G-20 Summit 2023: Geo-political Interest versus Economic –Cooperation as a Pressure Game

Introduction

 

In September of 1999, the finance ministers and central bank governors representing the Group of Seven countries (commonly referred to as the G-7) articulated their intention to "broaden the dialogue on key economic and financial policy issues among systemically significant economies and promote co-operation to achieve stable and sustainable world economic growth." The G-20 was established with the mandate of influencing the global agenda, addressing economic and financial matters in areas lacking consensus, and setting a guiding example. This Group was particularly regarded as a crucial forum for deliberations on various strategies.

Simultaneously, the global economy was experiencing heightened levels of integration. The escalation of cross-border trade has been notably marked in recent decades, a response to trade liberalization facilitated by the General Agreement on Tariffs and Trade (GATT) and subsequently the World Trade Organization (WTO). Between 1991 and 2006, there was a nearly twofold increase in the proportion of global trade involving G-20 members not included in the G-7, rising from 11 percent to 19 percent, based on consistent data for the G-20.

During its G20 presidency, India took the lead in advancing initiatives aimed at augmenting capacity-building measures, to enable and galvanize substantial capital for sustainable development endeavors. The inaugural session of the Sustainable Finance Working Group (SFWG) underscored the enhancement of the ecosystem for financing sustainable development as a pivotal item on the agenda, alongside a few additional focal points: the establishment of mechanisms to facilitate the timely and sufficient allocation of resources for climate finance, and the facilitation of finance in support of the Sustainable Development Goals (SDGs). Notably, there exists a discernible deficit in understanding among recipient nations (developing countries) regarding the most effective methods for integrating SDG metrics into policy formulation and business strategies.

Delhi Declaration

Acknowledging the G20 as the foremost platform for international economic collaboration, it is important to note that it may not be the appropriate forum for addressing geopolitical and security matters. The Russian perspective contends that the text pertaining to the Ukraine conflict, as enshrined in the Declaration, has successfully reinstated a state of equilibrium. In contrast, Oleg Nikolenko, spokesperson for the Ukrainian Ministry of Foreign Affairs, expressed a less sanguine view, asserting that the G20 had little cause for celebration. Throughout India's tenure as the presiding nation for ministerial meetings, an absence of joint communiqués was notable. Instead, emphasis was placed on the section pertaining to Ukraine, a document modeled on the template of the Bali Declaration. Noteworthy is the incorporation of Chinese and Russian reservations into the text in the form of appended footnotes.

However, it is crucial to recognize the immense human suffering and detrimental global impacts stemming from the conflict in Ukraine, particularly in terms of food and energy security, supply chains, macro-financial stability, inflation, and economic growth. Delhi Declaration commended the joint efforts of Turkey and the UN in brokering the Istanbul Agreements. And included the Memorandum of Understanding between the Russian Federation and the 3 Zero Draft Secretariat of the United Nations, aimed at promoting Russian food products and fertilizers in global markets, as well as the Initiative on the Safe Transportation of Grain and Foodstuffs from Ukrainian Ports.

The global economy is currently operating below its historical average growth rate, and this growth pattern remains inconsistent across regions. Moreover, the level of uncertainty surrounding the economic outlook remains exceptionally elevated. This uncertainty is compounded by a discernible tightening of global financial conditions, which has the potential to exacerbate existing debt vulnerabilities, while persistent inflationary pressures further compound the economic landscape.

As per the IMF's World Economic Outlook, the worldwide economic expansion is anticipated to taper off, dwindling from an estimated 3.5 percent in 2022 to a more modest 3.0 percent in both 2023 and 2024. This deceleration follows a robust surge of 6.1 percent in 2021. The ongoing elevation of central bank interest rates in the battle against inflation continues to exert a dampening effect on economic vitality. Projections indicate that global headline inflation is poised to recede, dropping from the 8.7 percent mark observed in 2022 to 6.8 percent in 2023, further moderating to 5.2 percent by 2024.

 

India- Middle East – Europe Economic Corridor

In a collaborative effort, India, the US, Saudi Arabia, the United Arab Emirates (UAE), France, Germany, Italy, and the EU have come together to initiate a multinational railway and maritime endeavor. This ambitious project is designed to establish a robust trade route connecting India to both the Middle East and Europe, with the dual purpose of enhancing trade flows, securing energy resources, and bolstering digital connectivity.

This grand initiative, known as the India-Middle East-Europe Economic Corridor, is set to comprise two distinct corridors. Firstly, the Eastern corridor will forge a vital link between India and the Middle East region. Secondly, the Northern Corridor will seamlessly connect West Asia, the Middle East, and Europe. The envisioned route will traverse from India through the UAE, making stops in Saudi Arabia, Jordan, and Israel, before culminating in Europe. This monumental undertaking holds immense promise for the development of railway networks and associated infrastructure, creating a fertile ground for long-term business prospects to flourish along its path.

