Introduction
India is readying to commence its year-long presidency of the influential Group of Twenty (G20) nations on 1 December 2022, and public interest in all matters relating to the multilateral economic governance institution has begun to grow. What is this group, how did it gain prominence, and why is India’s presidency in 2022-23 so important?
The G20 is the premier global forum for dialogue and cooperation on global economic and financial issues. It is over two decades old and holds the attention of experts and students alike for its intricate interaction between the geo-economics and geopolitics of the contemporary world. It is a unique grouping in which developing and developed countries come together with equal status. Understanding its mission, past trajectory, institutional mechanisms, work methods, and the multiplicity of challenges it addresses, is critical today and requires a serious examination.
What is and what is not the G20, therefore, is relevant. The G20 is “not a treaty-based multilateral organisation capable of taking legally binding decisions, much less implementing them,” says Stewart M. Patrick, Director of the International Institutions and Global Governance programmes at the Council on Foreign Relations, New York. “It is a consultative forum that allows the world’s most important advanced and emerging economies to harmonise their approaches, when so inclined, to the world’s biggest challenges.”[i] The G20 today represents 85% of global GDP, 75% of international trade, and 2/3rd of the world’s population.”[ii]
This essay traces the emergence and evolution of G20 as a global forum of vital importance; explains how it works through its two principal tracks and hundreds of meetings of ministers, officials, and non-governmental experts as well as the annual Leaders’ summits, and finally, decodes the context, implications, priorities, and challenges for the forthcoming Indian presidency.
Creation and Evolution
The G20, at the summit level, came into being after the western financial and sub-prime crisis of 2008 when the advanced economies led by the Group of 7 (G7) had to be bailed out of a potential bankruptcy by the developing countries, particularly India and China. That gave these two emerging economies and some other key developing countries (Indonesia, Turkey, Mexico, Argentina, Brazil, South Korea, and Saudi Arabia) a seat each in the decision-making councils on global economy and finance so far dominated by the advanced economies. It reflected the shift of a chunk of economic power and influence from the west and the north to the east and the south. It was an admission that developed countries by themselves were unable to resolve the global economic problems, and desperately needed the cooperation of countries such as India, China, Russia and Brazil among others, for this vital task.
Before the G20, there were the G7 and the G77
The G7 was established in June 1976, although its origin is traced to an informal meeting of four finance ministers viz. US, France, West Germany, and the UK, held in March 1973 amid the oil crisis. Canada, Japan, and Italy were added thereafter. Later, the G7 admitted Russia, thus transforming itself into the G8 in 1997. However, after Russia was expelled in March 2014 in the wake of its annexation of Crimea, the G7 resumed its original composition. It continues to be powerful and united, and its latest summit was hosted by Germany in June 2022.
Preceding the G7 was the forum of developing countries – G77 – established in June 1964. It has 134 members now but retains its old name. It is known as ‘G77 and China’ when it holds meetings jointly with China. It is much less influential today than it was during the Cold War. A smaller grouping of developing countries – G15 – comprising select developing countries from Asia, Africa, and Latin America was set up in September 1989. The aim was to foster cooperation in trade, investment, and technology within the South and provide inputs to G7 and the WTO. Later, its membership rose to 18, but the name remained unchanged. Regular summits were held during the 1990s and subsequently. The last summit was held in 2012.
The G20’s origins were in the Asian-turned-global financial crisis of 1997–1999, which the G7 was unable to resolve by itself. Paul Martin, the Canadian finance minister, and Larry Summers, the US treasury secretary, convened a meeting of select finance ministers and governors of the central banks in December 1999. The G20 functioned at that level for nearly a decade. When the financial crisis struck the US in 2008 and quickly turned global, G20 was elevated to the summit level, with the presidents and prime ministers holding regular bi-annual and later annual confabulations with the single goal of preventing another global financial crisis. But like most well-meaning initiatives, it began to expand its scope, including the areas of development. The crisis in Syria led to a migration crisis in Europe, making the shift to this issue inevitable, which was included in the G20 economic agenda.
The engagement of the highest political leaders legitimised the progressive expansion of the G20 agenda beyond finance, fiscal and monetary policies. The grouping now represents a ‘whole of the government’ approach. This was on display when the COVID-19 pandemic hit the world in early 2020, threatening lives and health security, livelihoods, and economic stability and growth. The G20, more than the UN, was tasked with finding solutions to the economic and health problems during Saudi Arabia’s G20 presidency year.
The composition of G20 is varied. For instance, different segments of the G20 should be carefully noted, as below.
- All G7 countries are its members: the US, Japan, Germany, France, the UK, Italy, and Canada.
