The Hindu Editorial Analysis- 4th March 2023 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

Context

After the conclusion of two key G-20 ministerial meetings, of the Finance Ministers and Central Bank Governers (FMCBG) in Bengaluru and Foreign Ministers Meeting (FMM) in Delhi, without consensus over the Ukraine war, diplomats and G-20 officials must pause for a stock-taking exercise on the government’s strategy for its G-20 presidency. The FMCBG is part of the key “Finance track” of the 20 most advanced economies, set up in 1999 to help global economic coordination after the Asian financial crisis.

What is G20?

• The G20 is an informal organization comprising 19 countries and the European Union, as well as officials from the World Bank and the International Monetary Fund.
• 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.

Origin

• ASIAN Financial Crisis, 1997-1999: This was a ministerial-level conference that arose when the G7 asked both rich and developing economies to participate.
• The first conference of finance ministers and central bank governors took place in 1999.
• During the 2008 financial crisis, the world recognized the need for a new level of political agreement. It was determined that the G20 leaders will meet once a year from now on.
• The G20 finance ministers and central bank governors continue to meet on their own twice a year to help prepare for these summits.
• They meet at the same time as the World Bank and the International Monetary Fund.

Members

• The G20 nations comprise Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union.
• 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.

G20 Summit

• 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:

1. 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).
2. The International Labour Organisation (ILO).
3. The International Monetary Fund (IMF).
4. The Organisation for Economic Co-operation and Development (OECD)
5. United Nations (UN)
6. World Bank
7. 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:

1. Financial market
2. Tax and fiscal policy
3. Trade
4. Agriculture
5. Employment
6. Energy
7. Fight against corruption
8. Women's advancement in the workplace
9. Sustainable Development Agenda 2030
10. Climate Change
11. Global Health
12. Anti-terrorism
13. 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".

Achievements

• 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.

Challenges

• 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.

Significance

• They bring together the world's most powerful economies, both developed and developing, to discuss international economic and financial stability.
• The G20 plays a crucial role in fostering an environment conducive to global growth and development that is inclusive.
• Its efforts to provide financial stability, promote growth, and avoid and manage crises are crucial in assisting LIDCs in pursuing opportunities and overcoming problems.

Conclusion

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.