- The G20, or Group of Twenty, is an intergovernmental forum made up of 19 countries and the European Union.
- It focuses on major global economic issues such as international financial stability, climate change mitigation, and sustainable development.
- The G20 membership is made up of a mix of industrialized and emerging economies, representing over two-thirds of the worldwide population, 85% of global GDP, 80% of global investment, and over 75% of global commerce.
- This international forum engages finance ministers and central bank governors from the major economies.
- It is noteworthy to mention that the G20 is not a permanent body (i.e. It does not have a permanent secretariat or Headquarters) and is accompanied by a leadership that is transferred annually among the members.
- The ‘G20 Troika’ depicts the current, previous and upcoming presidencies of the G20 wherein three member countries would work in close association to give effect to the agenda.
- The G20 troika consists of Indonesia, Italy, and India as of 2022.
Origin of G20
- The G20 was foreshadowed at the Cologne summit of the G7 in June 1999, and formally established at the G7 Finance Ministers’ meeting on 26 September 1999 with an inaugural meeting on 15–16 December 1999 in Berlin.
- When the Asian Financial Crisis of 1997-1998 ended, it was acknowledged that the participation of major emerging market countries was necessary for a discussion on the international financial system.
- Hence, the G7 Finance ministers agree to establish the G20 Finance Ministers and Central Bank Governors meeting in 1999.
- The meeting of G20 Finance ministers and the Central Bank Governors was centred on major economic and monetary policy issues amongst major countries in the global financial system.
- Their aim was to promote cooperation towards achieving stable and sustainable global economic growth for the benefit of all countries.
- They upgraded to the head of the state level, as a forum for leaders from major developed and emerging market countries.
- In September 2009, the third summit was held in Pittsburgh where the leaders designated the G20 as the “premier forum for international economic cooperation.” The summit meetings were, henceforth held semiannually until 2010 and annually from 2011 onwards.
- The European Union and the nineteen countries constitute the G20 grouping. These countries are namely:-
- Saudi Arabia
- South Africa
- South Korea
- The United Kingdom
- The United States
- The economic collapse of 2008 caused chaos in the Spanish economy, driving the country into a six-year financial crisis. Since then, Spain participates in leader summits as a permanent non-member invitee.
Works of G20
- The G20’s work is split into two tracks:
- All talks involving G20 finance ministers and central bank governors and their deputies are part of the finance track. They meet numerous times a year to discuss monetary and fiscal concerns, as well as financial rules.
- The Sherpa track focuses on broader topics like political engagement, anti-corruption, development, and energy, among others.
- Each G20 country is represented by a Sherpa, who plans, guides, implements, and so on behalf of the country’s leader. (Shaktikanta Das, an Indian Sherpa, represented India at the G20 in Argentina in 2018.)
Structure and Functioning
- The G20 Presidency is cycled every year in accordance with a structure that ensures regional balance over time.
- The 19 countries are divided into five groups, each with no more than four countries, to select the president. Each faction takes turns holding the presidency.
- Every year, the G20 elects a president from a different group.
- In Group 2, India is joined by Russia, South Africa, and Turkey. There is no fixed secretariat or headquarters for the G20.
- Instead, the G20 president is in charge of bringing the G20 agenda together in conjunction with other members and reacting to global economic events.
- TROIKA: Every year, when a new country becomes the president (in this case, Argentina in 2018), it collaborates with the previous presidency (Germany in 2017) and the following presidency (Japan in 2019) to form TROIKA. This maintains the group’s agenda’s continuity and coherence.
- The countries that represent and contribute more than 80% of global GDP gathered at the Premier Forum for International Economic Cooperation, which was approved by leaders at the Pittsburgh Summit in September 2009, to promote robust global economic growth.
- The “Summit on Financial Markets and the World Economy,” as it was then named, brought these countries together to discuss what is now known as the G20 Summit.
- Since globalization progressed and numerous concerns grew more closely interconnected, G20 summits began to focus not only on macroeconomics and trade but also on a wide variety of global challenges that have a huge impact on the global economy.
- Overall development, climate change, energy, health, counter-terrorism, migration, and refugees were among the topics discussed.
- Through its contributions to tackling these global concerns, the G20 has aimed to create a more inclusive and sustainable world.
G20 Cooperation Areas
- Leaders declared Toronto to be the primary venue for global economic cooperation in 2010.
- Several international organizations that give policy advice support the activities of G20 members. These are some of the organizations:
- The Financial Stability Board is a body that oversees financial stability (FSB). Following the commencement of the global financial crisis, G20 leaders established the Financial Stability Board (FSB).
- The International Labour Organisation (ILO).
- The International Monetary Fund (IMF).
- The Organisation for Economic Co-operation and Development (OECD)
- United Nations (UN)
- World Bank
- The World Trade Organisation (WTO)
- The G20 meets with non-governmental organizations on a regular basis.
- Throughout the year, engagement groups from business (B20), civil society (C20), labor (L20), think tanks (T20), and youth (Y20) will organize important events, the findings of which will inform G20 leaders’ deliberations.
Issues Addressed by G20
- The G20 focuses on a broad agenda of global issues; while issues related to the global economy dominate the agenda, other items have become more prominent in recent years, such as:
- Financial market
- Tax and fiscal policy
- Fight against corruption
- Women’s advancement in the workplace
- Sustainable Development Agenda 2030
- Climate Change
- Global Health
- Inclusive entrepreneurship
India’s Priorities in G20 Summits
- Investigating tax evasion to fight corruption.
- Choking terror funds.
- Cutting the Remittances Cost.
- Market access for key drugs.
- Reforms in the World Trade Organisation to enhance its functioning.
- The Paris Agreement’s “full implementation”.
- Flexible: With only 20 members, the G20 is flexible enough to make quick choices and adapt to changing circumstances.
- Inclusive: Every year, invited countries, international organizations, and civil society organizations are included in participation groups, allowing for a larger and more thorough viewpoint when examining global concerns and creating consensus to address them.
- Coordinated action: The G-20 has also played a key role in bolstering the worldwide financial regulatory framework, including improved cross-country cooperation.
- Assisted in a US$235 billion surge in loans from multilateral development banks at a time when private-sector sources of finance were dwindling.
- During the global financial crisis of 2008, one of the G20’s major accomplishments was the rapid deployment of emergency money.
- It also strives to improve the monitoring of national financial institutions in order to promote reforms in international financial institutions.
- Reforms to the international tax system driven by the G20/OECD Base Erosion and Profit Shifting (BEPS) project, as well as the implementation of tax transparency standards, are examples.
- The G20 was instrumental in the passage of the Trade Facilitation Agreement, which the World Trade Organisation estimates may contribute between 5.4 and 8.7% of global GDP by 2030 if fully implemented.
- Better Communication: The G20 brings together the world’s most industrialized and developing countries to debate how to bring consensus and rationale into decision-making.
- No Enforcement Mechanism: The G20’s toolkit includes everything from simple information exchanges and best practices to setting clear, measurable goals and taking coordinated action.
- Except for the incentive of peer review and public responsibility, none of this is possible without consensus, and none of it is enforceable.
- No Legal Bind: The judgments are not legally binding because they are based on debates and consensus that result in declarations.
- These statements are not legally enforceable. It’s only a 20-person advisory or consultative group.
The G20 will not be able to solve all of the world’s problems. The G20, on the other hand, has been an important venue for international cooperation for the previous ten years. As growing powers seek ways to influence and contribute to the global order, effective global governance, such as the G20, is critical.