With geopolitical currents redefining geoeconomics, India must be prepared to emerge as the world’s top diplomat.
GS Paper 2: Important International institutions, agencies and fora, their structure, mandate
Do you believe that the recent G20 summits have devolved into talking shops rather than getting down to business? Analyze critically. (250 words)
The G20 Presidential Chair
- The timer is ticking. In about three months, India will take over the Group of 20 (G20) presidency for the first time, from December 1, 2022 to November 30, 2023, culminating with the G20 Summit in India in 2023.
- Over the next few months, India will host over 200 meetings with hundreds of ministers, officials, diplomats, businesspeople, non-governmental organisations, working groups, and engagement groups from the G20, which is made up of 19 powerful economies and the European Union (EU).
- Large international conferences have been held in India, including the Non-Aligned Movement (NAM) summit in 1983 and the Third India-Africa Forum summit in 2015. Nothing, however, compares to hosting the G20.
- It is the world’s informal steering committee on global economic issues; it is responsible for shaping decision-making on key global challenges; and its summit is preceded by a large number of preparatory deliberations that feed into the final outcome.
The significance and complexities
- It is critical not to overestimate or underestimate the importance of the G20’s work. The G20 membership accounts for nearly 90% of global GDP, 80% of global trade, and 67% of the world’s population.
- It is an advisory body rather than a treaty-based forum, so its decisions are recommendations to its own members.
- The combined weight of this powerful membership wields enormous political and economic power.
- The G20 is an incomparable body because it includes the United Nations, the World Bank, the International Monetary Fund, the World Trade Organization, the World Health Organization, and other multilateral institutions.
- The G20 has been critical in addressing financial and economic challenges such as the 2008-09 global financial crisis and the 2010 Eurozone crisis.
- In 2008, the forum was elevated from finance ministers to heads of government/state.
- This was the era of the G8 (up until 2014, when Russia was suspended), of the major powers — the US, the EU, Russia, and also China — but they needed to collaborate with emerging economies in defining global challenges and crafting their solutions.
The Crisis of Existence
- However, in this second decade of the G20, the forum is facing an existential crisis, with major powers at odds.
- It complicates the task of country presidency, as the current president (Indonesia) is discovering.
- The devastating impact of the novel coronavirus pandemic, Ukraine’s war, India-China border tensions, EU/US-Russia hostility, and deteriorating US-China relations are already visible in the run-up to the 2022 Bali summit (in November), where all G20 leaders may not be physically present.
- The outcome in Bali will have an impact on the summit in Delhi. As the burden and prestige of the presidency are bestowed on India, Indian officials are carefully planning their strategy
- They are well aware that geopolitical currents are redefining the contours of geoeconomics today.
- Their mission will be to save not only the G20, but also the future of multilateral cooperation in various domains of the grouping’s multifaceted agenda.
- Four distinct ideas have emerged in New Delhi, each guided by the triple motivation of promoting India’s national interest, leaving its mark on the G20, and maintaining its primacy as an effective instrument of global governance.
- First, India’s G20 presidency provides a unique branding opportunity for the country’s recent accomplishments, such as its ability to combat COVID-19 effectively at home and abroad through vaccine aid and diplomacy.
- Other significant achievements include India’s digital revolution, steady progress toward renewable energy, meeting climate change targets, and pushing for manufacturing self-sufficiency and reshaping global value chains.
- New entrepreneurship trends, business innovation, the rise of many start-ups as unicorns, and gender progress must all be highlighted.
- ASIAN Financial Crisis, 1997-1999: This was a ministerial-level forum formed after the G7 invited both developed and developing economies. The meeting of finance ministers and central bank governors began in 1999.
- During the 2008 Financial Crisis, the world recognised the need for a new high-level political consensus. The G20 leaders agreed to meet once a year to begin with.
- The G20 finance ministers and central bank governors continue to meet separately twice a year to help prepare for these summits. They meet concurrently with the International Monetary Fund and the World Bank.
