A lengthening G-7 shadow over the G-20 was apparent in Rome

The 16th G-20 Summit was held in Rome on 30-31 October 2021 at a time the covid pandemic was still rampant. Its success hinged on what action G-20 leaders would take on the various recommendations made by groups it had tasked, and the commitments made in the Rome G-20 Health Ministers’ Declaration on pandemic response. Action on climate change was the other important area on which the success of the Rome summit hinged.

A straightforward reading of the Rome Leaders’ Declaration indicates that this was one of the more successful G-20 summits in relation to those held in the recent past. There was consensus on some major issues that have often divided developed and developing countries in the past, such as channelling to poor countries a minimum of $100 billion of the $650 billion total special drawing rights recently issued by the International Monetary Fund.

It also set a global target of 60% covid vaccination by 2022, agreed on minimum global corporate taxation of 15%, putting an end to the provision of international public finance for new coal power generation abroad by the end of 2021, decarbonization of the economy, and the conservation or protection of at least 30% of land and oceans by 2030.

It also set forth an ambition of zero net emissions globally by 2050, halving collective emissions over two decades by 2020, so as to limit the globe’s temperature rise to 1.5° Celsius above pre-industrial levels, and updating nationally determined commitments for consistency with these global objectives. This set the tone and agenda for the CoP-26 climate change conference in Glasgow that followed thereafter.

The G-20 also set an agenda for reforming the World Trade Organization (WTO) and global trading rules at the forthcoming 12th WTO Ministerial scheduled in Geneva this December.

This assessment needs to be qualified by the fact that this was the first crisis G-20 summit after the Global Financial Crisis of 2008, and its outcome therefore needs to be compared with the Washington, London and Pittsburgh summits. Not only did the Rome meet fall far short of what was achieved in those first few G-20 summits, but most of the major decisions listed above were anticipated in the G-7 meeting (of subset countries) held four months earlier in the UK’s Cornwall.

The Rome summit failed to take decisions on specific proposals of $50 billion put forth by the G-20 High Level Independent Panel on pandemic preparedness and response. It did, however, endorse the World Health Organization recommendation of vaccinating 40% of the global population by December 2021, over and above the 60% by 2022, as agreed by the G-7 earlier. Some G-20 countries also made specific commitments on donating and manufacturing vaccines, although these were not part of the official communique.

It was also disappointing that G-20 leaders did not go much beyond what had already been agreed at CoP-21 in Paris back in 2015 and the Copenhagen Accord of CoP-15 in 2009 on setting up a Green Climate Fund, under which developed countries committed “to fund actions to reduce greenhouse gas emissions and to adapt to the inevitable effects of climate change in developing countries… (by providing) US$30 billion for the period 2010-2012, and to mobilize long-term finance of a further US$100 billion a year by 2020 from a variety of sources” (a target still to be achieved). Or the G-20 commitment to phase out fossil-fuel subsidies at its third summit in Pittsburgh, also in 2009, although the world’s climate situation has worsened considerably since. Also, no individual or collective commitments were made at Rome by G-20 countries, which together account for over 80% of total greenhouse gas emissions, to lead Glasgow discussions on climate action from the front.

This remarkable meeting of minds between two groupings (G-7 and G-20) that have had a troubled relationship from the start of G-20 summitry was facilitated by the attendance of four G-20 countries’ leaders (i.e. of Australia, India, South Africa and South Korea) who were special invitees at Cornwall. This appears to be a revival of the Heiligendamm process that was discontinued after the G-20 was elevated to the level of leaders. Also, Italy, the chair that drafted the template of the G-20 leaders’ communique, was a G-7 member.

Be that as it may, going forward, this does not augur well for the G-20’s status as the world’s premier forum for international economic cooperation, or for getting multilateralism back on track, as both China and Russia are suspicious of the G-7 and were specifically critical of some of the actions spelt out in the Cornwall communique.

Russia and China were not invited by the G-7 to Cornwall. They also chose not to attend the Rome summit. This served to underscore the impression that the G-20 had lost much of its clout as the forum for the aims declared by G-20 leaders at their third summit in Pittsburgh, and that the baton of global economic leadership had passed back to the G-7. Their absence, along with that of South Africa, Japan and Mexico’s leaders, at the first in-person G-20 summit in two years is indicative of faltering multilateralism in an increasingly divided and multipolar world.

Alok Sheel is RBI chair professor of macroeconomics, Indian Council for Research on International Economic Relations