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Analysis

On the Eve a Significant Short-Term Success:
Promising Prospects for the G20 Riyadh Summit

John Kirton, G20 Research Group
November 20, 2020

On the eve of the Riyadh Summit, negotiations were going reasonably well to produce a summit of significant, short-term success (Kirton 2020, Kirton and Koch 2020).

Dominant Issues

On the dominant issues, advances will come on health, the economy, development and debt, International Monetary Fund–centred finance and climate finance.

On health, there will be much COVID-19 content in the leaders' communiqués. G20 leaders will spur the swifter creation of safe, effective, trusted COVID-19 vaccines and produce principles and processes for their fast, equitable, distribution to — and affordable use by — all people over the next year or more, with health care and other front-line workers first in line. They will probably promise to fill the short-term gap in funding the World Health Organization–led COVAX and the Access to COVID-19 Tools (ACT) Accelerator to support these priorities, although Donald Trump's United States will continue to refuse to contribute to these causes. Leaders will also address the many other diseases the virus has exacerbated, led by mental health problems compounded by anxiety and depression, rising non-communicable diseases due to delayed treatment, growing antimicrobial resistance, and increased substance abuse and domestic violence.

On the global economy, there will be much content in the communiqués. They will feature a new Action Plan crafted by the G20's Framework Working Group. G20 leaders will support more fiscal stimulus and supportive monetary policy in the United States, Europe and elsewhere. They will seek to have that policy better coordinated among G20 members and with their central banks, and will consider how long and how much the private sector and public will tolerate soaring deficits and debts, and how fast and how much inflation and rising interest rates might return.

G20 leaders will also consider the risks of, and their response to, potential financial crises, erupting not only among their emerging economy members but even among their advanced economy ones, in their governments, firms and households.

On development and debt, there are promising prospects for extending and expanding the Debt Service Suspension Initiative. G20 leaders will endorse their finance ministers' recent extension of the DSSI for the poorest countries, agree to start writing off debts, and grapple with the need for a permanent sovereign debt relief mechanism. They will endorse a common framework that will write off some government and commercial debt for the poorest countries, provided the IMF certifies that this will put the recipients on a fiscally sustainable path (Wheatley 2020).

On all IMF-related issues, there is optimism about the outcomes, as signalled by Saudi Arabia's finance minister Mohammed Aljadaan quoted on November 19 in the Financial Times (England 2020). That optimism centres on the growing consensus on the need for a new issue of IMF special drawing rights, directed toward the poorest countries. But this consensus is unlikely to solidify in time for the Riyadh Summit to announce a major new issuance of SDRs, as the historic G20 London Summit did in April 2009 due to an experienced Gordon Brown's chairmanship at the summit itself (Kirton 2013).

On climate finance and reporting standards, there is also optimism.

However on some dominant issues, major divisions remain and prospective deferrals are in store. They arise on climate change and trade, as they did at the Osaka Summit in 2019, and now on digital taxation too.

On climate change, their greatest challenge, G20 leaders will usefully affirm the concept of a circular carbon economy and promise to plant a trillion trees and protect the oceans. But they will struggle to repeat and fulfill their historic promise to phase out the fossil fuel "subsidies" — as distinct from the more elusive "incentives" — that are helping heat the planet to unliveable levels now. Moreover, pushback could still come for any communiqué recognition of the existence of climate change, or use of the term, which those in the preparatory process will have spent many hours debating due to the resistance of some members.

On digital taxation and its two pillars of nexus location and minimum tax, serious progress will wait until Italy takes the G20 chair in 2021. At Riyadh this year, leaders will promise only to produce, by mid 2021, rules for the fair taxation of the exploding digital economy. They will offer strategies to cope with the growing digital divides in jobs, education, gender equality and health that COVID-19 and its lockdowns have intensified.

Other issues have encountered problems. The Saudi host has tried to add some at the last minute, which has not gone over well with the other members.

Dominant Leaders

The dominant leaders at the summit will not be the usual ones. Rather, they will be those who step forward to fill the leadership gap left by the United States and who will promote the multilateralism that most G20 members want.

