Can G20 Replace G8?

After the widely publicised and effective G20 summit of the world leaders in the US city of Pittsburgh, there are speculations making round whether G20 will replace G8 in some near future as a better alternative to deliberate on common issues of the globe. The G20 summit held from 24 to 25 September 2009 primarily to discuss the global economic issues has emerged as a premier international forum to bring the economic power houses of the world, including the emerging ones like India, China and Brazil to deliberate on the issues of global economic slow down and the measures to come out of the crisis.
G8 (earlier G7), a conglomeration of the rich and industrially developed countries mostly from the Western hemisphere emerged in 1975 to deliberate on the issues of issues of mutual or global concern such as health, economic and social development, energy, environment, terrorism, etc. Dominated by the West, particularly by the US, this grouping controlled levers of the world economy with major saying in the affairs of global financial institutions like World Bank and International Monetary Fund. It was the richest club of the world. To further broad base its scope and nature, the grouping in 2005 formed G8+ 5, in which emerging economies like Indian and China were included. But these outreach countries do not have any say in the decision making process of the grouping.
The emerging realities in the post cold war world need to be taken into account. The first reality particularly from an economic perspective is the rise of BRIC countries. As per an estimate the combined economy of BRIC countries would surpass the economy of the most prosperous group of G7 (excluding Russia) by 2035. These countries particularly India and China have huge population with a huge and fast growing consumer market. Particularly India and China will play an effective role in this emerging matrix. Despite the global economic slow down Indian economy has grown in the period of 2008-2009 at more than 6 per cent and expected to grow at a similar rate in 2009-2010. China’s role in aiding the US in fighting slump in its economy is noteworthy. It can be mentioned here since its inception in 1999 G20, which also include all the BRIC countries, has played an important role “to strengthen the international financial architecture and to foster sustainable economic growth and development.” As its official website states, “the G-20 now has a crucial role in driving forward work between advanced and emerging economies to tackle the international financial and economic crisis, restore worldwide financial stability, lead the international economic recovery and secure a sustainable future for all countries.”
In fact the rise of Asia has been well pronounced at the summit of the G20 in Pittsburgh. Affirming the role of Asia, Indian Prime Minister Manmohan Singh emphasised in the summit the rise of Asia with both political and economic clouts, which must be recognised and factored in the politics of the nations. To quote him, ‘With the rise of Asia, with growth of India, China and Brazil, the economic decision-making has to take into account the views of these countries if it is to have an optimum impact.’ The G20, formed by both the developed and the developing, in contrast to the G8, dominated by the rich industrial nations, can provide a base for equitable international playing field for all the countries of the world. As Indian prime minister correctly observed, ‘Interdependence in a globalised world means that no country, however powerful it may be, can take on the entire burden of economic adjustment and economic decision-making.’ The G20 summit developed a compromise formula in Pittsburgh to accommodate that emerging economies’ demand to have greater voting rights in the International Monetary Fund.
It may be too early to predict the replacement of the G8 by G20. There are too many challenges which the grouping must confront. Though the G20 communiqué stated, “We designated the G20 to be the premier forum for our international economic co-operation” the question arises whether the grouping with differences within the members, with diverse political and economic set ups and aspirations can rise as a single body for action in international politics. In the context of politics there is divergence of perceptions between members. In the context of politics, G20 is probably more divergent when the issues of global climate change, non-proliferation, financial regulation reform, etc. come to picture.
However, it will be imprudent to ignore the clout of rising economies of the world. At the same time, it is also equally important to remember the G20 represents 90 per cent of the GDP of the world. The Asian drivers far outpace the European counterparts in terms of growth. While the global financial crisis has hit hardest the US and Europe, the Asian powers particularly India and China have managed well the crisis. It may not be too far fetched to project G20 as an alternative to the G8. While the G8 deliberates on both political and economic issues, the overwhelming economic nature of G20 keeps it out of political ramblings and keeps it in good stead as the major forum to sort out, and to deliberate on major global economic issues. Some of the important decisions taken at Pittsburgh need special mention. There was common agreement not to curtail the stimulus package to revive world economy, to invest in infrastructure, to restructure international financial institutions, to recapitalise world financial institutions, and to provide the needed will to tackle the protectionist measures.
It is predicted by the end of 2010 the global economy may witness recovery. This recession, probably the severest since the recession of the inter war period of 1930s, has goaded the world leaders to think broadly in terms of common goals and achievements. However, how far this common agenda will guide the nations only the coming years can say. The emerging power equations and reconfigurations in the post-cold war era will definitely impact the shaping of international order yet to come. In this emerging scenario, the emerging clout of the G20 and the clout of its leading members can not be ignored.