G20 (Group of 20)

The G20 (Group of 20) is an international premier forum for economic cooperation. It was established in 1999 following the Asian financial crisis as a forum for Finance Ministers and Central Bank Governors to discuss global economic and financial issues. It plays a critical role in shaping and strengthening global governance and architecture on all major international economic issues.

G20 (Group of 20) will be helpful for UPSC IAS Exam preparation. GS Paper-2 International Relations.

Table of Content

• What is G20?
• Origin
• Members of G20
• G20 Presidency
• Structure and functioning of G20
• Cooperation with and within G20
• G20 Summits
• Challenges Faced by G20
• Conclusion
• Frequently Asked Questions (FAQs)

What is G20?

• The Group of Twenty (G20) consists of 19 countries and the European Union.
• G20 represents about 85% of global GDP, over 75% of global trade, and about two-thirds of the world population.
• It is the primary forum for international economic cooperation.
• It plays a crucial role in global economic governance.
• Headquarters/Secretariat: G20 does not have a permanent secretariat or staff.

Origin

• G20 was established in 1999 after the Asian financial crisis of 1997-98.
• It serves as an informal platform for Finance Ministers and Central Bank Governors to discuss global economic and financial stability.

Elevation to Leaders’ Level

• After the 2007 global economic and financial crisis, the G20 was elevated to the level of Heads of State/Government to enable effective crisis coordination.
• Since then, G20 Leaders have convened regularly, making the G20 the foremost forum for international economic cooperation.
• G20 Summit takes place annually.
  • It is led by a rotating Presidency.
• Initially focusing on macroeconomic issues, the G20’s agenda has expanded to cover various areas, including trade, climate change, sustainable development, health, agriculture, energy, environment, and anti-corruption.

G20 Countries

• Members: 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.
• G20 Member countries are divided into five groups, with most groups formed based on regional proximity.
  • Group 1 and Group 2 do not follow the regional pattern.

Regional Groups

• Five Regional Groups of G20 are-
  • Group 1: Australia, Canada, Saudi Arabia and the United States.Group 2: India, Russia, South Africa and Turkify.Group 3: Argentina, Brazil, and Mexico.Group 4: France, Germany, Italy, and the United Kingdom.
  • Group 5: China, Indonesia, Japan, and the Republic of Korea.
• The European Union (EU) is not part of any regional group.

G20 Presidency

• G20 Presidency rotates annually among the members, selected from different regional groupings.
• Each year, a country from a different group assumes the G20 Presidency.
• Within a group, countries have equal opportunities to hold the Presidency.
• G20 Presidency is responsible for setting the agenda in consultation with other members.
• Troika: It consists of the current, immediate past, and next host countries that support the Presidency to ensure continuity.

Structure and functioning of G20

Sherpa Track

• G20 is led by a representative called Sherpa.
  • Sherpa represents the Leader.
• G20 focuses on various socio-economic issues across multiple domains.
• The areas of focus include agriculture, anti-corruption, climate, digital economy, education, employment, energy, environment, health, tourism, trade, and investment.
• G20 has several Working Groups that operate within this framework.
• The Working Groups include-
  • Agriculture Working Group
  • Anti-corruption Working Group
  • Culture Working Group
  • Development Working Group
  • Digital Economy Working Group
  • Disaster Risk Reduction Working Group
  • Education Working Group
  • Employment Working Group
  • Energy Transitions Working Group
  • Environment and Climate Sustainability Working Group
  • Health Working Group
  • Tourism Working Group
  • Trade and Investment Working Group

Finance Track

• Finance Ministers and Central Bank Governors lead this track.
• They hold meetings about four times a year, often in conjunction with WB/IMF meetings.
• The focus areas of this track include fiscal and monetary policy issues about the global economy, infrastructure, financial regulation, financial inclusion, international financial architecture, and international taxation.
• The Working Groups and Workstreams under this track include-
  • Framework Working Group
  • International Financial Architecture Working Group
  • Infrastructure Working Group
  • Sustainable Finance Working Group
  • Global Partnership for Financial Inclusion
  • Joint Finance and Health Task Force
  • International Taxation Issues
  • Financial Sector Issues

Cooperation with and within G20

• In 2010, during a meeting in Toronto, G20 leaders declared it the premier forum for global economic cooperation.
• The work of G20 members is supported by various international organizations that provide policy advice.
• These organizations include:
  • Financial Stability Board (FSB), established by G20 leaders after the global financial crisis.
  • International Labour Organization (ILO).
  • International Monetary Fund (IMF).
  • Organisation for Economic Co-operation and Development (OECD).
  • United Nations (UN).
  • World Bank (WB).
  • World Trade Organization (WTO).
• G20 actively engages with non-government sectors.
• Engagement groups from business (B20), civil society (C20), labor (L20), think tanks (T20), and youth (Y20) hold significant events throughout the year.
• The outcomes of these events contribute to the discussions and considerations of G20 leaders.

G20 Summits

List of G20 Summits:

Challenges Faced by G20

Russia-Ukraine Crisis

• The current major obstacle to G20 functioning is due to the reluctance of the U.S. and its allies to engage with Russia and its allies.

Rising Protectionism

• Globalization is retracting, and multilateral organizations face credibility challenges.
• This is because countries opt for a ‘G-zero’ approach and they are prioritizing their own interests over established groups.

Informal structure of G20

• G20 does not have a permanent secretariat.
• The agenda varies annually based on the presiding nation.
• This raise concerns that the G20 is merely an extension of the G7.

Influence on smaller countries

• Non-G20 nations also must implement the declarations and commitments made by G20 countries.
  • This can affect their growth and opportunities.
• Example: G20’s decision to cease international financing for coal power plants impacts smaller nations seeking financial support for such projects.

Inability to address internal challenges

• G20 struggles to resolve issues within member nations.
• Example:
  • Trade disputes between the US and China, or
  • Disagreements between the US and Russia regarding nuclear weapons.

Lack of enforcement mechanism

• G20 relies on consensus and peer review for achieving objectives, lacking enforceability and legally binding declarations.

Under-representation of Africa

• African nations are not represented in the G20.
• This raises concerns about their limited involvement and influence.
• Only South Africa is represented from Africa.

Conclusion

G20 has faced many challenges throughout its journey. One of the major challenges of G20 includes Under representation of Africa, Lack of enforcement mechanisms, Inability to address internal challenges etc. However, it served as an important platform to tackle issues related to the global economy because it represents 85% of the global GDP, over 75% of global trade, and about two-thirds of the world population.

Ref: Source-1

FAQs (Frequently Asked Questions)