Whither the G20?

Takatoshi Ito September 21, 2023 22:43

Whither the G20?

Following the latest G20 summit, held in New Delhi earlier this month, there is no longer any doubt about India’s central position in global power politics. But questions about the G20 itself are gaining traction.

India’s achievement with this G20 is indisputable. Prime Minister Narendra Modi, the summit’s host, managed to secure agreement on a joint communiqué not at the eleventh hour, as is so often the case for multilateral summits, but on day one. This is particularly notable given the deep divisions among G20 members over the war in Ukraine. Many wondered whether there would be any final communiqué at all.

The fault line is clear to see. The West wants to take a hard line on Russia’s invasion of Ukraine, whereas China and other Russia-friendly countries want to avoid any direct condemnations of the Kremlin’s actions. At last year’s G20 summit, the West’s perspective won out: the final declaration deplored “in the strongest terms the aggression by the Russian Federation against Ukraine,” and demanded Russia’s “complete and unconditional withdrawal” from Ukrainian territory.

But this year – despite the absence of Russian President Vladimir Putin and Chinese President Xi Jinping – the final declaration was much vaguer. “In line with the [United Nations] Charter,” it reads, “all states must refrain from the threat or use of force to seek territorial acquisition against the territorial integrity and sovereignty or political independence of any state. The use or threat of use of nuclear weapons is inadmissible.” Russia is not mentioned explicitly.

The G7, the European Union, and their allies claim that they accepted this softer wording – which some have labeled a “climbdown” – in the name of reaching a global consensus and getting Russia to respect international law. But their real motivation was probably to hand Modi a win, so that he could shore up domestic support, just as Japanese Prime Minister Fumio Kishida did after this year’s G7 summit in Hiroshima. Western leaders are doubtless hoping that Modi will use his strengthened position to help tilt the global balance of power in their favor.

As matters stand, India has obvious – and, in some ways, deepening – ties to Western rivals. For starters, it is a member of the BRICS (Brazil, Russia, India, China, and South Africa) – which recently decided to admit six new countries (Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates) – and of the Shanghai Cooperation Organization, which was established by China and Russia in 2001.

Moreover, India participated in the Vostok military drills in Russia’s Far East last year. And it has abstained from the UN General Assembly resolutions condemning Russia’s invasion of Ukraine, perhaps owing to its past commitment to Soviet-style socialism and its current reliance on Russian military equipment.

But India also espouses Western democratic values. It is a member of the Quad strategic security dialogue – alongside Australia, Japan, and the United States – and it has been gradually increasing its purchases of US-made weapons. When Modi visited the US earlier this year, he was welcomed warmly by US President Joe Biden.

For now, India is well served by sitting on the fence between the Western-led democratic alliance and the authoritarian camp led by Russia and China. But sooner or later, it will probably have to choose a side. Already, some are calling for India to drop out of the expanded BRICS, since that grouping will be increasingly dominated by China and hostile toward the West.

In any case, India’s successful G20 presidency does not mean that the G20 itself is still effective. On the contrary, the group appears to have lost its way.

The G20 emerged as a crisis-management mechanism. From the start, it stood out for an important feature: members’ influence is far more aligned with their economic weight than is the case at other bodies, such as the International Monetary Fund. While IMF quotas are closely tied to voting shares and based mainly on a member’s GDP, revisions to the weighting always lag behind reality. As a result, high-growth countries, like those in Asia, tend to be under-represented.

This was a source of considerable frustration after the Asian financial crisis in 1997-98, when the G20 finance ministers and central-bank governors meeting was created, and it was one reason why the G20 leaders’ meeting – whose participants were selected based on GDP, with small adjustments to improve geographical representation – became the forum to lead the response to the 2008 global financial crisis.

In those early meetings, G20 leaders were united by a shared goal. They quickly agreed to strengthen financial cooperation, reject protectionism (for the sake of global growth), and increase the IMF’s financial resources. In 2010, G20 finance ministers and central-bank governors agreed to double IMF quotas, distributing more to emerging-market economies. With that, the G20 became the global economy’s “steering committee.”

The sheer size of the G20 – which represents 85% of global GDP – means that, when a consensus can be reached, it is well-equipped to drive change. But since widespread agreement is hard to come by, the meetings can easily become mere photo-ops, with most of the action happening through bilateral meetings on the sidelines.

Today, the G20 not only lacks a common vision; it is being undermined by deep divisions, even hostilities, between member states. For example, China has been attempting, unsuccessfully, to challenge the planned US presidency of the G20 in 2026. Add to that the decision by Xi and Putin not to attend this year’s summit, and it seems clear that the G20 is no longer a priority for some key members. Its tenure as the world’s premier crisis-response organization may well be coming to an end.

Following the latest G20 summit, the G7 should be thinking seriously about deepening its own ties with more non-aligned countries. If the Ukraine war drags on, and if China continues to threaten to take Taiwan by force, the G20 will be split between friends of the BRICS and friends of the G7. Where will India land when it is finally forced to get off the fence?

Copyright: Project Syndicate, 2023.

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Takatoshi Ito

A former Japanese deputy vice minister of finance, the writer is a professor at the School of International and Public Affairs at Columbia University and Senior Professor at the National Graduate Institute for Policy Studies in Tokyo.