| bibo:abstract |
Ⅰ. The Context of the 2022 G20 Summit: A Four-fold Crisis
Ⅱ. Major Achievements
Ⅲ. Implications of the 2022 G20 Summit
Ⅳ. Policy Considerations for Korea
Global leaders from 20 countries met in Bali, Indonesia, for the 17th G20 Summit from November 15-16, 2022. The G20 Summit deserves attention for two reasons: First, it plays a significant role in finding effective solutions to the challenges of our time, and second, it affirms the principles upon which international relations operate. Since the G20 countries account for 80 percent of the global GDP, the resolution of global economic crises in today’s interdependent world relies on their capabilities and cooperation. And the G20 Summit reaffirms the principles, leadership, and the alignments and divisions among countries that shape the contours of international relations. If G20 countries could cooperate under shared goals and coordinate efforts to resolve an array of global economic crises, the G20 Summit can produce desirable outcomes and remain relevant as global premier governance.
For the past 15 years, the G20 Summit has recorded both successes and failures depending on the combination of its substantive effectiveness and operational principles. The G20 Summit was, at first, successful under U.S. leadership and rules-based multilateralism in preventing the 2008 global financial crisis from morphing into a crisis as severe as the Great Depression of the 1930s. On the other hand, as President Trump refused to assume the premier forum’s leadership in 2017, the G20 Summit itself and the rules-based multilateralism were destabilized and the summit failed to function as a crisis management mechanism during the Covid19 pandemic.
It appeared that the G20 Summit returned to normalcy in 2021 when President Biden took office with his favorite campaign tagline, “America is Back.” However, the G20 is put to the test again in 2022. Since February, international relations have been plunged into crisis, a situation being dubbed Cold War 2.0. The 2022 G20 Summit was held in the face of unprecedented global crises, and its process and deliverables signaled a possible change in the principles upon which international relations have operated thus far.
Ⅰ. The Context of the 2022 G20 Summit: A Four-fold Crisis
The 2022 G20 Summit was convened to deal with a complex set of crises amid a tense environment facing international relations. In 2022, the G20 Summit had to respond to a triple whammy of the Covid-19 pandemic, stagflation, and climate change, as well as a geopolitical crisis unrelated to the original mission of the G20 Summit. The unexpected eruption of a geopolitical crisis has worsened the Covid-19 pandemic, climate change, and stagflation, and the very fact that one of the G20 members is responsible for triggering the current geopolitical crisis is hindering joint efforts at addressing these challenges.
The Covid-19 pandemic, which stretches into its third year, still remains a public health emergency in many parts of the world. Despite ongoing efforts to provide the world with coronavirus vaccines, such as the Covax initiative, unequal vaccine distribution has left billions of people vulnerable to the deadly virus, and global recovery from the economic fallout of the pandemic has been uneven as well. Also, the pandemic has accompanied supply chain disruptions, monetary expansion, and inflation, and interest rate hikes in developed countries aimed at controlling inflation have raised the risk of stagflation, a combination of slow economic growth and a high rate of inflation. Moreover, the pandemic, rising food and energy prices, and developed countries’ tight monetary policy have led to a surge in debt in the developing world. And although climate change is an existential threat to humanity, responses have been slow, and while the developing world has contributed the least to the problem, they are bearing the brunt of the impact of a hotter climate.
The Russo-Ukraine war, which broke out in February 2022, has shaken the world order to the core since it is an attempt by a great power to change the status quo using force. It is also taking place in the European continent that had not experienced interstate wars for over 70 years. Furthermore, since Russia and Ukraine account for a considerable share of the global supply of energy and food, the war has triggered a sharp increase in energy and food prices and subsequent recessions.
Meanwhile, the Russian aggression has generated different reactions within the G20, dividing its members into three groups. One group consists of Russia and China with a shared goal of replacing the international order led by the West. Another group consists of the United States and democratic market-oriented countries in Europe and Asia, which have an interest in preserving the liberal rules-based international order. And the last group consists of a number of non-aligned countries - Argentina, Brazil, India, Indonesia, Mexico, Saudi Arabia, South Africa, and Turkiye - that avoid siding with either the authoritarian camp led by Russia and China or the democratic camp led by the United States and Europe.
The theme of the 2022 G20 Bali Summit was “Recover Together, Recover Stronger,” but due to the drastic changes in the global security and economic landscape that began in 2022, resolving the ongoing geopolitical crisis took precedence over the agenda chosen by Indonesia. Indonesia took the middle road by portraying geopolitical stability as a necessary condition for economic growth while highlighting that the Global North should heed the needs of the Global South concerning the pandemic, stagflation, and climate change.
Ⅱ. Major Achievements
The 2022 G20 summit kicked off amid low expectations for its success due to the ongoing geopolitical crisis. Nevertheless, it managed to draw up the Leaders’ Declaration as follows.
