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Analysis

A Prospective Substantial Performance at the G20's Bali Summit

John Kirton,
Director, G20 Research Group, November 13, 2022
[pdf]

The 17th regular G20 summit, in Bali, Indonesia, on 15–16 November 2022, will be a highly significant event.

It will build on the G20's Rome Summit hosted by Italy in October 2021, the United Nations Glasgow climate summit in November 2021, the first part of the UN conference on biodiversity in Kunming, China, in spring 2022, the G7 summit in Elmau, Germany, in June 2022 and the 27th Conference of the Parties (COP27) to the United Nations Framework Convention on Climate Change in Egypt in early November.

Bali will be the first G20 summit hosted by Indonesia, the anchor of the Association of Southeast Asian Nations and an important democratic power. Indonesia's majority Muslim, large, young population and its strong economy, vast geographic expanse, long coastlines and natural assets make it globally critical in the ecological, social, economic and security domains.

On its eve, Gideon Rachman (2022) declared the Bali Summit to be "the first global summit of the second world war" with the US-led West confronting both Russia and China. Edi Prio Pambudi and Yulius Purwadi Hermawan (2022) rightly noted that "the G20 Bali Summit constitutes the most strategic forum for global leaders to demonstrate their true commitment to pursue constructive collaboration in response to the deteriorating global economy and to the overwhelming geopolitical uncertainty. The Covid-19 pandemic is not yet over. The economic recovery remains very fragile. The G20 Bali Summit is a moment for its leaders to live up to the spirit of solidarity and collaboration among G20 members and to consolidate their concerted efforts in preventing catastrophic economic collapse."

The Debate

On the eve of the summit, prospects for its performance were the subject of a debate among several schools of thought.

The first school saw failure, due to the deep divisions between G7 members and Russia over the latter's invasion of and annexations in Ukraine. This prevailed despite the efforts of Indonesia, Turkey, China and India to bridge this deep geopolitical divide.

The second school saw a severe struggle for success despite the unprecedented global shocks, due to Russia's invasion of Ukraine and deep domestically embedded divisions on energy and climate change. Syed Munir Kharsu (2022) argued that "in the face of numerous globally interconnected crises, one would expect international cooperation to be stronger than ever. Instead, widening geopolitical divides will make it difficult for Indonesia to steer leaders toward a consensus in addressing pressing global issues … In a world marred by war and still reeling from the longest pandemic in living memory, setting common agendas and attainable action plans will be a challenge for Indonesia."

The third school saw the G20 summit saved, to make many modest advances across its broad built-in agenda, by relying on the agreements among its working groups and ministerial meetings (Pambudi and Hermawan 2022). This was due primarily to the skilful approach of the Indonesian chair.

The fourth school saw substantial success, spurred by the unprecedently severe and widespread set of security, ecological, energy, food and economic shocks, and the G20's uniquely predominant global power to address then, as a compact club that its leaders valued, as there was nowhere else for them to go to do the job (Kirton 2022).

The Argument

To meet the soaring demand for effective global governance, G20 leaders could well produce a substantial success, relative to the advances made by the 16 G20 summits in the past (see Appendix A).

Participants and Process

The Bali Summit's chair, Indonesian president Joko Widodo, is a G20 summit veteran, having attended since 2014. Fresh energy comes from Germany's new chancellor, Olaf Scholz, who hosted the G7 in June, Japan's Fumio Kishida at his first in-person G20 summit and the United Kingdom's Rishi Sunak, Italy's Giorgia Meloni, Australia's Anthony Albanese and Korea's Yoon Suk-yeol also at their first summits. Other participants include Argentina's Alberto Fernández, and the European Union's Ursula von der Leyen and Charles Michel, and veterans India's Narendra Modi, scheduled to host in 2023, Turkey's Recip Tayyip Erdogan, Canada's Justin Trudeau, Saudi Arabia's Mohammed bin Salman, China's Xi Jinping, France's Emmanuel Macron, and South Africa's Cyril Ramaphosa. Mexico's Andrés Manuel López Obrador will be represented by foreign minister Marcelo Ebrard; Russia's Vladimir Putin will be represented by foreign minister Sergei Lavrov. A few days before the summit, an Indonesian official confirmed that Brazil's President Jair Bolsonaro will not attend, as his presidential term ends at the end of the year.