- All BRICS members are included in it: Brazil, Russia, India, China, and South Africa.
- All the P-5 (Permanent Five) members of the UN Security Council are in G20: the US, the UK, France, Russia, and China.
- The members of the new MITKA group have also been included: Mexico, Indonesia, South Korea, Turkey, and Australia.
- Two countries not covered by any of the above groups, namely Saudi Arabia and Argentina, are also members of G20.
- The original plan was to include Nigeria, but it was dropped. Instead, the European Union (EU) was included.
- Besides the 20 members, the IMF and World Bank, Financial Stability Board, the UN, ILO, WTO, and WHO attend the G20 meetings. Spain is a permanent guest and so are the African Union (AU), the Association of Southeast Asian Nations (ASEAN), and the New Partnership for Africa’s Development (NEPAD). In addition, the country holding the presidency has the privilege of inviting guests of its own. Singapore and the Netherlands are almost always invited.
How it works
The G20 has two clear goals before it: i) to promote financial stability and economic growth, and ii) to make globalisation work for the benefit of all by devising consensus in policymaking on a wide spectrum of government issues. “Both directly reflect the intense connectivity that defines the 21st-century world.”[iii]
Official Fora
This grouping has a rotating presidency and does not have a permanent secretariat. That role is played by the country which holds the presidency. It is assisted by the Troika, comprising the past, present, and future presidency countries, much like the Rotary Club. As a legacy of the era when the G7 ruled the roost, OECD continues to provide considerable intellectual and policy advisory support to the presidency, keeping the influence of the G7 intact.
The G20 works on the Finance Track and the Sherpa Track. The first deals with economic, financial, and monetary issues through regular meetings of the finance ministers and governors of the central banks. It has eight workstreams: Global Macroeconomic Policies, Infrastructure Financing, International Financial Architecture, Sustainable Finance, Financial Inclusion, Health Finance, International Taxation, and Financial Sector Reforms.
The rest is handled by the Sherpas. Each country has a ‘sherpa’ who is the main interlocutor and coordinator of the G20 leadership. They prepare the ground and ensure the harmonisation of numerous Ministerial Meetings and Working Groups. The Sherpa Track has 12 workstreams: Anti-corruption, Agriculture, Culture, Development, Digital Economy, Employment, Environment and Climate, Education, Energy Transition, Health, Trade and Investment, and Tourism.
Engagement Groups
Beyond the governments, the G20 benefits from wide-ranging discussions and studies undertaken by 10 Engagement Groups of the private sector, civil society, and independent bodies. These are: Business 20, Civil 20, Labour 20, Parliament 20, Science 20, Supreme Audit Institutions 20, Think 20, Urban 20, Women 20, and Youth 20. Each sub-forum has its meetings and its summits, resulting in a crowded and busy annual agenda for the host country and other members.
Of these engagement groups, the two most important are the Think 20 and the Business 20.
Think 20 (T20) is a network of think tanks from G20 countries that provide intellectual support to G20 leaders through research-based policy recommendations. It is often called the “ideas bank”[iv] of the G20 process. The first T20 summit was held during Mexico’s G20 presidency in 2012 and has since become a constant feature in the G20 process. Members of the T20 are leading think tanks from across the globe. Hence, the T20 ‘thinks’ for the G20, and provides constructive evidence-based solutions to various global challenges.
Akin to the G20 leaders’ format, engagement groups also follow the Sherpa system. In the case of the T20, think tanks and research institutions from G20 states are nominated as Sherpas. The Chair-Sherpa is a leading think-tank from the G20 host state and acts as the nodal point of coordination for the T20. Some countries like Indonesia appoint a single think tank sherpa, but others like Japan, appoint more than 10 sherpas for their presidency year.
Every year sees two priority areas: one, which is a continuous G20 agenda, and the other which is identified by the G20 president country’s chosen agenda. For example, Indonesia’s G20 presidency focussed on three priorities: 1) Global Health Architecture, 2) Digital Transformation, and 3) Sustainable Energy Transition,[v] and the same was reflected in the T20 agenda as well.[vi] Through task forces, each focus area is further explored in a cross-disciplinary manner.
The main outcome of T20 is the communique, a vision document that is released by the chair at the T20 summit. The T20 communique lists proposals and recommendations for G20 leaders to consider during the summit. Some of these salient proposals eventually make their way into the G20 Leaders’ communique.
Business 20 (B20) is an exclusive G20 engagement group created for greater interaction with the global business community. As the corporate face of the G20 framework, the B20 strives to accommodate business interests within the broader global economic agenda. The B20, therefore, is a dialogue platform for leaders of business and industry to present, share and suggest policy options to the G20 leadership.