First, most G20 members agreed that the Russo-Ukraine war is causing immense human suffering and exacerbating existing fragilities in the global economy by heightening energy and food insecurity, demanded Russia’s complete and unconditional withdrawal from the territory of Ukraine, and upheld that the use or threat of use of nuclear weapons is inadmissible.
Second, the G20 central banks agreed to achieve price stability by appropriately calibrating the pace of monetary policy tightening and to maintain their independence. The G20 members reaffirmed their commitment to stepping up efforts to implement the G20 “Common Framework for Debt Treatment” to restructure low-income countries’ debts, to make progress on the 15 percent Global Corporate Minimum Tax, to strengthen trust in the rules-based multilateral trading system with the WTO at its core, and to improve the WTO’s functions including its dispute settlement mechanism.
Third, the G20 reaffirmed the leading role of the WHO in responding to pandemics, welcomed the negotiation of a legally binding Pandemic Treaty and amendments to the International Health Regulations (2005), encouraged voluntary pledges to the Pandemic Fund hosted by the World Bank, and supported the suspension of patent protections for Covid19 vaccines and establishment of Vaccine Technology Transfer hub.
Lastly, with a view to addressing climate change, the G20 countries agreed to support the developing countries’ clean energy transitions and discuss the formation of “Loss and Damage Fund” which would compensate for the losses and damages inflicted on developing countries due to climate change.
The achievements of the Indonesian G20 Summit suggest that, first, while the G20 summit is a forum originally designed to respond to global economic crises, it could also address geopolitical issues as its key agenda as the troubling geopolitical trend continues to have an adverse impact on the global economy.
Second, the emphasis on central banks’ independence indicates the weakening of macroeconomic coordination among the G20 and a shift towards deglobalization. In the face of the U.S. Federal Reserve’s pursuit of a tighter monetary policy, countries are expected to come up with their own measures to deal with high prices and high interest rates while reducing reliance on global supply chains in the post-pandemic era.
Third, while developed countries were the agenda-setters in past G20 summits, this year’s summit has seen remarkable progress in spelling out measures to assist the developing world, such as meeting their public health needs, mitigating the impact of climate change, and addressing the debt crisis. That said, the members did not hash out ways to fund these measures, except for largely relying on voluntary contributions from developed countries.
Ⅲ. Implications of the 2022 G20 Summit
First, the 2022 G20 summit held in the wake of the geopolitical crisis confirmed that U.S. leadership still works. Despite the division among the G20 countries, the condemnation of Russia in the Leaders’ Declaration indicates that there still exists international consensus on the U.S.-led rules-based multilateralism. As demonstrated by this year’s summit, U.S. leadership still remains indispensable for the G20 summit to function effectively. Also, by addressing the Russo-Ukraine war, the U.S. has shown that the G20 can serve a political role to maintain the principles of international order, in addition to its traditional role in responding to global economic crises.
Second, by tackling the current geopolitical crisis, the 2022 G20 summit has exposed China’s ambiguity toward global leadership. It can be safely assumed that China had prior knowledge of or acquiesced to the Leaders’ Declaration condemning Russia. However, China’s tacit acceptance of the condemnation does not mean that its stance on the Russo-Ukraine war has changed. China also took an ambiguous stance on matters concerning developing countries. China has recently become the world’s biggest creditor for developing countries, but it stands in the way of resolving the debt crises in the developing world. Beijing also shows reservations about the “Loss and Damage Fund” despite being the largest climate polluter in the world, because it wants to avoid being classified as a developed country and obliged to pay its fair share to compensate vulnerable countries for the costs of addressing climate change.
Lastly, future G20 summits are likely to continue to discuss ways to meet the needs of the developing world. From 2023 to 2025, the G20 summit will be hosted by India, Brazil, and South Africa respectively, which are members of BRICS alongside China and Russia. The development agenda will likely emerge as a crucial issue in the G20 summits as emerging market economies are set to assume the G20 presidency. It is worth noting that a renewed focus on the development agenda, combined with China and Russia’s continued push for an alternative world order, could turn the G20 into an arena of competition between the U.S. and China with very different visions of the world.
Ⅳ. Policy Considerations for Korea
The Korean government has to brace for possible changes in the G20 summit as the 2022 G20 summit has transcended its original purpose by addressing the current geopolitical crisis. Leveraging the G20 as a platform for advancing Korea’s “Global Pivotal State” diplomacy also merits serious consideration. Moreover, South Korea, as the tenth largest economy in the world, should also be ready to bolster its contributions to advancing the G20’s development agenda, which is likely to emerge as one of the main themes in future G20 summits. Lastly, the G20 in recent years has appeared to be drifting away from macroeconomic policy coordination, toward self-sufficiency and deglobalization. Against this backdrop, South Korea should adjust its trade, monetary, and supply chain policies to navigate its way forward.
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