Regular guests include Pedro Sánchez of Spain, Mark Rutte of the Netherlands and Lee Hsien Loong of Singapore, as well as the Senegal's Macky Sall, chair of the African Union, and Rwanda's Paul Kagame, chair of NEPAD. Other invited leaders include the United Arab Emirates' Sheikh Mohammed Bin Zayed Al Nahyan, Suriname's Chan Santokhi representing the Caribbean Community, Cambodia's Hun Sen representing ASEAN and Fiji's Frank Bainimarama representing the Pacific Community. Ukrainian president Volodymyr Zelensky is expected to participate by video link.

Also likely to attend are the heads of the Financial Stability Board, International Labour Organization, Organisation for Economic Co-operation and Development, World Health Organization (WHO), International Monetary Fund, World Bank and United Nations, among others.

Priorities

Guided by the theme of "Recover Together, Recover Stronger," the Bali Summit was designed to focus on Indonesia's initial priorities of the global health architecture, digital transformation and sustainable energy transition. It also sought to enhance economic resilience, recovery and connectivity disrupted by Covid-19, increase people's digital literacy and skills, standardize digital payment systems and highlight Indonesia's culture, tourism and creative industries.

As Indonesia's year as host began, the Bali Summit faced an unusually large list of pressing problems across and among the social, economic, ecological and security fields. Ten stood out.

1. Vaccine equity, as the omicron variants of Covid-19 spread and new variants could – and did – continue to arrive at any time.

2. Economic growth, which was increasingly uneven, with different rates across different countries, depending on vaccination rates, the ability to recovery, and the sustainability of fiscal and monetary support.

3. Green recovery, with everyone wanting an inclusive, smarter, greener recovery and increasing carbon prices gradually, but disagreeing about what "gradual" means.

4. Fiscal and monetary stimulus, while reducing the unprecedented government fiscal deficits, the debts of public and private actors, the monetary stimulus from the major central banks, and inflation, which was stronger for longer than first thought.

5. Tax, where the G20 must implement its new corporate tax regime.

6. Allocation of the International Monetary Fund's (IMF's) special drawing rights, where, by late February 2022, G20 members had only given $60 billion of the $100 billion they had promised at Rome in voluntary channelling to poor countries through the IMF's new Resilience and Sustainability Trust and its old Poverty Reduction and Growth Trust. The United States led with $21 billion, but China had given only $14 billion.

7. Debt relief for vulnerable countries, where China resisted disclosing and writing down or off the debts of its client countries.

8. Trade, where the deadlock reforming the World Trade Organization (WTO) remained.

9. Resources for the international financial institution, which must be raised to meet the Sustainable Development Goals and the promised climate finance.

10. Russia, whose invasion of Ukraine raised energy prices, increased financial stress and reduced the willingness of G20 members to cooperate on all the key challenges they faced.

Preparatory Process

In 2022, Indonesia planned to mount "184 G20-related events, including the Bali Summit, 20 ministerial and central bank governors' meetings, 17 sherpa or deputy-level meetings, 56 working group meetings, and 90 engagement groups meetings. Indonesia has also held more than 253 side events. In total, there will have been over 437 events in 25 different cities" (Pambudi and Hermawann 2022).

The G20 sherpas first met on December 7–8, 2021, to discuss Indonesia's G20's theme and priority agenda. Finance and central bank deputies first met on December 9–10, focusing on the finance track priorities, amidst high hopes of agreeing on spurring a strong recovery from the Covid-19 pandemic recession.

Ministerial and Working Group Meetings

As geopolitical divisions rose, causing prospective deadlock among G20 members due to Russia's invasion of Ukraine on February 24, Bali's G20 leaders increasingly are left to build on the results of the Indonesian presidency's many working group and ministerial meetings.

Indonesia had planned a large array of 15 ministerial meetings. Finance had five and health three. There was one each for education, tourism, research and innovation, digital economy, energy, environment and climate, and agriculture had one each. The list expanded to 20 meetings in all.