The B20 was the first engagement group founded within the G20, and its first meeting was held during the presidency of South Korea in 2010.[vii] However, the concept of B20 was formally introduced during France’s G20 presidency in 2011.
The B20’s usual focus includes international trade reforms, financial regulation, monetary system, global financial architecture, energy efficiency, sustainable investment, and digitalisation. For each focus area, a task force is constituted comprising industry leaders. The B20 network comprises business and trade organisations. Each G20 country is represented by trade organisations/associations that are nominated as Sherpas by their respective governments. While the apex chamber is usually appointed as the business sherpa, sometimes other chambers are too are given this designation. For instance, during the Turkish presidency in 2015, seven business chambers were assigned the work of the B20 Sherpa and focused on Small and Medium Enterprises and entrepreneurship.
From Bill Gates to Jack Ma, the B20 has witnessed the participation of prominent corporate leaders in the past, and their attendance speaks volumes. From India, business magnates such as Anil Ambani of Reliance Industries, Adi Godrej of Godrej Industries, Sunil Mittal of Bharti Enterprises, and others have been part of various B20 task forces/meetings in the past. Apart from the corporate world, policymakers, scholars from academia, and think tanks are also invited to participate in the B20 forum. The World Economic Forum and the International Chambers of Commerce are usual invitees and participate in the B20 network.
Besides the official engagement groups, there are unofficial engagement groups like the Young Entrepreneurs Alliance, the Girls20, and the Interfaith Dialogue.
The most important document that emerges from the presidency country each year is the ‘Leaders’ Declaration’, issued at the conclusion of each summit. It is backed by and is based on joint statements that are issued by the Ministerial and other meetings. The G20’s formal work through an expanding agenda is significant. Equally important is the opportunity the annual summit affords to the top leaders of member countries to meet, interact, and build personal relationships and “recast bilateral ties.”[viii]
Trajectory so far
The journey of the G20 may be classified into three periods: i) 1999–2008, ii) 2008–2019, and iii) 2019–2022.
1998-2008:
The first decade comprised regular meetings of the finance ministers and governors of the central banks. The agenda for their discussions extended progressively, to include financing for terrorism in the wake of the war in Afghanistan. A major focus was the reform of IMF which resulted from the decision to give the emerging economies a proportionately bigger share in the vote of its executive board.
2008-2019:
The second decade began with the global financial crisis raging in the West, which necessitated the G20’s elevation to the summit level. The first Leaders’ summit was held in November 2008. From 2009 to 2010, two summits a year were held. Then the grouping followed the practice to hold an annual summit until 2019. The UK, Canada, South Korea, Russia, China, Argentina, and others got the opportunity to host the summit. The G20 thus became an integral part of international economic governance. A few presidencies left a longer-term impact such as those of South Korea for pushing the cause of South-South cooperation, and Germany for advancing the ‘Compact with Africa’.
2019-2022:
The third period began with the Covid-19 era. Two summits were convened by Saudi Arabia in 2022 to address the unprecedented challenges created by the pandemic. The Debt Service Suspension Initiative (DSSI) proved a major achievement. Three summits were held in 2021 under the Italian presidency to tackle the continuing problems of Covid-19, the US-NATO handover of Afghanistan to the Taliban in August 2021, and the normal Leaders’ summit.
The Indonesian presidency of 2022 with its mission of ‘Recover Together, Recover Stronger’ had barely begun when the Russia-Ukraine conflict flared up in February 2022, resulting in new geopolitical tensions. If there was a hope of keeping geopolitics away from the G20 agenda, that was disbanded as positions hardened, and complexities rose. President Joko Widodo attempted to play a mediatory role, securing limited success and assurances from the leaders of Russia and China to attend the summit in Bali in October 2022. The Russian annexation of four regions of Ukraine in September 2022, however, raised serious question marks over the prospects of the Bali summit.
