After much uncertainty about whether G20 leaders would be able to reach a consensus on a joint statement, especially in the backdrop of the Ukraine war, the organisation’s 18th summit under India’s presidency concluded with the adoption of the New Delhi Declaration. This has been interpreted as a diplomatic triumph, not only for India, but also for this elite club of the world’s most advanced and emerging market economies.
But the move is in the interest of the rich nations that make up the G7, or Group of Seven, as African countries are major suppliers of vital minerals needed to meet energy challenges worldwide. The question, therefore, remains whether a permanent seat can enable the African countries to voice their concerns, such as of debt distress and the decolonisation of the international financial system, within the elite platform.
According to the Debt Justice campaign, 54 countries, most from Africa, are currently in a debt crisis and have no option but to choose between external debt repayments or government spending on public welfare.
The debt crisis is a recurring one under the current international financial system, which is controlled by advanced economies that combine lending with conditionalities on the economic policies of the debtor countries. These include pushing for markets to be liberalised, public services to be privatised and promoting austerity measures.
For instance, the March bailout agreement between the International Monetary Fund and the Sri Lankan government, as economist Jayati Ghosh noted, enabled the financial institution to impose “a series of conditions that have significantly exacerbated Sri Lanka’s wage and cost-of-living crises”.
An overhaul of this global financial structure and ensuring that its decision-making is more representative and transparent is essential to address these issues faced by Global South countries.
While the New Delhi Declaration is being celebrated as a success by India and key G20 members, observers have perceived it as “uninspiring and underwhelming,” made up of “empty promises,” “disappointing,” and “a compromise”.
But unpacking the text shows what it has actually offered, especially at a time of rising global inequality, the devastating impact of climate change, food insecurity, skyrocketing energy prices, ecological destruction, the systematic erosion of the rights of workers and vulnerable communities, war and conflict, and the democratic backsliding of many countries.
The weak language of the declaration does not not substantially address any of these pressing contemporary issues.
First, there was doubt over the possibility of a joint declaration because of how the G20 would address the Ukraine war. Without mentioning Russia, the declaration highlights “human suffering and negative added impacts” of the war on the global economy and states, “There were different views and assessments of the situation.” The significantly toned down language, compared to the Bali Declaration, was accepted by the G7 countries – as analysts noted – to keep the G20 relevant.
China and Russia have been pushing for the world order to be reshuffled through multilateral bodies like the expanded Brics grouping – of Brazil, Russia India, China and South Africa – and the Shanghai Cooperation Organisation. This makes it crucial for Western countries to keep the G20 active to maintain the dominance of the World Bank Group and the International Monetary Fund as well as to keep developing countries close.
Further, the West could not let India’s presidency fail because of the country’s geopolitical and economic significance in the Indo-Pacific region as a force to contain China. For Russia, it was a clear diplomatic win. Ukraine, the victim of this geopolitical tension, condemned the declaration as “nothing to be proud of”. The eight paragraphs on Ukraine made the G20 look like “a peace and security club” that could neither address the geopolitical aspect of the war, nor present a roadmap on how to tackle its impact on the global economy.
Second, in absence of concrete action plans or achievable timelines, non-committal language became the backbone of the entire text. The declaration fell short of expectations on multiple counts.
As political scientist John Kirton said, “Most of the commitments were weak, with G20 leaders promising to keep doing what they have already committed to do or to explore options, endorse or support others’ work or commission studies.”
On the United Nations’ 2030 agenda to achieve 17 sustainable development goals, the declaration repeated the existing commitments without paying serious attention to addressing poverty, inequality and new ways of development finance.
On debt distress, the document reiterated the already failed debt restructuring strategies, such as the Debt Service Suspension Initiative and the Common Framework for Debt Treatments. The measures, aimed at temporary suspension of debt repayment are unsuccessful for several reasons.
For instance, they have not been able to bring all forms of creditors, including private creditors, to the table. The peculiar eligibility criteria for countries seeking relief and the fear of debtor nations of negative credit ratings and access to international capital markets remain significant hurdles.