Eleven working groups were scheduled to meet. Only one was mandated to address climate change.

Engagement Groups

There were active engagement groups for business, labour, civil society, think tanks, science, audit institutions, parliamentarians, urban affairs, youth and women. The Indonesian presidency added a new Religious 20 Engagement Group, which met in early November. Also active was the informal Interfaith 20 (IF20), which issued its recommendations in September.

Compliance Momentum

As the summit approached, Bali's leaders could be encouraged by G20 members' 68% compliance by June with the priority commitments from the Rome Summit in October 2021. By October 14, 2022, a month before the Bali summit, compliance had reached 73% (G20 Research Group and Center for International Institutions Research 2022). This was slightly above the summit's overall compliance average of 72% since its start in 2008.

By subject, final compliance with the Rome Summit's 21 assessed priority commitments was led by the macroeconomic policy commitment on inclusive growth and the development commitment on inclusive recovery, both at 95%. They were followed by the climate change commitment on national plans, the food and agriculture commitment on malnutrition, and the environment commitment on natural resources at 93% each and the health commitment on One Health at 90%. The lowest compliance came with the energy commitment on non-unabated coal power at 30%.

By member, compliance was led by the United Kingdom's 95%, followed by Germany's 90%, and the European Union's 88%. Then came Japan's 83%, the United States and Canada's 81%, France's 80%, Argentina and China's 76%, and 2021 host Italy 73%. Below the 72% compliance average came Brazil and Korea's 71%, Australia's 69%, India's 67%, Mexico's 64% and Saudi Arabia's 62%. Indonesia ranked 17th along with Turkey at 60%. The lowest compliance came from South Africa's 50% and Russia's 57%. All members thus had positive compliance. The spread between the highest and lowest complying members was 45%.

The compliance of the eight G7 members averaged 84%, or 12% above the G20's 72% average. The five BRICS members compliance averaged 64%, or 9% below the full G20's 72% average.

Propellors of Performance

On the eve of the summit, Bali's substantial prospective substantial performance was propelled by the current condition of the six causes contained in the systemic hub model of G20 governance (Kirton 2013).

Shock-Activated Vulnerability

The first cause was the unprecedented set of severe, interrelated shocks proliferating during 2022.

The first shock was Russia's invasion of Ukraine in February and the ensuing crises in energy, food, inflation, developing country debt, declining economic growth, financial stability, trade and development. As the Bali Summit approached, there were no signs that Russia's invasion, assault and annexations would soon end, even with the Ukrainian defeat of Russia force in Kherson on November 11.

The second shock was the continuing Covid-19 pandemic with recent outbreaks in China, the new monkeypox pandemic, polio in the United States and United Kingdom, Ebola in Africa, and influenza and respiratory syncytial virus among children in G7 members. By November 8, Covid-19 was spreading throughout a locked-down China at a rapid rate, even if, three days later, Xi relaxed the restrictions in his zero-Covid-19 policy to stimulate China's sagging economic growth.

The third shock was the escalating assault from climate change and biodiversity loss, fuelling historic extreme weather events across the G20 and globe in 2022.

The fourth shock was mounting US-China tensions, especially over Taiwan, and concerns about the open, rules-based multilateral order itself.

The fifth shock was financial fragility, erupting in the housing market in China, followed by market reaction to former UK prime minister Liz Truss's budget in October and the collapse of the second largest crypto currency fund on November 11. These small shocks come amidst mounting debt crisis in developing countries.

Multilateral Organizational Failure

The second cause was multilateral organizational failure, as none of the ministerially governed foundational bodies from the 1940s Bretton Woods–UN system successfully controlled or curbed these shocks and the vulnerabilities they exposed.

On Russia's war against Ukraine, the United Nations Security Council failed to stop the war, due to Russia's veto as a member of its Permanent Five. The International Atomic Energy Agency failed to ensure nuclear safety at the Russian-occupied reactors at Chernobyl and Zaporizhzhia in Ukraine. However, UN Secretary General António Guterres, along with Turkey's Erdogan did succeed in brokering the Black Sea Grain Initiative, so that Ukrainian and Russian grain could be shipped out to feed desperate people in the global South.

