What to expect at the G20 Leaders’ Summit?

The G20 could play a vital role in orchestrating a non-protectionist, sustainable, and inclusive global recovery. Their special Summit on the Corona crisis in March produced some promising results. In previous years, however, in the past, the group of twenty very diverse developed and developing countries has had difficulty finding common ground on important global issues, such as international trade and climate change. It is questionable whether the pandemic will substantially change this. Moreover, Mr. Trump’s legacy and rising geopolitical tensions loom ahead.

This year’s G20 Leaders’ Summit will occur on November 21-22 in Riyadh, Saudi Arabia. It’s been 12 years since the G20 became more than a meeting of Finance Ministers and Central Bank Governors to discuss macro-financial issues.  In the middle of the global financial crisis in 2008, the G20 heads of state and government held their first Summit in Washington, which elevated the group to become a high-level platform for international economic cooperation.

Since then, the G20 has committed to maintaining an open international trade and investment environment, reducing global inequality, and promoting more sustainable and inclusive economic growth. Despite their efforts, however, protectionist measures and global inequality have increased worldwide, while progress toward sustainability has been sluggish.

Corona and the G20

At first glance, the Corona pandemic appears to have brought the G20 closer together, with their special Leaders’ Summit in March 2020 via video producing a promising roadmap to manage the crisis. The foci included fighting the pandemic, e.g., by supporting the World Health Organization and global vaccine initiatives and protecting the global economy from harmful measures, such as the disruption of supply chains.

Following up on this, the G20 Finance Ministers agreed upon deferring the debt of the most vulnerable and most impoverished countries to help them better cope with the crisis, while the Trade and Investment Ministers agreed to not allow for export restrictions on agricultural products. Regarding crucial medical goods, they pledged for restrictions to be transparent and short-term, except for humanitarian goods. They also emphasized their goal to keep markets open.

However, recent data from the Global Trade Alert Project shows that in 2020 the number of harmful measures on trade and investment so far has risen more than that of liberalizing measures. This might be a signal that despite official commitments to multilateral approaches, national inward-looking responses to the pandemic prevail, even though G20 economies are hit by the pandemic to very different degrees (see table).

While the G20 was able to take more concerted action during the global financial crisis, it appears to be more difficult for them in the current crisis. This has very much to do with the changes in the international landscape, especially in the last few years.

“Trumpism” may yet survive: The shifting role of the United States

The G20 was put to a severe test during the Trump administration, which turned its back on the United States’ traditional role as facilitator and moderator of international cooperation. With his “America First” policy, President Trump torpedoed multilateral approaches to global issues and undermined international cooperation in many ways.

Even now that President Trump is about to leave office, the rifts he caused in international and bilateral economic cooperation will not easily heal, if at all. The fact that the Leaders’ Summit takes place in the transition phase from President Trump to President Biden will neither make things easier, especially since it is hard to say how Trump will act at his last G20 Summit.

Moreover, Mr. Biden has already made clear that domestic issues will be on top of his agenda. This also means that we cannot expect the United States to renew their commitment to international cooperation and free trade very soon. Moreover, protectionism is likely to continue in the Biden era, though it might come along in a more civilized disguise. It should therefore be clear at this stage that the United States will not play the same role on the international level, and therefore among the G20, as before.

Will China fill the gap? Geopolitical tensions cast their shadows    

China, under Xi Jinping, presents itself as highly self-confident in global affairs. The withdrawal of the United States from international cooperation has further fueled Chinese ambitions to take a more assertive role in this regard.

For example, at the G20 Summit in Hangzhou 2016, China already positioned itself to have more say in the international free trade regime in the future and set its own standards. This was a sneak preview of the Chinese twofold approach to international cooperation, which on the one hand, includes playing a more active part in already existing formats and platforms, while on the other hand fostering China-led approaches and initiatives.

The Trump administration played into China’s hands when it came to proving China’s one-party state’s superiority to western-style democracies. Thus, it has also become easier for China to promote its development model as an alternative to that of the formerly US-led western market economies.

These developments have made it very clear that China is both a partner and a competitor, not only economically but also politically. The increasing geopolitical tensions that arise from this will impact the work of the G20 and put them to another severe test.

The European Union: Caught between the two powers?                  

Given the Trump administration’s sometimes hardly disguised blackmailing attempts towards its allies with regard to China, the European Union has definitely been caught between the Chinese and the US in recent years. When Mr. Biden takes office, things will most certainly improve. It is safe to say that The 46th President of the United States will not call the EU a “foe” alongside China and Russia. Mr. Biden will at least try to revive old alliances and to have the United States participate in multilateral processes, such as the G20, more constructively. However, as mentioned above, this will not be his top priority.

The EU should not wait for the US to take the lead again or for China to take over, but rather take on a more assertive international role itself. The EU is an unprecedentedly successful project of peace and prosperity. It has the advantage of representing not just one single superpower but bringing together the interests of 28 countries. The EU has the opportunity to play the role of mediator in multilateral processes, especially for those countries in Asia, Africa, or elsewhere that are possibly tired of the US or China as dominant powers and are looking for alternatives.

Therefore, it would be desirable for the EU to put aside internal disputes or at least not let them stand in the way of making more use of the EU’s economic and soft power internationally. One, admittedly daring, suggestion to strengthen the EU’s role would be to consider only including the EU in the G20. This could substantially push the European perspective while avoiding having four member states sit at the table while the other 24 have to wait outside the door.

Outlook: We should not expect big surprises from the upcoming G20 Leaders’ Summit

After Riyadh, the G20 Leaders will publish their Summit Communiqué as usual. It will most probably include – apart from their renewed promise to counter the Corona crisis’s effects –   commitments to inclusivity, sustainability, and the importance of trade and investment as drivers for growth. However, given recent developments, especially regarding the worrying spread of COVID19 and the US election outcome, it is very unclear whether concrete actions will follow any time soon.

The practical implications of the Communiqué might therefore be restricted: As China will be the only country forecast to grow even in 2020, most G20 countries will be struggling with their own economic recovery – which ironically leaves even less time to deal with international cooperation, even though it will be dearly needed to better coordinate the management of the Corona crisis.