A G20 summit borne out of crises, ends inconclusively

‘Buenos Aires’ might literally be translated as the plural of ‘good weather’, ‘or ‘nice air’; but as the leaders of twenty major global and emerging powers in the world economy came together in the Argentine capital for the 13th G-20 Leader’s Summit this weekend, there was hardly any optimism on the air.  

The G-20 which emerged as the principal platform of global economic governance in the aftermath of the global crisis in 2008 as a reflection of the participatory spirit and collective crisis-response strategy at the time, has lost a large chunk of its prestige and effectiveness in recent years. 

As it were, the G-20 was among the few grand projects that President Obama took over from George W. Bush and continued unabated during his two terms as the US President, since the collective action spirit of the group was in perfect conformity with the positive image that the US wanted to disseminate globally. 

The G-20 was presented as an inclusive international platform on which key political leaders from both the global and emerging powers might come together with representatives from regional organizations such as the EU, African Union, Caricom, ASEAN and Mercosur in order to produce practical multilateral solutions to pressing global problems. 

For the BRICS countries led by China and India, the G-20 summits represented a perfect opportunity to express their grievances and objections concerning the uneven architecture of global governance, while demanding more say in the running of international political and economic institutions. 

Likewise, representatives of the developing world were able to raise their voices at the G-20 concerning unfair practices in global trade and finance regimes, while pushing for structural reforms at the IMF, World Bank and the WTO for more inclusive and fair development.          

However, comprehensive transformations took place in both the global architecture of world politics and the domestic political stages of the key global players in recent years, which significantly weakened the common agenda of participatory governance and multilateral problem-solving. 

The blatant unilateralism of the Trump administration in the US which was expressed through withdrawal from multilateral international regimes and regional organizations, neo-protectionist economic policies and trade wars triggered widespread perceptions that the major global sponsor of the G-20 movement has stopped its support for deeper multilateralism. 

Moreover, rising geopolitical tensions between the US and Russia in critical conflict zones such as Syria and Ukraine increasingly led to the adoption of hard-power assets in bilateral dealings, leading some observers to conclude that the possibility of a physical military confrontation might be higher these days than during the Cold War. 

Finally, the rising tide of neo-protectionism and trade wars between the US and China throughout this year strengthened concerns regarding the future growth potential of the worlds economy and the prospective trajectories of global production, trade and finance networks.

As a result of American unilateralism, rising tensions between Washington and Moscow in geopolitical matters, and looming trade and currency wars between Washington and Beijing has contributed to rather pessimistic expectations on the outcome of the Buenos Aires Summit.

The official theme of this year’s Summit was determined as ‘Fair and Sustainable Development’ and sub-themes of energy efficiency, environment protection, development financing, digital economy, excess steel-production capacity, and modern agriculture were set as the main discussion points. 

However, it is most likely that the attention of world leaders will focus on the strategic tensions between the US and Russia over the seizure of Ukrainian vessels in the Kerch Strait. The cancellation of the bilateral meeting between Presidents Trump and Putin at the Summit was an early indication of the tense environment.

The second major area of international friction that will attract significant attention concerns the ongoing trade wars between the US and China that carry the potential of undermining growth prospects in the world economy via deeper and wider confrontation. 

Protectionism and trade wars which gained momentum over the course of this year via tough political rhetoric, accusations of industrial-technological espionage and sharp tariff increases between Washington and Beijing across a range of sectors raised concerns among the major public and private players of the world economy. 

Rising tensions between China, which has become a major global manufacturing hub, and the US which constitutes the largest consumer market and global leader in financial, defense-related and high-tech sectors carries the potential to undermine global growth dynamics. 

Since July 2018, the US imposed higher tariffs on $250 billion worth of Chinese exports, while China has retaliated by imposing higher tariffs to $110 billion worth of American goods. 

Very recently, President Trump has declared that tariff increases for an additional $200 billion worth of Chinese goods will go forward as planned, while threatening to take $267 billion worth of imports into the realm of tariff increases. 

On the eve of the Buenos Aires Summit, it looked like Trump was adamant in forcing China into a corner by using the trade wars card so that he could elicit the best possible deal from them. But in the end, both sides have agreed to halt trade tariffs for 90 days to allow an opportunity for talks. 

As the US economy continues to break historical records in growth, employment and productivity figures and China begins to struggle to maintain the momentum of its export-led growth strategy, a prolonged agenda of trade wars might trigger wider destabilizing effects that might hurt all emerging economies.

Also shadowing the Summit was the new trade deal signed between the US, Mexico and Canada (or the so-called US-Mexico-Canada Agreement-USMCA) which was carved out to replace NAFTA as a result of months-long intensive US diplomacy. 

Describing USMCA as the ‘greatest deal ever’, the message that President Trump tried to give to the global audience at the G-20 Summit was that the US will redefine the conditions of its bilateral and multilateral dealings on the basis of a renewed notion of national interest, rather than concerns for regional or global stability. 

Throughout the last two years, the global image of the US has been significantly tarnished thanks to the controversial steps of the Trump administration towards the NAFTA partners. Its decision to construct a wall on the Mexican border against migrants; blatant threats towards NATO partners and the EU; withdrawal from various UN platforms, as well as the Paris Climate Accord. 

The tendency of the Trump administration to act in total disregard of international law, established norms and its previous commitments might in the long-term trigger collective responses from the EU, China, Russia and emerging powers against unilateral US sanctions and trade wars.

In the end, international diplomacy is a two-track process. Behind the scenes and away from the cameras the US and Russia may very well talk, and we can see early signs of a trade deal between the US and China to end the vicious circle of trade wars. But expecting swift progress on both counts in Buenos Aires will be excessively optimistic. 

The new world of chaotic multi-polarity lacks a stabilising global hegemon, and issue-based bilateral confrontations are bound to continue with increasing intensity.