During the inaugural day of the Group of 20 summit in New Delhi, US Deputy National Security Adviser Jonathan Finer underscored that the Middle East plan transcends its infrastructure components. The primary objective of this initiative, as articulated by Finer, is to ameliorate prevailing conflicts within the region, some of which have endured for a considerable period. He characterized the Middle East as historically characterized by a propensity to generate turbulence and insecurity.

Initially conceived as a means to counteract Chinese influence in burgeoning markets, the project has witnessed shifts in geopolitical alignments. Notably, longstanding US allies Saudi Arabia and the UAE have drawn closer to Beijing, aiming to fortify their connections with swiftly expanding economies to the east. The US and the EU have concurrently endeavored to counter President Xi Jinping's Belt and Road Initiative, which has underwritten extensive infrastructure ventures in emerging markets valued in the hundreds of billions of dollars. China has also deepened its engagements with the Middle East, playing a facilitating role in brokering a détente between Saudi Arabia and Iran earlier this year. The implementation of the proposed rail link is anticipated to augment the velocity of trade between India and Europe by a substantial margin of 40 percent.

On August 23, 2023, during a summit held in Johannesburg, the BRICS nations reached a consensus to include six new member countries in 2024. Notably, among these additions were four Middle Eastern states: Egypt, Iran, Saudi Arabia, and the United Arab Emirates (UAE). This decision aligns with Beijing's recent prominent endeavors to secure a more substantial political foothold in the Middle East and North Africa (MENA) region.

Antagonism, Trap, and tilting factors 

 

• China surpasses the United States in trade with the region. In 2021, China's imports from the Middle East totaled $130 billion, while the US only reached $34 billion. Furthermore, China's exports to the region amounted to $129 billion, significantly outpacing the US's $48 billion. The China-Arab States Cooperation Forum (CASCF), initiated in 2004, serves as a platform for engaging with all members of the League of Arab States.

·    From 1999 to 2022, China has forged strategic partnerships with numerous states in the Middle East. Moreover, it is presently engaged in negotiations regarding free trade accords with entities such as the Gulf Cooperation Council (GCC), Israel, and Palestine. It is worth noting that the Middle East and North Africa region holds a pivotal position in the People's Republic of China's Belt and Road Initiative (BRI), constituting 28.5% of its total investments in the year 2021.

 

• President Biden has upheld the stringent approach towards China that was established during the Trump administration, thus indicating a sustained emphasis on the Chinese Communist Party (CCP). Although it was President Barack Obama who initially articulated his intention to reorient towards Asia, the pivotal alteration in policy should be chiefly attributed to the actions of both Trump and Biden. Notably, the period from 2005 to 2022 witnessed the People's Republic of China (PRC) making substantial investments and entering into contracts in the Middle East and North Africa (MENA) region, amounting to a total of $273 billion.

 

·   Non-military Coercion: China's economic coercive strategies have evolved in sophistication over time, frequently employing a blend of diverse approaches to magnify their effectiveness. From the perspective of the European Union (EU), China presents several notable challenges in the realm of emerging technologies and digital domains. Firstly, China demonstrates proficiency in the development of cutting-edge technologies, exemplified by advancements in areas such as 5G and Artificial Intelligence (AI). Secondly, China actively seeks to disseminate its technological innovations with the aim of shaping the global landscape of standards, thereby fostering adherence to a distinctly Chinese framework of technological norms and protocols. This endeavor is significantly facilitated by the extensive participation of over a hundred countries in the Belt and Road Initiative (BRI). Thirdly, China is actively augmenting its influence within international organizations such as the United Nations and other entities responsible for standard-setting, to promote the interests of its domestic enterprises.

Conclusion

The United States' established role as a "policeman" or security provider may ultimately constrain its range of negotiation strategies concerning China's involvement in both the Middle East and the Pacific region. This underscores the significance of Russia's position within the broader framework of international security dynamics, particularly in light of the adverse impact on Chinese interests in the aftermath of the Ukraine crisis, primarily on economic fronts. Concurrently, India, positioning itself as a middle power, seeks to navigate its stance distinct from the intricate layers of geopolitical conflicts. A multipolar global order is perceived to be more conducive to safeguarding Indian interests compared to a bipolar world order. India contends with a multifaceted array of challenges across various domains. Asymmetrical alliances or partnerships invariably underlie the impetus behind geopolitical determinations. Furthermore, the recent inclusion of the African Union as a new member of the G-20 underscores the increasing significance of the African continent as a platform for non-military, geo-political competitions among several prominent global powers.