The G-20 Summit on the World Economy brings together the members of the G 7 comprising France, United States, United Kingdom, Germany, Japan, Italy, Canada and the European Union. It further includes countries such as Argentina, Australia, Brazil, China, India, Indonesia, Mexico, the Republic of Korea, Russia, Saudi Arabia, South Africa and Turkey. This post-World War 2 initiative is aimed at international coordination of of economic policy. These include the key financial institutions, the International Monetary Fund and the World Bank as also the World Trade Organisation, Collectively, the G20 economies account for 80% of the global GDP and two third of the World’s population.
The G 20 was conceived in response to the series of massive debt crises which occurred since the 1990s. These crises include the Mexican Peso crisis, 1997 Asian Financial crisis, the 1998 Russian Financial Crisis which impacted the United States; most prominently in the form of collapse of a prominent hedge fund, and long term capital management. .
The organisation’s primary focus has been the global economy. The themes of the summit primarily dealt with the global economy. The turning point came in 2008 when Brazil was the Chairman. On 11 October 2008 after a meeting of G7 finance ministers, President George W. Bush stated that the next meeting of the G20 would be important in finding solutions to the burgeoning economic crisis of 2008.
The 2008 crisis was critical for the United States and the entire World. The summit was held in Washington D.C. on 14 and 15 November, 2008. It was a historic meet in which Germany and France said Bretton Woods-II should bring about genuine, all-encompassing reform of the international financial system. The US Government reported that the summit had reached what would be the Washington Declaration. The five key objectives the leaders agreed upon were as under:-
- A common understanding of the root causes of the 2008 global crisis.
- Reviewed actions countries and would take in the future to address immediate crisis and strengthen growth.
- Agreed on common principles for reforming their financial markets.
- Launched an action plan to implement those principles and asked ministers to develop further specific recommendations that would be reviewed by leaders at a subsequent summit.
- All leaders reaffirmed their commitment to free market principles.
Due to persistent efforts by all participants the global crisis was resolved. The G 20 hereafter became an extremely important group for resolving global economic problems.
Current G 20 Summit in Osaka
The leaders of the G 20 met in Osaka for the 14th Summit on 28 and 29 June. Prime Minister Modi represented India at the summit. The group made united efforts to address major economic challenges to the World. They committed to work together to foster global economic growth. It was also decided to harness the power of technological innovation particularly digitalization and its application for improvement in economic standards of all countries.
They would continue to build on the work by past leadership and strive to create a virtuous cycle of growth by addressing inequalities and create a society where all people can realise their full potential. Further, efforts would be made to foster development and address other global challenges to pave the way towards an inclusive and sustainable world as envisioned in The 2030 Agenda for Sustainable Development.
The Summit Statement focuses on the following areas:-
- Global Economy. It is viewed that global growth is stabilising and is generally projected to pick up during the current year and onwards to 2020. This improvement is supported by the continuation of accommodative financial conditions and stimulus measures taking effect in some countries. However, growth remains low and is tilted to the downside. The important issue is that trade and geopolitical tensions have intensified. These would be tackled by stepping up our dialogue and actions to enhance confidence. The leaders affirmed that carefully calibrated macroeconomic and structural policies tailored to country specific circumstances are necessary to address excessive imbalances and mitigate the risks to achieving the aspect G 20 goal of strong, sustainable, balanced and inclusive growth. The leaders also addressed the subject of demographic changes, and the steps to deal with the same.
- Fostering Robust Global Economic Growth. The Group strove for a stable trade and investment environment. They would work for a level playing field. In the bilaterals, trade was discussed between US and China as also US and India.
- Innovation, Digitisation, Data Free Flow with Trust. The Group would use innovation to advance towards Sustained Development Growth. Innovation would be appropriately used in the digital economy. The Group would use Artificial Intelligence for optimisation.
- Quality Infrastructure Investment. The Summit emphasised that this was an important driver of economic growth.
- Global Finance. The most important issue was that the Group was appreciative of the FATF in curbing funding of global terrorist organisations.
- Anti-Corruption. Implementation of the G 20 Anti-Corruption Action Plan 2019-2021 in synergy with related international instruments and mechanisms. This would lead to high quality infrastructure and a balanced economic development.
- Creating a Virtuous Cycle of Growth by Addressing Inequalities. This would include Labour and Employment, Empowerment of Women, Tourism, and increasing agriculture productivity.
- The next meeting would be in Saudi Arabia in 2020, Italy in 2021 and India in 2022.
- Realisation of an Inclusive and Sustainable World. This would be achieved by development, improvement of global health, addressing global environmental issues and climate change. Despite withdrawing from the Paris agreement the US remains committed to environmental protection and energy security.
- Displacement and Migration. Large movement of refugees is a global concern with humanitarian, political, social and economic consequences. The group emphasised the importance of shared actions to address the root causes of displacement and to respond to growing humanitarian needs.
India in the Osaka Summit and Implications
India feels that G 20 summit is extremely relevant for India. The important issues are as stated below:-
- The summit proved to be an ideal platform for India to advance its agenda of reformed multilateralism. In the backdrop of US-China trade tensions, it was extremely relevant.
- During the summit Prime Minister (PM) Modi addressed the issues of women empowerment, artificial intelligence and efforts to address terrorism.
- PM participated in three crucial plurilaterals. These were the Russia, India and China (RIC) informal summit, the informal meetings of the BRICS and JAI (Japan, America and India) leaders, which were extremely fruitful.
- PM Modi met with President Trump on 28 June. The discussions were primarily on Iran and trade. As regards trade, it was decided that the issues will be resolved by discussions at the appropriate level. The Iran issue did not reach any finite decision.
India took an active part along with South Africa and Indonesia to frame the G20 Declaration to suit their national interests. To achieve an inclusive, sustainable, safe, trustworthy and innovative society through digitalization and promoting the application of emerging technologies. However, they boycotted the Osaka Track on the digital economy as it overtly undermined multilateral principles of consensus based decisions in global trade negotiations and denied policy space for digital industrialisation in developing countries. India, South Africa and Indonesia expressed that this must be conducted on the basis of the 1998 work programme. Accordingly, they agreed to the G 20 Declaration but chose not to sign the Osaka Track, as it would fundamentally undermine the core WTO principles of arriving at consensus based decisions. India is a meaningful partner in the group and is likely to host the summit in 2022.
Economy and Security
The G 20 is a grouping for discussions of economic activities. Currently there are no discussions on security issues. Can economy be delinked from security? This is an issue for consideration. May be in the future this would be an area for discussions. It would garner greater importance for the group and its activities.
Maj Gen P K Chakravorty (Retd)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of BharatShakti.in)