The G20 also encouraged the Global Sovereign Debt Roundtable efforts, another measure for sovereign debt resolution that has been criticised for being non-inclusive and opaque.
Given that the World Bank and the International Monetary Fund are the core of the G20, without a wider representation of stakeholders, the grouping is incapable of dealing with private creditors and new sovereign creditors – like China.
On climate action, no agreement could be reached to phase out coal and neither was a new timeline created. The declaration committed to the “lowest hanging fruit”, ie, to triple renewable energy capacity by 2030, but climate activists have already decried it as having hardly any bearing on keeping emissions under the danger mark. Moreover, the need for $4 trillion a year for green energy transition, although recognised in the text, remained mere lip service with no pathway towards it.
Not surprisingly, the summit became yet another occasion for the G20 to renew its commitment to preserve financial stability and long-term fiscal sustainability. The central banks, predictably, were strongly committed to achieving price stability, ie, keeping inflation rates under check. The members emphasised the importance of open, rules-based trade and vowed to combat protectionism, even as geopolitical shifts and the “polycrisis”, constituted by inequality, food insecurity, debt crisis, climate change consequences and ecological degradation, is making several such tenets irrelevant.
The member countries pledged to enhance the resilience of the global financial system and called for increased monitoring by the Financial Stability Board. Such measures, like India’s now withdrawn Financial Resolution and Deposit Insurance Bill that was aimed at establishing a framework to deal with bad loans and bank failures, are designed to disproportionately burden the poor by exposing depositors to corporate borrower defaults.
Similarly, although the declaration endorsed the G20 expert panel’s report, it failed to address the much-needed reform of the governance of global multi-development banks such as the World Bank group. The inability of the G20 to arrive at “concrete and substantial decisions…makes the forum ineffective, even useless,” noted Patryk Kugiel, a senior analyst at the Polish Institute of International Affairs
Third, despite India widely pitching itself as the “voice of the Global South”, the term “Global South” did not find a single mention in the declaration. India’s efforts to become the voice of the Global South are also not unchallenged, with countries like Brazil also making a similar pitch. Indonesia, Brazil and South Africa also played a crucial role alongside India in building the consensus on the final declaration.
Moreover, advancing the neoliberal agenda, or encouraging more private finance in sectors like climate, health and education, or working towards debt justice is not the role that the “voice of the Global South” should play.
Finally, three more takeaways from the New Delhi Summit are:
(a) the launch of the Global Biofuels Alliance, which is aimed at expanding and speeding up the use of biofuels.
(b) a plan to build a trade route: the India-Middle East-Europe Economic Corridor, a counter to China’s Belt and Road Initiative
But without a time-bound action plan, the Global Biofuels Alliance remains meaningless. Moreover, there is the threat that cultivable land may be grabbed and used to produce ethanol. The next meeting on the proposed economic corridor will be held in the next two months to decide on an implementation plan. Several ports on this proposed corridor – Mundra in Gujarat, Haifa in Israel and Piraeus in Greece – are allegedly connected to the Adani Group. The conglomerate has been accused of using its closeness to the ruling Bharatiya Janata Party to corner business.
Digital public infrastructure brings to the fore issues of literacy, inequality, surveillance, reining in technology giants and building a people-friendly, participatory digital governance framework.
Notwithstanding the talks of “cascading challenges and crises”, the G20 remains structurally committed to the same market tools (such as free trade agreements, privatisation and deregulation) that in fact have precipitated the crises.
The summit has turned out to be a failed opportunity to even moot fundamental course correction of the kind suggested, for instance, by 300 economists, business leaders and politicians in an open letter to the G20. The letter had sought a wealth tax while voicing concerns that income equality is “corroding our collective future”.
The G20 New Delhi Leaders’ Declaration reads like a statement without solutions. Although the declaration starts with the claim “We are One Earth, One Family, and we share One Future”, growing power rivalries among key members of the elite club indicates a divided world with a dubious future.
Praskanva Sinharay is Senior Research Associate, International Finance, Centre for Financial Accountability.