The Group of Twenty (G20) is the premier forum for international economic cooperation. It plays an important role in shaping and strengthening global architecture and governance on all major international economic issues.
The G20 or Group of 20 is an intergovernmental forum comprising 19 sovereign countries, the European Union (EU), and the African Union (AU). It works to address major issues related to the global economy, such as international financial stability, climate change mitigation, and sustainable development.
The G20 is composed of most of the world’s largest economies’ finance ministries, including both industrialized and developing countries; it accounts for around 80% of gross world product (GWP), 75% of international trade, two-thirds of the global population, and 60% of the world’s land area.
India holds the Presidency of the G20 from 1 December 2022 to 30 November 2023.
How did G20 come into Existence?
- 1997-1999 ASIAN Financial Crisis: This was a ministerial-level forum that emerged after G7 invited both developed and developing economies. The finance ministers and central bank governors began meeting in 1999.
- Amid the 2008 Financial Crisis, the world saw the need for a new consensus building at the highest political level. It was decided that the G20 leaders would begin meeting once annually.
- To help prepare these summits, the G20 finance ministers and central bank governors continue to meet on their own twice a year. They meet at the same time as the International Monetary Fund and The World Bank.
How G20 Works
- The G20 Presidency steers the G20 agenda for one year and hosts the Summit. The G20 consists of two parallel tracks: the Finance Track and the Sherpa Track. Finance Ministers and Central Bank Governors lead the Finance Track while Sherpas lead the Sherpa Track after Finance Track.
- The G20 process from the Sherpa side is coordinated by the Sherpas of member countries, who are personal emissaries of the Leaders. Finance Track is led by Finance Ministers and Central Bank Governors of the member countries. Within the two tracks, there are thematically oriented working groups in which representatives from the relevant ministries of the members as well as from invited/guest countries and various international organisations participate.
The Finance Track is mainly led by the Ministry of Finance. These working groups meet regularly throughout the term of each Presidency. The Sherpas oversee negotiations over the course of the year, discussing agenda items for the Summit and coordinating the substantive work of the G20. - In addition, there are Engagement Groups which bring together civil societies, parliamentarians, think tanks, women, youth, labour, businesses and researchers of the G20 countries.
- The Group does not have a permanent secretariat. The Presidency is supported by the Troika – previous, current and incoming Presidency. During India’s Presidency, the troika will comprise Indonesia, India and Brazil, respectively.
Who are the Members of G20?
- The members of the G20 are 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.
- Spain as a permanent, non-member invitee, also attends leader summits.
What is the Structure and Functioning of G20?
- The G20 Presidency rotates annually according to a system that ensures a regional balance over time.
- For the selection of the presidency, the 19 countries are divided into 5 groups, each having no more than 4 countries. The presidency rotates between each group. Every year the G20 selects a country from another group to be president.
India is in Group 2 which also has Russia, South Africa, and Turkey. - The G20 does not have a permanent secretariat or Headquarters. Instead, the G20 president is responsible for bringing together the G20 agenda in consultation with other members and in response to developments in the global economy.
- TROIKA: Every year when a new country takes on the presidency, it works hand in hand with the previous presidency and the next presidency and this is collectively known as TROIKA. This ensures continuity and consistency of the group’s agenda.
What about the Cooperation with and within G20?
- In Toronto in 2010, leaders declared it to be the premier forum for global economic co-operation.
- The work of G20 members is supported by several international organisations that provide policy advice. These organisations include:
- The Financial Stability Board (FSB). The FSB, which was established by G20 leaders following the onset of the global financial crisis,
- The International Labour Organization (ILO).
- The International Monetary Fund (IMF).
- The Organisation for Economic Co-operation and Development (OECD)
- United Nations (UN)
- World Bank
- The World Trade Organization (WTO)
- The G20 also regularly engages with non-government sectors. Engagement groups from business (B20), civil society (C20), labour (L20), think tanks (T20) and youth (Y20) are holding major events during the year, the outcomes of which will contribute to the deliberations of G20 leaders.
What Type of Issues Are Addressed by G20?
- The G20 focuses on a broad agenda of issues of global importance, although, issues pertaining to the global economy dominate the agenda, additional items have become more important in recent years, like:
- Financial markets
- Tax and fiscal policy
- Trade
- Agriculture
- Employment
- Energy
- Fight against corruption
- Advancement of women in job market
- 2030 agenda for Sustainable development
- Climate Change
- Global Health
- Anti-terrorism
- Inclusive entrepreneurship
What are India’s Priorities in G20 Summits?
- Checking tax evasion to fight corruption
- Choking terror funds
- Cutting the cost of remittances
- Market access for key drugs
- Reforms in the World Trade Organisation to improve its functioning
- “Full implementation” of the Paris Agreement
What are the Strengths/Achievements of G20?
- Flexible: With only 20 members, the G20 is agile enough to make prompt decisions and to adapt to new challenges.
- Inclusive: The inclusion every year of invited countries, international organizations and civil society organization through engagement groups allow 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 a crucial role in strengthening the international financial regulatory system, including better coordination across countries.
- Facilitated an increase in lending from multilateral development banks of US$235 billion at a time when private sector sources of finance were diminished.
- Major achievements of the G20 include quick deployment of emergency funding during the 2008 global financial crisis.
- It also works for reforms in international financial institutions by improving oversight of national financial institutions. Such as G20 driven reforms to the international tax system, through the G20/OECD Base Erosion and Profit Shifting (BEPS) project and implementation of tax transparency standards.
- G20 played a critical role in the ratification of the Trade Facilitation Agreement, with the WTO estimating it could contribute up to somewhere between 5.4 and 8.7% to global GDP by 2030 if the agreement were fully implemented.
- Better Communication: G20 bring World’s top developed and developing countries together to bring consensus and reasoning into decision making through discussion.
- In the 2021 (November) G20 summit, the leaders made a commitment to reach carbon neutrality by or around mid-century.
- They have adopted the Rome Declaration.
- Earlier, the G20 Climate Risk Atlas was released which provides climate scenarios, information, data and future changes in climate across the G20 countries
What are the Challenges Faced by G20?
- No Enforcement mechanism: The G20’s toolkit ranges from simple exchanges of information and best practices to agreeing common, measurable targets, to coordinated action. None of this is achieved without consensus, nor is it enforceable, except for the incentive of peer review and public accountability.
- Not legally binding: the decisions are based on discussions and consensus which culminates in the form of declarations. These declarations are not legally binding. It’s just an advisory or consultative group of 20 members.
- Polarisation of Interests:
- Russian and Ukrainian Presidents are invited to the Summit to be held in November, 2022.
- The U.S. has already demanded to not invite Russian President, or U.S. and European countries would boycott his address.
- China’s strategic rise, NATO’s expansion and Russia’s territorial aggression in Georgia and Crimea and now Russia Ukraine Conflict in 2022 changed global priorities.
- Globalisation is no longer a cool word, and multilateral organisations have a credibility crisis as countries around the world pick being ‘G-zero’ (a term coined by political commentator Ian Bremmer to denote ‘Every Nation for Itself’) over the G-7, G-20, BRICS, P-5 (UNSC Permanent Members) and others.
- Russian and Ukrainian Presidents are invited to the Summit to be held in November, 2022.
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