On climate change, COP27 in Egypt in early November failed to attract the participation of several key leaders, notably Xi – China being by far the greatest climate polluter in the world – and Putin, Albanese and Trudeau. To be sure, Scholz, Macron and Ramaphosa did attend. So did Biden but only after his G7 colleagues had, and the US mid-term Congressional elections on November 8 were held.

On health, the WHO still struggled to control the continuing Covid-19 pandemic as its deadly variants spread. It did, however, join with the World Bank to manage a new Financial Intermediary Facility for Pandemic Prevention, Preparedness and Response – now renamed the Pandemic Fund – but still relied on G20 health and finance ministers to raise to targeted total of $10 billion.

On the economy, finance and development, the IMF and World Bank at their semi-annual ministerial meetings in October made limited progress in containing the escalating debt crisis or restoring progress towards the UN's Sustainable Development Goals.

On trade, the WTO's ministerial conference in June made some long overdue progress, notably on curbing fisheries subsidies, but left much undone.

At the leaders' level, the G7's Elmau Summit in June was the highest performing one to date, especially in countering Russia's invasion of Ukraine and the other regional security threats to the democratic world (Kirton and Koch 2022). But on the these and the other crises, it left much for the G20, with China and Russia as members, to do.

Predominant Equalizing Capability

The third cause, the globally predominant equalizing capability of G20 members, was mixed.

Their collective global predominance was very strong. Together they contained 60% of the world's people produced over 80% of its economy, greenhouse gas emissions and the natural sinks that remove them, and cereal production and agricultural exports. They also dominated military spending and the global financial system.

However, their internal equality was mixed, declining in their currency values but strengthening in economic growth. The soaring US superdollar, appreciating strongly in 2022, led to major declines in those of the Japanese yen, the euro, the British pound, the Canadian dollar and China's renminbi. Economic growth slowed in the most powerful members of the US and China, while rising in India and Saudi Arabia.

Converging Principles and Practices

The fourth cause, converging principles and practices, on a democratic core, increased a little across most of the 20 members but from a low base in 2021 not nearly enough to offset the deep retreat in Russia, with Putin's invasion of Ukraine and in China, with Xi's acquisition of a third term as president and purge of any reformist rivals from then Communist Party's top ranks (see Appendix B). It was this great divide that stopped much major G20 progress throughout 2022 and that kept Putin from attending the Bali Summit in person.

Beyond the advancing authoritarianism in these big two G20 members, democracy expanded in the most powerful country, United States, with the results of the mid-term elections on November 8 promising to retain the Joe Biden's Democratic Party's control of the Senate, and having a strong, if even slim, minority position in the House of Representatives. Democracy also advanced in Brazil, with the election of the well-loved G20 veteran Luiz Inácio Lula da Silva in October, in Italy with the election of the coalition led by Giorgia Meloni, and with the rapid, constitutionally compliant changes in the United Kingdom's prime minister in the autumn of 2022.

Domestic Political Cohesion

The fifth cause, domestic political cohesion, declined in most G7 members. It was less strong than the year before with Biden's prospective minority in the House of Representatives, and a presidential election in two years, with Lula's narrow, second round victory in Brazil, and with Meloni's complex coalition that could be forced to hold an election at any time. Biden's approval rating remained well below 50%, while Kishida, Macron, Sunak and Trudeau struggled too.

Among BRICS members, Putin's popularity declined and hundreds of thousands of his citizens left due to their dissatisfaction with his conduct of his war in Ukraine. Even in China, popular dissent with the hard Covid-19 lockdowns and government financial regulation grew.

Club at the Hub

The sixth cause, the G20's position as the valued club at the hub of an expanding network of global summit governance, also declined to unprecedented depths with Putin's refusal to attend.