Structure and Functioning of G20
- The G20 Presidency is rotated annually according to a system that ensures long-term regional balance.
- The 19 countries are divided into five groups, each of which has no more than four countries. Each group takes turns holding the presidency. Every year, the G20 elects a president from another group.
- Group 2 includes India, Russia, South Africa, and Turkey.
- The G20 lacks a permanent secretariat or headquarters. Instead, the G20 president is in charge of putting together the G20 agenda in consultation with other members and in response to global economic developments.
- TROIKA: Every year, when a new country assumes the presidency, it collaborates with the previous and subsequent administrations, which is known as TROIKA. This ensures that the agenda of the group remains consistent..
Strengths/Achievements of G20
- With only 20 members, the G20 is small enough to make quick decisions and adapt to new challenges.
- Inclusion of invited countries, international organisations, and civil society organisations through engagement groups every year allows 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 an important role in strengthening the international financial regulatory system, including improved cross-country coordination.
- facilitated an increase in multilateral development bank lending of US$235 billion at a time when private sector sources of finance were reduced
- The G20’s major accomplishments include the rapid deployment of emergency funding during the 2008 global financial crisis.
- It also works to improve oversight of national financial institutions in order to promote reforms in international financial institutions. G20-driven international tax reforms, such as the G20/OECD Base Erosion and Profit Shifting (BEPS) project and the implementation of tax transparency standards.
- The G20 played a critical role in the ratification of the Trade Facilitation Agreement, which the World Trade Organization estimates could contribute between 5.4 and 8.7% to global GDP by 2030 if fully implemented.
- Better Communication: The G20 brings together the world’s top developed and developing countries to foster consensus and reasoning in decision making through discussion.
The Presidency’s Aspects
- A one-year presidency does not give the host the authority to change the world, but India can provide evidence of domestic successes, tested on a continental scale, for global adoption.
- It can also be used to transform India’s subpar physical infrastructure into an appealing investment and tourism destination, particularly since several important G20 meetings will be held outside of Delhi.
- Second, by a remarkable coincidence, four democracies on the rise — Indonesia, India, Brazil, and South Africa — will hold the presidency from December 2021 to November 2025.
- This is a once-in-a-lifetime opportunity for synergy and solidarity to advance the interests of the developing world and assert their collective leadership of the Global South.
- Third, another remarkable coincidence is that all three IBSA members — India, Brazil, and South Africa — will hold the G20 presidency in succession in 2023, 2024, and 2025.
- This forum, free of the geopolitical constraints that constrain the BRICS (where these three countries are required to collaborate with Russia and China), can develop a cohesive plan to project the Global South’s priority concerns.
- IBSA requires immediate revitalization by convening an informal meeting of its top leaders, possibly on the sidelines of the Bali summit.
- Four, India must prepare to take over as the world’s top diplomat. As G20 president, India will be required to take a broader view of the G20 agenda in order to reconcile the divergent interests of the forum’s constituents: five permanent members of the UN Security Council, the developed world united under the banner of the G7, five BRICS members, and other G20 members such as Argentina and Mexico. More importantly, as president and host, India should consider the perspectives of countries that are not members of the G20.
- India will advocate for an inclusive approach to global issues, with pragmatic and human-centered solutions.
- One important goal should be to end Africa’s marginalisation by elevating the African Union (AU) from permanent observer to full-fledged G20 member, putting it on par with the EU.
A final thought
- These four alternatives are not mutually exclusive.
- It is possible to weld them together to form a holistic and comprehensive approach for India’s G20 presidency.
- The challenge is to combine an India-focused perspective, promote the vital interests of the Global South, and demonstrate diplomatic acumen in order to communicate with and reconcile the perspectives of rival and adversarial power centres such as the West, Russia, and China. Today, India is in an enviable position to provide this one-of-a-kind package. It must step up to the plate.