This year, the US president may not even show up.
Less than 48 hours before the scheduled start of the World Summit, the White House will not say whether President Trump will attend the event, which is hosting Saudi Arabia but is being held in practice due to the coronavirus pandemic.
This is just the last reminder that during this once-a-century health and economic emergency, world leaders have struggled to develop a common response. Initially, the president wanted to hold this year̵
The G-20 is now moving in the spotlight with expectations extremely low, given the stakes. On Saturday and Sunday, the annual G20 conclave is expected to finalize a framework to provide debt relief to poor nations and nothing more.
“I don’t think there will be much progress,” said Douglas Rediker, chairman of International Capital Strategies, a financial consulting firm.
With signs that the global economic recovery is slowing, some influential voices are calling for increased cross-border co-operation.
The head of the International Monetary Fund, Kristalina Georgieva, warned the G20 that uncoordinated crisis spending would cost two-thirds more than the joint approach. And she urged them to prepare an ambitious list of synchronized infrastructure investments to help complete the recovery once the pandemic has subsided.
Meanwhile, business leaders and prominent Democrats want President-elect Joe Biden to convene world leaders at the beginning of his administration to create a joint response to the intertwined pandemic of health and economic dangers. Failure to coordinate the global spread of the coronavirus vaccine, some say, could hamper global recovery as richer nations overtake poorer ones.
“Sustainable economic recovery cannot be achieved anywhere unless we defeat the pandemic everywhere,” Georgieva wrote on the IMF blog on Thursday, adding: “We can build momentum for growth, jobs and tackle climate change, a lot. more effective if we work together. “
The G20 was launched in 1999 to bring together finance and central bank employees from the traditional and emerging powers. But in late 2008, as the global economy disintegrated, Bush convened a summit of leaders.
The first forum quickly emerged as a crisis management cockpit for presidents and prime ministers. After the second summit in April 2009, Obama said leaders had achieved “a level of tangible, global economic cooperation that we have never seen before.”
Today, this harmony of heads of state is just a memory. And Trump’s well-known aversion to multilateral negotiations is only part of the reason. Even before Trump took office, the G20 has earned a reputation in recent years as an inefficient call shop, rather than as a real-weight organization.
The acidity between the United States and China, the world’s two largest economies, further complicated global cooperation, while the pandemic prevented personal contact, which symbolized the activism of leaders in the recent crisis.
“The G-20 lost its way years ago. But it was definitely worse in the Trump era, “said Matthew Goodman of the Center for Strategic and International Studies, which helped coordinate Obama’s summit. “Now there is no point in the common goal that was there in 2008-2009.”
In fact, Trump – whose official schedule has been almost empty since losing the Nov. 3 election – missed two virtual summits of Asian leaders last weekend. (A short video is expected to appear on Friday during another meeting in the Asia-Pacific region.) On Wednesday, the White House declined to comment on whether the president would participate in the G20.
The group’s eclipse could end after Biden is discovered in January. Prominent Democrats such as former Treasury Secretary Larry Summers have called on the president-elect to convene an early summit of G20 leaders.
Biden, who vowed to “bring the world together” during the presidential campaign to tackle shared challenges, is likely to do so, several analysts say.
“I expected that to happen,” said Tim Adams, president of the Institute of International Finance, an industrial group. “For the first time in the modern age, we do not have a strong visible coordinating response from the heads of state.”
A spokesman for Biden’s transition did not respond to a request for comment.
Elements of the business community are eager for the United States to reconnect with many international bodies, such as the World Trade Organization, and would welcome a more proactive anti-crisis stance.
“There is an important role for the United States in leading the world in a coordinated economic response, as the United States did in 2008-09. All indications are that President-elect Biden and his team understand this well, “said Josh Bolten, president of the Business Roundtable, which represents the CEOs of the country’s largest companies.
Talk of increased US efforts is coming as the outlook for the global economy remains troubled. Last month, the IMF said it expected global production to shrink by 4.4 percent this year and make only a “partial and uneven recovery next year.”
In a matter of months, the pandemic could bring 150 million people to extreme poverty, turning two decades of steady progress in alleviating the suffering of the world’s poorest people, according to the World Bank.
While global coordination is lagging behind, individual countries have spent this year freely to compensate for the damage caused by the pandemic. The United States took action within weeks of shutting down insignificant companies in March to approve approximately $ 3 trillion in aid for individuals and businesses.
European countries, both individually and through their common union, have spent a comparable amount. The Japanese government is planning more spending in addition to the more than $ 2 trillion it has already borne.
Officials from the Ministry of Finance and the Federal Reserve also worked in tandem with their counterparts in Europe, Japan and elsewhere this year to ensure a smooth operation in the financial markets. In March, the Fed re-used an instrument it had used to great effect in 2008, agreeing to provide central banks in countries such as Australia, Brazil and Mexico with up to $ 60 billion in foreign currency.
“Financial and central bank employees, including from the United States, have done a great job trying to mitigate the economic effects of the pandemic and ensure that the financial system has mitigated rather than amplified shocks,” said Dan Price, managing director of Rock Creek Global Advisors.
There was a lack of consistent coordination by heads of state. The $ 11.5 trillion that the G20 countries have allocated – even more than during the 2008-09 crisis – is not part of a roadmap. As individual governments set their course, emerging imbalances threaten to inflame political sensitivity. The sharp rise in US government spending is fueling an economic surge that sucks in imported goods, while some US trading partners are spending less. Each month in April, the United States receives a larger trade deficit than in the same month in 2019.
The weakened G20 has left uncertain hopes for the IMF’s financial war, long-term debt relief and global vaccine distribution plans, said Josh Lipsky, director of programs and policy at the Atlantic Council’s Center for Geoeconomics.
The United States this year blocked the creation of $ 1 trillion in new capacity to finance the crisis for the IMF, fearing that part of the money will go to countries like China or Iran. And the World Bank’s initiative to suspend debt service payments to the poorest countries initially did not involve China or private sector lenders. So far, the Debt Initiative has saved $ 43 billion for 43 poor countries, which Summers ridicules by using a “spray gun” to put out a raging fire.
“Unfortunately, the G20 was much more observant in this crisis,” said Lipsky, a former IMF official. “This is for the G20. If it doesn’t work now, what’s the point? ” he said.
The summit this weekend is expected to approve a new debt relief framework that will include both China and world banks for the first time.
But as it was 12 years ago, the summit will take place while leaders await the arrival of a new US president.
The departure of Trump, the most protectionist president in the United States since the 1930s, could facilitate enhanced cooperation, including a renewed commitment by the G20 to avoid new trade barriers.
But there will be points of friction. Biden’s plan to limit government procurement to “US-made” goods, for example, has already provoked objections from US trading partners.
“There is some tension between domestic industrial policy and working with allies,” said Kelly Ann Shaw, a former Trump White House official who is now a partner at Hogan Lovels. “But we face so many challenges, international coordination will be key,” she said.