Assessing the G20 Virtual Summit

Leaders of the Group of 20 (G20) countries, representing 85 percent of the global economy, met by videoconference on March 26 to discuss the international response to the COVID-19 pandemic and associated economic disruptions. This year’s G20 host, Saudi Arabia, issued a 20-paragraph communiqué on behalf of the group following the call. In it, leaders committed to doing “whatever it takes” to overcome the pandemic and laid out a number of individual and collective actions to address the health crisis, bolster the global economy, and assist countries in distress. However, the statement lacked concrete proposals, and questions remain about the extent to which major economies are committed to following through with a concerted international response to the crisis.

Q1: Did the G20 live up to its billing as the premier forum for international economic cooperation?

A1: No, certainly by comparison with the G20’s forceful role in the 2008-2009 global financial crisis. Leaders’ commitment in the March 26 communiqué to do “whatever it takes” to minimize the economic and social damage from the pandemic was a useful statement of shared purpose. However, the communiqué essentially recounted and endorsed what national governments and central banks are already doing individually through aggressive fiscal and monetary policy. Despite early press reports suggesting injection of a new $5 trillion in spending, this figure was merely an aggregation of existing measures by G20 countries. Nor did leaders provide any new framing of the economic challenges posed by the health crisis or offer guidance to policymakers—whether in individual countries or in international organizations such as the International Monetary Fund (IMF) or World Bank—on additional measures needed.

Q2: Where specifically did the G20 communiqué fall short?

A2: The communiqué’s language on the health dimensions of the crisis largely repeats prior commitments to strengthen capacities to respond to potential infectious disease outbreaks, increase epidemic preparedness spending, and assess gaps in pandemic preparedness. There is good news in the tasking of the World Health Organization (WHO) to report on gaps in pandemic preparedness to a joint meeting of finance and health ministers, building on existing WHO work to foster such dialogues. That future meeting will bring together officials in charge of the health response with those in charge of the economic and financial response, recognizing the reality that sustainably addressing the economic fallout will depend on addressing its root cause , the pandemic itself. A further positive outcome would entail sustained investment in health-security preparedness, addressing a gap that long predates the current crisis.

Engagement with the international financial institutions is another area where the virtual meeting made progress but failed to inspire with specific commitments. On the eve of the virtual meeting, the heads of the IMF and World Bank issued a statement asking “all official bilateral creditors to suspend debt payments from IDA [International Development Association] countries that request forbearance.” While G20 leaders made no such commitment, they did announce a forthcoming “action plan” to deliver international financial assistance, at least opening the door to future bilateral debt relief. Other proposals, including calls for a fresh allocation of the IMF’s “special drawing rights,” were not mentioned in the communiqué but could be forthcoming.

The brief section of the communiqué on trade contained few new commitments and several caveats. It began with the phrase, “Consistent with the needs of our citizens,” which is code in such documents for individual countries to do whatever serves their national interests. The trade language also implicitly gave license to countries to impose restrictions on exports of medical supplies, food, and other critical supplies provided these are justified as “emergency measures” that are targeted and temporary. There was no explicit commitment to avoid protectionism or reduce tariffs and other barriers to trade.

Energy is another area of missed opportunity. The G20 includes the three largest energy producers in the world: Saudi Arabia, Russia, and the United States. Two of the three have been openly sparring, pushing energy prices to record lows. While a specific commitment to cut back on production was not likely to be forthcoming, the absence of any language on energy suggests that the scope for cooperative approaches in the G20 is limited.

Q3: What do the outcomes of the G20 meeting say about the current effectiveness of multilateral cooperation?

A3: Unlike the early G20 leaders’ communiqués during the global financial crisis in 2008-2009, the G20’s March 26 statement fails to convey a spirit of robust internationalism and multilateral cooperation. It is short on new actions and commitments. Despite the aggressive fiscal and monetary policy responses by individual countries, in this case, the whole is less than the sum of its parts.

The limited results reflect various fissures in the G20. Most important are the tensions between the group’s two largest members, the United States and China. In 2008-2009, Washington and Beijing were able to overcome their differences and find common cause in responding forcefully to the global financial crisis. With recent disputes over trade, technology, and other issues already casting a shadow over the relationship, a war of words between Washington and Beijing over the origins of the current pandemic has effectively undermined any residual willingness of the two sides to work together.

The U.S.-China differences have also driven a further wedge between Washington and its closest allies. The G20 communiqué came a day after G7 foreign ministers could not agree on a joint statement because of reported U.S. insistence on labeling COVID-19 the “Wuhan virus,” which other G7 countries saw as unnecessarily antagonistic to China.

Until these fissures among major economies are healed, multilateral cooperation to address the pandemic and its associated economic disruptions is likely to continue to fall short.

Matthew P. Goodman is senior vice president and runs the economics program at CSIS. Stephanie Segal is a senior fellow in the same program. Mark Sobel is U.S. chair of the Official Monetary and Financial Institutions Forum (OMFIF) and senior adviser to CSIS.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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Mark Sobel
Senior Adviser (Non-resident), Economics Program