By Gonzalo De Cadenas (*)
The G20 summits are often documented merely in photographs, but this time snapshots won’t be enough for the covers of the major newspapers, as leaders are holding the meeting remotely in front of their screens. An unusual meeting for unusual times, but the expectations raised are significant for dealing with the aftermath of COVID-19. Financial commitments were made to find appropriate treatments and, most importantly, a vaccine that can initiate social and economic reconstruction. At the same time, it was widely agreed upon to reaffirm support for the WHO, which has now become a sort of imperfect substitute for the World Bank. Now the uncertainty is related to whether the G20 will actually be able to deliver this time around.
In these times, the G20 has the antidote to respond to the crisis thanks to its history and geographical scope. However, it will not necessarily be able to transform these advantages into opportunities. It was created to support the recovery of Asian economies and was promoted to a forum to strengthen northern/southern collaboration in the wake of the global financial crisis.
This was one of the few occasions that could be perceived as something similar to a conversation addressing the needs and interests of emerging and developed economies – something that we have rarely seen again. It is clear that tensions remain between the G7 and the major emerging countries, especially over the voice and influence of its participants on global institutions, in addition to issues such as the direction of trade policy and climate change. These bilateral tensions have once again become apparent during the current crisis, tensions that orbit around blame (the US vs. China) or denial (Brazil, and Mexico vs. the world).
On the other hand, in addition to dissent, there is the problem of legitimacy, as although the G20 has a wide geographical scope, it does not speak on behalf of the entire world. As the virus hits almost every country, the authority of the G20 will be questioned, especially in parts of the world where a single large power “represents” a whole region.
In the short-term, the discussion (topics, options and timelines) will depend on the trajectory of the virus. As the numbers of known cases and deaths increase, pressure will mount on political leaders to provide more tests and protection. Instead of seeing nations quarrel, the need for better coordination should be reflected, at least this time. It is through this coordination that the G20 has made an effort to break down barriers to trade medicines or equipment and increase funding for vaccine research and medical aid for the poorest nations. It will also be necessary to continue supporting the global economy and better prepare for future pandemics and other global risks, including climate change.
The G20 will need to work hard this year and in the future in order to prevent its historical weaknesses from appearing again. The challenge is enormous, but the G20 must remain a strong catalyst for change and agreements in spite of this in order to take action, as global organizations cannot ignore a strong message from influential nations or stakeholders, and markets take note of their commitments and messages. In short, the aim is to ensure that the health crisis, which will lead to an unprecedented economic crisis, does not turn into a major political crisis.
(*) Chief Economist at Mapfre Research.