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. It is facing continued 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.
  • With the African Union joining as the newest member, the 2024 summit faces continued divisions over the Russian invasion of Ukraine.

Introduction

The Group of Twenty (G20), originally a collection of twenty of the world’s largest economies, 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.

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Tensions within the group 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. The 2023 summit saw the entrance of the African Union (AU) as the group’s newest member, and at the 2024 summit in Rio de Janeiro, host Brazil is seeking to further strengthen the influence of the Global South in world affairs.

Who is in the G20?

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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 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.

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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 Richard 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.”

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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. Since then, the addition of the African Union brought to the table a bloc home to roughly 1.3 billion people and an economy worth some $3.1 trillion.

What’s been on its 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. 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. The 2024 host, Brazil, has been at the forefront of advocating for environmental policy in global institutions and has placed the clean energy transition high on the G20’s agenda

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. 

Brazilian President Luiz Inácio Lula da Silva, or Lula, seeks to continue this push. Lula has promoted a new “Global Alliance Against Hunger and Poverty” that he hopes will mobilize additional funding in the coming decade. Brazil is also championing its version of “global governance reform,” which seeks to make international institutions such as the United Nations, the World Trade Organization (WTO), and the World Bank more responsive to developing countries.

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 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. Putin likewise announced he would skip the 2024 summit in Brazil, which some observers attribute to a 2023 International Criminal Court arrest warrant that seeks to bring the Russian president to stand trial for alleged war crimes in Ukraine.

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 requested emergency assistance from the International Monetary Fund (IMF) in response to the pandemic. Beginning in 2022, IMF lending to distressed economies soared to a record high, reaching $149 billion by 2024. 

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 Donald 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. President Joe 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. 

Trump’s November 2024 reelection has boosted uncertainty over the future of Washington’s global economic policy. He has promised a new “universal tariff” of upwards of 20 percent, additional tariffs on China, and a suite of other measures at odds with the previous free trade consensus. Analysts say that poses a challenge for Biden’s final G20 summit. “Biden will want to convey the message that America’s engagement with the world, American values, and American interests are enduring,” Georgetown University’s Evan Medeiros told NPR.

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 a “phaseout,” and Lula argues “the planet has had enough of unfulfilled climate agreements.”

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 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. Meanwhile, the 2024 attendance of Mexican President Gloria Sheinbaum marks her first international summit since taking office in October 2024, and she is advocating for proposals to reduce arms spending and increase food self-sufficiency.

Recommended Resources

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

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

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Andrew Chatzky and Megan Fahrney contributed to this report.

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