International Relations
Syllabus
- GS-2: Important International institutions, agencies and fora- their structure, mandate.
Context: On December 1, India assumed the presidency of the G20 forum, taking over from Indonesia. Prime Minister Narendra Modi called it a “huge opportunity for India”.
What is the History of G20?
- The G20 forum was established in 1999 by the finance ministers and central bank governors of seven countries – Canada, France, Germany, Italy, Japan, the U.K., and the U.S. after a meeting in Washington DC.
- The uniting factor was the 1997–98 financial crisis and its aftermath.
- The 1997–98 Asian financial crisis began in Thailand and then quickly spread to neighbouring economies. It began as a currency crisis when Bangkok unpegged the Thai baht from the U.S. dollar, setting off a series of currency devaluations and massive flights of capital.
- Just weeks after Thailand stopped defending its currency, Malaysia, the Philippines, and Indonesia were also compelled to let their currencies fall as speculative market pressure built.
- By October 1997, the crisis spread to South Korea, where a balance-of-payments crisis brought the government to the brink of default.
- Other economies also came under pressure, but those with solid economic fundamentals and hefty foreign exchange reserves fared much better.
- The crisis was rooted in economic growth policies that encouraged investment but also created high levels of debt (and risk) to finance it.
- The International Monetary Fund bailed out many countries but imposed strict spending restrictions in exchange for the help.
- The G20 comprises Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the U.K., the U.S. and the European Union
- The representatives met in Berlin, Germany, for the first annual meeting of the group. The first meeting of G20 leaders took place in 1999, and it was elevated to the level of heads of government/State in 2008.
- The primary aim of G20 was to secure global financial stability by involving middle-income countries.
- In 2009, G20 was designated the “premier forum for international economic cooperation”.
- The forum initially dealt with matters related to macroeconomics, but over the years, its agenda has expanded to cover issues relating to trade, climate change, sustainable development, health, agriculture, energy, environment, climate change, and anti-corruption.
- G20 was considered as an acceptable medium between the more “elitist” G-7 (then the G-8 due to Russia), and the more unwieldy 38-member Organisation for Economic Co-operation and Development (OECD)
- However, G-20 was conceived in a more unified, post-Soviet era, when western economies made the rules
- Over the past two decades, the global economic balance has shifted, and the G-20 has been seen as a more representative and egalitarian grouping of global leadership, and was particularly useful in steering the global economy after the global financing crisis and banking collapse of 2008.
- At its 2009 summit, the G20 declared itself the primary venue for international economic and financial cooperation. The group’s stature has risen during the subsequent decade, and it is recognized by analysts as exercising considerable global influence.
- Today, G20 members account for more than 80% of the world’s GDP, 75% of global trade and 60% of the population of the planet.
How does the G20 work?
- The group does not have a permanent secretariat.
- Processes under G20 are divided into two parallel tracks – the finance track and the sherpa track. The finance track is led by finance ministers and central bank governors of member nations, who meet throughout the year.
- Sherpas, who are personal emissaries of leaders, lead the sherpa track. They oversee
negotiations all through the year, discussing agenda items for the summit and coordinating the substantive work of the G20. - In addition to Summits and Sherpa meetings (that help in negotiations and building consensus), various other events and group meeting are also organised throughout the year.
- Working groups designed around specific themes operate within both tracks. These include representatives from relevant ministries of member nations and invited/guest countries too.
- Various international organisations, like the United Nations, International Monetary Fund, and the Organisation for Economic Co-operation and Development also participate in working groups.
- This year’s working groups will cover topics like financial inclusion, digital economy, and environment and climate sustainability.
How does G20 Presidency work?
- The presidency of the G20 rotates every year among members, and the country holding the presidency, together with the previous and next presidency-holder, forms the ‘Troika’ to ensure continuity of the G20 agenda.
- India will assume the presidency of the powerful G20 grouping from the current chair, Indonesia, on December 1, and hold the post for a year.
