What Does the G20 Do?
Backgrounder

What Does the G20 Do?

The Group of Twenty, an informal gathering of many of the world’s largest economies, is the premier global forum for discussing economic issues. But it has faced divisions over trade, climate change, and the war in Ukraine.
World leaders meet at the 2023 G20 summit in New Delhi, India.
World leaders meet at the 2023 G20 summit in New Delhi, India. Dan Kitwood/Getty Images
Summary
  • The G20, formed in 1999, is a group of twenty of the world’s largest economies that meets regularly to coordinate global policy on trade, health, climate, and other issues.
  • Previous summits have addressed the COVID-19 pandemic, 2008 financial crisis, the Iranian nuclear program, and the Syrian civil war.
  • At the 2023 summit, the group welcomed the African Union as its newest member, even as the Russian invasion of Ukraine continued to cause divisions.

Introduction

The Group of Twenty (G20), a collection of twenty of the world’s largest economies formed in 1999, was conceived as a bloc that would bring together the most important industrialized and developing economies to discuss international economic and financial stability. Its annual summit, a gathering of G20 leaders that debuted in 2008, has evolved into a major forum for discussing economics as well as other pressing global issues. Bilateral meetings on the summit’s sidelines have occasionally led to major international agreements. And while one of the group’s most impressive achievements was its robust response to the 2008 financial crisis, its cohesion has since frayed, and analysts have criticized its lackluster response to the COVID-19 pandemic.

More From Our Experts

Under President Donald Trump, the United States clashed with the rest of the group on trade, climate, and migration policy. President Joe Biden promised a return to multilateral cooperation, achieving a new global agreement on corporate taxation, but tensions have continued to grow as high- and low-income countries have increasingly diverged on major issues such as climate change, economic development, and the ongoing fallout from the war in Ukraine. At the 2023 summit in New Delhi, India aimed to bolster its leadership bona fides by welcoming the African Union as the group’s newest member.

Who is in the G20?

More on:

G20 (Group of Twenty)

International Economics

Diplomacy and International Institutions

United States

Joe Biden

The G20 is a forum comprising nineteen countries with some of the world’s largest economies, as well as the European Union (EU) and, as of 2023, the African Union (AU). The countries are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom (UK), and the United States. Spain is invited as a permanent guest.

Every year, the leaders of G20 members meet to discuss mainly economic and financial matters and coordinate policy on some other issues of mutual interest. Examples include when the G20 discussed how to address a covert Iranian nuclear plant at the 2009 summit and when the forum debated how to administer a partial cease-fire in Syria at the 2017 summit. The G20 is not a permanent institution with a headquarters, offices, or staff. Instead, its leadership rotates on an annual basis among its members, its decisions are made by consensus, and implementation of its agenda depends on the political will of the individual states.

Why does the G20 matter?

Together, the nations of the G20 account for more than 85 percent of global economic output, around 75 percent of global exports, and about 80 percent of the world’s population. These figures have remained relatively stable while the corresponding rates for Group of Seven (G7) nations, a smaller group of advanced democracies, have shrunk, as larger emerging markets take up a relatively greater share of the world’s economy.

More From Our Experts

The G20 was formed in 1999, in the wake of the Asian financial crisis, to unite finance ministers and central bankers from twenty of the world’s largest established and emerging economies. A decade later, at the height of the global economic crisis, the G20 was elevated to include heads of state and government. Many experts credit the G20 with quick action; former CFR fellow Stewart Patrick said the group “rescued a global financial system in free fall.” In 2008 and 2009, G20 nations agreed to spending measures worth $4 trillion to revive their economies, rejected trade barriers, and implemented far-reaching reforms of the financial system.

Since then, many observers say, the G20 has struggled to achieve similar success on its goals of coordinating monetary and fiscal policies, achieving higher growth, and rooting out corruption and tax evasion. Geopolitical analysts Ian Bremmer and Nouriel Roubini have argued against the G20’s utility, saying that a “G-Zero” world is emerging instead—one in which countries go it alone or form ad hoc coalitions to pursue their interests. In 2021, then CFR President Haass and senior fellow Charles A. Kupchan called for a new concert of powers, contending that “fly-in, fly-out” G20 summits are often bogged down by “haggling over detailed, but often anodyne, communiqués.”

