G20: tensions likely to emerge as world leaders gather for Bali summit

The leaders of the world’s biggest economies assemble in Bali this week for the annual G20 summit. They do so facing multiple interconnected global crises. Russia’s war in Ukraine, economic slowdown in China, heightened Sino-American tensions over Taiwan, precipitous worldwide increases in costs of living, and growing global food shortages provide a worrying backdrop to the summit.

Beyond this perfect storm of predicaments, the G20’s Indonesia hosts have set an ambitious agenda. Leaders are set to discuss issues spanning the environment, health, security and development. Busy and contentious days at the top table of global governance await.

Despite it being the most powerful political leaders sitting around the summit table, there is actually little that G20 leaders can do to address the multitude, magnitude and complexity of crises the world now faces. They meet at a time of conflict over the most dangerous geopolitical flashpoints and without consensus on how to respond to political, economic and social upheaval.

While the G20 has always been composed of competitors on the world stage, in Bali the likes of China, Russia and the US will meet with open antagonism. The G20 can govern as a club of rivals, but not as one of adversaries. As a consensus-based forum, it’s simply not designed for an international domain riven with such geopolitical tension.

From crisis committee to committee in crisis

The G20 began life as a crisis committee. It first formed as a group of finance ministers responding to regional economic instabilities in the mid-1990s and was subsequently elevated to the leaders’ level to counter the global financial crisis in 2008.

The G20 was effective in its trial-by-fire infancy because its members agreed on the nature of the financial problems and on how to address them. The club was premised on its members subscribing to the “Washington consensus” of neoliberal economic management. This has been typified by commitments to debt reduction, deficit elimination and trade liberalisation.

It was also underpinned by a belief that economic governance could be essentially depoliticised, such that financial upheaval could be addressed by technocratic means. In the post-cold war “end of history” moment, stewardship of the global economy could largely be left to central bankers, state bureaucrats, and international financial institutions.

The neoliberal consensus and narrow focus served the group well for a time. But “mission creep in the years since has enlarged the G20’s remit well beyond economic and financial matters. A key problem with such an expanded remit is that as the range of topics the group seeks to manage grows, so too do the opportunities for policy divergence.

Moreover, even the neoliberal consensus has weakened – most notably with dramatic policy reversals by the US during the Trump administration. While the US appears to be returning to its usual positions under his successor Joe Biden, the dynamics that drove Trump’s nationalist protectionism have further accelerated and intensified globally. Combined with resurgent authoritarian willingness to flex military muscle, history has come roaring back.

In contrast to the G7, the G20 was designed to be more diverse and representative, while maintaining the G7’s consensus-based decision-making model. There are no votes, no majority rule – if the club is to take a position, promote a policy, or support a project, all its members must unanimously agree to it. The G20’s varied membership makes it more legitimate as a global institution. But with its leading members now directly at odds with one another, precisely when the world needs its crisis committee, the G20 has tied its own hands.

Meanwhile, the western-focused G7, which increasingly seemed like an anachronism, has now found a renewed sense of purpose. While lacking the G20’s legitimacy and diversity, the G7 unanimously shares a commitment to the rules-based international order and the protection of democratic institutions. This is not to say that this club’s ideals are better, but to note that a tight-knit, like-minded group of allies can function – if not thrive – in a turbulent international domain, while a much larger club, with little ideologically holding them together and much driving them apart, cannot.

Relic of a bygone era

If we are in a new era of intense geopolitical competition, we will need to revisit the institutions that were created during post-cold war moment of unipolarity. They were not built for this world. The return of great power politics does not necessarily mean that multilateral governance cannot work. But it does mean that the type of governance groups that have any hope of being useful are those that look somewhat different from the G20 and more like the G7 – smaller clubs made up of politically aligned states.

The G20’s ambition for global, representative and legitimate governance remains admirable, but the world in which it finds itself has changed. The harsh reality of today’s international politics means that unless there is a sudden and dramatic reversal in political trends, the G20 may soon find itself consigned to the past as a utopian relic.