- During India’s presidency, India, Indonesia and Brazil will form the troika.
- This would be the first time when the troika would consist of three developing countries and emerging economies.
- During the course of its G20 Presidency, India will be holding about 200 meetings in 32 different sectors in multiple locations across India.
What role can India play as the G20 President-nation?
- India’s G20 Presidency is a unique opportunity to showcase India’s strengths to the entire world.
- In his remarks at the closing Session of the G20 Leaders’ Summit in Bali, Prime Minister Narendra Modi rightly pointed out the linkages between inclusive development, gender equality, peace and security and the full use of technological innovations for universal benefit.
- G20 Presidency would help showcase parts of India beyond the conventional big metros, thus bringing out the uniqueness of each part of our nation.
- Apart from hosting the summit and setting the theme, the G20 presidency does not come with any formal powers.
- However, India plans on showcasing its philosophies of Vasudhaiva Kutumbakam (one earth, one family, one future), and LiFE (Lifestyle for Environment) through the theme and the logo of the event.
- India’s G20 presidency is “striving for just and equitable growth for all in the world, as we navigate through these turbulent times, in a sustainable, holistic, responsible, and inclusive manner,” an official statement said.
- India’s presidency also comes as many countries witness inflation and recession trends, compounded by the Russia-Ukraine war and the standoff between the European Union and Russia.
- The war will complete one year in February 2023.
- Given the large number of visitors who would be coming to India during India’s G20 Presidency, there is huge potential for promoting tourism and boosting the local economies of the venues where G20 meetings would be organized.
- The G20 presidency will also see India entrenching its credentials as a digital superpower which can leverage its unique digital public goods for benefits of people across geographies.
- Transforming G20 into a people-led movement for creating better lives of people could potentially become a lasting legacy of India’s G20 presidency.
- In the over 200 G20-related events that will be organised across the country, from Kashmir to Kanyakumari, involving civil society, students and women will promote greater people’s participation.
- For thousands of international delegates attending G20 events, it will be their first experience and taste of India, bringing them face to face with ordinary people.
- India’s own problems with China, also a part of the G20 group, pose a potential platform for the effective redressal of conflicting issues.
- However, Prime Minister Modi’s brief interaction with Chinese President Xi Jinping during the G20 Summit in Indonesia in November 2022 has left experts feeling optimistic about the situation.
- The long-term enduring legacy of India’s G20 presidency will be the prioritisation of the interests of the developing world and the Global South on the G20 agenda.
- Making global financial governance institutions more democratic and representative of ongoing shifts in the world order will be a major priority of India under its G20 presidency.
- Institutions such as the World Bank and IMF continue to remain the bastion of the West and need to provide greater representation and weight to emerging and developing countries in order to stay relevant.
- As India will be leading G20 at a time of escalating global tensions, it will have to take the lead in forging an inclusive and equitable world order, with reformed multilateralism at its core.
- Another valuable window of the G20 Presidency is its tradition of inviting some guest countries and international organisations to its G20 meetings and summit.
- These include guest countries such as Bangladesh, Egypt, Mauritius, Netherlands, Nigeria, Oman, Singapore, Spain, and UAE, as well as International Solar Alliance (ISA), Coalition for Disaster Resilient Infrastructure (CDRI).
- India inviting Bangladesh shows its commitment to strengthen the cooperative framework in its own region. However, India must work to reassure other neighbours such as Nepal and regional organisation are also on board so as to contribute to a better Asia.
- India’s G20 presidency is an unprecedented opportunity to shape the global narrative in favour of reducing the carbon footprint and encouraging green energy and digitalisation as significant components of transformational changes.
- India’s G20 presidency should be also used to pursue its thought leadership role and the broader goal of reducing polarisation, channelise resources in an inclusive manner, and firm up optics in favour of developmental priorities.
Main Practice Question: How does G20 presidency for India help in addressing its interests?
Note: Write answer his question in the comment section.
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