Scholars interpret the nature and degree of success of the G20 summits in different ways. V. Srinivas, a senior Indian official who studies the G20, says that G20 has usually been upbeat. “In the past, G20 has witnessed several major successes in multilateralism, and there is optimism that renewed multilateralism efforts can succeed.”[ix]
John Kirton of the University of Toronto’s G20 Centre has studied the past work of the G20 and suggests that the grouping be judged by six criteria comprising i) domestic political management, ii) deliberation for the collective conclusion, ii) principled and normative direction-setting, iv) collective commitments, v) compliance with commitments, and vi) institutional development of global governance. His macro verdict over two decades of the G20: “Charting G20 performance on these dimensions at each of its 16 summits shows the G20’s comprehensive rise to an impressive performance at Hamburg in 2017, then a substantial decline, and a revival at Rome in 2021.”[x]
Spelling out three key economic priorities for G20 in mid-2022, Kristalina Georgieva, managing director of IMF, highlighted the need for reduction in inflation, tightening of fiscal policy, and imparting of a fresh impetus for global cooperation – “led by the G20.”[xi] Today, the economic challenges facing the world are as pressing as they were in 2008 which led to the G20’s elevation to the highest political level. Worrisome for the hosts of the G20 summits this year and the next i.e., Indonesia and India, is the deteriorating state of geopolitics, casting a dark shadow on this largely economic forum.
India’s Presidency
India’s presidency of the G20 comes at a critical time, both for India and the G20 countries. Due to last for a year from 1 December 2022, it coincides with the 75th year of India’s Independence. The G20 summit will be a major milestone for the country’s democracy and diplomacy, bestowing a key leadership role on India on the world stage. But the stage is strewn with thorns on both the economic and geopolitical fronts. The Bali summit, followed by the Delhi summit, will demonstrate if the world – and the two host countries – can tackle the immediate issues of war and conflict as well as focus attention on the need for financial stability, peace, and sustainable development.
Handling it with finesse and balance is particularly important as the G20 has an unprecedented opportunity: it will be led by four developing countries in a row, starting with Indonesia in 2022, India in 2023, and Brazil and South Africa in 2024 and 2025 respectively. It is a chance to show whether the G20, a forum of the North and the South, can do justice to the needs and expectations of both the developed and developing countries as well as those outside the G20 family, in an equitable measure.
India will host the 18th summit of G20 in New Delhi on 9 and 10 September 2023. Nine country guests have already been invited: Bangladesh, Egypt, Mauritius, Netherlands, Nigeria, Oman, Singapore, Spain, and the UAE. In addition, the International Solar Alliance (ISA), the Coalition for Disaster Resilient Infrastructure (CDRI), and the Asian Development Bank (ADB) are invited as Guest-International Organisations (IOs)
India is expected to host over 215 events at 55 different locations across the country. At most of these meetings, the G20 world will be represented by 42 delegations of ministers and officials. The summit in September 2023 will bring nearly 12,000 international delegates, media, security, and associated personnel to Delhi.
The summit’s theme and priorities may be announced formally in December 2022. But the following media statement made by the Ministry of External Affairs on 13 September reflects the present official thinking:
Whilst our G20 priorities are in the process of being firmed up, ongoing conversations inter alia revolve around inclusive, equitable and sustainable growth; LiFE (Lifestyle For Environment); women’s empowerment; digital public infrastructure and tech-enabled development in areas ranging from health, agriculture and education to commerce, skill-mapping, culture and tourism; climate financing; circular economy; global food security; energy security; green hydrogen; disaster risk reduction and resilience; developmental cooperation; fight against economic crime; and multilateral reforms.[xii]
While speaking at the UN General Assembly on 25 September, External Affairs Minister S. Jaishankar observed, “As we begin the G-20 presidency this December, we are sensitive to the challenges faced by developing countries. India will work with other G-20 members to address serious issues of debt, economic growth, food and energy security, and particularly, of the environment. The reform of the governance of multilateral financial institutions will continue to be one of our core priorities.”[xiii]
India’s presidency will be stamped by its past contribution to the deliberations and decisions of the G20. India’s leaders – finance ministers, Reserve Bank governors, former Prime Minister Dr. Manmohan Singh, and Prime Minister Narendra Modi – have been proactive and influential in shaping the outcomes of the meetings and summits in the previous years. India has used the G20 forum to address its concerns on terrorism financing well. PM Modi addressed all the summits from 2014–21 and articulated the country’s concerns on black money and tax avoidance; countering international terrorism; effective measures against fugitive economic offenders; the need to maximize digital technology for social benefit; and the imperative to make available ample climate finance for developing countries.[xiv]
Guided by a mix of motivations – to promote its national interest, leave a mark on the G20, maintain the forum’s primacy as an effective instrument of global governance, and insulate it from rising geopolitical tensions, India has four choices:
- First, it can be content with a unique branding opportunity offered by the presidency i.e., to project India’s success as a democracy that delivers on development.
- Second, as part of a four-country chain (Indonesia, India, Brazil, and South Africa) that holds the presidency during 2021–25, India can consolidate their synergy and solidarity to advance the interests of the Global South.
