LONDON – On December 1, the G20’s rotating presidency will pass from South Africa to the United States, putting its agenda under President Donald Trump’s control. But it remains to be seen what this passing of the baton will mean for the world’s premier multilateral economic body. While Trump’s presence at the helm could further reduce the G20’s effectiveness, as many expect will happen, this need not be the case. In fact, if Trump wants to, he can breathe new life into the organization.
Although the G20 was founded in the late 1990s, it wasn’t operationalized until 2008, when US President George W. Bush awakened it to coordinate inter-governmental responses to the global financial crisis and put a floor under the world economy. The baton then passed to the United Kingdom, where British Prime Minister Gordon Brown’s government leveraged the G20’s convening and coordinating power fully, producing what was widely seen as a successful response to the crisis.
Owing to that success, it initially seemed as though the G20 would play a more permanent role in world affairs. But by the early 2010s – well before Trump’s first term – the G20 had already begun to lose its way. The one big exception came during the COVID-19 pandemic, when it helped coordinate governments’ responses and convened an urgent summit on stabilizing markets and supply chains.
In principle, the G20 still holds much promise. Unlike the G7, which previously sought to play a similar role, it includes the original BRICS countries (Brazil, Russia, India, China, and South Africa) and other emerging economies, such as Saudi Arabia. Representing more than 80% of world GDP, it has a much stronger claim to global legitimacy than any other economic grouping.
But the past decade has underscored the G20’s shortcomings. With more than 20 countries and other organizations, there are often too many cooks in the kitchen. As a result, every agreement and communiqué reflects the lowest common denominator, which often means that it has been diluted and drained of all ambition. Making matters worse, each host country brings its own urgent priorities, turning the agenda for every annual summit into an aspirational laundry list with no chance of being implemented.
Given these problems, many countries have often defaulted back to smaller groupings. The G7 continues to meet regularly to discuss global issues, and the BRICS have recently expanded to include five more emerging economies (Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates). But since neither of these groups can mobilize truly global responses without the other, the G20 remains the only game in town. Restoring its effectiveness should be our top priority.
Despite his skepticism of multilateralism, Trump is nothing if not unpredictable. Now that he will be officially presiding over the G20, he could win praise from around the world by making it work better. If this sounds fanciful, remember that the G20 did reach a consensus at its March 2020 summit, during Trump’s first term, on addressing the pandemic.
A good starting point for this US G20 presidency would be to focus less on compromise – the source of the lowest-common-denominator outcomes – and more on conciliation. For the organization to be effective, it must be capable of making hard choices that could upset some governments.
Specifically, we see two areas where Trump could make a real difference. The first concerns how the organization thinks about representation. It is important to recognize that not all members are equal. Global policy coordination would be more successful under the leadership of a tighter group comprising only the major economic powers. On most issues, whatever the US, China, India, and the European Union decide should carry the greatest weight. And in some narrower areas, such as energy production, it makes sense for countries like Saudi Arabia to have more of a say.
The second area concerns how economic goals are set. Trump could continue what former US Treasury Secretary Timothy Geithner started when he tried to persuade systemically important G20 members to commit to balance-of-payment and current-account targets, in the interest of reducing global imbalances. Given his preoccupations, Trump should jump at this proposal, especially as it becomes more obvious that his tariffs are doing damage to the US economy.
What about other major global challenges, from climate change to antimicrobial resistance? It may be prudent to pause any new initiatives until the G20 presidency passes to a government that is more aligned with the broad international consensus. Since coalitions of the willing can still work within existing frameworks on these issues, the agenda should aim to avert divisive debates and allow all members to focus on making the G20 fit for purpose again.
Jim O’Neill & Rami Kiwan
Jim O’Neill is a former UK Treasury minister and a former chairman of Goldman Sachs Asset Management. Rami Kiwan is a former head of the Policy Strategy and Planning Unit for Saudi Arabia’s G20 Presidency in 2020.
