By: Anit Mukherjee
On December 1, the United States assumed the presidency of the G20 — a grouping of over 20 large developed and developing economies and regional institutions, representing one-third of the world’s population and over four-fifths of the global economy. The United States takes over from South Africa after the first summit of the group on the African continent, with the handover garnering controversy over the absence of any official representation from the United States at the Leader’s Summit in Johannesburg. But in its initial actions and statements, Washington has signaled that it plans on shifting the G20’s focus to deregulation and macroeconomic stability, energy security, and innovation.
The G20 has been the institution that has undergirded international cooperation at a time when the multilateral system faces strong geopolitical challenges and the United Nations appears paralyzed. It has managed to reach rhetorical consensus on some difficult issues, such as a call for peace in Ukraine. Under the consecutive presidencies of Indonesia, India, Brazil and South Africa, the G20 has served as a valuable bridge between the developed and developing countries and has reprioritized the global development agenda.
In his welcome message, U.S. Secretary of State Marco Rubio outlined three thematic areas that the U.S. presidency will prioritize: removing regulatory burdens and unleashing global prosperity; unlocking affordable and secure energy supply chains; and pioneering new technology and innovation. These are not individual silos but an interconnected set of policies and instruments that the G20 can address. But to accomplish these objectives, the G20 needs a reset in three areas.
First, it needs to go back to basics. In the aftermath of the global financial crisis of 2008-09, the G20 managed to avoid a global meltdown through coordination and collective action, with an empowered Financial Stability Board tasked with strengthening the international financial system through prudential regulation. With global debt levels reaching unsustainable proportions — as some developing countries pay more for debt service than they spend on health and education — the U.S. presidency can propose practical solutions to prevent another global debt crisis. As new forms of digital instruments such as stablecoins (backed mostly by U.S. Treasury bonds) rapidly gain influence in global finance, their success will depend on closer cooperation among policymakers, regulators, and the private sector. The U.S. G20 presidency provides an opportunity to shape their adoption by encouraging innovation through appropriate, but not onerous, regulation.
Second, the G20 could streamline its consultative process. Currently, there are 21 official working groups: 8 for the finance and 13 for the Sherpa, or development, tracks. They meet multiple times over the course of the year to finalize a ministerial declaration that is supposed to provide input to the final summit document. In recent years, there has also been a proliferation of engagement groups, of which there are currently 11 ranging from business and startups to youth and women. Although the objective is to channel the views of civil society into the deliberations of the official G20 working groups, their substantive contribution is not clear. The proposal of the U.S. presidency to focus on four key working groups might ultimately lead to more productive dialogue and policy continuity on key issues such as sustainable finance, food security, and digital transformation.
Third, the group could build on practical initiatives with long term impact. In the aftermath of the COVID-19 pandemic, Italy’s G20 presidency was instrumental in creating the Pandemic Fund to support low- and middle-income countries to strengthen critical pandemic prevention, preparedness, and response capacities, with a current portfolio of $7 billion managed by the World Bank. India’s presidency launched the Global Biofuels Alliance bringing together a broad coalition of countries to address energy security, a key priority for the United States as well. With the G20 leaders recognizing the importance of leveraging critical minerals, artificial intelligence, and digital public infrastructure to promote inclusive growth, a Global Coalition on Technology Innovation can become a lasting legacy of the U.S. G20 presidency. This will create a forum for governments, private companies, start-ups and financial institutions to propose practical innovative solutions for food, health and energy security not just for the G20 but globally. Just as the Pittsburgh G20 Summit in 2009 shaped the global economy after the global financial crisis, next year’s Summit in Miami could reset the G20 to issues that matter: financial stability, economic security, and technological innovation.
Anit Mukherjee is Senior Fellow for the Global Economics & Development program at ORF America.