- Third, the three IBSA countries (India, Brazil, and South Africa) will chair the forum from 1 December 2022 to 30 November 2025, thereby giving this trinity, somewhat somnolent at present, a chance to promote the interests of democracies moving on the development path and fulfill the G20 promises made by the advanced economies to developing countries.
- Four, as the chair of the G20, India can (and should) take a broader view of its global responsibilities and attempt to coordinate and synthesize diverging perspectives of different constituencies within the G20 family and beyond.
A sober and balanced view suggests that these four choices are not mutually exclusive. “It is possible to weld them together to create a holistic and comprehensive approach for the Indian presidency.”[xv] India’s performance and ability to lead the G20 will be judged, above all, on this specific score.
Finally, India must invest in the G20 by putting more of its best resources into it, so that developing countries and advanced economies stand at the same level, making equal contributions. As Dr. Raghuram Rajan, former governor of the Reserve Bank of India, told Gateway House in 2015, “We must, across the emerging world, realise that some of the reasons why global governance seems to be sort of against us are because we are not putting enough resources into this… It makes a big difference who has the pen. Because what you write is very different [from what industrial country markets do].”[xvi]
Author Brief Bio:
*Amb. Rajiv Bhatia is a Distinguished Fellow at Gateway House, the author of three books, and a former ambassador who writes regularly on multilateral governance.
*Manjeet Kripalani is the Co-founder and Executive Director of Gateway House.
References:
[i] Stewart M. Patrick, ‘The G20 Was Made for Moments Like This’, Council on Foreign Relations, 25 October 2021. https://www.cfr.org/blog/g20-was-made-moments
[ii] ‘India @2023, G20 Presidency’, PowerPoint presentation by Harsh Vardhan Shringla, India’s Chief Coordinator for G20 at a business conference in Mumbai, 5 September 2022.
[iii] James McBride and Anshu Siripurapu, ‘The Group of Twenty’, Council on Foreign Relations, 15 November 2021. https://www.cfr.org/backgrounder/group-twenty
[iv] See, Multiple Authors (2012). Think-20 Meeting: Report to Sherpas. URL. www.g20.utoronto.ca/t20/2012-FINAL_Think-20_Report_to_Sherpas.pdf
[v] Issue Priorities (2022). G20 Indonesia 2022. URL https://www.g20.org/g20-presidency-of-indonesia/#priorities
[vi] Indonesia had 9 T20 task forces roughly covering sustainable investment, digital connectivity, energy transition, food security and sustainable agriculture, inequality and human capital, global health security, global SDG financing, infrastructure resilience, international finance, and economic recovery.
[vii] For details see Rajiv Bhatia, “The G20’s virtual year” in India in the G20: Rule-taker to Rule-maker (Manjeet Kripalani ed.), Routledge.
[viii] James McBride and Anshu Siripurapu, ‘The Group of Twenty’, Council on Foreign Relations, 15 November 2021. https://www.cfr.org/backgrounder/group-twenty
[ix] V. Srinivas, Talk on G20@2023: The Road Map to Indian Presidency, New Delhi. ICWA, 2 August 2022. P. 10.
[x] John Kirton, ‘The G20’s Growing Governance, 2008–2022’,
http://www.g20.utoronto.ca/biblio/Kirton_G20_Governance_UPH_220224.pdf
[xi] Kristalina Georgieva, ‘Facing A Darkening Economic Outlook: How The G20 Can Respond’, IMF Blog, 13 July 2022. https://www.imf.org/en/Blogs/Articles/2022/07/13/blog-how-g20-can-respond
[xii] ‘India’s forthcoming G20 Presidency’, 13 September 2022, Ministry of External Affairs. https://mea.gov.in/press-releases.htm?dtl/35700/Indias_forthcoming_G20_Presidency
[xiii] ‘India’s Statement delivered by the External Affairs Minister, Dr. S. Jaishankar at the General Debate of the 77th session of the UN General Assembly’, Ministry of External Affairs. 25 September 2022. https://www.mea.gov.in/Speeches-Statements.htm?dtl/35757/Indias_Statement_delivered_by_the_External_Affairs_Minister_Dr_S_Jaishankar_at_the_General_Debate_of_the_77th_session_of_the_UN_General_Assembly
[xiv] For details, see: V. Srinivas, Talk on G20@2023: The Road Map to Indian Presidency. Pp. 13–17.
[xv] Rajiv Bhatia, ‘The G20 and New Delhi’s choices’, The Hindu, 25 August 2022.
[xvi] ‘T20 Mumbai Keynote by Dr. Raghuram Rajan’, 19 October 2015. https://www.gatewayhouse.in/raghuram-rajans-t20-mumbai-keynote/
