Why the G-20 matters
On July 7-8 the leaders of the world’s biggest economies are meeting for the G-20 Summit in Hamburg. The 20 nations account for 85 percent of the global economy and around 80 percent of global trade. No wonder then that what is discussed at their meetings matters to the world, and more so than in just the narrow economic sense. The communiques may be vague at the best of times, but the leaders — some of whom are not regularly talking with one another — will have to engage in a meaningful manner.
Ever since Russia was expelled from the G-8 over its involvement in Ukraine, Western leaders have not sufficiently engaged with Russian President Vladimir Putin and Prime Minister Dmitry Medvedev. And this coincided with a time of several trouble spots — including Ukraine, Syria, or for that matter the alleged Russian cyber activities during the elections in the US and France.
Another key country is China, which over the last 27 years has become the world’s second-largest economy, up from 11th place in 1990. Beijing now increasingly looks at playing a role on the international stage, which more accurately reflects its new-found economic might.
This is evidenced by Beijing’s controversial assertiveness in the South China Sea, the epic “One Belt, One Road” initiative that aims to revive ancient trade routes, or its broader involvement in global issues such as climate change. Indeed, at last year’s World Economic Forum gathering of leaders in Davos, it was President Xi Jinping who was the advocate for globalization and the benefits of free trade, Chinese style. It looked as though the Chinese president had taken the mantle of leadership hitherto reserved for the US.
Under President Donald Trump, the US reverted to an “America First” policy. This stirred quite a bit of amazement among global leaders: One of Trump’s first actions after his inauguration was to withdraw from the Trans-Pacific Partnership (TPP) — a Pacific free-trade zone that had been negotiated for the better part of this decade. Trump also wants to renegotiate the North American Free Trade Agreement (NAFTA), has publicly challenged the validity of the North Atlantic Treaty Organization (NATO) and stunned the world by withdrawing US support from the Paris climate-change accord. The sheer volume of activity came as a shock to the status quo, and global leaders now need to get to grips with this “new world order.”
The G-20 also gives voice to important nations, that do not find a hearing in the G-7 and tend to get drowned out by the sheer size and cacophony of the UN. Saudi Arabia is the only Arab member nation and one of only three Muslim-majority countries, alongside Turkey and Indonesia, that are part of the G-20. It is vital to have their voices heard.
Dialogue and engagement are vital to the possibility of nudging the world’s pressing issues closer to a solution.
The “BRICS” — Brazil, Russia, India, China and South Africa — are members. It is important that this grouping engage not just among themselves, but with the other big stakeholders in the world. South Africa is the only nation on the African continent that is represented. Africa does matter: The continent has a population of 1.2 billion, a combined gross domestic product (GDP) of $2.3 trillion but, alas, a very low average GDP per capita. Germany wants to discuss Marshall Plan-like programs to help African economies develop and stem the tide of migration across the Mediterranean, which is a big issue for Europe and European unity.
The big issues facing the world are too significant not to be addressed by the leading economies. Such issues, to name just a few, include climate change, North Korea, Syria and other trouble spots, the humanitarian crisis in East Africa, migration and Brexit.
The lines are increasingly blurred with several G-20 members on different sides of the debate, depending on the issue. The G-20 may not come up with hard and fast solutions. However, behind closed doors, the dialogue and engagement are vital to the possibility of nudging the world’s pressing issues closer to a solution.
Last but not least, there will also be several new leaders present at the G-20, like Trump and the French President Emmanuel Macron. They will for the first time have an opportunity to engage with their G-20 peers — and, notably, Trump and Putin will meet face-to-face for the first time.
• Cornelia Meyer is a business consultant, macro-economist and energy expert. She can be reached on Twitter @MeyerResources.