More on:

G20 (Group of Twenty)

International Economics

Diplomacy and International Institutions

United States

Joe Biden

But experts point out that the G20’s membership is still more representative of the current international balance of power than blocs of countries formed earlier, such as the G7. Several rising democracies, including Brazil, India, and Indonesia, belong to the G20, as do other influential autocratic countries, such as China, Russia, and Saudi Arabia. (Russia’s G7 membership was suspended indefinitely in 2014 following its annexation of Ukraine’s Crimea region.) For this reason, Patrick described the 2008 elevation of the G20 as a watershed moment in global governance and argued that the group was the best-suited forum for tackling the challenges of the COVID-19 pandemic.

What’s been on the agenda?

The G20 initially focused largely on broad macroeconomic policy, but it has expanded its ambit. The 2016 summit in Hangzhou, China, broke new ground when U.S. President Barack Obama and Chinese President Xi Jinping formally announced their countries’ accession to the Paris Agreement on climate.

Economic and financial coordination remains the centerpiece of each summit’s agenda, but issues such as the future of work, climate change, and global health are recurring focuses as well. Broader agendas became more common in the decade following the global financial crisis, when the G20 was able to turn its attention beyond acute economic crisis management. But at recent summits, countries have struggled to reach a unified consensus—the hallmark of previous iterations of the conference—as the interests of high- and low-income economies continue to diverge.

The COVID-19 pandemic posed a major test for the group, which Patrick has criticized for largely failing to move beyond “uncoordinated national policies.” However, G20 countries did agree to suspend debt payments owed to them by some of the world’s poorest countries, providing billions of dollars in relief.

Although climate change has been a focus of recent summits, meetings have yielded few concrete commitments on the issue. At the 2021 Rome summit, countries agreed to curb emissions of methane and end public financing for most new coal power plants overseas, but they said nothing about limiting coal use domestically. (China, the world’s largest emitter, permitted more domestic coal power plants in 2022 than any year since 2015). At the 2022 gathering, Indonesia agreed to close coal power plants in exchange for $20 billion in financing from high-income countries, including the United States. But as of 2023, it is still building coal-fired plants. 

As the 2023 host, India sought to cast itself as a voice for the so-called Global South, framing the agenda around issues facing lower-income countries. These include rising debt levels, persistently high inflation, depreciating local currencies, food insecurity, and increasing severe weather events associated with climate change. In addition, New Delhi presided over the admittance of the AU, expanding representation to fifty-five countries. This allowed Indian Prime Minister Narendra Modi to “showcase his status as the leader of a rising India,” according to CFR’s Manjari Chatterjee Miller and Clare Harris.

What have been the main points of contention?

Geopolitical tensions, heightened by the Russian invasion of Ukraine but also spurred by strategic competition between China and the United States, have increasingly threatened cooperation. In the United States, bipartisan legislative efforts have aimed to deny Russia standing in the World Trade Organization (WTO) and other international institutions. Russia’s participation in the G20 has grown contentious, with some Western countries seeking to exclude Moscow, though members including China and Brazil have opposed that idea. Neither Chinese President Xi Jinping nor Russian President Vladimir Putin attended the 2023 summit. The issue continued to split the group in New Delhi, and their joint declaration on the war failed to mention Russia by name.

G20 members also faced divisions over how to address the economic shocks disproportionately affecting emerging economies. The energy crisis resulting from the war in Ukraine has led to food scarcity and soaring energy prices, as well as inflationary pressures that have engendered a stronger U.S. dollar at the expense of depreciating currencies in emerging economies. As a result, more countries are turning to international lenders for bailouts; over one hundred countries have requested emergency assistance from the International Monetary Fund (IMF) since the beginning of the pandemic. IMF lending to distressed economies soared to a record high of $140 billion in 2022. The G20 introduced a common framework for debt treatment ahead of its 2020 summit, but only four countries—Chad, Ethiopia, Ghana, and Zambia—have requested debt relief under the framework. Experts blame divisions between lender countries. 

