When the G20 first met in 1999, Russia had defaulted on its external debt a year earlier, the Asian financial crisis was a fresh memory, Mexico had undergone a peso crisis, Brazil was having trouble paying its debts, and Long-Term Capital Management, a major U.S. hedge fund, had collapsed.
The point of creating the G20 was to prevent the international transmission of financial crisis from one country to others. Financial instability affects big lenders, banks principally. Leaders of the G7 leading economies were not about to see their own financial institutions dragged down because of foreign-currency lending to shaky Third World borrowers.
Former Canadian finance minister Paul Martin Jr. says he pitched the need for a forum larger than the G7 to promote financial stability and to further globalization to incoming U.S. Treasury Secretary Lawrence Summers.
German finance minister Hans Eichel is credited for bringing the G20 together in Berlin as a meeting of finance ministers and central bankers. Martin was its first chair.
In addition to the G7, the group includes the five BRICS economies: Brazil, Russia, India, China and South Africa; plus Argentina, Australia, the EU, Indonesia, Mexico, Saudi Arabia, South Korea, and Turkey.
Today the G20 nations represent 85 per cent of world GDP, and since the global financial crisis of 2008, it holds meetings at the head of state and head of government levels.
Justin Trudeau was happy to report that the recently concluded G20 Summit in Buenos Aires agreed to pursue objectives championed by Canada to empower women and girls, promote global health, and pursue open government.
His optimism about advancing a “progressive” agenda through the G20 has to be tempered by the political figures who met in Argentina.
In attendance were the tyrants President Erdogan of Turkey and Crown Prince Mohammad bin Salman (a.k.a. MBS) of Saudi Arabia; the dictators Putin of Russia and Xi (president for life) of China; and autocrats including Trump of the U.S. and Modi of India. Italy, a G7 country, now has a two-party government formed by left populists and neo-fascists; Brazil has just elected a crypto-fascist president.
Only two women, Angela Merkel (Germany) and Theresa May (U.K.) head G20 governments.
As a champion of globalization, the G20 has kept the capitalist ethos alive. However, any idea that democratic practices would happen naturally in national economies as a result of adopting so-called market economics has been squashed.
Instead of external problems being visited on national economies, internal economic problems created by the operation of capitalism are undermining democratic practices. Unresponsive Western governments are facing popular outbursts from citizens getting a raw deal.
Inequalities are created as capitals flows away from higher-wage localities to low-wage areas across the globe. Wealthy corporations scoop up the extra value created by under-paying labour and record super profits. Coupled with tax breaks for the wealthy and consumption taxes on the poor, inequality has become a global sickness, and it is not receiving treatment.
The amount of untaxed income and wealth hidden away in tax havens would be enough to make a serious dent in inequality, but policies to address international tax evasion and fraud are not being acted upon by the G20.
In Argentina, an unmet concern was getting the U.S. to commit to supporting multilateral trade through the World Trade Organization (WTO). The U.S. opposes naming replacements for judges as their terms presiding over WTO dispute settlement panels end, in effect paralyzing efforts to reform the institution.
In a surreal Buenos Aires ceremony concocted to allow Mexican President Enrique Peña Nieto to sign the new NAFTA deal on November 30, his last day in office, Nieto and Justin Trudeau were photographed on either side of Donald Trump, each of the three standing behind podiums labelled with the U.S. presidential seal.
Trump promised upon his return to Washington to tear up the old NAFTA so he could force Congress to accept its replacement, the USMCA.
Ottawa will have noted Trump is opening the way to killing the old deal without getting the new one approved; not what Trudeau had in mind when he signed beside Trump in Argentina, despite promising to hold off doing so until U.S. steel and aluminium tariffs were removed.
Duncan Cameron is president emeritus of rabble.ca and writes a weekly column on politics and current affairs.
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