Putin signalled he would skip the summit, thus lessening its potential as a place where he and G7 leaders, and he and Zelensky virtually, could meet face to face for the first time since Putin invaded Ukraine on February 24. There would thus be no repeat of the success of the G20's St. Petersburg Summit in 2013, which led directly to stopping the use and removing the stockpiles of chemical weapons by Syrian president Bashir Assad. But Putin's absence did free the other leaders to focus on their bigger, broader agenda of advancing action on climate change, energy security and transition, food security. And the scheduled on-site bilateral between Biden and Xi on Monday November 14 could set the stage from broader G20-wide consensus and co-operation on Putin's war in Ukraine, climate change and much else. Indeed, only Putin, Bolsonaro and, as usual, López Obrador would stay at home. There is much that these 17 systemically significant leaders could do without Putin, whose declining Russia remains a superpower on only part of one of Widodo's initial three priorities – climate change – with far less relevance on the global health architecture and digital transformation. On the new crisis-fuelled priorities, Russia is still a superpower on nuclear weapons, but no longer clearly on conventional military capabilities, energy and food security, economics, finance, development and debt.

Prospective Substantial Achievements

G20 Governance

On G20 summit governance itself, the institution will survive to thrive next year. All leaders vital for advancing Bali's priorities will likely attend in person, and engage collectively in most sessions, despite the deep divide between the G7 leaders and Putin over Russia's ongoing invasion and annexations in Ukraine.

As Pambudi and Hermawan (2022) put it, "Indonesia has avoided a possible break-up of the G20 … effectively navigated the sharp divide among G20 members and maintained the very existence of the G20 as a premier forum for global economic cooperation, with the participation of all 20 members." It has expanded "inclusiveness through the active contribution of several invited countries and relevant international organizations" at G20 meetings and the summit. It "renewed the definition of consensus in a context where [the] unanimous agreement of all members is almost impossible to reach. It has also strengthened the principle of multilateralism in a context where members tend to adopt a unilateral approach for the sake of their utmost pivotal national economic interests…[and] not forced meetings to produce joint statements." It has "convinced G20 members to continue focusing on the main priority agenda and to deliver concrete implementable outcomes, in spite of some continuing deadlocks."

Russia's War in Ukraine

On November 9, Putin declared that he would not attend the Bali Summit in person, just as his government announced the retreat of its armed forces from Kherson and the entire north bank of the Dnieper River in Ukraine. Zelensky will thus attend by video, having said he would not participate if Putin did. There will thus be no chance to foster a direct dialogue between the two to control or end the war in a just way, as the dinner time conversation among G20 leaders at St. Petersburg in 2013 led Putin to tell Syrian president Bashar al-Assad to end his use of chemical weapons in the civil war there.

However, as Biden said in his news conference on November 9, all other G20 leaders at Bali would discuss the war in Ukraine and could come to a unified position to present to Putin and Zelensky about what these two should do. Putin's absence, even with his foreign minister replacing him, would also make it easier for the G20 to agree and act on their many other priorities.

Food Security

On food security, the Bali leaders may extend and even expand their UN-brokered agreement, due to expire in November, to allow grain exports from Ukraine and Russia through the Black Sea, especially if recent military setbacks make Putin conclude this war is hurting the very emerging and developing countries whose support he needs.

Nuclear Security

On nuclear security and safety, G20 leaders could even agree to reduce the danger of nuclear war, by affirming the need for nuclear safety at the civilian reactors in Chernobyl and Zaporizhzhia, and by declaring that nuclear weapons will not be used in such a war.

Health

On health, there will be clear advances in controlling Covid-19 and other pandemics, providing more equitable, worldwide access to diagnostics, therapeutics and vaccines, building resilience to health-related shocks, and strengthening the global health architecture to perform these tasks. Bali's leaders will raise resources for the new Pandemic Fund created by G20 finance and health ministers, above the $1.4 billion already pledged.

Climate Change and Energy

On climate change and renewable energy, leaders will endorse the Bali Compact containing basic principles for accelerating the energy transition, based on their G20 energy ministers' agreement and the intense discussions in the Energy Transition Working Group. The principles could hasten members energy transition.

Such action will arise from the shocks that show China and the US their soaring vulnerability, Biden's domestic success on spending on climate, environment and clean energy, and Indonesia's priority focus on renewable energy, which is now a military as well as economic and ecological imperative, given Russia's reduced natural gas exports to Europe.

