G20 (Group of Twenty)

Context:

Shri Sanjay Dhotre, MoS for Education and Electronics & IT will represent India in the G 20 Education Ministers meet on the 22^nd of June 2021

About:

• The G20 (or Group of Twenty) is an intergovernmental forum
• It comprising 19 countries and the European Union (EU) with representatives of the International Monetary Fund and the World Bank..
• The G20 does not have permanent offices or employees. The country that presides over the group (in an year) takes care of all the organization and the logistical coordination of the meetings.
• It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, and sustainable development.
• The G20 is composed of most of the world’s largest economies, including both industrialized and developing nations.
• The group collectively accounts for around 90 percent of gross world product (GWP), 75-80 percent of international trade, two-thirds of the world’s population, and roughly half the world’s land area.
• The G20 was founded in 1999 in response to several world economic crises.
• Since 2008, the group convenes at least once a year, with summits involving each member’s head of government or state, finance minister, foreign minister, and other high-ranking officials; the EU is represented by the European Commission and the European Central Bank.
• Other countries, international organizations, and nongovernmental organizations are invited to attend the summits, some on a permanent basis.
• At its 2009 summit, the G20 declared itself the primary venue for international economic and financial cooperation

Origin

• 1997-1999 ASIAN Financial Crisis: This was a ministerial-level forum which emerged after G7 invited both developed and developing economies. The finance ministers and central bank governors began meeting in 1999.
• Amid 2008 Financial Crisis the world saw the need for a new consensus building at the highest political level. It was decided that the G20 leaders would begin meeting once annually.
• To help prepare these summits, the G20 finance ministers and central bank governors continue to meet on their own twice a year. They meet at the same time as the International Monetary Fund and The World Bank.

G20 Countries:

How does G20 work?

The G20 agenda is annual and includes more than 50 meetings, enhanced by working groups and discussions between permanent members and guests.

The cycle concludes with the Leaders Summit , where a final declaration is signed by which the leaders commit themselves to address and collaborate on the issues addressed. For example:

• At the Hamburg Summit in 2017, the leaders agreed to limit protectionism, commit to a system of regulated international trade and favor policies that spread the benefits of globalization.
• At the Hangzhou Summit in 2016, the leaders agreed to expand the role of the G20 to establish greater global cooperation in the fight against tax evasion and promote international collaboration to facilitate investments in green bonds.

Structure and Functioning of G20

• The G20 Presidency rotates annually according to a system that ensures a regional balance over time.
• For the selection of presidency, the 19 countries are divided into 5 groups, each having no more than 4 countries. The presidency rotates between each group. Every year the G20 selects a country from another group to be president.
  India is in Group 2 which also has Russia, South Africa, and Turkey.
• The G20 does not have a permanent secretariat or Headquarters. Instead, the G20 president is responsible for bringing together the G20 agenda in consultation with other members and in response to developments in the global economy.
• TROIKA: Every year when a new country takes on the presidency (in this case Argentina 2018), it works hand in hand with the previous presidency (Germany, 2017) and the next presidency (Japan, 2019) and this is collectively known as TROIKA. This ensures continuity and consistency of the group’s agenda.

Issues Addressed by G20

• The G20 focuses on a broad agenda of issues of global importance, although, issues pertaining to the global economy dominate the agenda, additional items have become more important in recent years, like:

Two working channels of G20 – Finance Channel and Sherpas Channel

The flow of these meetings is channeled through two channels: the Finance Channel, headed by the Ministry of Finance and the Central Bank, and the Sherpas Channel, coordinated by the Chief of Cabinet of Ministers and of which ministries from different areas participate. .

The Finance Channel covers meetings between finance ministers and central bank presidents, as well as meetings of their second lines and working groups on financial issues. In their meetings throughout the year, they focus on global collaboration in financial and monetary policies, which may include issues such as investment in infrastructure, fiscal policy, inclusion and financial regulation.

The Sherpas Channel, meanwhile, covers non-financial issues, such as political commitment, the fight against corruption, development, gender equality, trade and energy, among others. Each member country of the G20 is represented at the meetings by the Sherpa and the minister that corresponds to the subject. The Sherpa then advises his Head of State or Government on the issues discussed and brings the dialogue to the relevant working groups.

To increase the scope and impact of the G20, and to ensure that the approach is truly global, the main international organizations are invited to participate in the meetings and the Leaders’ Summit.

What is G20+?

The G20 developing nations, also called G21/G23/G20+ is a bloc of developing nations which was established on August 20, 2003. It is distinct from the G20 major economies.

• The G20+ originated in September 2003 at the 5th ministerial conference of the WTO held at Cancun, Mexico.
• Its origins can be traced to the Brasilia Declaration signed by the foreign ministers of India, Brazil and South Africa on 6th June 2003.
• The declaration stated that the major economies were still practising protectionist policies especially in sectors they were less competitive in and that it was important to see to it that the trade negotiations that took place provided for the reversal of those policies.
• The G20+ is responsible for 60% of the world population, 26% of the world’s agricultural exports and 70% of its farmers.

India’s Priorities in G20 Summits

• Checking tax evasion to fight corruption
• Choking terror funds
• Cutting the cost of remittances
• Market access for key drugs
• Reforms in the World Trade Organisation to improve its functioning
• “Full implementation” of the Paris Agreement

What makes this G-7 Summit different from the past Summits?

• China factor: After the 2008 financial crisis, the more representative G-20, which includes China, Russia, India and many others, seemed to supersede the G-7.
• But amidst the growing sense that China has gamed the global economic order to America’s disadvantage, there has been renewed interest in like-minded coalitions like the G-7.
• Widening the base of G-7: There is also the recognition of the case for widening the base of institutions like the G-7 beyond the geographic West to include large democracies like India.
• Coalition of democracies: The case for a “coalition of democracies” was certainly gaining ground over the last two decades within American academia and the political class.
• But economic globalisation and the absence of great power rivalry meant there was no compelling policy urgency to construct an “alliance of democracies”.
• That condition has altered radically in the last few years amidst the growing US tensions with China and Russia. 

Achievements

• Flexible: With only 20 members, the G20 is agile enough to make prompt decisions and to adapt to new challenges.
• Inclusive: The inclusion every year of invited countries, international organizations and civil society organization through engagement groups allow for a broader and more comprehensive perspective when assessing global challenges and building consensus to address them.
• Coordinated action: The G-20 has also played a crucial role in strengthening the international financial regulatory system, including better coordination across countries.
• Facilitated an increase in lending from multilateral development banks of US$235 billion at a time when private sector sources of finance were diminished.
• Major achievements of the G20 include quick deployment of emergency funding during the 2008 global financial crisis.
• It also works for reforms in international financial institutions by improving oversight of national financial institutions. Such as G20 driven reforms to the international tax system, through the G20/OECD Base Erosion and Profit Shifting (BEPS) project and implementation of tax transparency standards.
• G20 played a critical role in the ratification of the Trade Facilitation Agreement, with the WTO estimating it could contribute up to somewhere between 5.4 and 8.7% to global GDP by 2030 if the agreement were fully implemented.
• Better Communication: G20 bring World’s top developed and developing countries together to bring consensus and reasoning into decision making through discussion.

Criticism Insufficiently legitimate

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 talk fests 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.

Source: G-20; PIB