What makes the G20 summit so valuable
The first G20 summit was convened in 2008 during the height of the financial crisis. Leaders met to avert a financial meltdown not seen since the Great Depression. In the face of danger, they cooperated well. The summits have had varied results since then. There is value in a gathering that represents 60 percent of the world’s population and 85 percent of its gross domestic product (GDP).
What has made the summits particularly valuable is that they have enlisted broader participation than the G7, particularly since Russia’s expulsion from what used to be the G8. As such, the G20 is one of the few forums where Western leaders collectively engage with the Russian president. Thus it was a pity that US President Donald Trump canceled his planned meeting with Vladimir Putin.
Trump is no friend of multilateral mechanisms, preferring bilateral talks instead. He puts America first and favors trade restrictions. His skepticism of climate change is well known. This has made it hard to draft communiques, though officials are hopeful that they may get there this time. Trump has so far acted as the disrupter-in-chief at these summits, but he seems more conciliatory this time.
He used the gathering to sign the US-Mexico-Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA). The automotive industry in all three countries sighed with relief when an accommodation was found. But it did not prevent Canadian Prime Minister Justin Trudeau from criticizing US tariffs on steel and aluminum.
Trade will be top of the agenda, especially when looking at the US- China relationship. All eyes will be on the meeting between Trump and Chinese President Xi Jinping. The world is waiting with bated breath to see whether trade tensions between the two countries intensify. This would put a damper on
Chinese economic growth and have ramifications on inflation in the US and beyond.
The US supply chain would become significantly more expensive in line with Chinese components. Europeans, especially German car companies, manufacture products for export to China in the US. BMW and Volkswagen would be particularly hard hit by an intensifying trade war between the US and China. German car manufacturers would be even harder hit if Trump makes good on his threat to impose tariffs on European cars.
The US-China rift goes well beyond trade though. It is also about the two countries’ geopolitical presence on the world stage. Over the last two decades, China has advanced its global presence through economic policy combined with soft power. Africa is a case in point, as is Asia, where the Belt and Road Initiative has increased China’s economic and geopolitical presence.
China’s presence is also intensely felt in Latin America, where Chinese companies have been behind at least 150 infrastructure projects since 2002. China keeps Venezuela’s economy afloat with loans, just about, and receives interest in the form of crude oil.
Xi and Argentina’s president will sign a contract for a nuclear power plant that will be built using Chinese technology. Latin America is the backyard of the US, and over the last 15 years China’s presence has crept up pretty much unnoticed.
German Chancellor Angela Merkel was sorely missed on the first day of the summit. She arrived late because her official plane had technical problems. Tensions between Ukraine and Russia are boiling over since their latest spat, which began when Russia’s navy rammed Ukrainian ships and took their sailors as prisoners.
Russia’s annexation of the Crimean Peninsula in 2014 remains an issue that does not just worry Ukraine but also NATO. When the issue first erupted, Merkel’s leadership was instrumental in calming things down somewhat.
The G20 has been dubbed the “real OPEC” meeting by some analysts as Saudi Crown Prince Mohammed bin Salman, Putin and Trump are in attendance. All of the above proves that trade, energy, the climate and stewardship of the global economy are far too important to be addressed solely by member states of the Organization for Economic Co-operation and Development (OECD).
The new big players, China and India, need to be included, as do the larger economies in Asia, the Middle East, Africa and
Latin America. Saudi Arabia is the only Arab member of the G20, and one of only three Muslim-majority countries. In that sense, it is important that the Kingdom is represented at the highest level.