dozens of countries to the G20 and the Paris Club.

Politics always finds a way to take centre stage. It can make or break situations. The G20 summit this year wasn't immune from this fact, as evidenced by the conspicuous absence of both Russia and China.

The disunity of member states on Russia's war against Ukraine was the elephant in the room. Many G20 nations were unhappy with Moscow's decision to suspend the Black Sea Grain Initiative and bomb Ukrainian ports, endangering global food security.  

On its part, China's absence seems to be related to the rise of India, which is promoting itself as a growing world power, much to Beijing's dislike. This comes as tense relations between China and the United States have only intensified.

While the problems seem to be economic on the surface, in light of trade and technical restrictions imposed by Washington, political undertones lurk in the background, which could potentially place the two world powers at the threshold of war.

Strengths and criticisms

Nonetheless, there is no doubt of the G20's crucial importance as a group of nations that account for nearly 80% of global output – compared to only 45% for the G7 – as well as three-quarters of international trade and over two-thirds of the world's population.

Others complain that excluding 173 countries gives them no voice or say in economic initiatives and decision-making. This criticism warrants a fresh review of the group's role, 25 years since its establishment. 

There are still poor countries and others that have become poorer due to mismanagement by G20 founding countries, with some exceptions. This is not to mention the exploitation of vulnerable peoples and the global economic and financial turmoil that resulted from their practices and conflicts over the years.

The G20 can find a global development approach to offset these apparent problems. It shouldn't wait for economic crises to arise. It should proactively mobilise and coordinate its efforts to utilise its fiscal and monetary power to preempt such disasters.

Friction and redlines

History has proven that friction exists between members due to red lines, calls for institutional reform of the WTO, the IMF and the World Bank, and the adoption of a multilateral and rules-based approach to global trade.

On its part, the US is reluctant to tackle these issues before G20 countries recognise the importance of reciprocity and equal opportunities in trade and investment relations at the Hamburg Summit.

Despite criticisms, the G20 has affected positive change. It has supported infrastructure development in many developing countries by calling on multilateral organisations and banks, including the OECD and the World Bank, to adjust their procedures and incentives to prioritise and finance such projects.

The G20 has also succeeded in developing an action plan to enhance food security and establish a global system to monitor the world's food stocks. However, in reality, financial and food crises prevail due to wars, particularly the war in Ukraine.

The G20 is constrained by conflicting interests and needs to be reformed in the face of multiplying crises. While the summit is often used as a platform to market and publish announcements as Indian Prime Minister Narendra Modi attempted to do, geopolitical and economic differences between the US and China are set to drive the trajectory of the grouping and other groupings in the future, no matter how hard India tries to avoid them.