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Analysis

The G20's Global Governance Centrality

John Kirton, G20 Research Group
November 18, 2020

Presentation on "The Future of Diplomacy: G20 in a Covid era," streamed live
by the Overseas Development Institute from London, United Kingdom, on November 17, 2020
(watch here).

The G20's Place in Global Economic Governance

Is the G20 the best global forum for marshalling, motivating and coordinating international finance and action to address global development challenges?

Yes, it is the best. Indeed, it is the only one. There is nowhere else to go. The only choice is between a G20 or a G-zero world.

The G20 is by far the best choice for several reasons.

Global threats are great and growing in our increasingly globalized world. To respond, the world needs global governance at the summit level, with the unique authority, comprehensive mandate and synthetic responsibilities that only country leaders bring. It needs the leaders of the most systemically significant states to gather, in a compact group that has globally predominant power, in economic, medical, ec ological, digital and other relevant capabilities. These leaders now know their big countries are themselves vulnerable in our globalizing world, just as small countries have long been. These leaders must come together to act face to face as equals, to collectively discover solutions to problems that none know the answers to when they are home alone, or even what their countries' specific interests are.

On September 15, 2008, when the American-turned-global financial crisis struck, only the G20 responded by rising to the leaders' level. The United Nations did not, nor did the Permanent Five (P5) members of its Security Council (UNSC). Nor did the International Monetary Fund (IMF), or the component Britain's Gordon Brown had recently created there — the International Monetary and Finance Committee. Nor did the "G7 Plus 5" that had shown its value at Tony Blair's Gleneagles G8 Summit in 2005. Nor did the 17-member Major Economies Meeting that subsequently arose. Only the G20 rose to the challenge.

Since then only the BRICS summit of Brazil, Russia, India, China and South Africa has appeared on the global summit governance scene. But even it quickly focused on the G20. And this year it delayed its summit, scheduled for September in St. Petersburg, until November 17, just four days before the G20 one takes place. And its compliance with its previous years' commitments has declined to only 72%, well below the G20's 78%.

So the G20 summit won. It did so by repeatedly proving its worth. First, it solved the American-turned-global financial crisis from 2008 to 2009. Then, it prevented the European one from going global, from 2010 to 2012. Next, it stopped any regional ones from erupting for seven years, from 2013 to 2019, until COVID-19 arrived in 2020 to bring us closer to another one.

In 2010, the G20 summit did what the IMF and World Bank could not do by themselves — reform the voice and vote of their executive boards to give emerging powers a greater place, in the ultimate zero sum game. In 2012 at Los Cabos, the G20 produced the great transformation, by creating the IMF's $500 billion "firewall fund." Here the United States withdrew from its historic role as the global lender of last resort, to be replaced by China, Japan and almost all other G20 states.

During its first 11 years, G20 summitry supported the rise of major emerging economies and many developing ones, led by China and India. China is already back from COVID-19 and on the rise again. The G20 helped lift many people out of poverty, and spurred the march to meet the UN's Sustainable Development Goals (SDGs).

Thus the G20 has done well on its first distinctive foundational mission of promoting financial stability, and is doing well to this day. But it still has a long way to go on its second mission of making globalization work for the benefit of all — not just the one percent at the top, but also the one percent at the bottom, and all those in between.

G20 Performance Beyond the Economic Core

How successful has the G20 been in bringing global solutions to systemic challenges in social, health and ecological fields?

Overall, the G20 summit has been a steadily rising, now substantial success. It has moved from financial and economic crisis response to crisis prevention, and become a global steering committee for these and social, ecological and security subjects too. But it has done best by far in its macroeconomic, finance and development governance, rather than on its newer, broader subjects. In the social domain, it has done well only on labour and employment, but poorly on gender equality, health and migration and refugees. Its greatest failure has come on the environment and climate change, especially since its performance peaked on these at its Hamburg Summit in 2017.

On the 2020 COVID-19 crisis, its response got off to a very good start. On March 26, 2020, its first ever inter-sessional, emergency, virtual summit made 47 commitments. They achieved 72% compliance in the next two months. But the G20 did not prevent the eruption of the severe second wave in Europe, Canada and the United States that was killing so many by the autumn of 2020. Nor did it help mobilize enough money and enough new power for the World Health Organization (WHO) to do these things.

Why did the G20 not hold a second emergency summit in September? Its test will come at its Riyadh Summit in just a few days. Will it provide safe, effective, affordable, trusted vaccines for all and simultaneously combat the soaring cases of mental health, non-communicable disease, antimicrobial resistance and other animal—health diseases?

Club Diplomacy as a Global Governance Form

What are the strengths and weaknesses of "club diplomacy," of the sort the G20 offers, over the full, formal, multilateralism that the major international organizations from the 1940s produce?

There is no alternative to club diplomacy. The Bretton Woods—UN system is still largely controlled by the highly closed clubs of the UNSC's P5, the permanently European-headed IMF executive board and the permanently U.S.-headed World Bank one. These multilateral organizations were born in, designed for and still largely govern for the world of 75 years ago. They had almost 65 years to prove their worth, before G20 leaders found it necessary to create their own summit club.

Neither the IMF nor the World Bank has ever had a summit. The P5 only did in 1992. The UN as a whole restarted its summitry, after a 45-year sabbatical, only in 1990, thanks to a G7 push. Some of its subject-specific high-level meetings add value. But they are mostly on siloed subjects and only a subset club of leaders actually attend. All G20 leaders almost always attend the G20 summits.

This year the UN took a summit sabbatical, by delaying its scheduled climate and biodiversity summits until year. For those who care about the climate and biodiversity crises, the G20 is the only global summit there to act on those issues this year.

The G20 has the best combination of a continuing, compact club, combining maximum power and global responsibility for all. Its inherent legitimacy comes from its dual distinctive foundational mission or promoting financial stability and making globalization work for the benefit of all.

It does have some serious weaknesses. First, the demand for global governance is great and growing, but the G20's supply declined from 2011 to 2019. Second, its agenda has expanded, but the leaders' time together to address it has remained very small. Third, the second African member slated to be given a seat at the start — Nigeria — has not yet been allowed to take it up.

Recommendations for Reform

Among the many institutional reforms the G20 summit needs, five stand out.

First, G20 leaders should meet more often. G20 summits should be held at least twice a year, as they were from 2008 through 2010. G20 leaders should come out of semi-retirement and go back to full-time G20 work. They should hold an emergency summit in early 2021 and add a permanent one each September at the UN General Assembly to address the SDGs.

Second, they should meet for longer when they gather. They should stay together for more than their usual 24 hours over two days, when they are awake for only 16 hours. They need more time to cover their expanding agenda, discover what's on each others' minds, invent new initiatives on the spot and bond as a cherished club.

Third, they should add as full members, alongside the IMF and World Bank, the head of the UN, the WHO and probably the United Nations Environment Programme too.

Fourth, they should change the Financial Stability Board, which is de facto a G20 secretariat, into the Sustainable Financial Stability Board, with the central mission, staff and powers to foster climate finance. They should do the same for Global Infrastructure Hub — the only G20 institution that reports only to the G20 — making it the Global Sustainable Infrastructure Hub.

Fifth, they should mandate many ministerial meetings, by many different ministers, before and after the summit. These increase members' compliance with their leaders commitments, making promises made, promises kept, as the first step to solving problems and saving lives.

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