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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer was governor of the Reserve Bank of India and is now a senior fellow at the Yale Jackson School of Global Affairs
India’s G20 summit last month turned out to be a celebration of the country’s growing heft in the global arena. But now that the euphoria has ebbed, it’s time to ask some hard questions.
Do we need the G20? Yes, certainly. In a world with a shared ecosystem and a shared economy, we face problems that don’t respect political boundaries — climate and virus infections, for example. These cannot be solved without global co-operation. We desperately need a forum to foster such co-operation.
However, the way the G20 has evolved — into an overload of meetings, conferences, events, exhibitions and exchanges — is less helpful. Some argue that the group should remain focused on its core competence of global economy and finance. It’s worth noting that the alliance originated in the aftermath of the 1999 Asian financial crisis, with the aim of bringing together developed and developing countries to monitor global economic and financial stability. That annual meeting of finance officials was upgraded when then US president George W Bush called a meeting of the G20 heads of government in November 2008 to craft a collective solution to the global financial crisis. Without this rescue effort, the global financial system would probably have gone into free fall.
More recently, however, the G20 has not been able to repeat these early successes. There has been no shortage of pressing problems — climate, global health and debt restructuring, for example. But the G20 has turned out to be more of a talking shop than a problem solver. The broad refrain is that the group is effective only if there is a raging fire: when faced with slow-burning problems, narrow national interests trump globally optimal solutions. And all that follows is anodyne communiqués.
The world cannot afford such cynicism. While nothing concentrates the mind like a crisis, emerging problems can gather momentum if they are not addressed. For the sake of our collective future, the G20 must repurpose itself. I want to suggest three ideas for a way forward.
The first priority is for the G20 to return to being lean and mean by shunning all the baggage it has acquired over the years. The group has always taken pride in the fact that unlike other international bodies such as the UN, the World Bank, IMF and the WTO, it is not burdened by a charter, rules of procedure or formalised bureaucracies. These are strengths of course, but they should not be allowed to turn into liabilities with every country refashioning the G20 each year according to its whims. The group should pursue a core agenda of three or four global issues each year. It is unrealistic to expect dramatic results, but if the needle moves even a little each year, we will make more progress than we would while pursuing an amorphous agenda from summit to summit.
The second step is to abandon the practice of issuing a communiqué. This has turned out to be a needlessly contentious and unproductive exercise. The agenda of the New Delhi summit was almost entirely overshadowed by finding appropriate wording to condemn Russia’s invasion of Ukraine. In the event, the compromise wording in the final joint declaration that touched on the war without specifically mentioning Russia pleased no one and made little difference to the real world. Even in the absence of divisive issues such as Ukraine, G20 communiqués have often read like manifestos for global governance, full of pious declarations and self-righteous intentions. With no concrete plan of action and measurable goals, no one is held accountable for results. And with a rotating presidency, the drama moves from one country to another
The lesson is clear. Replace the communiqué with minutes of the meeting that will faithfully record differences of opinion and indicate the plan of action until the next summit.
The third imperative on my list is to keep politics out of the G20. Of course it’s difficult to separate politics from economics when geopolitical tensions are running high. But we saw the cost of politics creeping into the forum when both Russia’s Vladimir Putin and China’s Xi Jinping stayed away from the New Delhi summit. The group will be more effective if all the leaders attend and express their differences than if some opt out because of political disagreements. After all, there is the UN for politics. What value can the G20 add on this front?
In a world divided by nation states, the G20 has to be the voice of consensus on the economy and related global problems. We cannot afford for it to fail.