Economy and Finance

On the economy and finance, leaders will endorse the 2022 G20 Sustainable Finance Report, prepared by the Sustainable Finance Working Group.

On taxation, they will push implementation of its historic reform of international corporate taxation.

Trade, Investment, Infrastructure and Tourism

On trade and investment, leaders will approve the Non-Binding Guiding Principles to Support the Multilateral Trading System for Achieving Sustainable Development Goals, and the G20 Compendium on Promoting Investment for Sustainable Development/Bali Compendium, prepared by the Trade, Investment and Industry Working Group (Pambudi and Hermawan 2022).

On infrastructure they will approve the Infra Tracker 2.0 and G20 Compendium of Case Studies on Digital Infrastructure Finance, Issues, Practices and Innovations, prepared by the Infrastructure Working Group.

On tourism, they will accept the Bali Guidelines for World Tourism Recovery, prepared by the Tourism Working Group.

Digitalization

On the digital transformation, the second presidency priority, leaders will promise to guide the digital revolution to benefit all. They will produce the Bali Package, prepared by the Digital Economy Working Group.

Labour, Employment and Gender Equality

On labour and employment, leader will agree on the Action Plan on Accelerating and Monitoring the G20 Principles for the Labour Market Integration of Persons with Disabilities and the G20 Policy Principles on Adapting Labour Protection for More Effective Protection and Increased Resilience for All Workers, prepared by the Employment Working Group.

On gender equality, they will endorse the 2022 edition of the Technical Annex, the KPI Dashboard and Best Practices Playbook, prepared by G20 Empower.

Development and Debt Relief

On development and debt relief, the G20 will take useful steps to expand debt relief for the growing number of beleaguered developing and emerging countries.

UN Support

On global governance, G20 leaders will reaffirm their full support for the UN's central, legitimate role on peace and security, the WHO as the leading institution in global health governance, for WTO reform to secure a fair trade system and COP27 on climate change in Sharm el Sheikh (Pambudi and Hermawan 2022).

Conclusion

Amid their severe geopolitical conflicts, all key G20 leaders will realise that to provide the global governance all need, now more than ever, there is nowhere else to go.

References

G20 Research Group and Center for International Institutions Research (2022). 2021 G20 Rome Summit Final Compliance Report, G20 Research Group, November 12. http://www.g20.utoronto.ca/compliance/2021rome-final.

Kharsu, Syed Munir (2022). "Amid Global Divisions, Indonesia Faces a Daunting Task to Achieve G20 Consensus," South China Morning Post, October 29. https://www.scmp.com/comment/opinion/asia/article/3197307/amid-global-divisions-indonesia-faces-daunting-task-achieve-g20-consensus.

Kirton, John (2013). G20 Governance for a Globalized World. Abingdon UK: Routledge.

Kirton, John (2022). "A Significant Summit in Bali," in John Kirton and Madeline Koch, eds., G20 Indonesia: The 2022 Bali Summit (GT Media, London), pp. 50–51. https://bit.ly/g20bali.

Kirton, John and Madeline Koch, eds. (2022). G7 Germany: The 2022 Elmau Summit (GT Media: London). https://bit.ly/g7elmau.

Kirton, John and Madeline Koch, eds. (2022). G20 Indonesia: The 2022 Bali Summit (GT Media, London). https://bit.ly/g20bali.

Pambudi, Edi Prio and Yulius Purwadi Hermawan (2022). "Indonesia's G20 Presidency: Indissoluble Challenges, Commendable Achievements," in John Kirton and Madeline Koch, eds., G20 Indonesia: The 2022 Bali Summit (GT Media, London), pp. 52–53. https://bit.ly/g20bali.

Rachman, Gideon (2022). "The First Global Summit of the Second Cold War," Financial Times, November 7, p. 17. https://www.ft.com/content/55428d56-fa9c-4c78-8f0e-59b34e094931.

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Appendix A: G20 Summit Performance, 2008–2021 ↩

Notes: a) London Summit, b) Pittsburgh Summit, c) Toronto Summit, d) Seoul Summit. N/A = not applicable.

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Appendix B: Democracy Scores of G7 Members and Global Powers ↩