Establishment of G20 is rooted in Asian Financial Crisis. Initially it was a forum only for FMs and governors of central banks from the 19 major developed and emerging economies and European Union. Aim of the summit was to discuss only economical matters. But during the Global Financial Crisis of 2008, in historical G20 summit at Washington DC it was upgraded to 2 days meeting of head of governments.
Agenda of G20 was also expanded to health, governance and equality. G20 economies brings together around 85% of world economy, 2/3 of the world population, 80% of world trade. So expectations from the G20 meetings are very high, every country keep eyes on its declaration.
It played critical role in driving the world out from both the crisis. In 2009, world leaders at UK meet agreed on USD 1.1 trillion injection into global economy. So we can say that G20 has experience of fighting and emerge victorious out of such crisis.
Unfortunately this time the crisis we are facing is very different. It is caused by pandemic, more than 1/3 of the population is under some form of restriction. There is very little demand in the market. Central banks of the countries are running out of the options. Leaders has no other options then to announce relief package for various industries. But this challenge gives G20 an opportunity to prove itself, establish its relevance again after 2008 crisis, emerge as a more powerful group than ever before.
The Saudi G20 presidency will steer the work of G20 towards Realizing Opportunities of the 21st Century for All. Meet was focused on three aims
- Empowering People Create a condition in which all people can live, work and thrive. Empower both women and youth, encourage quality jobs as well as social protection for all workers, scale up efforts for sustainable development.
- Safeguarding the Planet This includes combating land degradation, habitat loss, managing carbon emissions(G20 responsible for 80% of the world carbon emissions) for sustainable development, preserving the oceans, promoting food security, cleaner energy systems for new era
- Shaping New Frontiers By adopting long-term, bold strategies to utilize and share the benefits of innovation, while harnessing the benefits of digitalization across the economy, encouraging the use of new technologies in various industries.
Lets look at the major points discussed during 2020 meet, had anything solid came out of it or not. We will also analyse what critics call The G20's inadequate response to the worst global recession in decades.
G20 countries agreed for restructuring (only) government debt. Here restructuring means that loan payments are pushed back to June, 2021, to provide interim relief to the countries. Repayments start again after June, 2021. This came just after Zambia became the Africa's first defaulter to Eurobond in this pandemic, speaker of Maldives openly claimed in his tweet that they are not able to afford debt repayment this year. Amid the crisis it is very difficult for low income countries to pay back their loans on time. China is major creditor in G20, responsible for 63% of all loans from G20. Still, it is reluctant to acknowledge the need of restructuring.
You will be surprised to know that one of the reasons why this pact is called historical is just because China agreed on it. It is literally an achievement to bring it in this pact. Debt restructuring is need of the hour and definitely going to provide relief to the affected countries.
But is this enough? Of course not, this is may be a first step. MD of IMF said that
“Let’s be very frank here. We are not out of the woods. This crisis is not over. We need further support through debt relief and fresh financing,.”
Non government groups went step ahead to say that accord should have gone further by including middle-income countries and forcing private investors to accept cancellations. This is true criticism because First, main lender bank of Beijing is China Development Bank, which they said is a private bank, so resisting calls for full participation in debt relief.
Second, USA was open to extend the accord and include middle-income countries, but as you know China will never agree on this. World Bank report claims that COVID-19 to add 150 million extreme poor by 2021. Report estimates that middle income countries will be worst affected. So inclusion of middle-income countries would have increased the significance of the pact by many fold.
Third, why only government banks are compelled to restructure it should also include private banks. Finally, restructuring only to June, 2021 is not going to help much, according to MD of IMF only African countries are going to face a financial gap of USD 345 billion through 2023. This historical pact falls far short of what is needed to tackle the wave of debt crises in poorer countries - said Tim Jones, head of policy at Jubilee Debt Campaign.
PM Narendra Modi calls for a new global index for post corona world comprises of four key elements Creator of vast talent pool, Ensuring technology reaches all segments of society, transparency in governance, dealing with mother Earth with a spirit of trusteeship. It should treat per capita carbon footprint as a benchmark.
This is very good idea, elements that it includes are driving factors of sustainable development. The time has come to focus on multi-skilling and re-skilling to create human talent pool. This is for post corona world, means it will take at-least 3-4 years to come into effect. Before that we have to think about what will be the rank of India in this type of index. I am not saying that rank will demotivate us, instead we have to constantly improve. India ranked 80th among the 180 countries in Corruption Perceptions Index-2020. We have lot to improve before this index comes into place. He further said that actions of G20 amid this pandemic should not be limited economic recovery, trade, jobs, but to focus on planet Earth noting that all of us are trustees of humanity's future.
In every global or block summits this year we are observing that no concrete steps are being taken. That is the reason current crisis is completely different from all the crisis we had ever seen. Every country except China is almost facing recession. So, it is obvious that leaders are thinking about their own country. No one is thinking about the World Bank report cited above. Individual efforts are not going to help much. Each country especially China has to come together to save the millions of lives. Lets accept the fact that Farsightedness which the then leaders of powerful nations like Ronald Reagan(USA), Margaret Thatcher(UK) had showed during late 90s(Montreal Protocol) seems to be missing today. No leader is able to convince China for the well being of humanity.
This year marks the 10th anniversary of the G20 Anti-Corruption Working Group (ACWG). It was established to make comprehensive recommendations on how the G20 could continue to make practical and valuable contributions to international efforts to combat corruption. Inaugural ministerial meeting will be organized in Saudi Arabia to discuss measures to reduce the corruption, how G20 countries can lead by an example.
Corruption is a major issue in some G20 countries. Russia, Mexico, Brazil, Turkey, Indonesia, India, China, Africa ranked low in Corruption Perceptions Index-2020. Strong measures will surely help them to realise the theme and aim of summit.
From a long time, carbon has been important component of energy system that enabled economies to prosper. But as the world seeks solution to address the emission challenge. G20 countries which are responsible for 80% of world emissions has to take steps. Carbon economy encompasses the 4 Rs - Reduce, Reuse, Recycle and Remove to restore the human-earth balance and harmonizing the carbon cycle. This is exactly the idea of new global index as suggested by PM Modi, considering per capita carbon footprint as a principle of development.
By now, you can understand why critics called this summit as inadequate response. No doubt there are some good things that came out of it. But expectations are far high from the group which successfully fought two major crisis. Mistrust between members states has hampered coordination. Pandemic is showing its worst effects on women, youth in both developing and developed nations yet summit mentioned in its declaration that We will work to ensure pandemic does not widen gender inequalities. We affirm the importance of women empowerment and recognize that women are key driver of economic growth. But how and when part is missing.
G20 countries has to develop trust between them, pandemic is not over yet. PM Modi rightly termed this as an important turning point in history of humanity. Response of this group will be remembered for a long long time. Commitments mentioned in the declaration are too good, ground implementation can help lot of countries in this situation. They can also establish strict common framework to keep eye on all projects funded by loans, its T&C, interest rates, whether that project is viable, economical and profitable. This will prevent Hambantota, Djibouti like incidents in future. "Our fates are in each other's hands" as rightly said by UK PM Borris Johnson. World requires strong message of hope and reassurance. Either Today or tomorrow G20 will surely do that.
With that presidency of next year summit passed to Italy. India will host the summit in 2023 as she swapped her presidency with Indonesia.