China's Xi Jinping comes as a G20 summit veteran and host of its successful Hangzhou Summit in 2016, from the first and only G20 member that has conquered COVID-19 and its ensuing recession, and one that is its sharing its vaccine, medical, financial and economic strength with the world. He has just stepped up into global leadership on climate change, with his pledge of net zero emissions by 2065. He also did so on trade liberalization, by formally launching the Regional Comprehensive Economic Partnership a few days ago. He is also showing some of the flexibility needed to allow G20 leaders at Riyadh do more on debt relief. Indeed, China has already ranked first in contributing to the G20's DSSI, providing 36% ($1.9 billion) of the $5.9 relief deliver so far this year (Wheatley 2020).

Germany's Angela Merkel comes as the veteran dean of G20 summitry, the host of the highly successful Hamburg Summit in 2017 and the current head of the European Union's rotating presidency. She is backed by the power of Germany as the world's fourth largest economy and co-inventor of the first effective COVID-19 vaccine. She has long been a champion of climate change control and plurilateral and multilateral trade liberalization based on progressive, socially and ecologically protective rules. Her expertise as a physical scientist and her soft-spoken, good-listener, analytical style well matches that of President Xi, who is an engineer by training.

India's Narendra Modi arrives as host of the BRICS summit in 2021 and the G20's in 2022. He heads the second largest emerging economy, the most populous and a highly diverse democracy, and a leading global producer of the pharmaceutical ingredients relevant to rolling out the desperately needed COVID-19 vaccines.

The UK's Boris Johnson, a G20 newcomer, comes as host of the G7 in 2021 and of the delayed United Nations climate change summit in Glasgow that year. He has a strong need to showcase his self-proclaimed "global Britain," following its post-Brexit departure from the European Union at this year's end. He has a strong incentive to show leadership on Riyadh's two toughest issues — trade and climate change. On the latter, he has had a good start.

Italy's Guiseppe Conte also matters at his fourth G20 summit. He will host it in 2021. He comes from the third biggest EU member after the United Kingdom leaves, and the first and latest victim of COVID-19 in the democratic world.

Less dominant than usual will be the president of the United States. President Donald Trump's participation is surrounded by essentially complete uncertainty — about whether he will attend, what he will do if he does, who he would send in his place and what they would do (MacKinnon 2020). Trump would participate as a lame duck leader, with only 60 days left in office, and a known four-year successor, Joe Biden, with eight years of vice-presidential experience before he takes the top job. Trump has spent no serious time preparing for the summit since the U.S. election on November 3 and for many months before. But he could well attend for his last hurrah, to bask in the limelight on the centre of the global stage, to tell the world what a winner he has been and still is. As his presence at previous G20 and G7 summits has brought out the best in him, a somewhat cooperative approach and solutions could again come, although not on the now familiar U.S. opt-outs on climate change and the environment. Should the United States send Vice-President Mike Pence instead, such cooperation is still possible, now in a more low-key way. Should it send Secretary of State Mike Pompeo, less is likely. But any U.S. representative would come as a lame duck.

The supporting cast consists of veterans Russia's Vladimir Putin, Canada's Justin Trudeau, Turkey's Recip Tayyip Erdo†an, Korea's Moon Jae-in, France's Emmanuel Macron, South Africa's Cyril Ramaphosa, Indonesia's Joko Widodo, Australia's Scott Morrison and Brazil's Jair Bolsonaro (Kirton and Koch 2020). The newcomers are Mexico's Andrés Manuel López Obrador, Argentina's Alberto Fernández, Japan's Yoshihide Suga and the European Union's Charles Michel and Ursula von der Leyen.

Conclusion

Together the G20 leaders will make the G20's 2020 Riyadh Summit a significant short-term success. But another emergency G20 summit will be needed soon after January 20, 2021, to sustain and strengthen the significant but still relatively small steps forward the Riyadh leader take to meet the much greater and growing global needs.

References

England, Andrew (2020). "G20 nears accord over IMF relief funds," Financial Times, November 19.

Kirton, John (2013). G20 Governance for a Globalized World (Ashgate: Farnham).

Kirton, John (2020). "A Significant Short-Term Success: Promising Prospects for the G20 Riyadh Summit," G20 Research Group, November 18.

Kirton, John and Madeline Koch, eds. (2020). G20 Saudi Arabia: The Riyadh Summit (GT Media: London).

Mackinnon, Mark (2020). "Virtual G20 summit puts tolerance of global leaders to the test," Globe and Mail, November 20.

Wheatley, Jonathan (2020). "Calling for a bigger pandemic response," Financial Times, November 20, p. 15.

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