India’s prime minister, Narendra Modi, will have the unenviable task of forging agreement between the world’s biggest developed and developing countries when G20 leaders gather in Delhi for their annual summit later this week.
The scale of the challenge will be reflected in two significant no-shows. Vladimir Putin will not be leaving Moscow and nor will Xi Jinping be flying in from Beijing. The theme of the meeting is “One Earth, One Family, One Future” but in truth the G20 is riven by conflict and struggling to remain relevant.
It wasn’t always this way. The group dates back to the late 1990s but came of age a decade later during the global financial crisis, when rich and poor countries worked together to mitigate the impact of the slump that followed the near-collapse of the global banking system.
Conceptually, the G20 made sense because it recognised that the tectonic plates of the world economy had shifted. It no longer made sense for the rich members of the G7 – the US, Japan, Germany, France, Canada, Italy and the UK – to try to solve problems on their own when China, India and Brazil were emerging as serious forces.
The G20 accounts for about 80% of global gross domestic product and should be well placed to forge agreement on issues such as the climate crisis, financial stability and debt relief for the world’s poorest nations. In reality, its record has been unimpressive and since the high point of cooperation reached in London in 2009, meaningful agreement has been increasingly hard to find.
There are a number of reasons for this. The first involves the structure of the G20, which has a diverse membership and a presidency that rotates each year, but lacks a permanent secretariat. This lends itself to summits that offer photo opportunities and bilateral chats rather than decisions. Modi wants to expand the membership of the G20 to include the African Union, which would make the group more representative but even more unwieldy.
The second problem is the deep fault lines running through the G20. Clearly, one big divisive issue is the war in Ukraine, where attempts by western countries to impose a full economic blockade of Russia have been thwarted by China and India’s willingness to import Russian oil.
But relations between China and India are far from cordial. The two countries have a long-running border dispute and are economic rivals. Modi is actively seeking to build stronger economic ties with the US and is eager not to take sides in the new cold war that has developed between Washington and Beijing.
The third problem is that the G20 was created to manage globalisation, but globalisation is in retreat. As Dario Perkins of TS Lombard puts it: “De-globalisation is real and gaining traction, despite the resilience of global trade over the past three years. With bilateral trade patterns starting to shift, and both the US and China using strategic industrial policy with a fair amount of success, there is no way back to the neoliberalism of the last 40 years.”
There are still issues where breakthroughs are possible. The G20 could take action to avert a looming debt crisis in the world’s poorest countries. This, though, will require the US and China to put their differences aside.
The Economist Intelligence Unit says economic agreement will be increasingly difficult for the G20, hamstrung as it is by geo-political differences. It believes a joint leaders’ declaration will probably emerge from the summit, but “ongoing differences between members over text related to the Russia-Ukraine war suggests that negotiations will go to the last minute. Failure to issue a declaration would suggest the G20 is losing its viability as an organisation.”
But the fact that issuing a bland communique is seen as an achievement tells its own story. The G20 has seriously lost its way.