“No framework for coordination among official creditors can work if official creditors don’t have enough in common to work together,” CFR senior fellow Brad W. Setser wrote in March 2023. “The ‘Common Framework’ exists in name only.” International lenders are now considering ways to reform the framework.

The group’s long-standing commitment to an international order based on WTO principles of reducing tariffs and other trade barriers has in recent years collided with growing economic competition between great powers. President Trump launched a multifront trade war involving several G20 members, imposing a suite of tariffs on China that the Biden administration has largely left in place. Biden has also pursued other measures meant to “de–risk” the U.S. economy from China’s. In August 2022, he signed the CHIPS and Science Act, which encourages advanced technology manufacturing to move back to the United States. That measure was followed by strict export controls that restricted China’s ability to buy certain chips made anywhere in the world with U.S. inputs, and an outbound screening regime prohibiting some U.S. investments in Chinese sensitive technology sectors. 

There is also still friction within the group regarding climate change. China, India, Russia, and Saudi Arabia reportedly blocked an agreement on phasing out coal use and fossil fuel subsidies at a July 2021 meeting of environment ministers. And following the invasion of Ukraine, Germany and other G20 countries have reneged on previous promises to stop financing fossil fuel projects overseas. The New Delhi summit again failed to produce ambitious climate action, calling only for a “phasedown” of coal rather than the “phaseout” sought by many climate advocates.

What happens on the sidelines of the summits?

Some experts have emphasized the G20’s flexibility compared with other multilateral institutions, noting that it can help shake up a sometimes rigid geopolitical order. This flexibility extends to the summits themselves, where bilateral meetings between heads of state and government often focus on issues outside the formal agenda.

These tête-à-têtes, whether planned or impromptu, often grab headlines due to their diplomatic gravity. In Hamburg, Germany, in 2017, Trump met Putin for the first time, holding multiple meetings that lasted several hours each and sparked concerns among U.S. allies within the G20. The following year, a bilateral meeting again overshadowed the G20 summit, this time between Trump and Chinese President Xi Jinping. The two leaders agreed to delay threatened tariff hikes. 

The 2022 Bali summit hosted the first in-person meeting between Biden and Xi since Biden was elected in 2020. Though the two leaders did not agree to any tangible measures, they committed to keeping diplomatic lines of communication open. In 2023, summit sidelines saw the formation of the India-Middle East-Europe Economic Corridor (IMEC), a rail and port deal linking India and Europe via infrastructure networks that cut through the Middle East. Some observers see IMEC as one of the most serious challenges to China’s Belt and Road Initiative to date.  

Many experts stress the substantial effects of personal relationships among leaders on the creation of foreign policy. By gathering so many leaders together, G20 summits offer rare opportunities to develop such relationships and recast bilateral ties.

Recommended Resources

For Foreign Affairs, CFR’s Richard Haass and Charles A. Kupchan make the case for a new concert of powers.

This Backgrounder explains the recent international agreement on a new framework for corporate taxation

This In Brief breaks down the progress countries made at the ​​twenty-seventh Conference of the Parties (COP27) climate summit.

In this blog post, CFR expert Brad W. Setser analyzes the G20 common framework and its limitations.

Experts from around the world break down the 2023 G20 summit in this Council of Councils Global memo

Creative Commons
Creative Commons: Some rights reserved.
Close
This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) License.
View License Detail

Andrew Chatzky and Megan Fahrney contributed to this report.

For media inquiries on this topic, please reach out to [email protected].
Close

Top Stories on CFR

Election 2024

The European Union (EU) began implementing the Digital Services Act (DSA) this year, just in time to combat online disinformation and other electoral interference in the dozens of elections taking pl…

Taiwan

In his inaugural address, Taiwan’s new president Lai Ching-te signaled broad continuity on cross-strait issues. China, however, is likely to respond with increased pressure. 

Kenya

During Kenya’s state visit, the United States should work toward building a more resilient model of U.S.-Africa partnerships.