G20 summit and Geoeconomics

The Covid 19 pandemic rigorously disordered the global economic activity. In most countries across the globe, this led to the sharpest contractions in Gross Domestic Product (GDP). At the national level, the governmental response to economic crises has generally been influential, with fiscal expenses reaching record levels. In the same context, G20 leaders met in October 2021, for the first time since the emergence of the Pandemic. The critical issues on the agenda of the latest G20 summit included climate change, the impact of the Covid Pandemic on economic growth, a landmark tax deal, and global economic disruptions.

G20 was established in the backdrop of the 1997 Asian financial emergency as a comparatively low-profile conference of finance ministers. The group rapidly reached a high-profile convening of influential heads of government in the repercussion of the 2008 Global Financial Crisis. In 2009 it was further institutionalized at Pittsburgh Summit as the significant forum for coordinating the international monetary and financial cooperation. The G20 remained instrumental in determining the universal response to the Global Financial Crisis.  This time in response to the COVID crises, economic development activities remained conspicuously unusual. Regardless of an initial pledge to take significant actions to maintain the global economy, the practical approach appeared to lack practical actions and measures from the G20. Approved in April 2020, actions predetermined in the G20 Action Plan incorporated a compilation of national monetary and fiscal policies. In the recent summit of 2021, the leaders of the world’s twenty biggest economies endorsed a global least tax designed to prevent big businesses from hiding profits in tax havens. And also, they decided to provide more COVID vaccines to underprivileged or underdeveloped nations.  The G20 supported further action to expand debt relief for underdeveloped countries and guaranteed to vaccinate 70% of the world’s population to defeat COVID-19 by mid-2022.

Leaders at the latest summit agreed to a minimum 15% tax as part of an attempt to make a steadier and unbiased international tax system. This way, many US internet giants such as Amazon, Google parent Alphabet, Facebook, and Apple have benefited from showing themselves in low-tax countries to reduce their tax bills. These digital applications are the real targets of the latest global directive. The reform, brokered by the Organization for Economic Co-operation and Development (OECD) and supported by 136 countries on behalf of more than 90% of world GDP, has long been in the creation and is expected to achieve goals in 2023. However, the deadline can be altered due to the ongoing global situation of the Covid crisis. Each country is taking part in the global agreement needs to adopt new legislation at the national level. There can be halts as well, and the current example of this is the US president Joe Biden who is facing harsh domestic opposition to the plan. However, at the G20 summit, it was decided to work on relevant working groups within the OECD and G20 to quickly develop the model system and multilateral instruments to guarantee that the latest regulations will be promulgated globally in 2023.

After more than a decade of reform and practice of governance, G20 has become the chief forum for international monetary cooperation. It is more reliable and representative than any other relevant forums. This is because its members account for two-thirds of the world’s population and 86 percent of the world’s GDP. The emerging economy represented by China is another strong factor to augment the progress of this particular forum.  The forum has played a key leadership role on major international issues relating to global security, climate change and human development, economic development, and economic stability, and developing strategies to defeat the COVID-19 Pandemic. The term geo-economics has become familiar in the global arena, but it lacks an approved classification. Most generally, it is viewed that financial tool is used to achieve geopolitical objectives. Other definitions overturn the ends and means, highlighting how flexing geopolitical muscle is used for financial consequences. Largely, one can think of geo-economics as the interaction of international economics, geopolitics, and policy. Regarding geo-economics, the most important statement within the recent communiqué at the G20 summit was the connection to the international financial institutions and G20’s support for forming a Resilience and Sustainability Trust (RST) within the IMF. The IMF planned the RST to channel its member states’ new Special Drawing Rights (SDRs) allocations. It was also anticipated that mentioned proposal had met a lukewarm response when presented to the IMF Executive Board in July. However, the G20 support means the proposal, which will necessitate $30 billion to $50 billion in funding over the next ten years, will approximately definitely be veracity soon.

The G20’s endorsement of the RST has been called a landmark achievement by analysts.  The group of 20 is regarded as the leading international forum for monetary and financial cooperation. Evolution towards a more resource-efficient and circular economy has earned rising political concentration across the globe. The CE notion is ever more seen as a central part of the world’s quest for new models for sustainable, green, and flexible expansion. Structuring superior social, environmental, and economic elasticity in a post-pandemic world is now a vital subject of debate among policymakers and commentators worldwide. Currently, the Italian government showed determination to include CE as one of the major priorities for international collaboration during the recent G20 summit. The G20 is a forum focused on advancing international collaboration and harmonization among 20 main developed and emerging-market countries. It accounts for more than two-thirds of global material resource use and has, on standard, advanced growth rates for material use than the rest of the world. Based on present trends, the amount of material used in G20 countries is predicted to increase from 65.4 billion tons in 2015 to 142.2 billion tons by 2050.

In the past few decades, universal material uses have tripled. The nonexistence of precise measures to counter such a trend is anticipated to double by 2060. It is also pertinent to mention that countries progressively are practicing power politics by financial means. Most growing powers have also become the agents of monetary statecraft. China, for example, is using economics, investment, and trade to attain strategic power and get the global rise. Thus far, the way states employ economic power to chase strategic aims remains an understudied topic in International Political Economy and International Relations. The contributions to this volume assess geo-economics as a form of power politics. They aim to project power and security are no longer merely coupled to the physical control of territory by military means, but economic binds are important in contemporary globalized and extremely unified world. Certainly, as the volume shows, the aptitude to use economic power shapes a vital means in the foreign policies of key powers.

In the current scenarios, G20 is also an example of geo-economics where those in power are striving to move ahead with their ideas and influence of political economy. In short, G20 is a global body established to deal with the international economy and move ahead in this regard. The recovery of the world economy in the Pandemic is an important factor. How things will move ahead is still something to evolve with the strategies under this particular forum.  By 2021, the global economic movement has been improving at a firm pace. However, the recovery remains extremely different across and within countries. Therefore, G20 shows determination to use all existing tools for as long as necessary to deal with the unfavorable consequences of the Pandemic.

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About Saima Zaman 40 Articles
Writer is the Assistant Editor ‘Mélange int’l Magazine’, ‘The Asian Telegraph’ & Project Coordinator (COPAIR); a degree holder in communication & media sciences.